How Do I Get Rid of a Special Needs Trust?

My son is the beneficiary of a special needs trust that was set up when she was young and received a settlement from a lead poisoning case.  He's 18 now and doesn't need the trust anymore.  How do I get rid of it?

Nearly every state's probate code includes a right to terminate a trust for a variety of reasons, typically if there are changed circumstances or the original intent behind setting up the trust no longer applies. Even if there are not specific laws in your state, probate courts are courts of equity (meaning that they can do what’s fair, regardless of the law) and you may be able to argue that it no longer makes sense to have a special needs trust.  However, this does not mean that you should terminate the trust.  If this is a first-party special needs trust and your son used Medicaid, then terminating the trust may trigger a payback to the state’s Medicaid agency for all Medicaid benefits it paid for your son. Further, if your 18-year-old is handed a large sum of money without any restrictions, the money will probably not be spent well. Sometimes keeping the assets in trust may allow your young son time to mature in managing money, and the money may be used later.

Article Last Modified: 08/11/2015

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