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Walt Shurden Elder Law

Why Seniors Should Think Twice About Asking Family Members to Serve as Trustees

Walt Shurden
Board Certified Elder Law Attorney
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You’re not worried about setting up a special needs trust for your disabled relative. You want her to be able to enjoy the best of care even when you’re no longer around, and you know that creating a special trust for her can give her the income and governmental benefits she needs for long-term care.

But while setting up the trust is a no-brainer, selecting a person to serve as trust administrator is exactly the opposite. So many people are invested in her care—who is the right person to make sure she receives the funds from the trust and uses them wisely?

The Problem With Choosing Family Members as Special Needs Trustees

Seniors will often select a family member as trustee for a relative with special needs due to the person’s emotional relationship with the disabled beneficiary. However, using your heart rather than your head to choose a trust administrator can have disastrous results—both for the beneficiary and the administrator. Here are three common misunderstandings about choosing family members to serve as trustees:

  1. The Most Caring Family Member is Best for the Job

    Many seniors make the mistake of choosing the disabled person’s caretaker to act as trustee, believing that the caretaker’s familiarity with the person’s needs makes him ideally suited to handle her funds. However, caretakers may not be willing, able, or financially competent enough to take on the job (and some may even be tempted to appropriate the funds for their own use).
  2. The Family Member’s Job Ends with the Trustmaker’s Death

    Unlike acting as executor of your will, acting as an administrator to a trust is not a “one time” job. The person named as trustee will be responsible for maintaining the requirements of the trust, including paying associated costs from trust funds, investing funds on behalf of the beneficiaries, and other financial duties for as long as the trust is in effect. This is commonly referred to as serving as a fiduciary to the trust, and can be a lot of work to handle. Even if the trustee uses outside services to file taxes or keep track of investments, he or she is still legally responsible to make sure that all of these actions are taken (and may face legal action if they are not).
  3. It’s Cheaper to Ask Family than Hire an Outside Administrator

    All trustees are legally entitled to receive a fee for the time they spend administering to the trust. Although family trustees can choose not to charge, friends and family members who administer to the trust have a right to be paid for their services (usually with trust funds).

Attorneys as Trustees: The Best of Both Worlds

Even if it is well-intentioned, naming a family member as trustee can overburden the relative and lead to resentment and hard feelings. By naming an attorney as your loved one’s administrator, your child can retain all of her protections: her family members can provide companionship and support, while the attorney handles business and benefit matters. Family members are still able to exercise control and protection of the loved one’s future by getting power of attorney or health care proxies, allowing a disabled relative to have a full network of support.

To find out how we can help protect your loved one, call Walt Shurden Elder Law today at 877-241-1230 or email us at [email protected].

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