How to Choose the Right Trustee for a Special Needs Trust in California

Written by Robert Nickerson

Setting up a Special Needs Trust (SNT) is one of the most powerful ways California families can protect a loved one with disabilities. But creating the trust is only half the job;  you also need to choose the right trustee or administrator. The trustee manages the money, protects eligibility for Medi-Cal and SSI, and ensures the trust truly improves your loved one’s quality of life.

What Does a Trustee Do in California?

The trustee’s role goes beyond just writing checks. In California, trustees of special needs trusts must:

• Protect eligibility for public benefits like SSI and Medi-Cal by following strict distribution rules.

• Manage trust funds wisely, investing carefully so the funds last as long as possible.

• Keep accurate records for taxes, government agencies, and family reporting.

• Follow state and federal laws that apply to California special needs trusts.

What to Look for in a Trustee

Choosing the right person (or organization) matters. Here are the qualities that make for a strong trustee:

• Knowledge of benefits programs (or willingness to learn with professional help).

• Financial management skills to budget and invest properly.

• Strong organizational skills for paperwork and deadlines.

• Trustworthiness and empathy to always act in the beneficiary’s best interest.

• Time availability to stay engaged with ongoing trustee duties.

Who Can Serve as Trustee?

Families in California typically choose between:

Family Member or Friend

• Pros: Knows the beneficiary well, cares personally, often trusted.

• Cons: May lack legal/financial knowledge, or time to manage ongoing responsibilities.

Professional Fiduciary or Trust Company

• Pros: Brings expertise in California benefits law, tax rules, and trust administration.

• Cons: Charges fees, may feel less personal.

Nonprofit / Pooled Trust

• Pros: Accessible option if the trust isn’t very large; professional administration included.

• Cons: Less personalized, funds are pooled with other families.

Questions to Ask Before You Choose

When considering a trustee, ask:

1. Do you understand how distributions affect Medi-Cal or SSI?

2. Do you have time to handle ongoing duties like reporting and budgeting?

3. Will you hire legal or financial help when needed?

4. Who will serve if you can’t; do you have a successor?

California-Specific Rules to Keep in Mind

• First-party special needs trusts (funded with the beneficiary’s own assets) must include Medi-Cal payback provisions when the beneficiary passes away.

• Trustees often must notify California’s Department of Health Care Services (DHCS) when setting up or terminating a trust.

• Documents must clearly explain how the trust’s funds can be used without affecting benefits.

Selecting the right trustee is one of the most important decisions you’ll make for your loved one’s future. Whether you choose a family member, a professional fiduciary, or a nonprofit, the key is to ensure the trustee understands their role and is committed to protecting both the trust and the beneficiary.