Economic Turbulence – Minimizing Risk for Trustees and Fiduciaries

There are lessons learned from the 2008 economic downturn that are applicable today, given our turbulent economic situation. Lawsuits originated from that time period specific to Trustee and Fiduciary management of Special Needs Trusts and other protected accounts for individuals with a disability.

Investment income from trust accounts is often essential for meeting the caregiver, supply, equipment, housing, medical and quality of life needs for beneficiaries on a monthly basis. Real life costs. While not all accounts are funded adequately to last over the individual’s lifetime, it is still very important to make sure that these accounts are managed proactively and consistent with the terms of the trust document for the optimum outcome for the beneficiary.

Based on National Care Advisor’s experience – the following tasks can be extremely effective in mitigating risk for Trustees and Fiduciaries managing funds for special needs individuals:

1. During the economic crisis, frequently review the balances and income to the trust or guardianship account. Consult with financial managers to mitigate loss when appropriate.
2. Analyze the current expenditure “run rate” as it relates to the change in the corpus of the account or the investment income stream for the account.
3. DOCUMENT that this analysis has been completed and the recommendations for action as a result of the analysis.
4. Review and analyze the current expenditure plan with the special needs beneficiary and special needs case manager to determine if there are adjustments that are reasonable given the economic changes in account balance or income.
5. Obtain objective verification that all third-party benefits have been maximized and that the Trust account is the payer of last resort. Be sure to use a qualified special needs case manager to do this review and provide documentation.
6. DOCUMENT that third-party benefits have been maximized and that the expenditure plan has been reviewed and adjusted specific to the new and changed economic situation.
7. Communicate directly and proactively with the beneficiary and/or their primary caregiver, guardian or key family member regarding the realities of the changes in the income and balance of their accounts. Share the run rate and proposed 12-month expenditure plan adjustments in writing.
8. DOCUMENT that the communication has occurred, the date, who participated in the communication, the documentation provided, and the outcome action items from the discussion. If possible, have the participants sign that they received the information.

National Care Advisors staff are highly skilled, experienced case managers that can assist with the difficult conversations, revision of expenditure plans, verification of benefits and objective documentation to assist in the management of Special Needs Trusts and other protected accounts during these challenging economic times. Contact us today to learn how our team can help you mitigate your fiduciary risk.