Tuesday, May 6, 2014
Trustees of Supplemental Needs Trusts need to be aware of their enhanced duty to the disabled beneficiary.
Supplemental Needs Trusts are funded with the assets of a third party for the benefit of a disabled individual and should be carefully drafted so the disabled individual isn’t disqualified from government benefit programs. In Matter of J.P. Morgan Chase, the Trustees of a $2.7 million trust for an autistic man claimed commissions of over $52,000, yet for over three years, they didn’t visit or inquire about his needs or spend a single dollar for his benefit. The New York County Surrogate’s Court denied their commission for that period, stating that the Trustees had a fiduciary obligation to be proactive "in keeping abreast of the beneficiary's condition, needs, and quality of life, and to utilize trust assets for his actual benefit."
The lesson of this case? Trustees of Supplemental Needs Trusts should pay special attention to the needs of the disabled beneficiary, hire an agent if they are not suited to do so, or resign.
See Matthew A. Levitsky, Trustees of Supplemental Needs Trusts: Do Not Take Your Duty Lightly, Apr. 26, 2014.