When you set up a special needs trust for a loved one through Alabama Family Trust (with Alabama Family Trust serving as trustee), you’ll need to name one or more co-trustees. You may choose to fill this role yourself, but who will take over once you’re gone? This is a critical question, because if you’re not around to make sure the trust is handled properly, someone else will have to do it — and that someone else needs to be a certain type of person with a specific set of skills and character traits.
The reason it’s so important to choose the right co-trustee is that trusts basically operate on the honor system. Yes, co-trustees are required by law to carry out the trust’s terms responsibly, but there is rarely any court supervision over the situation.
So what kind of person should you choose?
In order for the special needs trust to work the way it should, the co-trustee you choose should have a thorough knowledge of the beneficiary’s needs. This will likely come as a result of good communication and a familiar relationship between the beneficiary and the co-trustee.
The stronger this relationship is, the better. A close bond will give the co-trustee more freedom to negotiate distribution requests that may significantly deplete the funds in the trust, and it will decrease the chances that the co-trustee may act selfishly or make decisions based on a misconception about the beneficiary’s disability.
Since you’re selecting a person to manage the special needs trust alongside Alabama Family Trust staff after you are no longer around, you’ll want to choose someone who is close in age to the beneficiary. This will increase the likelihood that the co-trustee will be able to manage the trust for as long as the beneficiary is living (or at least close to it).
If the person you want to choose as co-trustee is not the right age, you can always add a clause in the trust document that allows them to appoint a successor. However, you’ll need to have full confidence in their judgment in order to feel secure with this type of arrangement.
#3: Financial Competence
There are a lot of other responsibilities that come with being co-trustee other than just managing distributions. Trust management has a lot of business aspects that need to be dealt with properly, such as keeping detailed records, filing tax returns, and making investment decisions.
You’ll want a co-trustee who is detailed and organized enough to stay on top of all these tasks, plus has a working knowledge of finance. They can always get help from financial professionals and lawyers, and of course, Alabama Family Trust will be acting as trustee — but it doesn’t hurt to choose a person who will need minimal hand-holding.
We Can Help With Your Special Needs Trust!
No matter what questions you have about setting up a special needs trust, Alabama Family is here to help you every step of the way. Contact us for more information!