Whether it is designed for an individual or part of a pool, a special needs trust requires honest, diligent supervision to best serve its intended beneficiaries. Poor decisions or selfish motives on the part of a trustee can squander the assets that are meant to support a disabled individual or serve another purpose. If you know or even suspect that funds in a special needs trust are being mismanaged, it’s important to take immediate action. Even if a breach of a fiduciary duty is proven, waiting too long might make the lost assets impossible to recover. Special needs trusts address a wide range of concerns, so it can be difficult to determine when a transaction is appropriate. In some cases, trustees might be funneling money to themselves by mysterious fees or costs. In one such case, Special Needs Integrity, an Indianapolis-based organization that administered these instruments, was accused of squandering millions of dollars in trust assets by charging for unexplained “general fees,” “trustee fees” and “legal services.” To recover missing assets, it is often necessary to prove that they were misspent and that the trustee did not uphold their duty to act in the best interest of the beneficiary. Replenishing a special needs trust and winning damages in court will require you to:

  • Demonstrate trust mismanagement —The terms of a special needs trust are tailored to the particular goals of the trust creator. A trustee is legally bound to act according to the terms set forth within the trust document. Violations can involve withdrawals that benefit the trustee or unreasonable expenditures ostensibly made on behalf of the beneficiary.
  • Show the beneficiary was harmed by mismanagement — Courts are able to award compensatory damages to help remedy the harm caused by a trustee’s failure to perform their fiduciary duty. When a trust is drained, assets are not only diverted from their intended purpose but they also can’t accumulate interest in the way they would have otherwise. This can leave the disabled beneficiary without the money the grantor provided for them.

Sadly, unscrupulous individuals and businesses might view special needs trusts, their creators and beneficiaries as easy targets, so it’s important to keep track of how assets are managed. When problems occur, a knowledgeable attorney can perform a thorough investigation of the circumstances. If necessary, they can retain financial experts to determine the extent of the harm. From there, based on the relevant statutes and case law, the attorney will outline your options and the likelihood of obtaining appropriate compensation. At Calwell Luce diTrapano PLLC, in Charleston, we are West Virginia attorneys who are committed to enforcing the terms of special needs trusts and other legal instruments. Call us at 800-876-5529 or contact us online to schedule a consultation.