Forming a private trust for your special needs child is the long-lasting solution. But the most difficult aspects parents have to address is finding a reliable trustee. Mostly the next trustee after parents is one among the family members. But that’s not enough. A trustee has to be someone who is adapt to managing accounts, taxes, and other financial matters. The trustees should know how to allocate money to these needs in an efficient manner. More than this the trustee has to be someone committed to the beneficiary interest and needs.
Finding an ideal trustee is quite difficult. The trustee has to have many qualities and have to dedicate themselves entirely for the needs of someone else. Also, they have to think beyond their interest and probably to life after them.
It’s hard to find such a resourceful person. The family members may or may not understand the role of a trustee or may not be competent. The most challenging work in front of parents is how to identify who can be a good trustee for a trust created for their special needs child. The trustee has to have some qualities associated with managing affairs of a trust.
Here are factors to consider while identifying a suitable trustee:
A trustee should be competent enough to manage the financial affairs. The trustee has to oversee how the funds to be invested and where. The trustee also has to consider managing books of the accounts of the trust, handle taxation matters and mange investments of the funds. Though a trustee is not supposed to be expert in all these matters but he/she should be well aware of how to meet this requirement. If hiring a professional advisor the trustee should be knowledgeable enough to ask the right questions. Choosing among the family members has on disadvantage that he/she is not experienced to handle trust matters and so will need time to understand.
Free From Conflict
The conflict of interest in a trustee arises when the trustee starts thinking about his profits from the trust. In an ideal situation, the trustee should be people who can put the beneficiary interest on the top. Though this is easier said than done the provisions in the trust deed is created to safeguard this aspect. The legal law under the Indian Trust Act 1882 also put this rule as primary under the duties if a trustee.
The trustees are going to work for the beneficiary and so it’s important that they understand his/her requirement well. Many a time’s personal situations will arise when trustees may have to communicate with the beneficiary caregivers/professionals for a certain reason. They may have to even maintain a personal relationship with the child to be in a comfortable situation. The trustee-beneficiary relation is critical for the success of any private family trust. Hence the trustee should be made aware of the beneficiary situations so that a healthy relationship is maintained with all. The understanding of the trustee will decide how this relationship emerges in the future.
Individual Or Corporate Trustees
Managing a trust requires a commitment especially if it’s a special needs child. If all trustees are identified as individual then it has to be seen how they will bring changes in their life. If these individuals are taking responsibility of trustee for the first time then there are more chances that they need understating of the role. Contrary to this professional trustee may be well experienced to manage the affairs of the beneficiary. Another aspect which has to be considered is the continuity of the trust functioning in both the scenarios. Thus while appointing trustees but the options has to be looked and what benefits for the family trust should be considered.
Assessing Family and Friends as Trustee
Though most families prefer friends and other family members as successor trustees, the going can be tough. This is because the trustee is well intentioned but the lack of knowledge and awareness are the cause of them failing to play the role of a right trustee. Globally professional trustees have seen outperforming family members since they have adequate knowledge and experience.
Having said that family member may still be the best choice in smaller trust. But trusts which have a large corpus to manage will find professional trustees better equipped to handle the job. For special needs trust where parents themselves become the initial trustees the decision of family members or professional trustee may come later. Even if the professional trustee is involved the family members has to be there in a guiding role. This can be done by making a protector or involved them as co-trustees.
A trustee has to be prudent enough to manage the affairs of the trust for the beneficiary benefit. The trustee should also understand the rules in our country and should be knowing how to work around them. Moreover, the trustee should be well versed with the utilization of funds from the trust and managing books of accounts. It’s not necessary that the trustee is an expert in financial and elgal aspects but he/she should know how to manage these and what kind of professionals to hires.