Monthly Archives: August 2014

Three Steps to Choosing a Guardian for Your Child with Special Needs

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Preparing a comprehensive estate plan to protect a child with special needs can be an emotional roller coaster. On the one hand, parents should be relieved that they are taking steps to guarantee that their child will be well cared for after they are gone. On the other hand, confronting one’s own mortality and having to decide who will manage the affairs of a child with special needs can be stressful.

Out of all of the decisions that parents of children with special needs have to confront, the choice of a guardian stands out as one of the most difficult because the person serving in that role will essentially step into the parents’ shoes and take care of the child. But parents don’t have to dread this decision, especially if they follow these steps:

1. Take Time to Choose, But Don’t Take Too Long

Choosing someone to become the guardian of your child is not a decision that should be made lightly, but this doesn’t mean that the decision should keep you up at night, either. Start by putting together a list of potential candidates. Don’t spend a lot of time worrying about the list; just write down anyone who could potentially serve. Then go through the list and eliminate anyone who, for whatever reason, doesn’t strike you as an optimal choice, keeping in mind that no one is going to be a perfect substitute for the original parent. Chances are, this ten-minute exercise will immediately winnow your options down to a couple of people. Once you’ve narrowed down your options, take some time to think about each person on the short list. But don’t get hung up on choosing a person yet; you will still have some work to do.

The key at this stage of the game is to not get overwhelmed with worry about your choices, especially since you haven’t even asked anyone on your list if they are willing to serve. One of the biggest mistakes parents of children with special needs make is getting so caught up in the decision making process that they don’t go ahead with their planning at all. Don’t let this be you — make your list, start to narrow it down, and then proceed to the next step. But whatever you do, don’t stop planning.

2. Talk to Your Potential Guardians and Make Sure to Encourage Honesty

After you’ve narrowed your list of potential guardians down to a few names, talk to each one (separately) and ask them if they are willing to serve. Don’t put these people on the spot with statements like, “If you don’t do it, I don’t know what we’ll do,” and encourage each person to be honest with you about his or her questions and concerns. Don’t look for immediate answers; give your potential guardians time to think about things and get back to you if they are on the fence.

This conversation may immediately narrow down your list, as some people may tell you that they absolutely will not or cannot serve. At the same time, talking face to face with your choices may help you to weed out a few more people.

3. Make a Decision and Put Your Plan into Action

After speaking with your prospective guardians you may be able to make a decision about who will serve. But if you still need to think about your choice, keep a few things in mind. First, you can always change your nomination at a later point, and, in fact, many people do. For instance, it may make sense for young parents to name their parents or older relatives as guardians while those people are still fairly young and then change their estate plans when the original nominee gets too old to serve. Likewise, as friends and family move away, parents may have to update their estate plans as the guardian they have picked for their child no longer lives in the area. Nothing is set in stone.

Here are some additional questions to consider if you are having a hard time choosing a guardian:
o Do I want my child to stay in his community and is the guardian willing to move here if she doesn’t already live here?
o Does the guardian have experience working with people with special needs?
o How does the guardian interact with my child specifically?
o Does the guardian have too much going on in his own life to care for a child, especially one with special needs?
o Does the guardian have children, how old are they and can the guardian take on another child?
o How old is the guardian? Do I have a backup in case he or she can’t serve?
o Does the guardian share my values about things like religion, education and finances?
Although the decision making process may not be easy for every family, it is a necessary one. Remember, the worst thing that you can do is to leave guardianship to chance, which is what will happen if you don’t have an estate plan that reflects your wishes. Once you’ve followed these simple steps and made your decision, put it into effect by meeting with your special needs planner and drafting the proper documents immediately. Again, don’t put it off.

* The information contained in this Blog is intended for general information and educational purposes only and does not constitute legal advice or an opinion of counsel.

 

Accounting Is Not Only Important – It’s Mandatory

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Imagine how you would feel if you walked into your bank, asked for a summary of your account activity and the bank told you that it had no idea how much money was in your account or how it had been spent. Of course, this doesn’t normally happen because the bank has a fiduciary duty to account for your money and it takes that job very seriously. Unfortunately, too many trustees of special needs trusts or those who oversee funds for people with special needs don’t even know that they have a duty to account for the funds they manage, let alone perform that duty correctly.

All trustees, representative payees, guardians and conservators are required by law to keep track of funds under their control. In California all guardians and conservators are required to provide court accountings directly to the court for approval. Additional if a trust was established by the court in a conservatorship or guardianship, the trustee must account to the court.
Likewise, the Social Security Administration mandates yearly accounting by representative payees handling other people’s funds. In some cases, typically when a trust is not established by a court, the trustee has a duty to account that is spelled out in the document or by state law. But in all cases, the person with the fiduciary duty has to keep track of the money under her control, just like a bank.

Trust and guardianship accounting does not have to be difficult since, in quite a few cases, the trustee, conservator or guardian only has to worry about one or two bank accounts. This type of cash accounting is basically the same as keeping a balanced check book. The trustee, conservator or guardian simply records all transactions and makes sure that they match the monthly bank statement. Typically after the first year, the trustee, conservator or guardian itemizes all of the transactions and provides a report to the beneficiary and possibly the court explaining how the funds were spent and how much money remains. If court approval is not required, the trust beneficiary or his guardian typically has a certain period of time to object to the account before it becomes final.

The same principles apply to trustees accounting for larger pools of money, although in those cases the trustee usually has to account for investment gains and losses as well as typical expenditures. If the trust is large, it makes sense to hire an attorney or accountant to make sure that the accounts are properly prepared because they can get tricky if multiple investments are involved.

Although the accounting process is simple, it is surprising how few non-professional fiduciaries actually do it correctly (and even some professionals fall down on the job). Every year there are dozens of cases from across the country where trustees, conservators and guardians are removed from their positions because they can’t explain what happened to the funds under their control. In some cases, this is because the trustee, conservator or guardian actually looted the trust or guardianship/conservatorship account, but in many cases the person in the position of responsibility simply didn’t keep track of what was going on, either because he was too busy or he didn’t know that he needed to account for the funds under his control. When this happens, the trustee could possibly be sued or even go to jail.

Aside from the fact that a trustee or guardian has a duty to the person with special needs to account for his money, accounting also protects the trustee or guardian. Once an account becomes final due to court approval or the passage of time without objection by the beneficiary, no one can come back and sue the trustee for mishandling the funds that were accounted for, so long as the account was not fraudulent. If the trustee doesn’t file an account, she doesn’t get that important peace of mind.

If you’ve been named as the trustee of a special needs trust or as the representative payee, guardian or conservator of a person with special needs, you need to talk with your special needs planner immediately about accounting. It’s one of the most important duties you have.

 

* The information contained in this Blog is intended for general information and educational purposes only and does not constitute legal advice or an opinion of counsel.