Time Log and Trustee Fees for a Special Needs Trust

Posted by Patty Manko on Thu, Apr 16, 2015 @ 05:31 PM

time_log

Trust Distributions

Most special needs trusts give the trustee sole discretion to make distributions from the trust funds. There are specific guidelines to be followed in making distributions.  A general rule is that distributions should not be made directly to the beneficiary.  Instead checks should be made payable directly to the vendors when goods are purchased or to the providers when services are rendered.

Charging a trustee fee

Even if the trust does not contain any specific language about fees, the trustee has a right to be paid.  The trustee fee is a tax deduction for the trust and is taxable income to the trustee.  The following are some factors to consider in determining an appropriate fee:

  •   the amount of assets in the trust
  •   the complexity of the investments
  •   the beneficiary’s needs
  •   the services being performed 

There are two considerations used in determining a fee; the first is the number of hours worked, the second is the type of service provided. Activities such as paying bills and balancing the checkbook will be charged at one rate. More complicated tasks such as working on legal, investment, and tax matters would probably command a higher figure. This is especially important if the trustee has a financial or legal background. 

Time and billing records

The trustee should keep a written record of all the time spent on trust activities. Some trustees maintain a log book in which they write down the date, time spent, and nature of each service. If any personal funds are used for the trust, the trustee should keep receipts for reimbursement from the trust assets. Reimbursements should be made promptly. Plan to keep these records at least until the beneficiaries have approved your account. Click below to view an example of a  trustee log and to download a blank log. 

Download a Trustee Time Log

Tags: Trustee Services

Ask the Experts : A Focus on Trustees

Posted by Patty Manko on Tue, Oct 28, 2014 @ 02:54 PM

RSVP Click here to RSVP.  Seating is limited, reserve your space NOW -             

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Tags: Trustee Services

You've Been Appointed Trustee: What Now?

Posted by Patty Manko on Thu, Oct 23, 2014 @ 03:35 PM

trustee_weekWhether it's an honor or a burden (or both), you have been appointed trustee of a trust. What responsibilities have been thrust upon you? How can you successfully carry them out?

Here are some dos and don'ts to get you started:

1.  Do read the trust document. It sets out the rules under which you will operate. So you need to understand it completely.

2.  Do create a checking account for the trust. All income and expenses should go through this account. While you can and should invest the money, a checking account will enable you to make distributions and payments and keep track of them.

3.  Do keep the best interests of the beneficiaries in mind at all times. You have what's called a "fiduciary" duty to them, which is an extremely high standard.

4.  Don't have any personal financial dealings with the trust. For instance, you cannot borrow money from the trust or lend the trust money to anyone.

5.  Do provide the beneficiaries and anyone else indicated in the trust with an annual account of trust activity. This can be a copy of the checking and investment account statements or a more formal trust account prepared by an accountant or attorney.

6.  Do invest the trust funds prudently and productively. It is wise to get professional investment advice.

7.  Do keep in regular contact with the beneficiaries to understand their needs.

8.  Do be aware of any public benefits the beneficiaries may be receiving and make sure you do not jeopardize the beneficiaries' eligibility.

9.  Do file annual income tax returns for the trust.

10.  Don't fly solo. Get professional advice to make sure you are correctly fulfilling your role.

Attend our panel discussion, November 12,  A Focus on Trustees

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Contact us for further information.

 

 

 

 

 

 

Blog Source: Margolis & Bloom Law 

 

 

Tags: Trustee Services

Trust Distributions and Trustee Fees

Posted by Patty Manko on Thu, Jun 12, 2014 @ 02:38 PM

trustee time logDistributions

Most special needs trusts give the trustee sole discretion to make distributions from the trust funds. There are specific guidelines to be followed in making distributions.  A general rule is that distributions should not be made directly to the beneficiary.  Instead checks should be made payable directly to the vendors when goods are purchased or to the providers when services are rendered.

Charging a trustee fee

Even if the trust does not contain any specific language about fees, the trustee has a right to be paid.  The trustee fee is a tax deduction for the trust and is taxable income to the trustee.  The following are some factors to consider in determining an appropriate fee:

  • the amount of assets in the trust
  • the complexity of the investments
  • the beneficiary’s needs
  • the services being performed 

There are two considerations used in determining a fee; the first is the number of hours worked, the second is the type of service provided. Activities such as paying bills and balancing the checkbook will be charged at one rate. More complicated tasks such as working on legal, investment, and tax matters would probably command a higher figure. This is especially important if the trustee has a financial or legal background. 

Time and billing records

The trustee should keep a written record of all the time spent on trust activities. Some trustees maintain a log book in which they write down the date, time spent, and nature of each service. If any personal funds are used for the trust, the trustee should keep receipts for reimbursement from the trust assets. Reimbursements should be made promptly. Plan to keep these records at least until the beneficiaries have approved your account. 

 

Download a Trustee Time Log

Tags: Trustee Services

FAQs : Funding a Special Needs Trust

Posted by Patty Manko on Thu, Feb 13, 2014 @ 11:41 AM

moneyThe establishment of a special needs trust can provide a false sense of security that you are all set. It is
the money that funds the trust that will secure the resources for your loved one to be cared for.

What is a special needs trust?

A Special Needs Trust (SNT) is a legal document and a very important part of your child's long-term financial plan.

The trust may be used to hold money:

  • that you save that others give your child as gifts
  • that you receive from an insurance settlement
  • Funds in the SNT will not interfere with your child's eligibility for federal benefits like Medicaid and Supplemental Security Income (SSI).


Who are the parties involved?
The individual who funds the trust is the Donor. The individual who benefits from the trust is the Beneficiary. The individual who oversees the trust is the Trustee. 


When should families fund the SNT ?
 In most circumstances the SNT is funded at the death of the parent(s) or primary care giver, rather than during their lifetime. The term used for a trust that is funded at the death of an individual is a Testamentary Trust.


Reasons for not funding the trust during a donor’s lifetime include:

  • Once a trust is funded, the money can only be used to meet the  beneficiary’s supplemental needs. 
  • A separate tax return must be filed.
  • Taxes on any earnings must be paid by the trust. Income earned in  the trust is usually taxed at a higher tax rate than an individual rate.
  • Once a trust is funded, it becomes irrevocable. This prevents you  from making any changes to the terms of the trust.
  • Overall, there is no flexibility in your plan. 

Although funding the trust may reduce flexibility, the following are some of the reasons why one may consider funding a SNT during the lifetime of the donor as a planning strategy: 

  • If an individual has more than enough money to meet his/her  personal needs and will not jeopardize their personal financial  security.
  • Provides the donor with the comfort of knowing that there will be a  certain amount of money available for the beneficiary.
  • Parents who have taxable estates and are implementing strategies to  reduce their estate tax liability.
  • Grandparents or others are trying to reduce their taxable estate by  gifting to your child – the SNT protects the child’s eligibility for  government benefits.

•  Money in the trust can provide some protection from creditors. 

  •  Money directly received by the child either through an inheritance  and/or a legal       settlement which would otherwise disqualify them for  benefits. This would be a “payback” SNT.


Regardless of the timing decision for funding the trust, it is important to do whatever you can to makes sure there will be adequate money in the trust to provide for your child’s security. There are two steps:

•  identify what the anticipated needs will be
•  assess what steps you can realistically take to provide what is  necessary in light of your other financial requirements and goals.

 

View the ways we help a Trustee  in their fiduciary role.

Tags: Special Needs Trusts, Trustee Services

Special Needs Trust Distributions and Trustee Fees

Posted by Patty Manko on Fri, Nov 15, 2013 @ 12:22 PM


describe the imageTrust Distributions

Most special needs trusts give the trustee sole discretion to make distributions from the trust funds. There are specific guidelines to be followed in making distributions.  A general rule is that distributions should not be made directly to the beneficiary.  Instead checks should be made payable directly to the vendors when goods are purchased or to the providers when services are rendered.

Charging a trustee fee

Even if the trust does not contain any specific language about fees, the trustee has a right to be paid.  The trustee fee is a tax deduction for the trust and is taxable income to the trustee.  The following are some factors to consider in determining an appropriate fee:

  •   the amount of assets in the trust
  •   the complexity of the investments
  •   the beneficiary’s needs
  •   the services being performed 

There are two considerations used in determining a fee; the first is the number of hours worked, the second is the type of service provided. Activities such as paying bills and balancing the checkbook will be charged at one rate. More complicated tasks such as working on legal, investment, and tax matters would probably command a higher figure. This is especially important if the trustee has a financial or legal background. 

Time and billing records

The trustee should keep a written record of all the time spent on trust activities. Some trustees maintain a log book in which they write down the date, time spent, and nature of each service. If any personal funds are used for the trust, the trustee should keep receipts for reimbursement from the trust assets. Reimbursements should be made promptly. Plan to keep these records at least until the beneficiaries have approved your account. Click below to view an example of a  trustee log and to download a blank log. 

 Download a Trustee Time Log

Tags: Special Needs Trusts, Trustee Services

10 Steps to Plan for Your Child with Special Needs

Posted by Patty Manko on Fri, Oct 18, 2013 @ 09:22 AM


describe the imageAs friends worry out loud about how they'll pay for their kids' college education, the parents of children with special needs have worries that extend beyond the few years it takes to get a college degree:

  • How will we pay for the special therapies our child needs now?
  • Who will pay our child's expenses once he or she becomes an adult?
  • Where will our child live and who will oversee his or her care after we're gone?

 

These daunting questions and fears stop many parents in their tracks but creating a plan can ease anxiety. Some of the issues you need to confront are financial: How do you set aside money for your child without affecting his or her government benefits? And some are emotional: Who would understand your child's needs if something were to happen to you right now?

Here are 10 steps to planning your child's financial future. Some are simple, some are challenging; some cost nothing and some require paying legal fees. Get started on some of these now, so you'll have peace of mind down the road.


1. Create a Special Needs Trust

A special needs trust is the most important part of your child's long-term financial plan. This is where you can put money that you save, that others give your child as gifts, or that you receive from an insurance settlement without worrying that these funds will interfere with your child's eligibility for federal benefits like Medicaid and Supplemental Security Income (SSI).

Even if you're unable to pay into a trust right now, set one up anyway. This way, you can make the trust the beneficiary of your life insurance policy and your estate, ensuring that those assets don't get passed to your child when you die. Why wouldn't you want your child to be the beneficiary of your estate? Because showing more than $2,000 in assets could make your child ineligible for federal benefits such as SSI.Learn more about special needs trusts by clicking below.

Learn about Special Needs Trusts

2. Write a Will

A will specifies what will be done with your assets after your death. By writing a will, you make sure that your assets are left to the special needs trust and not to your child. Without a will, a probate court judge could name your child as a beneficiary, which could make your child ineligible for federal benefits (see above). The will is also where you can specify a guardian who will take care of your child.

When you have a child with special needs, a will should not be a do-it-yourself endeavor. Hire a lawyer who works specifically for people with special needs and is aware of your state's disability laws. Once the documents are drafted, have your lawyer keep one and then give copies to any executors or guardians named in the will.

Costs for this legal paperwork, including the will, trust, and powers of attorney, start at $1,500 and go higher depending on where you live. Contact the Academy of Special Needs Planners or the Special Needs Alliance for a referral to an attorney in your state.

3. Name a Guardian

A guardian is the person who will care for your child if you were to die before he or she becomes an adult. In choosing this person, consider how much time you now spend tending to your child's needs. Who can handle that type of commitment? Who has bonded with your child? Who has the patience, understanding, and other personality traits necessary to deal with the day-to-day responsibilities of raising your child?

Once you pick someone, ask the person if he or she can and will accept that responsibility (even though you hope it will never be necessary). And talk about how this commitment will likely stretch beyond when your child turns 18.

4. Name a Trustee

A trustee is the person who will be responsible for managing the special needs trust after your death. It can be a family member, a friend, or even a bank or lawyer. The trustee ensures that the money in the trust is spent only on your child with special needs and only on services that you've specified or that are appropriate to your child's needs. The trustee also supervises how the money in the trust is invested. The person who is caring for your son or daughter (the guardian) cannot spend any money in the trust without the trustee's approval.

And a word on trustees and guardians: They often are not the same person, and some financial advisors recommend that they never be the same person. By separating these roles, you ensure a "checks and balances" system for your child's future needs.

Duties of a Trustee

5. Build Your Savings

Parents of children with special needs quickly learn that just because a child needs a certain treatment or therapy doesn't mean that your school system will offer it or insurance will cover it. This is where personal savings become so important. Start putting aside whatever you can each month — no amount is too small — to cover these extra expenses. Just make sure you never put this money in your child's name.

Savings also can help pay for a special needs advocate, an expert in special education who can help you navigate the paperwork, programs, and laws that affect what services your child qualifies for. Special needs advocates can save parents money in the long run by using their expertise to ensure that kids get all the services they're entitled to from their local school district.

To find an advocate in your area, contact your local school district, organizations focused on your child's disability, or local colleges with special needs programs for a referral.

6. Write a Letter of Intent

Preparing for your child's financial future is important. But hand-in-hand with that is making sure that your child's everyday needs will be met should anything happen to you. That's where a Letter of Intent comes in. Is your child's daily routine very important? Write it down and be as detailed as possible. The same goes for your child's daily, weekly, and monthly schedules.

Create a list of contact information for your child's physicians, therapists, and other medical support people as well as current medications and their dosages and schedules. Are there people you don't want around your child or activities to be avoided? Write that down too.

And then once a year, update the letter. This is not a formal legal document, so you can draft it yourself. Keep a copy wherever you have copies of your will. And make sure that your child's appointed guardian has a copy too.

Download a template for your Letter of Intent

7. Plan for Your Child's Independence

When your child is about 16, start thinking about where he or she will live as an adult. In most states, people with special needs are 21 or 22 years old when they become ineligible for education services through the local public school system.

So start thinking: Will your child remain living with you? If so, will support personnel be needed during the day when he or she used to be at school? Are day programs for adults with special needs available in your area? If independent living is the goal, start investigating options in your community such as shared living, group homes, or apartments. Once you find a place you like, get on the waiting list if there is one.

Download our Exclusive Resource on Transition  and Residential Planning

8. Apply for Guardianship or Power of Attorney

Once children turn 18, they're considered adults in the eyes of the law. This gives your child the right to make medical and financial decisions. If he or she is not capable of this or needs your guidance, consider assuming legal guardianship or the less-restrictive power of attorney and health care proxy for his or her financial, legal, and health care affairs. This way you maintain the same supervision and control you had over these as you did when your daughter or son was younger.

Experts advise parents to hire an attorney to help with this process. This will ensure that you have all the powers you would need to assume control of your adult child's health care in the event of an emergency. If your child cannot or won't consent to you assuming power of attorney, the matter will likely be decided before a probate court judge.

9. Educate Family Members

Grandparents, aunts, uncles, and other loved ones might want to help out with expenses. But explain to them the importance of not putting anything in your child's name. Have a family meeting and explain why grandpa can't leave anything to your child in his will or name your child beneficiary on his life insurance policy. The same goes for gifts of savings bonds, stocks, or cash: nothing should ever be in your child's name.

And if your son or daughter will not attend college, there is no need for a 529 savings plan. Those funds can only be used for post-secondary education, not private schools, tutoring, or therapies needed before age 18.

If loved ones want to leave something to your child, they can. But tell them to name the special needs trust as the beneficiary to ensure that your child holds no assets of his or her own.

10. Need Help? Find an Advisor

If all of this is too overwhelming, as certified financial planners and  special needs financial planners, we can help. Ask your human resources department if your company offers this service as part of your benefits package. 

We have been there both personally and professionally. We can help.

 

Source:Kidshealth.org

Tags: Special Needs Financial Planning, Special Needs Trusts, Trustee Services

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