Trust Administration: A Vital Consideration
By: Herbert D. HInkle, Esq. and S. Paul Prior, Esq.
The administration of a trust involves the funding, investing, and managing of assets in a trust for the benefit of another – often, a person with a disability. It also involves receipt and disbursements of assets for the benefit of the beneficiary of the trust.
- Who can be a trustee?
- What are the main duties of a trustee?
- Why is proper trust administration important?
- Who oversees or ensures the trust is correctly administered?
What is trust administration?
The administration of a trust involves the funding, investing, and managing of assets in a trust for the benefit of another – often, a person with a disability. It also involves receipt and disbursements of assets for the benefit of the beneficiary of the trust.
Who can be a trustee?
Typically, the trustee is a family member, guardian, trusted friend; but is often an attorney or financial entity. Depending on size, our firm is able to serve as a trustee.
What are the main duties of a trustee?
A trustee has several duties:
Invest the funds prudently to grow the assets to meet the lifelong needs of the beneficiary.
File annual tax returns - Consult with counsel regarding the overall administration and appropriateness of expenditures to ensure ongoing eligibility for SSI & Medicaid.
File annual informal accountings of his/her administration to the beneficiary's personal representative and Division of Medical Assistance & Health Services, where required.
Explore disability programs and assist in obtaining and maintaining eligibility of the beneficiary for SSI, Medicaid, and other state and federally based disability programs.
Only make disbursements for the beneficiary's benefit to meet unmet needs so as to maintain ongoing SSI & Medicaid benefits.
Why is proper trust administration important?
Proper administration is important in order to preserve funds to meet those unmet needs of the disabled beneficiary while maintaining eligibility for means tested programs such as SSI & Medicaid. Improper trust administration can expose the trust assets to recoupment by the State during the beneficiary's lifetime or loss of SSI or Medicaid benefits. Our firm is routinely engaged by trustees to assist in the administration of the trust.
Who oversees or ensures the trust is correctly administered?
Unless the special needs trust is court created and there is an annual obligation for the trustee to file an accounting with the Surrogate, there is no one "overseeing" the trustee's actions. In response to this concern, our firm has created Trust Protection language to include in special needs trusts families create as part of their estate plan. The Trust Protection language requires trustees of trusts funded at greater than $100,000 to consult on annual basis with our firm to review the administration of the trust and the needs of the beneficiary.
Trust Protection provides peace of mind to families that the trust they created will be administered correctly and that their family member's needs will be met throughout their lifetime.
Hinkle,
Fingles, & Prior a multi-state law practice with offices in Lawrenceville, Cherry Hill, Florham Park, and Paramus, New Jersey, and Plymouth Meeting and Bala Cynwyd, Pennsylvania. They lecture and write frequently on topics of elder law, estate planning, special needs trusts, guardianship, special education, health care insurance & Medicaid, and accessing adult services and are available to speak to groups in New Jersey and Pennsylvania at no charge.
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08648-1012.
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2009 Hinkle, Fingles & Prior, Attorneys at Law. All rights reserved.
