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Who should manage a supplemental needs trust in Colorado?

On Behalf of | Dec 15, 2023 | Estate Planning |

Those who have family members with special needs have to think carefully about decisions that others may take for granted. For example, estate planning is often a very simple process for many adults in Colorado. They create an inventory of their resources and personal financial responsibilities. They draft documents allocating their assets to specific people and naming guardians for their minor children.

Those who have loved ones with special needs, however, often need to take a more considered and measured approach to the estate planning process. Oftentimes, they need to consider setting up a trust. A lump-sum inheritance could make someone ineligible for state benefits. They may also require support before their guardian or other loved one actually dies.

A supplemental needs trust, also known as a special needs trust, can potentially help augment someone’s standard of living without depriving them of crucial benefits. Choosing the right trustee can be as important as properly funding that trust.

A trustee needs to be responsible

There are many tasks that a trustee will need to manage. They have a responsibility to oversee and protect investments. They also need to determine when distributions from the trust would be appropriate. They act as a gatekeeper preventing someone with special needs from misusing those resources and protecting them from the financial abuses of others.

Some people engage in misconduct when they stand to benefit financially from their role as trustee. Therefore, the trustee selected should be an individual capable of putting the beneficiary’s needs ahead of their own wishes. They will also need to be organized and responsible enough to manage the resources in the trust indefinitely.

Ideally, they will also live nearby so that they can provide social support to the beneficiary in addition to protecting their financial resources. The trustee managing a supplemental needs trust has a major influence on the beneficiary’s quality of life.

Sometimes, parents and other family members choose to hire a professional fiduciary because they don’t want to cause conflict among their family members or worry that they don’t know anyone who can adequately fill that role. Other times, people may name two or more people who will serve as co-trustees. They will share responsibility and serve as a form of protection against embezzlement and other potential misconduct.

Carefully considering candidates for the role of trustee when creating a supplemental needs trust is a crucial step for those who want to protect a vulnerable loved one.