When the beneficiary has died, anything left in the trust should be earmarked. The money could go to the person's siblings, just as if he or she had died intestate. Another consideration, in choosing a residual beneficiary, is the fact that certain agencies do a tremendous job helping persons with a disability.
Some parents generously choose to reward such an agency by making it the residual beneficiary.
This raises a potential conflict of interest. We believe that any technical conflict of interest is greatly outweighed by the benefit of having Janet as trustee, because we know her to be a responsible person who truly cares about Freddie. Other protections could be built in to the plan as the facts warrant them. For example, requiring an annual accounting to be reviewed by a third party, or local advocacy agency. Some parents write a specific letter of intent to go with the trust.