Thought for the Day” #1168 – by Stephen R. Elville, J.D., LL.M.

November 8, 2018

Trustees of special needs trusts are often approached by family members of trust beneficiaries who would like to be paid as caregivers for the beneficiaries. While the Social Security Administration (SSA) currently does not explicitly prohibit payment of family caregivers from special needs trusts that support Supplemental Security Income (SSI) recipients, there are other reasons why trustees should be cautious about doing so. Many states have laws that require parents to care for their children. In those cases, it is inappropriate for trustees to compensate parents for services that they are legally required to provide to their children. These duties of support often survive past the age of majority in cases where children have lifelong special needs. Secondly, there is trustee liability to consider. Caregivers are employees of the trust and must be treated as such, even if they are family members. When employing caregivers, including family caregivers, trustees must follow all state and federal wage and hour guidelines and must properly withhold the appropriate taxes from the caregiver’s paychecks. In many cases, trustees, especially non-professional trustees, are not equipped to do this job, so they must work through agencies that actually hire the family members and are paid a premium by the trust to administer their benefits. Also, when trustees are serving as employers, there is always a risk that family members will be injured on the job, resulting in workers’ compensation claims. While there are many reasons why family members might make the best paid caregivers, careful consideration to all of the factors surrounding the employment of family members should be taken into account. #elvilleeducation