For family members planning for a loved one who has a significant disability, a discretionary or special needs trust can be an essential tool in setting funds aside for their care. Setting up a special needs trust will require that a trustee be named to manage and distribute the trust. In ideal circumstances, the trustee would perform their duties to the beneficiary’s satisfaction. However, there are times and situations which require a trustee change. Depending on the circumstances, when the beneficiary no longer wants the person serving as their trustee to serve in that capacity, some actions can be taken.
A special needs trust is like any other kind of trust that is funded for the care and maintenance of the beneficiary. The funds in the trust are managed and disseminated by a named trustee who has specific duties and obligations to the beneficiary. A special needs trust beneficiary cannot have direct access to the trust funds and must rely on the trustee to perform their duty to manage the trust wisely and distribute the funds according to the rules and terms of the trust. While removal of the trustee is possible, it will depend on specific key factors.
To remove the named trustee the first place to look is the special needs trust document itself. If the document, which created the trust, has language which dictates reasons for removal and allows the beneficiary to remove the trustee, then the beneficiary can have the trustee removed provided one of the removal reasons is present. However, the beneficiary must have the capacity to act on their behalf and understand the proceedings to effectuate this change. The other possibility when setting up a Special Needs Trust is to name what is commonly known as a “Trust Protector”. A Trust Protector is independent third party with authority to perform certain duties with regard to a trust. A trust protector’s role is to ensure that the wishes of the grantor – the person who made the trust – are carried out. This authority may include the ability to remove and replace a trustee.
If trustee removal language is not present or a Trust Protector has not been appointed, then the beneficiary will have to petition a probate court to have the trustee removed. However, the beneficiary must have grounds to believe that the trustee is not acting according to the law which governs the trust and trustee’s duties. Merely not being able to agree with the trustee or a personality difference will not usually be sufficient for removal of the trustee. As in the situation where removal language allows for the beneficiary to remove a trustee, the beneficiary must have legal capacity to file with the court seeking removal of the trustee.
Preparing a special needs trust changes can be complicated. It is essential to include the correct language to ensure that removal of a trustee or other trust issues can be handled as easily as possible. Our office has attorneys who are knowledgeable about special needs trust planning and can help you create a trust which will ensure your loved one’s assets are protected for their future. Please contact us online or by phone if we may be of assistance. https://www.michiganestateplans.com/contact/.