When setting up a special needs trust—or any type of long-term trust arrangement—families face a critical decision: who will serve as trustee, and how will the trust be managed?
Traditionally, many families have turned to large financial institutions that offer “bundled” trust services: trust administration, investment management, and sometimes even legal guidance—all under one roof. That can seem convenient, especially if you’re already working with a big bank or national firm.
But for families who want more control, greater independence, and truly specialized service, there’s another way while often reducing costs.
Let’s break down the two primary trustee arrangements, and why many of the families we serve choose an independent model.
The Bundled Approach: Everything in One Place
With a traditional corporate trustee, all services are centralized. A single institution handles:
- Trust administration (distributions, recordkeeping, compliance)
- Investment management (choosing funds, rebalancing, etc.)
- Often, some in-house legal and tax resources
On the surface, this looks efficient. There’s one relationship to manage, and decisions are made internally. But dig a little deeper and conflicts of interest often arise.
What’s the problem?
These bundled providers are often incentivized to:
- Keep assets invested in proprietary funds or platforms at a higher cost
- Limit flexibility on how assets are managed
- Avoid outside scrutiny of investment performance
The same institution that decides how money is invested is also responsible for monitoring whether it’s being invested appropriately. That can create tension between what’s best for the institution and what’s best for the beneficiary.
Employee turnover at large trust companies can disrupt continuity and strain communication with families. When relationship managers or trust officers frequently change, families are forced to re-explain their loved one’s needs and history—leading to frustration, miscommunication, and a lack of personalized care. A revolving door of professionals makes it hard to build trust or maintain a consistent planning strategy.
The Unbundled Model: Independent Trustee + Independent Advisor
An alternative approach—one we often recommend—separates trust functions:
- A corporate trustee handles trust administration: distributions, compliance, tax filings, and legal oversight.
- An independent investment advisor (like Rockwood) manages the trust portfolio: strategy, asset selection, and alignment with the beneficiary’s needs.
This structure is often called a directed trust or delegated trust, depending on the legal setup.
Why go this route?
It offers:
- Checks and balances: The advisor and trustee each play distinct roles, with accountability between them.
- Expertise: You can choose a trustee who specializes in administration and an advisor who specializes in investing within a special needs trust.
- Fiduciary alignment: Advisors like us are legally obligated to put your family’s interests first—always.
- Flexibility: You have more say in how investments are managed and who is making those decisions.
Focused Professionals, Aligned Interests
At Rockwood, we believe the best results come from letting each professional do what they do best. Trustees should focus on trust law, compliance, and distributions. Advisors should focus on financial planning and portfolio strategy.
That separation not only avoids conflicts—it gives beneficiaries the full benefit of a team of experts working together, not working for a bank’s bottom line.
If you’re establishing a trust intended to last a lifetime (or longer), the structure is just as important as the strategy. We’re here to help you evaluate your options and build a team that supports your goals and your family’s future.
To learn more about our approach to special needs financial planning and trustee administration for special needs trusts, visit rockwoodwealth.com/special-needs-financial-planning. We also share practical tips, educational content, and planning strategies on LinkedIn and YouTube—follow along and join the conversation.
Jeff Llewellyn
Advisor Jeff Llewellyn, CERTIFIED FINANCIAL PLANNER®, is also a father to an adult daughter with autism. He combines technical expertise, lived experience, and genuine empathy to help families navigate special needs planning, estate strategies, and government benefits. Jeff has guided hundreds of families in establishing estate plans, including establishing special needs trusts and structuring wealth transfers while preserving benefits like SSI, SSDI, Medicare, and Medicaid. A compassionate and knowledgeable guide, Jeff helps families plan with confidence and clarity.