Trust protectors -- long popular in offshore trusts set up by high rollers -- are now gaining popularity in trusts established in the U.S. by less affluent folks. A trust protector is someone who is appointed to watch over a trust that will be in effect for a long time and ensure that it is not adversely affected by any changes in the law or circumstances.

There are a number of reasons for appointing a trust protector. Having a protector allows a long-term trust to be more flexible and adapt to factual and legal changes. For example, beneficiaries may get divorced or die prematurely or laws may change. A protector can also be helpful if you believe there may be conflict among the beneficiaries and the trustee or if you don't fully trust the trustee to fulfill your wishes. At San Diego Elder Law Center, we most frequently recommend them to our clients when drafting Special Needs Trusts. “This allows us to have a professional serve as trustee of the Special Needs Trust, assuring compliance with the myriad rules for Special Needs Trusts, while still keeping the family in control via their ability to name Trust Protectors” says Attorney Philip Lindsley. The family can then leave the technical end of trust management to the professionals, without feeling that they've given up the control they'd want,” Lindsley notes. “The Trust Protector could be given the power to remove a trustee that was not performing well.” 

You can name a trust protector in your trust document and also the powers they will be allowed. Here are some powers that a trust protector may be given:

• Remove and replace a trustee
  

• Allow the trust to be amended due to changes in the law
  

• Resolve disputes between trustees (if there is more than one) or between beneficiaries and the trustee(s)
  

• Change distributions from the trust based on changes in the beneficiaries' lives
  

• Allow new beneficiaries to be added if there are additional descendents
  

• Veto investment decisions
  

You should be as specific as possible about your wishes when creating the trust document. The more specific you are, the more likely your wishes will be carried out. An attorney can help you ensure that the trust protector does not have too much power.

Technically, anyone can serve as a trust protector; however, it is a good idea to appoint an independent third party such as an attorney, an accountant, or a private professional fiduciary rather than a family member or a beneficiary. There are also companies that provide trust protector services.

The Social Security Administration (SSA) manages the two largest government benefit programs for people with special needs, Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). Many of the people with special needs who receive these benefits are qualified to manage their own money and can make other financial decisions for themselves. The SSA sends these people their own benefit check each month. 
However, when a beneficiary cannot make important financial decisions for themselves, either because of a disability or because they has not reached the age of majority, the SSA sends the benefits directly to a third party, known as a representative payee, who is charged with managing the funds for the beneficiary. When a parent, caregiver, or other designee signs up to be a representative payee, they often do not take the time to fully understand the responsibilities this entails, which could lead to trouble down the road. Here are a few key things to remember about being a representative payee.

It's Not Your Money
The funds you receive are the beneficiary's funds, not yours. When you agree to be a representative payee, you are responsible for managing the beneficiary's money for their benefit, not yours. It's easy to lose track of the beneficiary's funds, especially when family finances are mixed together. As a representative payee, you must ensure that the monthly payments get to, and are used for, the beneficiary and no one else.
Don't Commingle Funds
The best way to ensure that the beneficiary's funds are used for their benefit is to segregate the funds in a separate bank account. This account should reflect the beneficiary's ownership of the funds, and should not be a joint account with the representative payee as an owner. Instead, the account should be titled in the name of the beneficiary, with the representative payee noted in their capacity on the account, i.e., "Your name, as representative payee for (recipient's name)." It is also important that you keep track of the expenditures of these funds, as you will be held accountable.

File Your Representative Payee Report
The SSA requires that a representative payee file an annual accounting called the Representative Payee Report. This report details what you, as the representative payee, have done with the beneficiary's funds during the previous year. If you have kept accurate records of the beneficiary's funds over the course of the year, the report will be very easy to complete. Commingling funds, or not keeping accurate records of expenditures, can lead to an incredible headache when it comes time to file the report. Not filing the report, on the other hand, could lead to your removal as representative payee.
Know the SSI Rules

If you are serving as a representative payee for a person receiving SSI benefits, your job is made even more difficult by the SSI program's stringent income and asset rules. For instance, SSI beneficiaries can have only $2,000 of assets in their name in order to be eligible for benefits. As representative payee, you must make sure that you know the rules regarding asset accumulation and their effect on the beneficiary. You must also deal with any lump-sum payments that the beneficiary may receive as "past due" SSI benefits, which have their own set of rules. In a worse-case scenario, not knowing the rules can lead to loss of benefits and the possibility of overpayments that the beneficiary must repay from her own funds. 

Get Help
As you can see, being a representative payee is an important job that should not be undertaken lightly. The SSA offers information for representative payees here, (http://www.ssa.gov/pubs/10076.html) The best way to make sure that you fully understand your duties and responsibilities is to speak with a qualified special needs planner who can explain the intricacies of the system and give you information that fits your particular situation. 
To find out more about special needs planning, visit us at: http://www.sandiegoelderlaw.com/specialneeds.html

The Medicaid program often favors housing the disabled and the elderly in nursing homes. Many people end up in institutions when all they really need is the help of an attendant in their home. An amendment to the Senate Finance Committee's health care reform proposal encourages states to offer greater access to in-home attendant services for people with disabilities. The amendment, which incorporates many elements of the Community Choice Act, passed its first legislative hurdle when Finance Committee Chairman Sen. Max Baucus (D-MT) accepted it as part of the Chairman's Markup of the committee's health reform bill. The amendment, which was proposed by Sen. Charles Schumer (D-NY), is called the Community First Choice Option, and it serves as a less stringent substitute for the Community Choice Act, which appears to have stalled in committee. As currently written, the Community First Choice Option would provide partial federal Medicaid reimbursement to states that establish community support programs for people with disabilities. The programs must be designed for people with disabilities who require an institutional level of care, thus offering them the chance to leave facilities and institutions for their own homes and communities with appropriate services and supports. Importantly, the program would not allow caps on the number of individuals served or allow waiting lists for services. San Diego Elder Law Center attorney Phil Lindsley notes that we have waiver programs in California attempting to provide in home services as provided in this bill, but the cap on the number of individuals allowed in the program, and a very long wait list, makes the program primarily an illusion. 

The Community First Choice Option is not as comprehensive as the Community Choice Act, and unlike the Act, it does not require states to develop community support programs. Furthermore, the amendment funds the new programs only for five years. However, given the Community Choice Act's uncertain prospects, advocacy groups are viewing the Community First Choice Option as a very important step forward for people with disabilities seeking increased care in their communities, and provides much-needed support to get these important programs off the ground.

To read about the Community First Choice Option on the National Council for Independent Living's Web site, click here.