Trustee Advisor, Trust Advisory Committee or Trust Protector in a Special Needs Trust Situation

by: Thomas D. Begley, Jr.

Where there is a professional trustee rather than a family trustee, there may be a trust advisor, trust advisory committee or a trust protector.

Trustee Advisor. A commonly used technique is to name a trustee advisor. A trustee advisor can advise the trustee without actually making decisions. In most cases, the independent trustee will rely on the trust advisor for advice concerning distributions, to ensure that proposed distributions are not improper.
The trustee advisor’s role is to review the financial records of the trust and to meet with the trustee and the family to ensure that the trust is being administered smoothly. He or she serves as a neutral third party with regard to disputes between the trustee and the beneficiary. More appropriately the trustee advisor can be given the power to remove or replace a trustee. A trustee advisor can be one person or a committee or two or three people.
It is often appropriate for the parent of the person with a disability to serve as one of the trustee advisors. The appointment of the trustee advisor gives the family a sense of participation, which gives them a comfort level necessary to accomplish the appointment of an independent trustee.

Trust Advisory Committee. Another solution to the problem of grantors and beneficiaries feeling uncomfortable with strangers, such as banks and financial institutions, is the establishment of a Trust Advisory Committee (“TAC”). The document can be designed so that the bank or financial institution is the trustee, but a separate TAC is appointed for purposes of advising the trustee as to distributions. The TAC may consist of three to five individuals, which may include a parent or other family member, an attorney, a social worker, a care manager, an accountant, a nurse, a physician, or any combination thereof. The TAC can even be given authority to remove and replace the professional trustee. Where both parents serve as members of the TAC, it is common to have them divide one vote.

Trust Protector. A trust protector is another device to protect the beneficiary and to make the family feel comfortable in dealing with a professional trustee. The trust protector is given the authority to review the actions of the trustee and to remove and replace the trustee where appropriate. It is difficult to find a person willing to serve as trust protector because of potential liability.