Guardians and trustees for special needs children

The ideal surrogate will bring specialized expertise and should also be able to deliver that expertise loyally, decisively and impartially

Selecting the right people to implement a long-range plan for your special needs dependent is as critical to its success as trust design and funding.

While your will and trust documents may represent your best-laid plans for your special needs dependent, such documents are only as good as the people you trust to administer them. By selecting suitable stewards for that financial blueprint, you can help ensure that those plans do not go astray.

Here are some guidelines that may help you when you designate your trustees and guardians:

 • Select your stand-ins with care. Your trustees will fulfill the roles of guide and protector when you can no longer do so. You should assure yourself that the people you select are willing, prepared and able to seek the kind of outcomes you would have sought had you been there.

 • Appoint fiduciaries for your dependent’s valuable assets. A financial guardian should not only act to protect your dependent’s financial assets, but should be prepared to do so according to the highest standards of prudence and forethought.

 • Prepare to confront the unpredictable future. No one can really foretell what twists and turns may sway a person’s life years or decades into the future. Many parents improvise virtually every day to balance the demands on their families and themselves and to meet the needs of all their dependents. You will be selecting agents who will continue to do so in your stead.

You may choose people you know well — a business associate you’ve worked with closely, or a relative in whom you have strong faith, such as a sibling or spouse. You can also select a professional whose skills might be especially useful to your purposes, such as a lawyer or accountant. Or you can designate a bank or trust company to act as a corporate trustee.

As your surrogate, a trustee or guardian can be expected to weigh in on the medical, educational and psychosocial issues affecting your special needs child. He or she may also confront the legal, tax, investment and administrative questions inherent in managing both trust resources and the day-to-day affairs of someone who may not be able to do so for him or herself.

The ideal surrogate will bring specialized expertise to these circumstances and should also be able to deliver that expertise loyally, decisively and impartially.

Insource or outsource?

The closest source of potential trustees and guardians is your family and friends. A personal confidant or relative may already have a well-established relationship with your intended beneficiaries and a detailed knowledge of the unique circumstances in your bequest. That familiarity can provide the context needed to interpret your wishes in your absence most effectively. It can also lay the groundwork for a strong long-term relationship between the trustee and the beneficiaries.

However, someone chosen solely on the strength of personal relationships and intimate knowledge may lack the training or skills needed to act impartially and efficiently in the face of duress or emotional entanglement. What's more, a friend or relative acting as a trustee might have a conflict of interest or be unable to devote sufficient time to the duties of trusteeship, and these potential deficiencies may not become readily apparent for some time.

You should also consider tapping into existing relationships with licensed advisory professionals, such as lawyers and accountants. A professional practitioner who has had significant involvement in your family's affairs may offer many of the same advantages as a personal associate, such as direct acquaintance with beneficiaries and historical knowledge of unusual situations and special needs.

Such advisers may also have the professional distance needed to remain dispassionate under difficult circumstances. However, like a lay trustee, an individual professional's tenure may be subject to the vicissitudes of his or her life and may ultimately be unavailable at some critical future juncture.

A bank or trust institution can act as a corporate trustee. As such, it can provide a high level of impartiality and detachment as well as ready access to specialized technical, tax and legal expertise. An institutional trustee can also offer a high level of continuity and stability, since its ability to serve is generally not dependent upon any single individual.

However, an institution cannot maintain the same level of intimate knowledge as a family insider about your intentions or your beneficiaries' needs.

You should keep in mind that different types of trustees may be subject to different rules, insurance and licensing requirements. Lawyers, for example, must meet the terms of their state bar association licenses when they act as trustees. Banks may be subject to regulatory audits and documentation procedures. Also, professional trustees are often held to the highest fiduciary standards under the "prudent investor" principle. Simply put, that means that trust assets would have to be managed according to the best practices of the asset management profession, with special attention to appropriate risk management and diversification.

Ultimately, your choice of trust officials will have great influence on whether your trust arrangements achieve your long-term goals for your special needs dependent.

Donald E. Sommese is a financial advisor at Morgan Stanley Smith Barney’s Manchester offices, and may be reached at 603-629-0233.