A Checklist for Evaluating
a Special Needs Trust

January 21, 1993
John Shea
Allen, Shea & Associates
(707) 258-1326



  • Does your trust document specify who will serve as trustee (or trustees, if more than one)?

  • Have you made provision for successor trustee(s), if the original trustee(s) are unable or unwilling to serve? Have you executed a durable power of attorney, which is an alternative to a well-crafted provision as to incapacity due to disability with advancing age.

  • Are the purposes of the trust clear? Is it clearly your intent that the trust (income and principal) be used as a supplemental (and emergency) fund to meet the special needs of ____________, the beneficiary? That is, is it clearly recognized that basic, support needs (e.g., food, clothing, shelter, basic medical care, training and employment) will be met through public entitlement programs, such as SSI, Medi-Cal, Regional Center, Habilitation, and that the trust will be used to fund only those things that otherwise would not be provided (e.g., trip to see Aunt Tillie; a second set of dentures within 5 years; monitoring by a personal advocate; etc.)?

  • Is the trust discretionary, in the sense that the trustee (and only the trustee) has complete and total discretion as to how to use the principal and income from the trust to meet the special needs of the beneficiary? Is it clear that the beneficiary cannot decide how the trust is used?

  • Has the trust been funded? That is, have assets been retitled or placed in the name of the trust? Living trusts (intervivos, or 'among the living') are implemented by placing assets in the trust (e.g., establishing a bank account in the name of the trust). Assets put into the trust are listed in a Schedule, attached to the trust document. A testamentary trust is one established through a will. It is typically funded by life insurance proceeds (or other assets), and goes into effect when the trustor (or creator) dies.

  • Is there a provision in the trust document indicating whether the trust is revocable (or, irrevocable) in whole or in part? Does this provision reflect your thoughts as to such matters as (a) your own needs and the needs of other family members, now and in the future; (b) tax consequences; (c) the likelihood that your ideas and the needs of the beneficiary will change radically; and (d) the desirability of key individuals (e.g., yourself, a sibling, a non-profit parent organization) getting some experience with the trust while you are still alive?

  • Is there a provision regarding amendment of the trust? (This clause should point out again that the beneficiary has no right to revise, amend, or modify the trust.)

  • Does the trust document have a spendthrift provision, wherein it is clear that assets and undistributed income in the trust are not part of the beneficiary's estate, and that no creditors have a claim on trust resources?

  • Is there a provision disallowing commingling of trust assets or income with the beneficiary's earnings, public assistance benefits, or anything else belonging to the beneficiary? (Note: Sometimes the trustee is also a representative payee.)

  • Are the powers of the trustee listed, and are these powers broad, thereby permitting the trustee to engage in a wide variety of financial transactions?

  • Are there trust provisions covering litigation (e.g., to defend attacks on the trust), trustee liability, limitations on trustee powers (e.g., doing anything for the benefit of the trustee rather than the beneficiary), and reasonable compensation for the trustee's services?

  • Is it clear how assets remaining in the trust will be distributed when the trust ceases or is terminated upon death of the beneficiary? Have you considered potential conflicts-of-interest (e.g., remaining assets going to a successor trustee's children) in crafting this remainderman clause?

  • Is there a backstop provision, giving the trustee the power to terminate the trust, if it comes under serious attack, and to distribute all (or some) of the assets and undistributed income in the trust to others with requests that they informally carry out the purposes for which the trust was created?

  • Is there a similar provision if the trust becomes so small that it no longer makes sense to maintain the trust?

  • Is there a provision for trying to resolve differences when the trustee, beneficiary, conservator or personal advocate, or others (e.g., Regional Center) disagree on expenditure decisions to meet special needs?

  • Is a letter of intent attached to the trust document, giving the trustee information about the beneficiary and expressing how the creator(s) of the trust see that person's needs now and in the future?

  • Do you have a pour-over will, which will transfer assets you may acquire later and want to place in the trust, if you fail to take such action before you die?
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    Words of Advice

    Parents should work with lawyers who specialize in estate planning and disability law, because few lawyers ever have occasion to prepare a special needs trust. The Social Security Administration will want to look at the trust document to see whether it is a support trust, or a special needs trust. Hence, you may want to speak to the person in your local SSA Office who handles SSI, to see how that person interprets your intent.



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