[WSBAPT] Deferral of Special Needs Trust in Trust provisions

[Eric Nelsen]

I had a thought while working on another matter, that there are situations where an estate planning client might want to provide for a trust for someone - grandchild, for example - but does not know whether that beneficiary might at some point need government benefits, and a special needs trust would be appropriate.

What do y'all think about having an option for a Trustee to fund a special needs trust and terminate the ordinary trust early? Something like:

If the Trustee determines, in Trustee's sole and absolute discretion, that X qualifies or could qualify for government benefits but for the benefits provided under this trust, then Trustee may retain counsel to create a special needs trust for X's sole benefit during his/her life and having remainder interest provisions identical to this current trust, and having trust purposes and distribution instructions that would allow X to qualify for such government benefits, and upon creation of such special needs trust may terminate this Trust and transfer all remaining assets into such special needs trust.

Would this work? Assuming the special needs trust had the appropriate provisions, I think this could change an ordinary trust into a non-self-settled special needs trust if it becomes necessary.

Sincerely,

Eric

Eric C. Nelsen
SAYRE LAW OFFICES, PLLC
1320 University St
Seattle WA  98101-2837
phone 206-625-0092
fax 206-625-9040

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