Family Law Attorney Harry Margolis Provides Suggestions for How to Select a Trustee for your Special Needs Trusts.
Harry Margolis is a family law attorney with the Boston law firm Margolis Bloom & D’Agostino. This series from Mainstay Supportive Housing explores different topics related to finding the right supportive housing for your loved one with intellectual or developmental disabilities. This interview has been edited for length and clarity.
1. What’s the role of a trustee for a special needs trust?
Well, first of all, a trustee of a special needs trust has all the obligations and duties as a trustee of any trust. They have to manage the assets within the trust, whether those are investments, savings or real estate. They have to distribute the assets to beneficiaries under the terms of the trust. They have to read the trust and see what that says. And they have to usually do annual accountings of what they’ve done as trustee.
But a special needs trustee has the added obligation of really taking more time to see to the needs of the beneficiary, and making sure that the trust really meets those needs as well as possible. And to make sure they can stay qualified for public benefits programs, whether that’s Mass Health, Supplemental Security Income (SSI) or subsidized housing. That’s an added layer that the special needs trustee has, that trustees and most other trust don’t have.
2. For families considering opening a trust and selecting a trustee. What’s important for them to know?
Well, I think they need to know these basic requirements of a trustee, but they need to know who’s going to really look after the person they want protected. So, they have to pick someone who they have confidence in, and confidence that the person has the time to devote to the job, not just tomorrow or next year, but for a long period of time.
3. Is there experience needed for someone who is going to be a trustee of a special trust?
Well, the best experience is having been a trustee. And I think then the next most important thing for a trustee of a special needs trust is to know the beneficiary and their needs and what programs they take advantage of.
4. Are trustees paid?
If they are non-family members, they’re usually paid. If they are family members, they are usually not paid.
5. Should it be a family member?
Family members have the benefit of knowing the beneficiary, probably already being involved in their lives, knowing what they need, then knowing who’s providing care to them if they are receiving care from other people. So those are all good, but there’s also some potential downsides of having a family member if it’s a sibling, that can create some conflict or tension. “So why is this sibling managing my money?” And it can get in the way of the sibling relationship. Every situation is different. A family member can be a good trustee, but sometimes there’s not a good fit.
6. In some circumstances, co-trustees are appointed. Could you talk about when the right time is to consider co-trustees?
I like co-trustees a lot for special needs trusts, because then you could have a family member who knows the beneficiary well as one trustee and then, perhaps a professional, whether it’s a bank, a trust company, or a lawyer as the co-trustee. The professional manages the investment, takes care of the disbursements, does the annual tax return; does all that stuff. And that doesn’t have to be on the shoulders of the family member trustee. The family member can inform the professional trustee about what’s needed and what’s going on with the beneficiary. In addition, there can be a little bit of a good cop/bad cop, because if you don’t want to make disbursements for one reason or another, then the family member can say, “Well, it’s out of my hands. It’s a professional trustee who’s saying ‘no.’” The combo can work very well.
7. Can families change their trustee if circumstances change?
Yes, and every trust should have a mechanism for changing trustees. Sometimes, they give a particular person that power, and they often name them the trust protector. So, you don’t have to formally have that designation, but there should be someone in that role who can change the trustee because sometimes relationships don’t work out. Or you’ve been working with one trust officer at a bank and they leave and the new person who comes in doesn’t work out so well. You don’t want to have to go to court to try to prove that this is not a good fit because it’s not necessarily malfeasance, it’s just it’s not a good fit.
8. What is a successor trustee?
A successor trustee is really the person or entity, if it’s a bank or trust company, who will take over under some circumstances. In some cases, the parents may be the initial trustees, but they say [may] pass away or become incapacitated. Then whoever takes over will be the successor trustee. It’s good either to have a particular person or entity named in the trust document as successor trustee, or again, have a mechanism in the trust so that someone has the power to name a successor.
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