Economic Turbulence – Minimizing Risk for Trustees, Fiduciaries, Beneficiaries and Families

There are lessons learned from previous economic downturns that are applicable today, given our turbulent economic situation. Trustees and fiduciaries have significant professional risk of a lawsuit if they fail to proactively manage a Special Needs Trust or other protected accounts for an individual with a disability.

Investment income from trust and guardianship accounts is often essential for meeting the caregiver, supply, equipment, housing, medical and quality of life needs for beneficiaries on a monthly basis. These “real life costs” do not go away just because the funding stream is diminished because of an economic downturn. While not all trust and guardianship 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 are consistent with the terms of the trust document and available resources for the optimum outcome for the beneficiary.

Based on National Care Advisor’s experience – the following tasks can be extremely effective in mitigating risk:

1. Frequently review the account balances and income to the trust or guardianship account. Consult with financial managers to mitigate investment loss when appropriate.
2. Analyze the current expenditure plan “run rate” as it relates to the change in the balance of the account or the investment income stream for the account.
3. Adjust the current expenditure plan with input from the special needs beneficiary/family and special needs case manager to be consistent with the income and/or sustain the account balance.
4. Verify 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 for the file.
5. 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.
6. Document the action to analyze the account, all recommended expenditure adjustments and verification that all benefits have been maximized. Document that the communication has occurred with the beneficiary/family, 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 certified nurse consultants are experienced at having difficult conversations and working with clients to adjust trust account expenditure plans if necessary. In addition, we are experts at verifying and maximizing all third-party benefits that a client is eligible to receive. Our professional, objective documentation can assist and protect the trustee or fiduciary 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 professional risk while meeting the beneficiary’s essential needs.