Investment Advice for Fiduciaries

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Investment Advice for Fiduciaries


If you are the caregiver for a disabled child or disabled adult, or an incapacitated adult or person of any age with special needs, you are an exceptional person.  The duties required are extremely taxing, and the personal relationship you have, whether it is a parent, a child, or a spouse, makes it even more difficult.  As guardian of the person, you are responsible for the day to day care of this person, ranging from medication maintenance to constant supervision and treatment of impairments.  Usually, this results in having no time for anything else.

Many caregivers or guardians are also responsible for managing the financial affairs of the incapacitated individual.  In some cases, there might be no assets or income at all, while in others, there might be a large settlement from an insurance claim or other lawsuit, or inheritance.  Insurance companies will try to have settlements structured or annuitized, but this limits access and is often not the best way to handle a settlement.  On the other hand, there has to be a way to maximize access to and longevity of assets, and when an incapacitated individual is unable to handle their own financial affairs, a system does have to be put in place.

As any caregiver knows, even the smallest amount of additional resource can make a huge difference in the quality of life of an incapacitated or disabled individual.  However, resources play a critical role in determining benefits under social security disability and Medicare/Medicaid, and the rules are complicated. Of course, no caregiver has the time to navigate this system and identify the rules.

The person in charge of the assets of a disabled or incapacitated individual usually takes one of two titles.  They are called “conservator” if charged with the direct management of the financial affairs of disabled or incapacitated individual, or “trustee” if a trust is involved that has been established for the benefit of the disabled or incapacitated adult or child.  Trustees are responsible for the beneficiary of the Trust.  The conservator is responsible for the “ward”.

The duties of the conservator or trustee fall into the three main categories of asset management, record-keeping, and disbursement.

Asset management:  Conservators and Trustees must manage the resources in the best interest of the ward or beneficiary.  This might include divesting of assets to make sure social security and Medicaid are available.  It also involves the duties of preserving capital and maximizing income.

Record-keeping:  Conservators and Trustees must keep records of all of their activities, as they are beholden to some authority to justify they are operating in the best interest of the ward or beneficiary.  Keeping records of transactions and notes for the reasons why certain decisions were made is critical.

Disbursement:  The conservator or trustee is given a certain amount of discretion when managing the assets of the ward or beneficiary, as long as it is in their best interest.  You may choose to pay the rent directly, put supplemental income on a gift card, and pay for medical treatment or therapy that is not covered by insurance.  Any action taken must be well thought out and documented.

Caring for a disabled, incapacitated, or special needs individual is extremely difficult and extremely rewarding.   While it is a pleasure to serve them and care for them, it usually leaves little time for anything else.  Taking the time to set up conservatorship or trusteeship correctly, however, can make a huge difference in the ward’s or beneficiary’s life, as well as the caregivers.

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