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Don’t Confuse a Trustee With a Care Manager

Jerry D. Bell, JD

Director of Financial Education

Last Updated
September 30, 2022
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If you’ve set up a special needs trust, then you’ve named a trustee to serve in the best interest of the person it benefits — the beneficiary.

A trustee of a special needs trust can often wear many hats, which can lead to confusion for the beneficiary and their family. For example, a trustee may be in constant communication with the beneficiary and their caregivers regarding such things as approving distributions for the purchase of a vehicle, or even the purchase of a home.

This level of involvement can be confusing for beneficiaries and their families, who may be under the impression that the trustee can make decisions regarding all aspects of a beneficiary’s life. If a trustee can approve or reject the proposed purchase price of a home for the beneficiary, does it follow that they can also decide where the beneficiary lives? In general, the answer is no.

What care trustees do

It’s important for families to understand what, in fact, the trustee is responsible for, ensuring they’re not putting unwanted power or responsibility on that individual. In the case of a special needs trust, trustees are intended to serve as:

  • An investment advisor
  • A trust distribution manager
  • A benefits advocate

Other, more day-to-day decisions may be handled better by a care manager.

What care managers do

While a trustee makes distributions from the trust and administers it, the trustee’s duties do not extend to day-to-day decisions regarding the management of the beneficiary’s care and placement. These decisions are typically made by a parent (or both parents), a close family member or a guardian of the beneficiary who is acting as the beneficiary’s care manager.

The reason these decisions are not taken on by trustees is that, although a trustee may have had the opportunity to get to know a beneficiary well, the beneficiary’s family members typically know how to best serve his or her daily and personal needs.

A lifetime of management

Making the distinction between trustee and care manager is vitally important. You need to plan appropriately so that the beneficiary has an advocate not just for the lifetime of the family member managing his or her care but for the beneficiary’s entire lifetime.

It’s possible that a parent or close family member will be appointed as trustee. In that circumstance, the parent or close family member would still be acting in their capacity as care manager and not as trustee when making decisions regarding the beneficiary’s care and placement. When a parent or close family member is serving this dual role, it’s even more crucial to plan ahead in order to ensure continuity for the eventuality of that person becoming no longer able to manage the trust for the beneficiary’s care.

If you have questions about a trustee’s role or want to ensure your loved one will be cared for even when his or her current caregivers are no longer able, we encourage you to schedule a call with a member of our team.

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This commentary is provided for general information purposes only and should not be construed as investment, tax or legal advice, and does not constitute an attorney/client relationship. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.

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