Appoint a Trust Protector For a Third-Party Created and Funded Special Needs Trust

A third-party created and funded SNT can have a trust protector. At a minimum, the trust protector should can have the power to: (i) direct the trustee’s actions; (ii) receive financial-investment statements and accountings; (iii) terminate the trust (and have the assets be distributed to the remainder beneficiaries), (iv) remove and replace a trustee, and (v) direct or approve the reformation or amendment of the trust to reflect changes in the law and in order to comply with the settlor’s intent and purpose.

For tax reasons, a trust protector should not be “related or subordinate” to the settlor or the trust beneficiaries, within the meaning of IRC section 672(c).

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