Accepting the role of trustee comes with an abundance of responsibility, especially when it comes to a special needs trust (SNT). The trustee’s duty is to oversee the investment, administration, and distribution of the trust. When broken down this means the trustee is owning responsibilities like paying bills, filing taxes, maintaining records, and ensuring the trust is growing through diverse investments. While some can look to a family member to act as the trustee, some turn to a professional fiduciary who is experienced in the nuances of special needs trusts.
A professional fiduciary can be a person or organization that acts on behalf of the trust. They have a legal and ethical duty to prioritize their client’s best interests above their own and will typically manage all aspects of the trust, while also bringing in experienced parties to oversee more specialized areas.
Before selecting a trustee or professional fiduciary for your or your family member’s special needs trust, it’s important to get clarity into all of your options. Here we outline 4 steps when finding the right professional fiduciary for a special needs trust.
If you’ve already established a special needs trust, your next move may be to name a trustee. A trustee can be any person you feel is most capable to oversee and positively impact the SNT. Trustee options can include family members, friends, attorney, corporate trustee or a professional fiduciary.
Accepting the role of trustee is not always an easy decision and many families struggle with making the right move. Much time and effort is required to act in the best interest of the beneficiary, which can sometimes cause familial strain.
A professional fiduciary adds value to any well-drafted special needs financial plan. Professional fiduciaries are also willing to act as successor trustee, whereas many financial institutions would not in the case of a special needs beneficiary.
If you’ve agreed to hire a professional fiduciary to oversee the special needs trust, it’s time to find and vet the right one for you. Consulting your SNT attorney is a great place to start. Your attorney will likely have recommendations on professional fiduciaries they’ve worked with in similar scenarios and can help find a solid fit for you.
While there is no central database for all professional fiduciaries nationwide, your state or state-based organizations may offer look-up tools by zip code or city. Take, for example, Professional Fiduciary Association of California (PFAC); they offer a helpful look-up tool to find a fiduciary near you. Here you can see their specialities, licenses, and any memberships.
If you’re not central to California, try searching for a professional fiduciary organization in your state and reach out for assistance with finding a professional in your area.
Once you’ve landed on a few potential options, it’s time to vet. The vetting process can be tiresome, but remember the importance of this person or organization and their role within the trust.
Before meeting with any professional, be sure to investigate all required licenses and/or certifications to ensure they are the right fit. For instance, California requires professional fiduciaries be licensed by the Professional Fiduciaries Bureau under the California Department of Consumer Affairs. To be licensed in California the person must pass an exam, complete 30 hours of approved education courses, and earn 15 hours of continuing education credit each year for renewal.
Due diligence will help weed out any non-contenders. From there, it’s always recommended to interview the candidates with a series of predetermined questions that are most relevant to your situation and the special needs trust at hand. It’s during this process that you may discover areas that the professional fiduciary specializes in. For example, some fiduciaries might come from a care background, while others might be experts in finances and daily money management. Don’t be afraid to ask for references, interview clients, or request second round interviews either.
After you’ve settled on a professional fiduciary to manage the SNT, it doesn’t end there. It’s important to continuously evaluate the fiduciary’s performance in relation to the trust. Establishing regular reviews can be helpful to ensure all advisors are on the same page and working towards the good of the trust. It might be helpful to hold the meeting shortly after the annual trust accounting has been completed, as this will allow you to see an up-to-date picture of the financial status of the trust and review the appropriateness and accuracy of the accounting.
The review period may also be a point to evaluate whether other advisors should be included within the trust, like a financial advisor. A financial advisor with experience in special needs trust planning will help make sure the beneficiary’s financial needs are prioritized and can provide detailed insight into investment options.
Related: How to Prepare Your Child’s Special Needs Trust Before You Go
The journey to find the right professional fiduciary for your special needs trust will take time. Remember, being thorough with your due diligence early on will help you weed out anyone who isn’t specialized in the areas that are most important to you.