A major issue in the establishment of a Special Needs Trust is the question of who will serve as Trustee. If an individual is appointed, then it is necessary to name one or more successors since individuals die, resign, or become incapacitated and cannot continue serving.
In addition to the risks of an individual no longer being able to serve, there is a potential risk of loss of trust value due to embezzlement or foolish investments by an unscrupulous or ignorant/naïve individual serving as Trustee.
Because of these and other risks, some parents choose a professional/corporate Trustee, such as a bank or trust company, to avoid any risk of such losses. Corporate Trustees have the expertise to handle investments and tax issues, while offering a personal relationship (via a trust officer) so as to serve the disabled beneficiary on an ongoing basis. A corporate Trustee will avoid the personal biases that sometimes "infect" family members or friends.
If an individual is serving as Trustee and he/she is also a remainder beneficiary of the Trust after the disabled person dies, there is a potential conflict of interest for that individual, since any distribution for the benefit of the disabled person may, or will, affect the amount left in the Trust passing to the remainder beneficiary. A corporate Trustee faces no such conflict, since they are never named as a beneficiary.
In summary, corporate Trustees don't die, embezzle, or have obvious conflicts of interest, as do individual Trustees. Some parents will appoint a corporate Trustee to avoid those risks but name a family member or friend, or other trusted person, to act as a "Trustee Advisor" to provide some special wisdom or advice to the corporate Trustee. The two working together can provide (1) safety in management of the Trust by the corporate Trustee, with (2) some extra individual oversight of the needs of the person by the Trustee Advisor.
If the size of the Trust is too small to secure the services of a corporate Trustee, then either an individual Trustee must be name or a non-profit organization that offers "pooled trusts" may be a convenient option, since such organizations will normally accept very small trusts.
Curtis J. Shacklett, Esq.
Barber & Bartz, P.C.
525 S. Main St., Ste. 800
Tulsa, OK 74103-4511
Telephone: (918) 599-7755
Facsimile: (918) 599-7756
Email: cshacklett@barberbartz.com
Website: www.barberbartz.com
