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Is Your Special Needs Trust Well-Managed? 6 Questions to Ask a Trustee

As someone who has been administering Special Needs Trusts (SNTs) for more than 25 years, most of them at the Laird Norton Trust Co., I get many questions on this topic.  Quite a few of these are from potential clients asking what a professional trustee does. I make myself available to answer any and all of these questions because I realize how difficult and easily overwhelming this situation can be.

Special Needs Trusts are created to support loved ones facing long-term physical and mental challenges. In selecting a trustee, you are making a decision that will potentially last over someone’s lifetime. The institution you choose must be highly experienced managing these types of trusts AND possess the skills to work with families encountering this new world. What questions do you ask? How do you find someone who understands what you have been through and who will help you and your loved one for years to come?

Here are six important questions I get asked — and which I advise that you ask any professional trustee you are considering for your Special Needs Trust:

#1. Will you be around for the long haul?

Guardians and beneficiaries should be looking for a professional trustee that will be there for them over a lifetime, navigating the complexity of a Special Needs Trust while meeting the beneficiary’s needs and helping them accomplish their goals. The firm should have longevity and proven experience.

Our answer: The Laird Norton Trust Co. (LNTC) is the oldest independent trust company in the Pacific Northwest, having started in 1967. We have served as trustee for Special Needs Trusts since the early 1990s, when the first food-borne illness settlements were issued. We have the experience, along with the compassion, needed to serve in this capacity. We understand how these trusts interconnect with government benefits. The trust beneficiary will work with a team of professionals at LNTC so there is always someone who knows their story. We also work with attorneys and CPAs outside of LNTC who are experts in this unique field.

#2. How do you determine what is in the best interest of my loved one (the beneficiary)? This is one of the top questions to ask. This entire process encompasses the needs of the beneficiary over their lifetime. How does a trustee get to know the beneficiary and what steps do they take to make distributions from the trust?

Our answer: Our process is built on developing strong relationships with our clients and trust beneficiaries. Starting with your initial interview of us, we are taking notes and listening to the needs of the beneficiary. We take advantage of every opportunity to get to know the beneficiary, either by holding meetings, through emails, or during periodic calls to see how things are going. Each interaction is important in developing our relationship, and we take each interaction seriously. We gain a deep understanding of the needs and goals of each beneficiary. We use that information to guide us when making a distribution under the terms of the trust.

There are times when we may have to redirect a beneficiary’s financial goals. We help the beneficiary understand how their trust can benefit them and create compatible solutions.

#3. This entire process is new to us, how does it work? This is a great question and challenges the trustee. You’ll want to know how they work with the drafting attorney, what happens when the trust is ready, and how they will work together with you in the future.

Our answer: Attorneys are excellent at drafting the trust document, but they don’t administer the trust, which is where the Laird Norton Trust Co. steps in. Before the trust document is finalized, we review it looking for the key goals the beneficiary and their guardians have shared with us.  We engage with you and the attorney during the drafting process, review any changes and bring up suggestions that can further the beneficiary’s goals. Once the trust is finalized and the Court approves our appointment as trustee, we will reach out to the beneficiary or their guardian(s) and continue discussing their goals while developing an investment plan. From that point on, we meet as often as necessary and whenever the beneficiary or their guardians would like.

#4. What is included in your fee? Asking the prospective trustee about their fees is very important. You should be provided with an inclusive fee schedule. Does this fee include both administration and investment advice? What is covered?

Our answer: We provide and review a copy of our fee schedule with you. It outlines our annual fee, inclusive of trust administration and asset management. It also details our custody and trust tax return fees. We don’t charge extra for bill pay, meetings, discussions with care providers, etc. We do not complete personal tax returns, but we can help you find a CPA who is experienced in returns involving trusts.

#5. Can the trust purchase a home? This question comes up a lot, and it all depends on the trust document, not necessarily the trustee. It is a good question to ask because it should provide you with some insight on how a trustee makes decisions.

Our answer: The answer isn’t always straightforward. We typically see home ownership as a good investment; however, it needs to be accomplished with the best interest of the beneficiary in mind while adhering to the terms of the document. A well-drafted Special Needs Trust document will contain provisions with regards to either the purchase of a home or a major asset, and each trust can be different. If the document allows ownership in some fashion, we consider the needs of the beneficiary, and if the trust can support all aspects of homeownership such as taxes, maintenance, and insurance. We also consider any government benefits the beneficiary is receiving and provide guidance on how those may be affected.

#6. Everyone is so nice, its hard to make this decision. This is not a question, per se, but it is a comment we hear quite often. I think what potential clients really want to know is this: On what do I base my decision when everyone is so nice and appears to have all the right answers?

Our thoughts: Special Needs Trust administration involves more than being nice. This is a group of people who will be working with your loved one for a lifetime. They need to have the experience and knowledge of how these trusts work. As you listen to the potential trustees, think about how you want your loved one to be treated. Does it sound like the trustee has experience working with someone with similar disabilities? Did the trustee mention government benefits and the requirements for those? Did the trustee share any experiences involving difficult conversations? Do you feel comfortable asking this trustee any question?

I’ll share a quick story. Before becoming a client, the parents of a child with disabilities and I held an initial interview. When I visited them at their home, I noticed their son playing a video game that my son really enjoys. So, before we talked about the trust, I started talking about the video game which led to other games, which led us to a more in-depth conversation about the parents, the family, and some of the things they are passionate about. We ended up connecting in an important, fundamental way and to this day that connection provides a great foundation for administering their son’s Special Needs Trust.

Susan Zurek

Susan is a Director, Client Services at Laird Norton Wealth Management. She works closely with many different generations within families – children, parents, grandparents – to establish and administer a wide variety of trusts.