YourABA April 2012 Masthead

Creating effective special needs trusts

When it comes to creating a special needs trust for a disabled loved one of a client, too many practitioners focus only on the preservation of public benefits, says Stephen Dale, a disability advocate and specialist on estate planning. “Maybe 20 years ago that was good enough, but if that’s what you’re doing, you need to broaden your scope.”

In the ABA-CLE “Building a Successful and Supportive Special Needs Practice,” Dale explains that as states grapple with budget shortfalls, funding to social service programs across the country are being severely cut or phased out entirely. Taking the place of public agencies are an increasing number of private-sector providers.

“To expect the government to provide adequate resources for a disabled loved one could be a mistake,” Dale warns.

Not only must today’s special needs trusts include the flexibility to address changing circumstances, but the attorneys preparing them must stay up to date on the ever-evolving environment in order to be effective, Dale says, noting that advocacy organizations such as the Arc, Autism Speaks and National Alliance for Mental Illness can help practitioners stay informed.

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A special needs trust that can adapt to changing circumstances involves including the right team of advisors who will advocate for the needs of the protected loved one. These advisors collectively use their discretion in the best interest of the beneficiary—advocating for appropriate care, preventing abuse, keeping up with changing laws and investing funds.

“To expect the government to provide adequate resources for a disabled loved one could be a mistake,” Dale warns.

A team approach can make a positive difference. Too often, people just name one of their family members as conservators or successor trustees, and it doesn’t work.

“What you’ll often find is parents will serve as advocates for their disabled children, and they will get so involved in being the advocate that they lose sight that not everybody—including their siblings in the family—are following along,” cautions Dale, warning that some family members end up “running as far away as they can from disability.”

Family members can instead be part of a team, functioning as an advisory committee that directs the actions of a trustee. Committees typically include a care manager who interacts directly with the beneficiary, as well as a trust protector who receives all the reports and has the ability to fire the trustee, if necessary. “In the best circumstances, the advisory committee provides a system with checks and balances to ensure the trustee is acting in the best interest and incorporates the family in the process.”

For smaller trusts, Dale says that co-trustees with the power to seek assistance from benefit, tax and financial advisors may be adequate.

In order to ensure that the trust functions as intended, Dale recommends creating a document that clearly expresses the trust’s intent as well as what it needs to do. This document should be a journal of sorts, with more detail than a typical letter of intent. Dale describes it as ongoing documentation of the beneficiary’s needs. “You have good information in your head about what kind of food is good, what kind of treatment is good, what didn’t work. What is that information? Log it.

“It’s imperative to be clear how the trust committee is structured, who’s in charge, and when and how the family members need to act,” says Dale, noting examples of advisors with only a vague idea of their roles, causing their committees to fail.

Preparing an annual distribution plan can provide committees with a reason to regularly meet, thereby providing the trustee with the necessary advice to direct future actions.

Proper trust preparations are important—and so is a periodic review and updates to an estate plan, advises Dale.

“Building a Successful and Supportive Special Needs Practice” is sponsored by the ABA Center for CLE, Commission on Disability Rights, General Practice, Solo and Small Firm Division, Health Law Section, Section of Labor and Employment Law, Section of Real Property, Trust and Estate Law, Senior Lawyers Division and Young Lawyers Division.

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