Special Needs Trust Trustee Fees

Simple explanation of a Special Needs Trust and Special Needs trustee fee schedule

There are situations where a parent, grandparent or possibly the result of a court settlement where assets are left to a loved one and/or an individual, with a disability, in a trust structure. The moving parts to calculate the special needs trustee fee schedule are more complex due to the government assistance and trust administration rules.

Special Needs Trustee Fee Schedule*

*A $750 onetime set-up fee. Assumes trust holds marketable securities only  under a delegated trust structure. For real assets special needs trustee fee schedule would be different as those assets are priced on a hard dollar perspective. Fees for extraordinary or non-standard services will be charged on a time and expense basis, payable by trust assets, for all personal and charitable trustee/trust services. 

Detailed explanation of a Special Needs Trust and Special Needs trustee fee schedule

The evolution of Special Needs Trusts have yielded great comfort for families with children/grandchildren with disabilities. The court system has also evolved allowing for court settlements to create these unique type of trusts and to still offer government assistance for the affected individuals. The special needs trustee fee schedules are higher than normal due to the complexity of their administration. Below is a simple flow outlining who does what and how this affects the delegated trustee fee schedule:

The key focus of a special needs trust rests on allowing the beneficiary to retain their eligibility for SSI and Medicaid while at the same leaving assets in special needs trusts. SSI and Medicaid administrators are allowed to ignore the assets owned by the trust when computing their benefit calculations as long as the beneficiary has no control or decision over the trust assets. This makes the trust administration a larger issue especially for trust distributions thus creating a higher special needs trustee fee schedule.

These trusts are irrevocable and they fall under state trust statutes with the sole purpose of terminating at the passing of the sole beneficiary.  Apart from allowing the beneficiary with a mental and/or physical to receive government assistance they also act as an asset protection trust to avoid the circumstances where beneficiaries can be taken advantage of through devious methods. There are two different types of special needs trusts affecting their trustee fee schedule.

A first-party special needs trust occur in situations when an individual inherit assets or falls under a court structured settlement. These types of trusts occur when the individual did not have a disability prior to inheriting the assets and at some future event becomes disabled and thus qualifies for government assistance under the SSI and Medicaid rules. A third-party  special needs trust exist when family members are planning in advance for a child/grandchild with a known disability. These types of trusts can be created during the lifetime of the parent/grandparent or within their Will under a testamentary trust structure. The trust administration requirements for either type of special needs trust will not affect change the complexities around the trustee fee schedule.

The method for calculating a special needs trustee fee schedule focuses on our risk and time. This allows the trustee fee to be efficient in how the administration and related costs are handled and control. There are 7 distinct factors around how risk and time can be separated for transparency:

We feel that using a 7 factor model provides more transparency for calculating the trustee fee. The traditional model using a scaled down percentage of assets model which is rather opaque.