Managing Trust Assets:Balancing Fiduciary Responsibilities with Needs of Beneficiaries

Posted by Patty Manko on Sat, Mar 25, 2017 @ 08:00 AM

The Special Needs Financial Planning Team  Cynthia Haddad, CFP | John  Nadworny, CFP | Alexandria Nadworny, CFP  We are committed to offering educational workshops to organizations and parent  groups.  Please call Alex or click here to attend a workshop or discuss a presentation  to your group.Workshops Calendar

accountant-accounting-adviser-advisor-159804.jpegManaging Trust Assets: An Investment Balancing Act

We help trustees meet their fiduciary responsibility by providing independent, objective advice in managing the assets to meet the needs of the beneficiary. According to the UPIA, the following considerations should be examined when building the appropriate investment portfolio: financial situation, current investment portfolio, need for income; tax status and tax bracket, investment objective and risk tolerance.

The investment manager should view the portfolio from a cash flow perspective; how much money may be taken out of an account while maintaining a high level of confidence that the money will last for a certain period of time. A distribution analysis, monitoring the rate at which money is being distributed from an account, should be performed at least on a quarterly basis.

Many special needs trusts have been established by parents for the benefit of their child with a disability (third party trusts). Other trusts may have been established by a parent, grandparent or court for an individual with special needs allowing them to protect their eligibility for certain government benefits (first party trusts). Regardless of how these trusts have been created, the guiding principles to follow in the investment management process is to create, monitor and change an investment portfolio to comply with the purposes, terms, distribution requirements and individual circumstances of each beneficiary. With an elder or disabled beneficiary, investment managers need to look beyond their model investment portfolios to the unique needs of the individual.

A good starting point in the process is to collect, analyze and review information or documents that pertain to the establishment and management of each trust account. The second step is to identify and establish the specific goals and objectives of each trust and the needs of the beneficiary. These goals and objectives should be determined by (but not limited to) the following factors:

  1. Income needs for short term, mid term and long term expenses
  2. Current and potential future assets to be added to the trust from future gifts, inheritances, settlements, etc.
  3. Income of beneficiary derived by all sources, including SSI, SSDI, Pensions, Child Support, etc.

  4. Government benefits currently being received by beneficiary such as Medicaid, Section 8, etc.

  5. Future potential government benefits, such as Medicare, etc.

To achieve these goals and objectives the portfolio must be invested across multiple investment classes. In addition, attention to fees and expense ratios of investments need to be considered and monitored. Overall, the account should be managed to pursue the needs of each specific beneficiary. One of the most important factors in determining the investment strategy of each account is the time horizon for the beneficiary. This is necessary to determine the most appropriate asset allocation including cash that must be available to help address the needs of each beneficiary. In situations where the trust assets are not adequate to provide for the lifetime needs of the beneficiary, a specific spend-down strategy should be followed. Since investing and planning is an art as well as a science, there are frequently various options and strategies to be considered. It is imperative to document the reason for each strategy and to identify the pros and cons of the various options.

Distributing Trust Assets: A Fiduciary Balancing Act

Paramount to the role of the investment manager and all of the strategies, suitability, and risk versus return analysis they are required to do is the role of the Trustee. The Trustee will dictate the specific distributions of the trust and needs of the beneficiary.

The Trustee looks at the portfolio from a fiduciary point of view, executing the provisions of the Trust document to meet the needs of the beneficiary and successors. It is their role to protect the integrity of the terms of the trust document.

 There are also times when a document is very flexible with distributions and other times that documents are very strict. In the end, the trustee must adhere to the legal requirements of the trust with the best interest of the beneficiary.

Another layer of complexity is added when the beneficiary is someone that has special needs and may not be able to communicate or understand their overall situation. Family members may or may not be involved in the life of the beneficiary. There may or may not be a written Letter of Intent to help the trustee get to know the beneficiary. The trustee is further challenged to maintain the values of the family and the spirit of the grantor when they may never have met the beneficiary prior to be appointed in the role of the trustee.

Balancing Together

A primary focus for meeting the needs of the beneficiary is a balance between the roles of the trustee and the investment manager. It is in working together that the strengths and viewpoints of each professional compliment one another. For example, the trust may indicate a certain percentage of interest and/or principal must be distributed. From an investment management perspective, this may be considered an excessive distribution rate that cannot be sustained. The Trustee will interpret the provisions within the trust. The role of the investment manager is to maintain a proper asset allocation and provide adequate cash required to meet the direction of the trustee.

 The key is in having effective communication between all parties working together as a team.

To learn more:

 How We Serve Trustees 

 Contact Us.

 

Tags: A Team to Carry On

Tips for Talking about Money and Future Roles with Your Family

Posted by Patty Manko on Sat, Feb 04, 2017 @ 07:57 AM

 

The Special Needs Financial Planning Team  Cynthia Haddad, CFP | John  Nadworny, CFP | Alexandria Nadworny, CFP  We are committed to offering educational workshops to organizations and parent  groups.  Please call Alex or click here to attend a workshop or discuss a presentation  to your group.Workshops Calendar

There are many ways to present your vision and discuss your finances around the future care of your family member with special needs. Opening the lines of communication with members of your Team to Carry On is key.
Begin with one on one, low-key conversations.
 It is often easiest and best to approach this process in a gradual manner and in an informal environment. Although it is important to have all family members in agreement, scheduling initial discussions in a formal meeting or large family setting is not always the best.

Gather information. We recommend speaking to one child at a time, to get their feelings about their willingness to help. This will give them the opportunity to share ideas with you rather than you telling them what you hope will happen. Remember, caring for a family member with disabilities is a lifetime commitment that you do not want to force on anyone, yet it is important for them to know your intentions.

hands-people-woman-meeting.jpgAfter everyone has had an opportunity to discuss their feelings and ideas in an informal way, you may wish to plan a discussion with everyone at once.  Since every family’s dynamics are unique, you will find the best way to communicate with your family.

Questions to ask and information to share.  The following steps should help to move the communication process along smoothly.

  • Share your vision
  • Talk about the amount of money you plan to have available to support your vision. You do not have to reveal all of your financial matters. You can choose to only mention the financial aspects that pertain to the needs of the family member with a disability.
  • Determine the best person to take on each role. For example, who is the best with finances? That person may be a good trustee or trust advisor of a Special Needs Trust. Who is most involved in the day to day life of the child? That person may be a good guardian.
  • Ask family members if they feel able to perform their roles independently. If not,design your plan to give them resources to work with. For example, let them know that they could hire an investment advisor to help with the trust management or a social worker to help oversee supports.

Family Parity . Sometimes parents feel that they must treat all of their children equally. They feel that their children expect it. However, in many cases children without disabilities are more than willing to forego any type of inheritance to guarantee security for their brother or sister with  a disability. They understand the financial realities and would rather make sure their brother or sister is taken care of and would not expect that everything is shared equally. Here's an example of a parent putting a plan in place for his son, Charles:

Although Charles is receiving all the benefits that he is eligible for and living independently, we feel that it is not enough for him to simply have what the government provides. We supplement his expenses by about $1,000 a month. This gives him the sense of self-worth and control to be able to do what he likes rather than do what someone else wants him to do. He has schizophrenia and his sense of self-worth is most important to his ability to function in life. In working with our financial planner and our attorney, we made arrangements for our other son to provide this supplement to support Charles’ needs without jeopardizing his government benefits when we are no longer able to. 

How much will it cost? So how do we determine how much money is needed? And how much is too much? Just as the educational needs of every child are unique, so are the long-term planning needs of every individual with special needs. Even two individuals with a similar medical and/or cognitive diagnosis, can have significantly different support requirements. With these varying requirements, costs will also vary. There is no clear answer; the best we can do is to maximize all resources and coordinate all of the Five Factors.

Beginning the conversation is huge. In our decades of planning, one of the biggest obstacles that we have encountered is that people do not feel comfortable talking about how much money they have. Even professionals in the field of providing services to families, including government agency employees that serve families, do not feel comfortable talking about money or the specific costs of providing services to individuals with disabilities. 

One of the first steps that is required for you to be able to achieve financial security for your child is to overcome the reluctance to discuss the issues of money. We all know it takes money to provide services, staff, housing expenses, employment supports, transportation, education, health care services and the like. We also know that the government does not have an endless supply of money to fund these services. That is why it is so important to have a comprehensive plan and to reevaluate it periodically.

Questions? Talk with us.

This information is not intended to be a substitute for individualized legal advice. Experience provided is for illustrative purposes only, and is not intended to provide specific advice or recommendations for any individual. Your situation and circumstances may be different. To determine which strategy may be appropriate for you, consult your financial, tax, or legal advisor prior to making a decision.

 

Tags: A Team to Carry On

January To- Do: Your Letter of Intent

Posted by Patty Manko on Sat, Jan 21, 2017 @ 08:00 AM

The Special Needs Financial Planning Team  Cynthia Haddad, CFP | John  Nadworny, CFP | Alexandria Nadworny, CFP  We are committed to offering educational workshops to organizations and parent  groups.  Please call Alex or click here to attend a workshop or discuss a presentation  to your group.

Workshops Calendar

TTCO_hands_pexels-photo-233223.jpegJanuary To- Do: Your Letter of Intent

"Well, I've been afraid of changin'
'Cause I've built my life around you
But time makes you bolder
Even children get older
And I'm getting older, too"-

- Landslide, Lyrics by Stevie Nicks 

It is not surprising, with day to day life as busy as it is, time sneaks up on all of us, especially parents. All of a sudden, it is time to think about what will happen when you are unable to do all you do to care for your child. We call this planning A Team to Carry On

A Team to Carry On and the Letter of Intent

A Team To Carry On is a plan, encompassing both the people and the money needed, to carry forward your vision for the care and well-being of your family member with a disability as you age, and ultimately, when you are gone. While we often think of the legal documents assigning roles and responsibilities, but it is also important for parents to communicate their vision and the personal details that make a difference to their Team to Carry On.  The Letter of Intent is the document that gets this job done. 

 What exactly is a Letter of Intent?

Although not legally binding, a Letter of Intent communicates your desires and concerns to future caregivers.  It covers vital statistics, your child's financial picture, details about what works well or not so well for your child, suggestions about what changes might be needed for the future, a list of all pertinent documents and records, and individuals that are important in your child's life- your Team to Carry On.

You may download a free, fillable PDF version of the Letter of Intent by clicking on the Heart below.  And don't forget to share the Letter of Intent with the key members of your Team to Carry On!

 

The Letter of intentClick on the heart for your fillable Letter of Intent.

 

Tags: A Team to Carry On

This Week! Join Us January 11 to Begin the New Year with Focus

Posted by Patty Manko on Mon, Jan 09, 2017 @ 04:16 PM


 The Special Needs Financial Planning Team 

Cynthia Haddad, CFP® | John Nadworny, CFP® | Alexandria Nadworny, CFP®

 

We still have space available so come out and join us on January 11!  Begin the New Year by taking the first step in deepening your planning for the future; learn about a Team To Carry On.

hands 2 TTCO.pngWhat is a Team To Carry On?

A Team To Carry On is a plan encompassing both the people and the money needed to carry forward the care and well-being of your family member with a disability as you age, and ultimately, when you are gone. 

As we go through the cycle of life with our families, as well as many of our clients, we began to identify the need to formalize thinking about both the people and the money needed to plan into the next generation

in 2017 we will feature a Team To Carry On in our blog and workshops, with new information and resources centered around this next level of planning for the future of our families.  

A parent is irreplacable, but the team you build carries on. Circumstances may change and your thinking about your team may change but it is important to get startedJoin us January 11 to learn about a Team To Carry On and to hear about what others are doing!

Contact Alex for details and to RSVP. (email/781-756-1804)

Jan 11 _TTCO poster.jpg

 

Tags: A Team to Carry On

Join Us January 11; The Next Level of Planning for the Cycle of Life

Posted by Patty Manko on Thu, Jan 05, 2017 @ 03:02 PM


 The Special Needs Financial Planning Team 

Cynthia Haddad, CFP® | John Nadworny, CFP® | Alexandria Nadworny, CFP®

 

Join us on January 11!  Begin the New Year by taking the first step in deepening your planning for the future; learn about a Team To Carry On.

hands 2 TTCO.pngWhat is a Team To Carry On?

A Team To Carry On is a plan encompassing both the people and the money needed to carry forward the care and well-being of your family member with a disability as you age, and ultimately, when you are gone. 

As we go through the cycle of life with our families, as well as many of our clients, we began to identify the need to formalize thinking about both the people and the money needed to plan into the next generation

in 2017 we will feature a Team To Carry On in our blog and workshops, with new information and resources centered around this next level of planning for the future of our families.  

A parent is irreplacable, but the team you build carries on. Circumstances may change and your thinking about your team may change but it is important to get startedJoin us January 11 to learn about a Team To Carry On and to hear about what others are doing!

Contact Alex for details and to RSVP. (email/781-756-1804)

Jan 11 _TTCO poster.jpg

 

Tags: A Team to Carry On

Join Us January 11; a New Year and a New Planning Focus

Posted by Patty Manko on Sun, Jan 01, 2017 @ 08:10 AM

christmas-holly-clipart-holly3.pngSeason's Greetings from The Special Needs Financial Planning Team 

Cynthia Haddad, CFP® | John Nadworny, CFP® | Alexandria Nadworny, CFP®

 

Join us on January 11!  Begin the New Year by taking the first step in deepening your planning for the future; learn about a Team To Carry On.

hands 2 TTCO.pngWhat is a Team To Carry On?

A Team To Carry On is a plan encompassing both the people and the money needed to carry forward the care and well-being of your family member with a disability as you age, and ultimately, when you are gone. 

As we go through the cycle of life with our families, as well as many of our clients, we began to identify the need to formalize thinking about both the people and the money needed to plan into the next generation

in 2017 we will feature a Team To Carry On in our blog and workshops, with new information and resources centered around this next level of planning for the future of our families.  

A parent is irreplacable, but the team you build carries on. Circumstances may change and your thinking about your team may change but it is important to get startedJoin us January 11 to learn about a Team To Carry On and to hear about what others are doing!

Contact Alex for details and to RSVP. (email/781-756-1804)

Jan 11 _TTCO poster.jpg

 

Tags: A Team to Carry On

Begin 2017 with Listening, Learning and Conversation

Posted by Patty Manko on Wed, Dec 21, 2016 @ 08:26 AM

christmas-holly-clipart-holly3.pngSeason's Greetings from The Special Needs Financial Planning Team 

Cynthia Haddad, CFP® | John Nadworny, CFP® | Alexandria Nadworny, CFP®

 

Join us on January 11!  Begin the New Year by taking the first step in deepening your planning for the future; learn about a Team To Carry On.

hands 2 TTCO.pngWhat is a Team To Carry On?

A Team To Carry On is a plan encompassing both the people and the money needed to carry forward the care and well-being of your family member with a disability as you age, and ultimately, when you are gone. 

As we go through the cycle of life with our families, as well as many of our clients, we began to identify the need to formalize thinking about both the people and the money needed to plan into the next generation

in 2017 we will feature a Team To Carry On in our blog and workshops, with new information and resources centered around this next level of planning for the future of our families.  

A parent is irreplacable, but the team you build carries on. Circumstances may change and your thinking about your team may change but it is important to get startedJoin us January 11 to learn about a Team To Carry On and to hear about what others are doing!

Contact Alex for details and to RSVP. (email/781-756-1804)

Jan 11 _TTCO poster.jpg

 

Tags: A Team to Carry On

Subscribe via E-mail

Follow Me

Special Needs Financial Planning
Our Most Recent