Question:
A reader of The Voice writes to ask:
"Can you suggest some non-profit organizations that act as
trustees and have a knowledge of special needs trusts?"
Our
Response (from Alliance member Brian Rubin, an Illinois
attorney): First,
before you decide to use a non-profit as trustee, I urge you
to consult with an
Alliance attorney in your area to review the advantages
and disadvantages of using family or close friends, or
possibly a traditional corporate fiduciary (Trust Company).
When
relatives or close friends are not a viable alternative to
serve as trustees of a Special Needs Trust (and the demands
and specialized knowledge can make the job a challenging
one), the choice of a competent and caring trustee becomes
very difficult. Non-profit organizations in many states and
some nationally, have attempted to resolve this very serious
problem by accepting the role of trustee of "private" or
"individual" 3rd party special needs trusts, even relatively
small trusts--where "small" is a an obviously variable
concept.
Many
non-profits have established Master "Pooled" Trusts. The
individual special needs trusts are actually "sub-accounts",
managed under the umbrella of a "master" or large trust
fund. The non-profit trustee also often serves as an
advocate for the beneficiary with special needs. These may
be pooled 3rd party trust accounts (that is, funded by
contributions or inheritances from someone other than the
beneficiary himself or herself), or self settled "pay-back"
trust accounts as authorized by federal law (that is, trusts
funded by assets of the individual with disabilities,
whether those funds existed before the disability, were
inherited without proper advance planning, or were received
from personal injury settlements).
The typical
non-profit master trust is established by a local charity or
nonprofit agency to serve persons with special needs.
Sometimes, several charitable organizations serving
different populations will pool their resources to establish
a community pooled trust. Their services as trustee,
however, are usually not free. The family of a prospective
trust beneficiary will normally have to pay a "set-up"
charge, as well as an annual fee. The family generally is
required by the non-profit to engage an attorney, at the
family"s expense, to represent them in the process.
There are
some non-profits that have operated successfully for many
years. It is essential that families perform due diligence
investigating the stability and history of the non-profit,
of the Master or Pooled Trust, before making the decision to
participate in the Trust.
In my state
(Illinois), I often recommend the use of such a non-profit,
a chapter of the Arc of Illinois. I suggest that you contact
an Alliance Attorney in your state for similarly
individualized recommendations. Another suggestion is that
you contact your
state Arc chapter for a recommendation. In some states,
the state Arc actually serves as trustee.
Some things
to consider in selecting a non-profit trustee:
- Will
the organization be responsive and attentive to the needs of
the beneficiary?
- Who
will be managing the investments?
- What
is the initial and what is the ongoing cost?
- What
are the provisions when the beneficiary passes on?
- What
provisions are there for family involvement in decisions?
Conclusion:
Non-profit trustees are an excellent option in some cases,
but with much local variation. Before giving blanket advice
about the non-profit alternatives, an attorney will need to
know more about the beneficiary's condition, the size and
source of the trust, and the expectations of family members
and caretakers.
About
the Author:
Brian Rubin is a Special Needs Alliance member in
Illinois, and he is also the father of a son with autism
(among other special needs). Brian is very active in the
disability community, serving as a member of the Board of
Directors of The Arc of Illinois and as a former chairman of
the Illinois Department of Human Services Statewide Advisory
Council on Developmental Disabilities.
About this Newsletter:
We hope you find this newsletter useful and informative, but
it is not the same as legal counsel. A free newsletter is
ultimately worth everything it costs you; you rely on it at
your own risk. Good legal advice includes a review of all of
the facts of your situation, including many that may at
first blush seem to you not to matter. The plan it generates
is sensitive to your goals and wishes while taking into
account a whole panoply of laws, rules and practices, many
not published. That is what The Special Needs Alliance is
all about. Contact information for a member in your state
may be obtained by calling toll-free (877) 572-8472, or by
visiting
www.specialneedsalliance.com