Guardianships & Trusts
In guardianship, ownership remains with the ward, even though assets
are subject to management by the guardian. Financial reports must be
made to the court on a continuing basis. All expenditures and investment
changes must be approved by the court. This often restricts investment
activity to only the most conservative options.
With guardianship, a public proceeding governs a private purpose.
Unless a Surety Bond is obtained, investment opportunities are limited.
The annual accounting process and reporting to the probate court can
be a very time consuming and frustrating task. After the court authorizes
investments, a broker may become involved. Delays in obtaining court
approval may cause the loss of an immediate investment opportunity.
When guardianship assets exceed statutorily-prescribed levels, the
guardian is required to post a bond at the expense of the guardianship
estate. Investment commissions and accountant's fees are standard expenses
in mananaging a guardianship estate with substantial assets.
Using a trust as a financial, investment, and management tool can
be financially more advantageous than guardianship or conservatorship.
A trust allows bypassing the court as an investment and disbursement
authority. Thus, investments can take immediate advantage of interest
rates and stock prices. Annual court reports may also be avoided as
the financial reports required of a trustee under most state trust accounting
acts are made using normal bookkeeping techniques. Since trustees usually
have authority to make all investment decisions, and the trust committee
is able to make all trust spending decisions subject to state trust
law, expenses seeking court approval are avoided.
In a trust, ownership of assets passes directly to the trustee, subject
only to the management and control of the trustee under the terms of
the trust. Fees charged by professional trustees generally include stock/bond
brokerage fees or commissions and all money-management charges. On the
other hand, if a guardian's investment authority is restricted, the
rate of return on investments may be substantially less than that from
trust investments.
Trust accounts can be established so that traditional duties are divided
between a trustee who manages and invests assets and a trust advisory
committee that makes disbursement decisions. A trust advisory committee
should include persons who are directly involved with the beneficiary,
professionals with expertise in dealing with the needs of people with
similar disabilities (a certified life-care planner fits this category)
and professionals knowledgeable in government benefit systems (e.g.,
trust officers or compliance experts).
A trust advisory committee regularly reviews the activity of a trust
case, thereby assuring financial security. Using a committee establishes
a system of checks and balances and creates a management team with expertise
in a specific beneficiary's actual needs. The committee can formulate
and follow a plan within the restrictions of the trust to meet those
needs, and it can establish a continuing expenditure plan to meet the
beneficiary's known recurring disability related needs. Beyond these
needs, the discretion granted in the trust allows the team to respond
to emergency needs quickly and more successfully than a guardian requiring
court approval could. Consequently, the team approach allows for a more
varied perspective on situations as they arise.
A trust can also help establish or preserve a beneficiary's eligibility
for local, state, or federal government benefits, such as Supplemental
Security Income (SSI) benefits. Beneficiaries may qualify for Medicaid,
a program of direct commuitity medical assistance and/or long term care,
such as assisted living services. Other agencies may be available to
provide additional assistance such as vocational services, recreation
training, housing, food stamps, and rehabilitation services. Assets
held in a guardianship belong to the ward and, thus, are available to
him or her. Assets held in a trust belong to the trust, not to the beneficiary.
Therefore, the trust could potentially preserve eligibility for government-supported
services when there is no other way for the beneficiary to access them
with his own funds. Depending on the size of the settlement, this could
be the most important consideration.
A settlement trust, properly used, can dramatically improve your client's
quality of life and opportunities while maximizing and enhancing funds.
Well-informed, dedicated attorneys use their legal skills and expertise
to protect the client by conducting proper management of the settlement
proceeds and by establishing a beneficial, ongoing maintenance plan
for the care of the client with a disability. In so doing, they build
a solid reputation for themselves as caring, insightful experts and
avoid malpractice liability. Success for the client and success for
the attorney nets a win-win situation.
Certified Life-Care Planners(Back to Articles)
Personal injury attorneys often find that determining the life-time
needs of a client who is chronically or catastrophically disabled, either
physically or mentally, is nearly an impossible task. But it is exactly
in those situations that the experience and skills of a trust attorney
and certified life-care planner can help.
Expertise that makes CLCPs invaluable to trust attorneys and personal
injury attorneys makes them equally valuable to those in the trust field
dealing with clients with physical and/or mental disabilities. CLCPs
are specifically trained to realistically forecast the medical and financial
demands of an individual's condition - in short, CLCPs try to foresee
the future. Life-care plans attend to the physical and mental well-being
of clients for their lifetimes. When needs change, the plan can be changed.
Life-care plans outline what progressive disablement can be anticipated
down the road and, most importantly to the trust attorney in his/her
capacity, the present and future monetary costs of necessary care.
Once present and future needs are established, the trustee can more
effectively establish an investment program based upon those needs.
Since the primary concern of corporate fiduciaries is making sure trusts
remain healthy and generate income commensurate with needs, this is
particularly important. Such expertise allows trust officers to truly
manage their cases, not simply "put out fires."
Also, the CLCP would be an essential trust committee member due to
his/her expertise in disabilities and the specific needs of the client,
especially if this professional developed a life-care plan for the client.
The CLCP would determine the following (all documented in an organized,
detailed fashion with all costs, frequency of replacement, etc., throughout
the person's life) in the life-care plan: 1) regular, ongoing, monthly
expenditures for respite care, therapies or other chronic needs, and
2) surgeries, special equipment, residence modifications and other anticipated
needs not covered by insurance or benefits.
By being informed of the expected costs of essential services for
the rest of the trust client's life via the life-care plan, the committee
members are better equipped to discuss the anticipated income and growth
of the trust corpus as a factor in making their disbursement decisions.
To be effective, the CLCP only produces life-care plans tailored to
the needs of a specific individual. In other words, generic life-care
plans simply do not work. In the short run, a generic life-care plan
looks like a less expensive way to go. But, in the long run, a generic
plan can jeopardize total dollars required for future needs, and make
the client pay for its inadequacies.
Trust attorneys, of course, have a broader range of clients than personal
injury attorneys. While the trust attorney may also have clients who
have been catastrophically disabled by accidents, there are other clients
for whom life-care plans are equally important. These are two types
of amenities trusts: children with disabilities and the geriatric population.
Public awareness of the plight of the elderly has risen considerably
in recent years. But the same advances in medical techniques and technology
which have allowed adults to live longer have also increased the life
expectancy of individuals with chronic disabilities. Children with disabilities
who survive infancy and live well into adulthood, elderly people with
disabilities and people with catastrophic disabilities live longer and,
therefore, need a life-care plan for the future.
Child With A Disability
The following is an actual case which illustrates the advantage of
using certified life-care planners to help children with disabilities
and their families.
Lucy is a child with a developmental disability. Her parents were
so protective of her that they prevented the medical specialist and
the school therapist from providing what was required to help Lucy become
independent.
Lucy's trust officer became acutely aware of the parents' overprotectiveness.
He also realized that without a plan of action, the long-term cost of
the trust would be significantly more and the trust would probably not
provide for her full life. Lucy's parents feared this as well. But their
solution to the problem was to conserve the trust by becoming extremely
frugal.
The trust officer contacted a CLCP who was willing to meet and talk
with the parents several times. Through these sessions, the CLCP convinced
Lucy's parents to become involved at a Cerebral Palsy Center. There,
Lucy's parents met and received reassurance from other parents who,
at one time, had felt and responded as they had.
Gradually, Lucy's parents began considering other opportunities for
their daughter: an innovative wheelchair, orthotics, aids for independent
function, respite care, transportation and architectural renovations.
A life-care plan was formulated, incorporating vocational concerns and
an Individualized Education Plan (IEP). Medical, educational and community
resources were contacted so that key people in these areas could combine
their input in developing Lucy's life-care plan.
By doing so, the life-care plan provided proper management of resources
and prevented more costly medical concerns in the future. Meanwhile,
Lucy's parents realized that their overprotection made her more, not
less, vulnerable to the difficulties of the outside world.
Life-care plans encourage and assist parents in looking well into
the future so that when their ten-year-old daughter reaches the age
of 21, they will have already considered various vocational and residential
environments suited to her needs. Such plans also help parents confront
the unpleasant but realistic possibility that their disabled child may
outlive them. Here, too, the trust attorney's fiduciary expertise can
be of great value.
Trust attorneys should also be aware that many families still believe
in the availability of government funds to cover specialized services
for the mentally or physically disabled. This is no longer the case,
and that makes proper trust management even more of a necessity.
Conclusion
Trust officers who meet the needs of clients who are catastrophically
disabled, or geriatric or pediatric clients with special needs (amenities
trusts) by bringing in CLCPs - and other professionals that the CLCPs
recommend to address the needs of these clients - often find unexpected
rewards for their efforts. That extra level of service such trust officers
provide encourages more new business.
Then, too, personal injury and trust attorneys using CLCPs note that
their owr anxiety levels decrease, their time become freed up for work
requiring their expertise and they experience genuine satisfaction in
knowing that they improved the quality of life for their clients.
Personal injury attorneys using certified life-care planners often
urge trust attorneys and trust officers to use CLCPs and offer the following
key reasons for employing a life-care plan:
- it helps use money effectively by tailoring investments to client
needs and assuring the most effective services and equipment;
- it decreases the trust attorney's/officer's and the client's anxiety
as to a future game plan;
- it decreases the trust attorney's/officer's need to work outside
the area of expertise; and
- it establishes a better, more effective relationship among all involved
parties.
