Duties and Responsibilities of a Trustee of a Supplemental Needs Trust [Guest Blog]

by Andrew M. Cohen, Esq.

In a previous article, I wrote about the importance of a Supplemental Needs Trust and how it permits a disabled individual, as the beneficiary of the trust, to gain or maintain eligibility for means based government benefits such as Medicaid and Supplemental Security Income (SSI). Once a trust has its funding, the Trustee (the person or persons appointed as the Fiduciary to manage and administer the trust assets) is then responsible not only for the demanding financial requirements of trust management, but to do so in a manner that considers the disabled beneficiary’s financial, medical, emotional and social circumstances.

From the start, the Trustee of a Supplemental Needs Trust has all of the duties of the Trustee of any trust, including appropriate investment of trust assets, accurate bookkeeping and accounting activities, tax reporting on behalf of the trust and distribution of trust property to the beneficiary or beneficiaries, taking into account current and future needs. In addition, the Trustee of a Supplemental Needs Trust must be careful to factor in the special needs and/or welfare of the disabled trust beneficiary, to insure that the trust beneficiary maintains his or her eligibility for public benefit programs. This is accomplished by administering the trust properly and working closely with agencies, family members, social workers and benefit coordinators to make certain that the disabled person is reaping the maximum benefits from the trust and the best possible quality of life.



Perhaps the most difficult of the responsibilities of a Supplemental Needs Trustee is making appropriate disbursements on behalf of the beneficiary. The highest level of awareness as to how the distributions can affect public benefits is required. It is important for a Trustee of a Supplemental Needs Trust to know that if the trust is used for housing or shelter and/or food, then SSI benefits can be reduced (up to a maximum reduction of one-third). Housing and shelter not only include rent or mortgage payments, home insurance and real estate taxes, but also include heating fuel, gas, electric, water and sewer. “Household” expenses do not include such items as cable, phone, internet, cleaning services, landscaping, newspapers and other non-essential items, each of which can be paid for by a trust. Moreover, there are no limits on the amounts of purchases to be made for the disabled beneficiary for clothing, furnishing, electronics or medical expenses that are not otherwise covered by the government. Trustees also need to be keenly aware of local rules as well. In some counties, a First Party or Self-Settled Supplemental Needs Trust requires court budgeting and/or oversight prior to making any expenditures from the trust.

The above is a concise and far from exhaustive look into the role of being the Trustee of a Supplemental Needs Trust. While the responsibilities and tasks may appear daunting at times, a Trustee has the right and is encouraged to work with a knowledgeable team of professionals (financial, legal and/or accounting) to assist in making sure that the disabled beneficiary is having his or her needs met and enjoying life as fully as possible.

Andrew M. Cohen, Esq. is the principal of the Law Offices of Andrew M. Cohen. The firm concentrates on Trusts & Estates and estate planning, with an emphasis on planning for special needs families and disabled persons. Mr. Cohen has a Juris Doctorate and an L.L.M. in taxation. The firm’s offices are located in Long Island and Manhattan and can be reached at (516)877-0595, (212)244-0595 or on the web at www.amcohenlaw.com.