Budgeting for Trustee Success

The government prepares a budget. Businesses and families
prepare budgets. A special needs trust should be no different.

Unfortunately, many trustees of special needs trusts
(especially family members of trust beneficiaries) have little or no experience
handling financial matters for another person. Add to that the fact that
special needs trusts are often funded with sums of money that greatly exceed a
trustee's own means and you have a recipe for mismanagement.

The smartest solution is to name a professional as a trustee
of a special needs trust, either alone or in conjunction with a friend or
family member of the person with special needs. If you work with a professional
trustee, the first thing the trustee will want to do after getting to know the
trust's beneficiary and family is to establish a budget.

The trust's budget does not need to be complicated. Some
trust beneficiaries are independent and able to manage their own financial
affairs. In this circumstance, the trustee may only have to establish a system
of payments to the beneficiary that are guaranteed to last over time, while
keeping funds in reserve for emergencies (provided it's possible to pay the
beneficiary directly without compromising government benefits — in many cases,
it isn't).

Other trust budgets are much more complex. The trustee must
manage complicated investment portfolios that are specifically designed to
provide for a trust beneficiary's needs over time. Trustees may have to pay for
daily living expenses, extraordinary medical care, and once-every-ten-year
resources like specially equipped vans. A trustee without a well considered
budget will be flying blind when it comes to these expenditures–to the
detriment of the beneficiary who is counting on the trust's assistance.

Almost nothing can be more frustrating for a trust
beneficiary than having money tied up in a special needs trust and not being
able to access the funds on demand. Of course, there is an important reason for
preventing a beneficiary from being able to withdraw trust funds at will — protecting
valuable government benefits. But adult trust beneficiaries who are not used to
having to ask other people for help can feel hurt or resentful about having to
work through a trustee. A clearly-drawn-out trust budget can help the trustee
avoid conflict with a beneficiary, and it provides the beneficiary with
stability and assurance that the beneficiary's needs will be met.

Sometimes a professional trustee will work with a financial
advisor or other financial professional to establish a trust budget that will
guarantee fiscal security well into the future. In many cases, the budgeting
process will also call for a detailed professional evaluation of a
beneficiary's current and future needs. This is often undertaken by a
professional care manager or by a team of medical professional and social

Trust budgeting is an incredibly important trustee duty, and
a trustee without a budget is like a traveler without a map — completely lost.
If you've been serving as a trustee of a special needs trust and you don't have
a trust budget in place, there's no time like the present to set one up. Talk
to your special needs planner today about your options. You, and the trust's
beneficiary, will be glad you did.


From Special
Needs Planner

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