Trust Advisor: Pros and Cons

In my June, 7, 2012 blog post, I mentioned the new Oklahoma Statute authorizing the creation of a "Trust Advisor" within a trust instrument. (The language of the new Oklahoma Statute can be found here.) I personally believe this person (the "Trust Advisor," hereafter "TA") can play a positive role in the administration of a Special Needs Trust (SNT) and may also be helpful in dealing with beneficiaries whose lives and changing circumstances suggest a person other than the trustee might be aware of facts and information about the beneficiary, family dynamics, etc., that can be useful if such person were to "advise" or inform the trustee of those facts. Such information or advice can assist the trustee in making wiser decisions in making or withholding a distribution from the trust.


In the case of an SNT, a TA (or his/her legal counsel) knowledgeable in Medicaid and Social Security rules can be of critical importance in enabling the trustee to avoid managing the trust or making fatal or impermissible distributions from an SNT which would negatively affect the protected status of the SNT and its assets, or negatively affect the beneficiary's right to continued receipt of public benefits.


An experienced trustee, such as a professional/corporate trustee, may or may not welcome the appointment of a TA. The acceptance of a TA may depend on how the TA views his/her role and what powers are granted to the TA in the document, and how the TA actually exercises those powers.


Asset management is usually best left in the hands of the professional trust officer since that is one of the many things they are trained to do, and granting power to a TA to direct the trustee as to asset management may backfire or even result in the trustee declining to accept the role of trustee out of increased apprehension of liability for a "bad" investment outcome.


A TA could be given power to remove and replace a corporate trustee with another trustee closer to the beneficiary's city or state of residence. If acceptable to the trustee, the TA could be given the following examples of powers:

• Power to modify the trust within certain described limitations;


• Power to determine which state law should apply to the trust and power to "relocate" the situs of the trust to a sister state;


• Power to direct distributions to an individual or to and among a class of beneficiaries;


• Power to terminate a trust.

None of the above examples of powers of a TA are set forth in our new statute and whether or not any of them are contemplated by the statute is uncertain. The statute provides that the powers given to the TA seem to involve those related to the property of the trust. What specific powers granted to a TA relate to "property" and what relate to something else is not clear. The statute also indicates that the terms of the trust instrument may contain powers granted to the TA (as well as to the trustee) which may be different from the role of the TA as described in the statute.

Although there are many unknowns as to how the new statute will be implemented by estate planning and trust attorneys, or how well the role of the TA will be accepted by professional trustees, I believe the role of a Trust Advisor is a welcome tool in our desire to provide flexibility to our trusts to better handle future uncertainties. We suggest you discuss the benefits and the role of the Trust Advisor with your attorney when designing your estate planning documents, and especially in a SNT for your special needs family member. If you comtemplate designating a corporate trustee, seeking their input and consent to the appointment of a TA may be wise.

Curtis J. Shacklett, Esq.
Barber & Bartz, PC
525 S. Main St., Ste. 800
Tulsa, OK 74103-4511
Telephone: (918) 599-7755
Facsimile: (918) 599-7756
Email: cshacklett@barberbartz.com
Website: http://www.barberbartz.com/