Administration is tricky. You need a trustee that understands the programs the special beneficiary is on. If distributions are not made correctly they will disqualify the beneficiary from vital government benefits. For example, if the trustee purchases a house that the trustee and beneficiary would live in. Can they do this? You must be careful. It can be done but if others live in the house they must pay the trust rent that owns the house. If the house is owned in part by the trust and another family member that other family member must carry their costs. SSI or Medicaid might argue that the trust is making a gift to the family member and disqualify the trust.

Trust assets might be used to purchase an accessible van. You must make sure that the disabled beneficiary is the primary beneficiary, or SSI could argue the trust is making a beneficiary. You can have someone drive the disabled beneficiary, but caution is in order. You should even consider keeping a log to show who is using it. Anyone else using the van must carry their costs.

A SNT is a grantor trust for tax purposes but the grantor for tax purposes is the beneficiary is the defacto grantor. You need to get a taxpayer ID number (EIN) for these trusts so that the trust has its own number. If it uses the Social Security Number it gets harder to show that the trust income is not that of the beneficiary. There is a distinction as to who the grantor is for legal purposes (i.e., listed in the trust) and the person treated as the “grantor” for income tax purposes. Sometimes Social Security will notify the family that they will be disqualified if the wrong Social Security number is used so you will have to sort out what was income and what is a distribution.

You must pick trustees carefully.

The parent or whoever sets up the trust should right a letter of intent explaining programs, needs and desires/preferences of the special beneficiary. You can have an institution serve but they will not do so if there are not sufficient assets because of the complexity of administering these trusts properly. For most trusts, a person working with the bank or a trusted family or friend serves. Most banks won’t do it at all and many want a $1 million minimum.

When choosing an individual trustee, choose someone that understands the disabilities, will investigate what distributions can be made, and is “good with money”. They will have to comply with the prudent investor act which governs how trust assets should be invested.