Tri County Elder Law

It Is Not Easy to Replace a Special Needs Trustee

A special needs trust is restrictive and the third-party trustee sometimes needs to be replaced. It can be quite challenging for the beneficiary to replace the trustee. If a special needs trustee is not up to the job or intentionally mishandles the trust, it can be difficult for the beneficiary to change the trustee, according to the Wills, Trusts & Estates Prof Blog in "Can the Beneficiary of a Special Needs Trust Change the Trustee?" The advantage of a special needs trust is to allow a beneficiary to have access to income, while remaining eligible for government benefits. However, in exchange for that benefit, the trusts are very restricted. They must be created in specific ways and the beneficiary's ability to control the assets in the trust is limited. Technically, the beneficiary cannot distribute or manage the trust assets and a third-party trustee is needed. A beneficiary of a special needs trust can petition a court to have the trustee removed and another appointed. However, this can be a difficult process and many people with special needs are not able to handle the complex legal issues of filing a petition with the court, let alone arguing for a trustee change. This could potentially stick a beneficiary with a bad trustee and no recourse. It is, therefore, important that special needs trusts be drafted with this problem in mind. Reference: Wills, Trusts & Estates Prof Blog (Sep. 27, 2017) "Can the Beneficiary of a Special Needs Trust Change the Trustee?

McClatchy’s Son Charges Trust was Violated

McClatchy Trust case finally goes to court. James B. McClatchy created a trust in an effort to prevent his media company from being absorbed by a larger company. His son, Carlos McClatchy, is now getting his day in court concerning the trust after years of preliminary work, according to the Sacramento Bee in "San Francisco trial weighs breach-of-trust claims by McClatchy family member." Carlos McClatchy is claiming that the terms of the trust were violated in 2006, when McClatchy purchased media company Knight Ridder Inc. James McClatchy died in 2006. Carlos McClatchy claims the purchase caused a decline in value in McClatchy's common stock and subsequently caused the company to stop paying dividends. The trust points out that at the time of the purchase, James McClatchy was the sole income beneficiary of the trust and he supported the purchase. It also claims that, at the time dividend payments were stopped, there was a financial crisis that was responsible for the stoppage. It is not clear which party is in the right. The court will have to settle that. What this illustrates is that trustees need to be careful with how they handle trust assets. Reference: Sacramento Bee (Sep. 13, 2017) "San Francisco trial weighs breach-of-trust claims by McClatchy family member."