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Dwayne B.
Dwayne B., Attorney
Category: Estate Law
Satisfied Customers: 32154
Experience:  Estate Law Expert
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CA based Dad forgot about work life insurance policy. When

Customer Question

CA based Dad forgot about work life insurance policy. When Dad dies, his CA based disabled adult son was a named beneficiary on the policy. His son is on SSI. His son has a special needs trust set up for him administered in Tx. How can the disabled son receive the policy pay out without losing his CA benefits?
Submitted: 25 days ago.
Category: Estate Law
Expert:  Dwayne B. replied 25 days ago.

Hello and thank you for contacting us. This is Dwayne B. and I’m an expert here and looking forward to assisting you today.

Expert:  Dwayne B. replied 25 days ago.

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?

Customer: replied 25 days ago.
A conservatorship is in place, but the Conservator is in CA and the SNT Trustee is in TX.Another expert said the life insurance benefit payment will have to go to the beneficiary and he will lose his benefits. They advised the Trustee will have to spend down the payout and re-apply for his benefits once it's done. He ways to spend down include buying the beneficiary a car or pre-paid funeral. Can you help me understand the difference in opinions? Thank you for your answer too.
Expert:  Dwayne B. replied 25 days ago.

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.

If your question has been answered then I'd offer my best wishes to you and ask that you please not forget to leave a Positive Rating so I receive credit for my work.

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