What are my duties as a special needs trustee?

by | Dec 30, 2014 | Trustees, Executors & Fiduciaries |

A Supplemental Needs Trust is designed to assist individuals who qualify for certain governmental benefits such as Medicaid and Supplemental Security Income. Also commonly referred to as a Special Needs Trust, an SNT is basically a trust which ensures that beneficiaries who may qualify for those benefits have someone to help them in cases where the beneficiaries have become disabled or suffer from some other limitations.

Under New York Estate Planning and Trust statutes, a person named in a SNT as the individual who will help the benefit recipient is known as the trustee of a supplemental needs trust. A good example of this relationship might be a daughter assisting her mother who is currently suffering from dementia associated with advanced age. That daughter needs to have certain legal authority that will enable her to use those government benefits on behalf of her ailing mother.

That’s where the SNT trust comes in. Under state law, a trust can form a fiduciary relationship between that mother and her daughter in the form of an SNT trust. A fiduciary is often someone named in an estate plan as a person entrusted with receiving and distributing trust assets.

Due to the high potential for abuse, fiduciaries are bound by strict regulations. For example, fiduciaries are forbidden from allowing the benefit recipient’s money to mingle with their own. Fiduciaries are also forbidden from profiting from their roles as trustees, except for the amount of commission they receive that is designed to compensate them for their time.

There are a lot of rules associated with establishing special needs trusts. For example, the beneficiary of the trust must be under 65-years-old at the time the trust is created. If you are a New York resident, you should know that your estate planning attorney can assist you in determining whether a forming an SNT is a good step to protect yourself in the future.

Source: Findlaw-New York Code, “N.Y. EPT. Law § 11-1.1 : NY Code – Section 11-1.1: Fiduciaries’ powers” Dec. 30, 2014