One of the big decisions families face when establishing a special needs trust is who will act as trustee.  The trustee not only decides how money in the trust can be used, he or she is also responsible for the administration of the trust –  planning investments, preparing tax returns, and complying with Medicaid regulations among other complex tasks.  A professional or corporate trustee is often the best prepared to deal with these responsibilities, but will they also know what expenditures are in the trustee’s best interests?

In this case, a New York Surrogate’s Court decision reviewing guardian and trustee accounts for a young man with disabilities is remarkable not for its legal implications, but for the detailed analysis of how an engaged trustee and caregiver can have a huge impact on the life of the trust beneficiary. In the Matter of the Accounting by JP Morgan Chase Bank, N.A. v. Marie H. (N.Y. Surr.Ct.,No. 2005-1307, Dec. 31, 2012). 

The beneficiary in this case is Mark C.H., a young man with autism.  Mark was placed in a center for people with autism shortly before his mother passed away, leaving a significant trust fund for his benefit. In a guardianship action undertaken after the mothers death, the proposed guardian (the lawyer who drafted, and served as co-trustee of, Mark’s special needs trust) testified that for two years none of the trust’s income or principal had been spent on Mark’s care and that no one had met with the staff at the center regarding Mark’s care. After facilitating several meetings between the trustees and the center’s staff, and making sure that appropriate caregivers were hired, the court approved the guardianship.

Several years later, Mark’s guardian and the trustees of his trust filed accountings with the New York Surrogate’s Court. Although there are still ongoing accounting problems, the court has found that the hiring of a care manager and greater trustee involvement in Mark’s life “has improved the beneficiary’s quality of life and his functional capacity to enjoy what is now a near ‘normal’ existence in the community.”

In a must-read opinion for anyone serving as the trustee of a special needs trust, the court outlines, in great detail, the steps that have been taken to make Mark’s life better, including the purchase of special equipment to help him communicate, coordination with Mark’s brother so that the two could meet for the first time since Mark moved out of his mother’s home, and facilitation of Mark’s move into a community setting.

The court explains that “once the Trustees were required to make themselves knowledgeable about Mark’s condition and his needs, and the availability of services that would enable them to provide for those needs, they began, and continue to use funds from his trust for the purposes his deceased mother anticipated and so deeply desired. The history brings into sharp focus the obligations of trustees, both individual and institutional, to the beneficiaries of trusts they administer when they know, or should know, that those beneficiaries have disabilities, and have medical, educational or quality of life needs that can and should be met from trust income.”

For the full text of this decision, click here.


New York Decision Lays Out, in Plain Terms, What It Takes to Be a Successful SNT Trustee
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