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Who should the bank account for a Special Needs Trust be in?

Who should the bank account for a Special Needs Trust be in?

Q: Can a trustee of a special needs trust be paid?

Yes, a trustee of a special needs trust can be compensated for their duties. The payment should be reasonable and in accordance with the trust terms. However, the trustee must be cautious that their compensation does not affect the beneficiary's eligibility for public assistance programs.

Q: Does the trustee of a special needs trust get paid?

The trustee of a special needs trust can receive payment for their services, as long as it is reasonable and specified in the trust document. Compensation must be managed carefully to ensure it does not impact the beneficiary's eligibility for government benefits.

Q: What happens to a special needs trust when the beneficiary dies?

When the beneficiary of a special needs trust passes away, the trust typically terminates. The remaining assets in the trust may be distributed according to the terms set forth in the trust document. In some cases, funds may need to be repaid to Medicaid or other government agencies if the trust was funded with certain assets.

Full question:

We purchased a Special Needs Trust (US-00646). We are setting up a bank account for the beneficiary and need to know if the account is set up in the Beneficiaries name or the Trustee's name. The trustee will be the only person able to access the account. Home phone 302.653.0276

Category: Trusts
Date: 04/07/2025
State: Delaware

Answer:

The bank account for a Special Needs Trust is usually titled in the trustee's name. For example, if John Doe is the trustee for Jane Smith's trust, the account would be titled, "John Doe, Trustee of the Jane Smith Irrevocable Trust."

Special Needs Trusts must follow strict requirements to ensure the beneficiary qualifies for need-based benefits. Depending on the source of the trust funds, some trusts may need court approval, and age restrictions might apply. If the beneficiary receives SSI, a Self-Settled Special Needs Trust must be filed with the Social Security Administration.

These trusts are complex due to the interplay of state and federal benefit laws and trust laws. It is advisable to consult a local attorney who can review your specific situation and documents.

To ensure the trust supplements rather than replaces government benefits, it must be properly drafted. Here are some general guidelines:

Only a parent, grandparent, legal guardian, or court can establish a Special Needs Trust; the disabled person cannot create it, even with their own assets.
Funds in the trust may not be directly accessible to the disabled beneficiary.
The beneficiary cannot revoke the trust.
The individual must be considered "permanently and totally disabled" under SSI criteria, with different rules for adults and children.
The trustee may be restricted from making payments that could affect government benefit eligibility, meaning distributions cannot be made directly to the beneficiary.
Special Needs Trusts can be created as part of a will or during the creator's lifetime.
There is no limit on the amount of funds in a Special Needs Trust, and it can be funded at any time.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

Who is the owner of a special needs trust?

The owner of a special needs trust is typically the person who establishes the trust, often a parent, grandparent, legal guardian, or a court. The beneficiary of the trust is the individual with special needs, but they cannot create the trust themselves. The trustee manages the trust assets for the benefit of the beneficiary.

Can a trustee receive income from a trust?

Yes, a trustee can receive compensation for their services, but this is subject to the terms of the trust document. The compensation must be reasonable and may be outlined in the trust agreement. It’s important for the trustee to ensure that their payments do not jeopardize the beneficiary's eligibility for government benefits.

How to open a bank account for a special needs trust?

To open a bank account for a special needs trust, the account should be titled in the name of the trustee, indicating their role. The trustee will need to provide the bank with the trust document and identification. It’s essential to ensure the account is managed in compliance with the trust's terms and government benefit regulations.