Serving as Trustee of a Supplemental Needs Trust

November 22, 2010
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A Trustee is a fiduciary and is subject to the commonly recognized fiduciary duties of diligence, loyalty, obedience and prudence. All trustees are required to:

– Maintain accurate records

– Invest the funds as a reasonably prudent investor

– File all appropriate tax returns and accountings

– Comply with the terms of the trust document itself

Duties and Responsibilities Unique to SNT’s:

1. Securing or Maintaining Public Benefit
The special needs trust is a spendthrift discretionary trust and can be administered without concern for the eligibility requirements for the various public benefit programs. It is essential that Social Security benefits and trust funds be maintained separately and that they are not commingled with personal assets.

2. Paying Fees on Social Security Cases
When attorney fees have not been paid, Title II of the Social Security Act allows withholding of claimant’s past-due benefits. Anyone may pay the fee.

3. Trust Administration with Public Benefits
Once the trust is funded, the trustee should provide a copy of the trust to the Social Security Administration, and in the cover letter should explain why the trust is exempt. Distributions to third parties on behalf of the beneficiaries are exempt from being counted as income. If the trust was created by court order, notice of the hearing should have been provided to any agency providing cash benefits to the beneficiary.

4. Trust Provisions Requiring Special Attention
Annual Evaluation: The trustee or his or her agent must arrange for an annual evaluation of the beneficiary, addressing specific topics. This may be accomplished by participating in a person-centered planning meeting with a community mental health agency, or in a private meeting.

Defending the Trust: A special needs trust should include a provision requiring the trustee to defend the trust from attack by the SSA. The trustee shall exhaust all legal options to defend the trust before it is terminated because adverse determinations.

Letter of Intent: If there is a dispute about a trust, a judge will look to give effect to a letter of intent. The letter should state the grantor’s intent, usually the parent, so that the trustee may fight the system. The trustee must make his or her best efforts to give effect to the specifics in the letter.

Permissible Distributions from a Supplemental Needs Trust:
By way of example, the trustee may use any of the following for expenditures from the trust:

– Automobile/Van

– Accounting Services

– Acupuncture/Acupressure

– Appliances (kitchen, household, entertainment)

– Alterations/mending clothes and shoe repairs

– Bottled water or water service

– Bus pass/public transportation costs

– Camera, film, recorder and tapes, development of film

– Clothing

– Clubs and club dues (record clubs, book clubs, health clubs, service clubs, zoo, advocacy groups, museums)

– Computer hardware, software, programs, and Internet service

– Conferences and travel related to same

– Courses or classes (academic or recreational) including supplies

– Curtains, blinds, drapes, and the like

– Dental work not covered by Medicaid, including anesthesia

– Down payment on home or security deposit on apartment

– Dry cleaning and/or laundry services

– Elective surgery

– Fitness equipment

– Funeral expenses

– Furniture, home furnishings

– Gasoline and/or maintenance for automobile

– Haircuts/salon services

– Holiday decorations, parties, dinner dances, holiday cards

– Home alarm and/or monitoring/response system

– Home improvement

– Home purchase(to the extent not covered by benefits)

– House cleaning/maid services

– Insurance(to the extent not covered by benefits)

– Legal fees/advocacy

– Linens and towels

– Massage

– Musical instruments (including lessons and music)

– Non-food grocery items (laundry soap, bleach, fabric softener, deodorant, dish soap, hand and body soap, personal hygiene products, paper towels, napkins, Kleenex, toilet paper, any household cleaning products)

– Over-the-counter medications (including vitamins and herbs, etc.)

– Personal assistance services not covered by Medicaid

– Pet and pet’s supplies, veterinary services

– Physician specialists if not covered by Medicaid

– Private counseling if not covered by Medicaid

– Repair services (appliance, automobile, bicycle, household, fitness equipment)

– Snow removal/landscaping/lawn service

– Sporting goods/equipment/uniforms/team pictures

– Stationary, stamps, cards, etc.

– Storage units

– Taxicab

– Telephone service and equipment, including cell phone, pager, Medicaid

– Therapy (physical, occupational, speech) not covered by Medicaid

– Tickets to concerts or sporting events (for beneficiary and an accompanying companion)

– Transportation (automobile, motorcycle, bicycle, moped, gas, bus passes)

– Utility bills (direct TV, cable TV, electric, heating)

– Vacation (including paying for personal assistance to accompany the beneficiary)

Examples of Trust Distributions That Will Reduce SSI Benefit:

– Basic shelter-relaxed expenses

– Food

– Basic items of clothing

– Cash for any purpose

Examples of Impermissible Trust Distributions:

– Paying for a service already paid for by another source

– Distribution not in the best interest of the beneficiary (made primarily for the benefit of another person)

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