Two recent cases make it clear that, even when you are working with special needs trusts, there are reasons for caution.

In the first case, Indiana resident Timothy Todd filed a lawsuit claiming the trustee managing his special needs trust was charging thousands for unnecessary and inappropriate fees. His suit, which seeks class status, claims the National Foundation for Special Needs Integrity, which does business as Special Needs Integrity, violated its fiduciary duty by taking millions of dollars various trusts to pay unjustified legal and other fees. To read more about it, see http://www.indystar.com/story/news/2015/11/16/nonprofit-accused-taking-millions/75886746/.

In the second case, a court denied the National Foundation for Special Needs Integrity’s attempt to retain funds in a pooled trust subaccount. The case, National Foundation for Special Needs Integrity v. Reese, centered on an ambiguous pooled trust joinder agreement. Although there was evidence that Mrs. Reese wanted any remaining funds to go to her family following her death, the Trust attempted to retain all funds remainding after her death because she named her estate (rather than individuals) as the remainder beneficiary. At stake was $240,000 that could have gone to her family. When Ms. Reese’s family made a claim against the funds, the trust filed a motion to dismiss their claims. The court denied the trust’s motion, finding there was sufficient evidence for a trial regarding Ms. Reese’s intentions. You can read the opinion here: https://docs.justia.com/cases/federal/district-courts/indiana/insdce/1:2015cv00545/57835/47

The lesson here is simple: Get appropriate legal advice. We suggest seeking out a member of the Special Needs Alliance. http://www.specialneedsalliance.org/