This may be the hardest, most important question you will face in the entire estate planning process. If your child is young, the guardianship question is probably harder and more important but this is a close second! I say this not to intimidate you but to reassure you that hundreds of our clients have been in your very position before and every single one of them has found a solution.
We can go into greater detail on any of these in the comments or on a future blog, depending upon demand, but for now we’ll look at a brief overview of your options:
Your Parents: they might be great as a temporary solution but in the natural order of things, they will not live long enough. This Special Needs Trust needs to last for your child’s entire life.
Your Siblings: while they can be a great choice for initial trustee or successor trustee after you, they too will probably not outlast the trust. But they can manage it while we wait for other candidates to, literally, grow up.
Your Other Children: this is a mixed bag. While they are the same generation as your child with special needs, there’s no predicting who will outlive whom. Then there is the burden. You may be counting on you other child(ren) to visit or even to act as Guardian/Conservator to your child with special needs. The job of Trustee, done properly, is an onerous one, fraught with liability. Finally, if your child with Special Needs has more than one sibling you MUST consider family dynamics. Can you name them all as co-trustees, or will that be placing your Beneficiary in the eye of an endless hurricane? If you choose one, how will the other(s) react to “the chosen one” and to the Beneficiary?
Your Special Needs Trust Attorney: in limited cases, I will agree to act as a successor trustee for clients. It often makes sense when naming family does not, and the clients want more personalized attention than a bank can provide. Of course, since I’m mortal, my back up is usually…
A Bank or Trust Company: their minimum trust sizes range from $300,000 to $1M, with the vast majority of banks, brokerage houses, and trust departments either refusing to accept Special Needs Trusts or setting their minimum at $1M. They have one big advantage and that is “deep pockets”; however, in my experience, it’s very hard to get anything out of those pockets because they will not accept a trust that holds them to a standard of accountability that is any higher than “gross negligence“. Gross negligence is very difficult to prove because it goes beyond all kinds of mistakes that no one in their right might would make to mistakes that are just outrageous.
Sometimes a combination makes sense. For example: the estate planning attorney together with the brother of the beneficiary. Then, whichever of them lives the longest with a bank that has a stellar trust department reputation. Then, the bank alone with a Care Manager-style Advocate for the rest of the Beneficiary’s life.
If you find yourself more confused about your choices than before you read this post, don’t be alarmed. That’s just because you realize you have more choices than you thought.
Many a client has resolved an “impossible” situation in my office, not because I have the answer but because I have learned to ask great questions over the years.
So come in, have a cup of coffee with me and let’s take on your toughest choice together. I promise it will be time well-spent.
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