The trustee appealed the trial court’s ruling, stating the court applied too narrow a definition of special needs, as defined both in the trust itself and applicable law, in making its finding. The appeals court agreed. Upon review, the appeals court looked at both the definition of special needs in the trust and in the federal statutes.
The trust instrument itself included a very broad definition of special needs. Specifically, the trust defined special needs as “the requisites for maintaining the Beneficiary’s good health, safety, and welfare when, in the discretion of the Trustee, such requisites are not being provided by any public agency, office, or department of the State of California, or of any other state, or of the United States of America.
The funds of the trust may be used as an emergency or backup fund secondary to public resources. Special Needs include without limitation special equipment, programs of training, education and habilitation, travel needs, and recreation, which are related to and made reasonably necessary by this Beneficiary’s disabilities. This is not a trust for the support of the Beneficiary.”
The appeals court also noted that the trust instrument itself gave the trustee broad discretion to make distributions from the trust “to or for the benefit of the Beneficiary during her lifetime, such sums and at such times as the Trustee, in [their] discretion, determines appropriate and reasonably necessary for the Beneficiary’s Special Needs.”
The appellate court continued: “In making distributions to the Beneficiary for her Special Needs, the Trustee shall take into consideration the applicable resource and income limitations of the public assistance programs for which the Beneficiary is eligible, and the duties of any persons legally obligated to support the Beneficiary.”
Thus, not only did the trust in Mcgee include a broad definition of special needs, but it also gave the trustee broad discretion to make distributions in support of the beneficiary’s special needs.
