ElderLaw News — The Estate Planning & Elder Law Firm, P.C. — MD, VA, DC
ElderLaw News

ElderLaw News is a weekly e-newsletter that brings you reports of legal developments and other trends of vital interest to seniors and their advocates. This newsletter is brought to you by The Estate Planning & Elder Law Firm, P.C., William S. Fralin, Esq., President., William S. Fralin, Esq., President.

Duties of a Trustee in Managing a Trust for the Benefit of an Individual with Special Needs

It is common knowledge that one of the most important decisions in creating a trust is the selection of a trustee.

The grantor, or person creating the trust, must choose a trustee that will understand what his or her duties are, the intent of the grantor, and exercise spending power for expenses that fall within the parameters set forth by the terms of the trust. Over the past year, two important decisions have emerged from New York which detail the affirmative duties assumed by trustees managing a trust for an individual with special needs.

The first case memorialized a trustee's requirement to take reasonable interest in and action on behalf of a beneficiary with special needs. In Matter of JP Morgan Chase Bank N.A. (Marie H.), 2012 NY Slip Op 22387 (December 31, 2012 Sur Ct New York County), the trustees, in essence, abandoned the beneficiary and left him without adequate care, despite his significant inheritance. In finding that the co-trustees breached their duties, the court reflected on the co-trustee’s failure to exercise a reasonable degree of diligence. Specifically, the court determined that a trustee has a duty "to make themselves knowledgeable about [a beneficiary's] condition and his needs, and the availability of services that would enable them to provide for those needs." This duty extends to determining the medical, educational, and quality of life needs that can be met by utilizing trust assets. By turning a blind eye to such needs and not approving proper and necessary payments to accommodate such needs, a trustee fails to fulfill their obligations.

The second case, Liranzo v. LI Jewish Education/Research (N.Y. Sup. Ct., Kings Cty., No. 28863/1996, June 25, 2013), focuses on the duty of a trustee to investigate the public benefits available to a beneficiary of a special needs trust and holds a trustee liable for such a breach. During the course of administration, the trustee of the trust made significant distributions for private caregivers, family cab rides, medications, and payments to family members that rendered the beneficiary of the trust ineligible for SSI and Medicaid. The court determined that he breached his duties by "failing to make the necessary inquiries".

While the findings of the court could be deemed as common sense, the lesson deduced from both of the cases is that a trustee has a duty to be actively involved with the administration of trusts, particularly when such a trust was created for a the benefit of a beneficiary with special needs. By investigating a beneficiary's needs and the availability of resources, both public and those held in trust, the trustee of a trust established for the benefit of an individual with special needs can protect himself from the consequences imposed by courts.

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The Estate Planning & Elder Law Firm, P.C. is an elder law firm. We represent older persons, disabled persons, their families, and their advocates. The practice of elder law includes estate planning, estate and trust administration, powers of attorney, advance medical directives, titling of assets and designations of beneficiaries, guardianships, conservatorships, and public entitlements such as Medicaid, Medicare, Social Security, and SSI, disability planning, income tax planning and preparation, care management, and fiduciary services. For more information about The Estate Planning & Elder Law Firm, P.C., please visit our website at http://www.chroniccareadvocacy.com.

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