Video Summary

Who controls the money in a supplemental or special needs trust?

Perhaps the most important consideration for an SNT is the selection of a trustee. The trustee of the special needs trust is critical to the successful achievement of the goals and objectives of the special needs trust.

First, the trustee should never be the beneficiary of the special needs trust, or the beneficiary spouse, because of the control and the deeming factors. The trustee should be someone who is experienced with financial matters, or who is capable of retaining the appropriate financial expertise to assist in the management of the assets in the special needs trust.

The trustee must have the time and be willing to exert the effort to become acquainted with and maintain current knowledge of the needs of the beneficiary. And, very importantly, the requirements of the public benefits programs for which the beneficiary of the special needs trust is eligible.

Often, especially with a supplemental needs trust, it is advisable to name co-trustees. One co-trustee could be a corporate trustee, and the other could be a family member or close friend who has frequent contact with the beneficiary of the special needs trust.

Whether co-trustees, a single corporate trustee, one or more individuals are appointed as trustee, consideration should be given to the use of a care manager. The special needs trust can provide that a care manager be hired by the trustee of the special needs trust, to provide the constant contact with the beneficiary necessary to become aware of the beneficiary’s personal needs. And then they can communicate that information regularly to the trustee.

The grantor of the special needs trust can also use a memorandum of instruction, or other similar type of document, to communicate the various personal information about the beneficiary of the special needs trust. Such as the beneficiary’s favorite color, favorite food, likes, dislikes, medications, and other important information regarding the beneficiary.

The special needs trust should include terms that prohibit the distribution of any trust asset for anything provided by the public benefits programs for which the beneficiary of the special needs trust may be qualified. If the trustee conscientiously complies with those provisions, the special needs trust assets will not be deemed to be owned by the beneficiary of the special needs trust, and will be available to use in the trustee’s discretion for other needs of the beneficiary of the trust.

Another common provision for a supplemental needs trust is allowing the trustee to make payments that could possibly disqualify the beneficiary of the trust for some government benefits, if the trustee decides that it is in the best interest of the beneficiary. For example, the trustee may use the special needs trust funds to purchase a house on behalf of the beneficiary. This would cause a reduction in the beneficiary’s social security income stipend, because it is considered a shelter expenditure. However, if the beneficiary of the special needs trust has housing needs that exceed the government benefits, it is in the beneficiary’s best interest to use the trust funds for better housing.

Special needs trusts are commonly used to provide the beneficiary with specially equipped vehicles, concert tickets, transportation tickets, dental work – these things are not covered by Medicaid or other public benefits programs. They could also be considered to be used for things such as the theater, performing arts admission tickets, computers, and other electronic devices such as televisions, iPads, and anything that would be necessary to the benefit of the beneficiary of the special needs trust.

With a third party special needs trust, the grantor has the right to designate, in the special needs trust document, who will be the beneficiaries of the trust upon the death of the primary beneficiary.

In conclusion, special needs trusts, whether third party or self-settled, are valuable tools for beneficiaries who are disabled or have other special needs.

If you’re interested in setting up a special needs trust, please contact me at Waller and Mitchell, at 727-847-2288.

Video Summary

What is a joint trust and can I establish one?  A joint trust is whenever usually husband and wife sign a trust agreement.  Thereby you’ve gotta have two people, of course, to have a joint trust, particularly whenever they own all their assets jointly, and it’s not – you just need to contact an attorney to be able to establish a joint trust.

If the purpose of the joint trust is to avoid probate, you can do that through titling your assets as husband and wife and that way you avoid probate when the first one passes away.  If the purpose of the joint trust is to establish a… who you want to receive the asset when both the husband and the wife passes away, that is very, very remote on a simultaneous death, and I really don’t recommend it on that basis.

Also if you do set up a joint trust, do not put your homestead property into a joint trust.  There’s all sorts of problems that are associated with that.  Also joint trust destroy what they call tenancy body entirety is to give you a certain amount of protection from creditors if there is a judgment against either husband or wife under Florida law.  So I am not a big fan or I don’t usually recommend folks to set up joint trust.  I think you can title your assets so that they can go to the survivor rather than having a joint trust.  If you don’t want your assets to go to your spouse, you have a prenuptial agreement; you have a second marriage or something like that; then I suggest you have separate trust, one for the husband and one for the wife as far as that’s concerned.  And again, not putting the homestead property in either trust.

So if you have any questions about establishing a trust, joint or otherwise, give me a call at (727) 847-2288.  Thank you.

Video Summary

Hi!  I’m Chip Waller. Does a designated trustee need to hire a lawyer to administer a Trust?

Usually the designated trustee is a successor to a decedent. So the answer is, I suggest that you contact an attorney, like me, and find out what your duties and responsibilities are as a successor trustee as well as can you be held liable if you don’t follow the Florida statute for the Florida Trust Code.

Some of the things that you need to do as a successor trustee is obtain a Federal Identification Number because you’re dealing with monies that are not yours, and you don’t want to have to report any income under your Social Security number because it’s not your money or your income.  And you need to file what they call a Fiduciary Tax Return, a 1041.

Next as a successor trustee you’re required to send a copy of the Trust to all the beneficiaries.  And that’s sometimes not what anybody wants to know about, but particularly if there’s a distribution or if you’re supposed to pay income for life to someone.  But everyone who is a beneficiary under the Trust is to get a copy of the Trust document.

You also usually have many questions about, well, should I pay all the creditors?  Well, and now can I – when can I distribute all this money and not be responsible for the creditors’ claims?  That’s usually a fairly tough question.

And one of the other responsibilities that you have, and potential liability for, is doing an accounting.  So you initially have to prepare an inventory and send out, to all the beneficiaries, an inventory of all the assets.

Once they get that, well then they’re entitled to an annual accounting which sets forth how much income and what transaction took place.  And if you fail to do that, you have liability for many, many, many years to come and have potential liability.

So, as my recommendation, that before – if you’re designated as a trustee of a Trust, that you consult with an attorney to find out what your duties, responsibilities and liabilities are as far as serving as a successor trustee, and decide if you want to undertake those responsibilities and potential liability.

If you have any questions give me a call at 727-847-2288.  Thank you!

Video Summary

What are the duties of a trustee named in a trust?  The most common scenario we see is whenever someone comes in and they set up a trust during their lifetime, which is called a living trust or a revocable trust, where they name themselves, and then they provide who their assets are going to be distributed to under the provisions of the trust, and name a successor trustee.

During the person’s lifetime they can pretty well treat the trust assets any way they want to since it’s for their benefit.  Upon their death, the revocable trust becomes irrevocable, and the successor trustee then assumes the responsibilities, and they are to send a copy of the trust to all the beneficiaries, whether they be income beneficiaries, whether they like the beneficiaries or not, but they’re to send a copy of the trust to everyone.

They’re also to file a notice of trust in the public records.  After having sent out the trust and recorded the notice of trust with the probate court, then they go about obtaining an inventory of all the assets that are in the trust.  Once that’s accomplished, they need to obtain a federal identification number so that an accounting or a tax return can be filed by them so that they don’t have to pay any taxes.

Now during the lifetime of someone who sets up a trust for their own benefit, they’re not required to get a federal identification number, and can use their Social Security number.  However, upon their death, the successor trustee has to have a federal identification number in order to file a fiduciary tax return, and that would govern how the people are to pay taxes on the money that they receive or the income  that they receive from the trust, and that would be something that the successor trustee would want to consult with the attorney about, as far as the administration of the trust and the distribution of the assets, in particular, if there is homestead property involved, if there’s property in the name of the decedent, and we need to go through a probate proceeding in order to obtain those assets to be titled in the trust, and then the trustee must be very careful in reviewing the provisions of the trust to see what they’re directed to do.  If it says simply, “Distribute out at my death as soon as possible to the named beneficiaries,” well, you need to make sure that the creditors are paid, and then have an accounting of everyone, as far as the inventory, to make distribution, and then file a fiduciary tax return with the Internal Revenue Service so that the income can be accounted for, and you can be compensated as trustee in order to be able to fulfill your duties as a trustee.

If this is a continuing trust, meaning that you must pay the income to a beneficiary for an extended period of time, then you need to consult with an attorney concerning your investment responsibilities and financial responsibilities, and that you’re governed under the Prudent Investor Act.  There’s a whole trust code, a bunch of rules and laws as to what you’re obligated to do, and I would urge you to consult with an attorney about a trust administration.

If you have any questions, give me a call at 727-847-2288.

Thank you.

Video Summary

Good afternoon.  My name is Tom Mitchell.  I’m a partner in the law firm of Waller & Mitchell, and we’re located at 5332 Main Street in Downtown New Port Richey, Florida.

Did you know that ten percent of the families in America have a family member who is disabled, as defined by federal regulations?  This could be a minor child who suffered malpractice at birth.  It could be an adult who has been injured in a traffic accident or an industrial accident.  It could be a senior citizen who has suffered neglect in a nursing home and incurred serious injuries.

If this describes anyone in your family, we at Waller & Mitchell can help you.  There are federal and state programs designed to assist individuals who have these kinds of injuries and require special assistance.  These programs are all means-tested.  That means that you cannot have more than a certain amount of money and be qualified for these programs.

When these types of injuries happen to someone, typically there is a lawsuit filed on behalf of the injured party.  And this lawsuit can result in hundreds of thousands or, in some cases, even millions of dollars that are to be made available to that person.  The problem is twofold.

First, that money has to last for the entire lifetime of the individual.  And, second of all, if they receive that money in their individual names, they will be disqualified from public assistance benefits because of the means testing that I mentioned earlier.

There is, however, a special kind of trust authorized under federal law that’s called a Special Needs Trust.  In a Special Needs Trust, the money from the lawsuit settlement can be deposited to the trust account, and a trustee can be named, and the trustee can then pay for the special needs of the individual.  The public benefits are still qualified for the individual, and they will pick up the basic nursing home and medical care.

What this allows for is that the special needs of the individual can be met – such things as advanced medical care, special caregiver services, education, entertainment.  Any of those things would qualify.

In addition, with a Special Needs Trust, you can have a trust that’s set up by a third party.  For example, a grandparent who has a disabled grandchild.  In that circumstance, the grandparent sets up the trust, puts the money in the trust, and then the trustee administers the trust for the benefit of the injured party.

The injured party continues to receive their public benefits, so we don’t have any problem with the money being diverted or expended unnecessarily.  And the good thing about the third public trust is that after the death of the beneficiary, the disabled child, the original person who set up the trust can put in the trust where that money is to go if there’s anything left.

So if you’re interested in any of these concepts, give me a call.  I’m Tom Mitchell.  My number is 727-847-2288.