Can I change a special needs trust?

Asked over 5 years ago - Placentia, CA

My daughter has a special needs trust. Her dad and I are the executors. The money is invested in annuities currently. We are looking to take the money from the annuity and purchase our house. If we are unable to do this we will lose our home. The trust states that changes can only be made with the approval of the court. Is it worth going before the court or is there no chance they would approve. The house would be purchased in my daughter's name and when she comes of age she would have the opportunity to sell or live in the house.

Attorney answers (3)

  1. Howard Mark Thomas

    Contributor Level 8

    Answered . On the surface, you are proposing to use what appears to be your disabled daughter's money to bail out your mortgage. This doesn't smell right in terms of your fiduciary duties as trustees (prudent investment, self dealing, etc.) You could easily run afoul of various laws.
    Having said that, your actions are governed by the both the terms of the trust and the law. Whether you have to go to court to "invest" in your family home depends on both. In particular, the answer depends on the type of Special Needs Trust (first party or third party) and the specific terms of that trust. Whether such an investment is proper, also depends on the specific facts of your daughter's projected needs and resources.
    I understand that you are in a difficult financial situation, but you could really dig yourself into a hole if you proceed without having an attorney review your particular situation and your special needs trust.

  2. William Richardson Christian

    Contributor Level 12

    Answered . First, you need to look carefully at the trust. A Special Needs Trust is generally designed to avoid disqualification of the beneficiary from some type of government benefits. If this is what you have, we need to know what government benefits are being provided, and look at their disqualification issues. Since a special needs trust is usually irrevocable, it's terms are critical.
    Generally, a change of assets within a trust is not a change of the trust instrument itself And thus not an "amendment"). The trustee has descretion as to what the trust is invested in. TItle to investments need to be in the name of the trust, NOT in your daughters name. You may have issues, however, on matters such as proper diversification of trust investments, etc.
    Like most attorney answers, the real response is that "it depends." You should have the trust and its investments reviewed by counsel, who would then be in a position to advise what steps could be taken under your specific circumstances.
    Obviously no opinion or specific advice on the matter can be provided without more information on your actual circumstances. I hope this general comment is helpful.
    Bill Christian

  3. William Richardson Christian

    Contributor Level 12

    Answered . First, you need to look carefully at the trust. A Special Needs Trust is generally designed to avoid disqualification of the beneficiary from some type of government benefits. If this is what you have, we need to know what government benefits are being provided, and look at their disqualification issues. Since a special needs trust is usually irrevocable, it's terms are critical.
    Generally, a change of assets within a trust is not a change of the trust instrument itself And thus not an "amendment"). The trustee has descretion as to what the trust is invested in. TItle to investments need to be in the name of the trust, NOT in your daughters name. You may have issues, however, on matters such as proper diversification of trust investments, etc.
    Like most attorney answers, the real response is that "it depends." You should have the trust and its investments reviewed by counsel, who would then be in a position to advise what steps could be taken under your specific circumstances.
    Obviously no opinion or specific advice on the matter can be provided without more information on your actual circumstances. I hope this general comment is helpful.
    Bill Christian

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