Should You Have a Care Committee in Your Special Needs Trust?


Most special needs trusts give their trustee wide authority, often appropriately so, to respond to unforeseen circumstances. But for those concerned about placing some checks and balances on the trustee’s authority, one possible option is a care committee.

Special needs trusts are trusts designed to protect the assets of a person with disabilities. The trustee is the person tasked with managing and distributing the trust’s assets on the beneficiaries’ behalf.

As previously discussed here, in addition to the trustee, many trusts create a separate care committee, either explicitly in the trust or through a separate memorandum of intent. Care committees, also commonly known as “trust advisory committees,” are typically granted the right to review accountings, to examine records, and to remove and replace the trustee.  To use an analogy from the corporate world, the trustee is the CEO and the care committee is the board of directors. The care committee may also be given the authority to amend the trust, veto certain distributions or participate in other decisions.

A downside to the creation of a care committee is that it can slow down the decision making process, at the expense of the beneficiary. Likewise, a care committee can deny the trustee the appropriate flexibility to act in the person with disability’s best interests.

To see if a care committee is right for your special needs trust, contact your special needs planner.

President Signs Special Needs Trust Fairness Act

The 21st Century Cures Act, which includes the Special Needs Trust Fairness Act has passed both the House and Senate and was signed by President Obama on December 13, 2016.  Individuals with disabilities, who have capacity, can create their own first party special needs trusts (sometimes called (d)(4)(A) trusts as they are established under 42 U.S.C. s. 1396p(d)(4)(A)). The federal statute prior to this legislation only allowed a special needs trust to be established for a person with a disability by the person’s parent, grandparent, guardian, or by a court.

The individual that would benefit the most from the trust, the beneficiary, however could not establish the trust themselves. The law as it was written presumed that all individuals with disabilities lack the mental capacity to establish a trust. The Special Needs Trust Fairness Act will end this presumption. No longer will individuals in need of a special needs trust, but without parents or grandparents, face undue legal difficulties.

The assets held within a special needs trust are considered to be non-countable for purposes of eligibility for means-tested public benefits, including Supplemental Security Income and Medicaid. The Special Needs Trust Fairness Act, along with the recent ABLE account, give individuals more options to managing their own financial affairs.

Please click here for our post on the Achieving a Better Life Experience Act, or ABLE account.

Legislation Would Add Option For Special Needs Planning

Parents of special needs children know how expensive education, therapies, rehabilitation and other medical costs can be.  When children transition into adulthood, adding in the costs of transportation, housing and other basic living necessities can be financially devastating.  Traditional planning for families included, among other things, special needs trusts to manage and distribute funds for special needs beneficiaries over their lifetimes.

The Achieving a Better Life Experience Act (ABLE Act) would allow parents and caregivers to put money into tax-deferred savings plans, like the 529 plans that parents use to save for college, to cover expenses like education, housing, transportation, therapy, rehabilitation and assistive technology. Advocates say the accounts, called 529-ABLE plans, would be easier and less expensive to set up and maintain than the trust funds often used for beneficiaries with disabilities.  As some government assistance programs only allow beneficiaries to keep $2,000, these new plans would allow a beneficiary funds to cover many services without jeopardizing programs like SSI and Medicaid.

Planning financially for a special needs child can be overwhelming.  Expanding the options for special needs families is critical.  To read the text of the bill and track the progress, click HERE.