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The payout can go directly from the insurance company into his special needs trust.
However, different attorney draft the trusts in different ways. You will want to call the attorney who drafted it or have another local attorney look at the trust to see if that will be allowed by the trust. You will also want to check with the insurance company to be sure that they will pay it that way.
Has a guardianship through the courts been done for the disabled son? If so, who is the guardian for him?
I'm not sure why they would tell you that. I've had cases where hundreds of thousands went into a special needs trust with no effect on the person receiving benefits. It does have to go directly into the trust and not to the person first because if it goes to the person first then it is an asset of theirs, even if only for a little while and that could disqualify them. Perhaps that is what the other person is thinking.
You may be able to get an order from the court in the conservatorship that orders the insurance company to make the payment directly into the trust. You could if it was a guardianship in Texas. However, if you can get the money paid directly into the trust then it absolutely will not require a spend down, etc. You will want to visit with a lawyer in CA that does trusts and estates and handles conservatorships and they will understand what I am saying and figure out a way for the judge to do it. Possibly the conservator could also waive the benefit "in favor of the special needs trust" and that would enable the money to go there.
All the insurance company cares about is being relieved of any further liability and a court order from the court handling the conservatorship will do that so they shouldn't give you an problems.
I am just about to sign off for the evening.
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