Provide for someone with special needs: Special Needs Trust
What is a Special Needs Trust?
The Special Needs Trust does not replace needs-based government benefits, but instead provides supplemental and extra care over and above that which the government provides. If you are an individual with special needs who holds assets to be used for your benefit during your lifetime, the Special Needs Trust can be made by anyone other than you. If you want to provide for an individual with special needs, you may make a Special Needs Trust for that specific beneficiary. A properly drafted Special Needs Trust will be tailored to your specific circumstances. If you need assistance, ask a lawyer.
When to use a Special Needs Trust:
- You are leaving assets to an individual with special needs.
- You want to create a trust to provide for the health and welfare of an individual with special needs.
- You want to supplement the needs-based government benefits supplied to an individual with special needs.
Sample Special Needs Trust
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IRREVOCABLE SPECIAL NEEDS TRUST
This Special Needs Trust (also referred to as the "Trust Agreement") is made and entered into on , by and between of , and
WITNESSETH:
In consideration of the mutual covenants and promises set forth in this Trust Agreement, the and agree to execute this Trust Agreement as shall be necessary to transfer said property to the Trust, and the to hold the Trust estate, in trust, nevertheless, for the following uses and purposes and subject to the terms and conditions set forth herein:
ARTICLE I
IDENTIFICATION
. PURPOSE
The to make a trust to be held, administered, and distributed in accordance with the provisions of this Trust Agreement. (the "Beneficiary") is the sole beneficiary of the trust made by this Trust Agreement during their lifetime. Any property listed in this Trust Agreement or hereafter conveyed to the subject to the trust hereby made (collectively, the "Trust assets") shall be held, administered, and distributed by the upon the trust and for the purposes and uses set forth herein.
. NAME
This trust shall be known as the Irrevocable Special Needs Trust. It shall be sufficient that it be referred to as such in any deed, assignment, bequest or devise by that name.
. INITIAL FUNDING & INTENT
| (1) | Initial Funding. The to make a trust to hold such property itemized and described in attached and made a part of this Trust Agreement, together with such monies, life insurance, securities and other assets as the Trustee may hereafter at any time hold or acquire for all of the purposes within this Trust Agreement. The property funding this trust originates with . |
| (2) | Intent. It is the intention to establish a supplemental needs trust which preserves 's eligibility for means-tested benefits, while at the same time making funds available for 's supplemental needs which may not be provided for by means-tested benefits, as deemed appropriate and in the absolute discretion of the Trustee. No part of the principal or income of this trust shall be used to supplant or replace any public-assistance benefits received by from or through any county, state, federal, or other governmental agency. Grantor directs sThe assets of this trust are not intended to be a resource of the Beneficiary and those assets are not directly available to the Beneficiary. The this trust to be a discretionary spendthrift trust made for non-support purposes. The interests of the remainder beneficiaries are of secondary importance only and the Trustee shall not be liable to the remainder beneficiaries in the event that the Trust assets are exhausted by providing for 's supplemental needs. |
ARTICLE II
GENERAL PROVISIONS
. LAWS GOVERNING
This Trust Agreement shall be construed, enforced and regulated in all respects in accordance with the laws of the and in the Courts of the .
, with the consent of the may at any time or from time to time add to the principal of the Trust made herein by donation, deed, will or otherwise. , without the consent of the may at any time or from time to time add to the principal of the Trust made herein by donation, deed, will or otherwise.
. PAYMENTS TO OR FOR BENEFICIARIES
. SPENDTHRIFT PROVISION
The trust made by this Trust Agreement shall be a spendthrift trust to the fullest extent allowed by law. No income or principal shall be assignable by the Beneficiary or available to anyone having a claim against the Beneficiary before actual payment to the Beneficiary. No part of the trust shall be subject to the claims of any of the Beneficiary's creditors (if any), or specifically the Beneficiary's voluntary or involuntary creditors for the provision of care and services to him or her during his lifetime, including payments for residential care and maintenance by any public entity or private creditor.
Under no circumstances can compel a distribution from the trust for any purpose. discretion in making non-support distributions is final, even if elects to make no distributions at all. The absolute and independent judgment, rather than any other party's determination, is intended to be the criterion on which distributions are made. No court or any other person should substitute its or their judgment for the decision or decisions made by a trustee.
. PROTECTION AGAINST PERPETUITIES
All distributions required by this Trust Agreement and the final accounting of the trust must be accomplished and finished as provided in this Trust Agreement and, in any event, no later than twenty-one (21) years after the last to die of the expressly named remainder beneficiaries or, if such beneficiaries are all charities, then twenty-one (21) years after the death of . No judicial modification of this provision shall be permitted.
ARTICLE III
SPECIAL NEEDS PROVISIONS
This trust is intended as an irrevocable special (or supplemental) needs trust. Accordingly, the the trust assets, income or principal, be used to supplement, not supplant, impair or diminish, any benefits or assistance of any federal, state, country, city, or other governmental entity, including but not limited to Medicaid and Supplemental Security Income (SSI), for which may otherwise be eligible or which they may be receiving. Additionally, this trust is intended to satisfy those non-support needs, as deemed appropriate in the absolute discretion of the . This Trust is not a support trust. It is designed to supplement support from other sources. Consequently, no support obligation owed to shall be deemed met, in whole or in part, by this Trust Agreement or any trust made hereunder.
the Beneficiary's needs will be better met if such distribution is made
The , when applying funds for the benefit of , may apply or give funds to care managers and/or monitors, social service organizations, attorneys, accountants, financial advisors, and other professionals who provide care management, personal or professional services, or care monitoring services for . Should the mere existence of this subparagraph be read to cause a loss or diminution of need-based public benefits, then it shall be stricken in favor of the more restrictive provisions herein. Not by way of limitation but by way of example, the following would be deemed expenditures which could be made in the sole and absolute discretion of the for 's needs:
. TERMINATION
The trust made by this Trust Agreement shall last for 's lifetime and shall only terminate All remaining principal and accumulated income shall be distributed to
. RESTRICTIONS ON BENEFICIARY
Notwithstanding any provisions found within this Trust Agreement to the contrary, the following restrictions shall apply and be binding on :
| (1) | Beneficiary shall not have the right to serve as a co-Trustee or sole Trustee of the trust made by this Trust Agreement. |
| (2) | Beneficiary shall not have the right to remove any Trustee of the trust made by this Trust Agreement. |
| (3) | Beneficiary shall not have the right to appoint a successor Trustee of the trust made by this Trust Agreement. |
| (4) | Beneficiary shall not have the power to direct, assign, distribute, or authorize distributions from the trust made by this Trust Agreement. |
| (5) | Beneficiary shall not have any power of appointment, special nor general, over the property of the trust made by this Trust Agreement. |
| (6) | Beneficiary shall not have any right to withdraw any property from the trust made by this Trust Agreement. |
. BENEFICIARY'S ESTATE
The property owned by this trust shall not be considered as part of 's estate nor shall it be subject to the claims of creditors, whether voluntary or involuntary, for the provision of care and services, including by any governmental agency or entity. Any provision found within this Trust Agreement which disqualifies from any means-tested benefit shall be deemed void.
Upon the death of , the will receive all remaining trust assets up to the total cost of the medical assistance the Beneficiary received. If the trust is terminated on an event before 's death, it may not allow payments to third parties or creditors before required payments are made to the state or county.
ARTICLE IV
ADMINISTRATION DURING LIFETIME OF GRANTOR
. LIFE INSURANCE
The may, but need not necessarily, name the Trust Estate as beneficiary of life insurance policies. Furthermore, the may directly maintain life insurance policies, change beneficiaries thereon, borrow against same, receive dividends thereon, pledge and hypothecate such policies as security for undertakings, exercise any option granted under such policies and may withdraw such policies from this Trust as the owner of the policies wishes.
. IRREVOCABILITY
This Trust Agreement is irrevocable and once executed, may not be changed, amended, altered or revoked except as expressly provided herein. In no event shall any change to this trust be effective which would serve to alter the Beneficiary designation expressed herein, or which would serve to grant the lifetime Beneficiary power over the property of the Trust, or which would cause an unintended loss of the Beneficiary's need-based public benefits.
Notwithstanding any provision hereof to the contrary, the may amend this Agreement to change trustees, provide replacement or successor Trustees or to comply with provisions of law as may be constituted from time to time. All amendments shall be made in writing and delivered to the and , if living.
For purposes of the foregoing, "administrative provision" refers to any provision of the Trust dealing with the management and administration of the Trust, and in no event shall any such amendment affect, enlarge, or shift any beneficial interests made hereunder or cause a loss of need-based government benefits. The purpose of this power to amend is to permit the Trustee:
| (1) | To handle tax and/or other circumstantial changes that may affect such Trust, contributions to or distributions from the trust, and/or its beneficiaries; |
| (2) | To take advantage of changed trust drafting approaches or to otherwise improve the clarity and administrability of the trust provisions; |
| (3) | To comply with qualification requirements for public benefit programs, including but not limited to Supplemental Security Income, and medical assistance or Medicaid, and further including the changed qualification requirements that may be applicable if the Special Needs Beneficiary moves to other states; |
| (4) | To carry out the expressed intent of the Trust, in the event that changed laws and/or circumstances and/or changes in the Beneficiary's condition would otherwise cause this Trust to fail to carry out such expressed intent |
In exercising this power to amend, the shall observe the general fiduciary duties of loyalty, good faith, fairness, and due care. Nothing in this Trust should be construed to deny a Trustee the right to otherwise modify the Trust as provided by law.
ARTICLE V
ADMINISTRATION UPON DEATH OF BENEFICIARY
. COLLECTION OF INSURANCE PROCEEDS
The shall collect the proceeds of any life insurance policies subject hereto when they become payable to the trust, or to the in their fiduciary capacity, adding any proceeds thereof to the principal of the Trust Estate. Full authority is given to the to take legal action to collect all such insurance proceeds.
. EXPENSES AND COST OF ESTATE SETTLEMENT
Upon the death of , the shall comply with all laws regarding duties and laws as to creditor claims of the Trust Estate and may pay or settle from the Trust Estate all or part of the just debts, funeral, administrative, and inheritance and/or estate tax expenses of 's estate and trust administration as necessary, wise, and/or prudent.
. REPAYMENT TO THE STATE
Upon the death of the primary Beneficiary, the State will be notified, and paid all amounts remaining in the Trust up to the total value of medical assistance paid on behalf of the Beneficiary, without requiring the State to take any action except to establish the amount to be repaid.
ARTICLE VI
APPOINTMENT OF TRUSTEES
. APPOINTMENT
hereby nominate and appoint, of , ,
. APPOINTMENT OF SUCCESSOR
of , , is designated as the successor Trustee.and of , , are designated as the successor Co-Trustees. of , , is designated as the successor Trustee.and of , , are designated as the successor Co-Trustees.
| The may, however, appoint other or replacement Successor Trustees by amendment to this Trust. Any Successor Trustee must accept the terms of the Trust by signature witnessed by two unrelated persons. Such designee(s) shall become the Successor Trustee(s) upon acceptance of the terms and conditions of this agreement. |
| (2) | Any Trustee(s) or Successor Trustee(s) may resign by instrument in writing, although a Trustee may petition a court of proper jurisdiction to appoint a replacement or Successor Trustee. Any Trustee may resign by delivering notice of such resignation to the Grantor. |
| (3) | Any Successor Trustee(s) shall have all the rights, powers, duties, and discretion conferred or imposed on the original Trustee(s). No Trustee shall be liable for any act or omission unless the same be due to such Trustees own default. In no event shall a corporate trustee be a corporation owned or controlled by any beneficiary hereof. |
| (4) | Any Successor Trustee who becomes responsible for the applicable Trust Estate shall be responsible to make a reasonable inquiry for the records of the prior Trustee which are available. |
| (5) | If none of the above named Trustee(s) or Successor Trustee(s) shall be serving as such, whether by reason of death, resignation, incompetency, or discharge, and the cannot make an appointment due to their death or incompetency, the then current income beneficiary may petition a court of competent jurisdiction to appoint a Successor Trustee. Such Successor Trustee must be a trust company, bank, or attorney qualified to act as such, and if a bank or trust company, must possess trust powers. In no event shall such Successor Trustee be or any remainder beneficiary who is to be paid his or her share of income and/or principal. |
. SIGNATURES AND DECISIONS
All acts, deeds, and transactions, including but not limited to, banking, securities and real estate transactions of any kind, nature, or amount, with regard to this Trust Agreement or pursuant thereto, shall require the signature of only one (1) Trustee .
. BOND
It is the request and direction of the that , including successor Trustees, excluding successor Trustees, unless otherwise exempt under the Loans and Trusts Corporations Act
. DISCRETION
Each decision, act, transaction, and deed of a named Trustee herein shall be deemed discretionary and not subject to judicial review in any jurisdiction unless a fraudulent, wanton, criminal or gross negligent act of a Trustee is first proven against him.
ARTICLE VII
POWERS AND DUTIES OF TRUSTEES
. INVESTMENTS AND DUTIES
The Trustee(s) and Successor Trustee(s) shall have all powers and authority conferred upon trustees by the laws of the besides such additional powers and authority conferred by the provisions of this Trust Agreement. In exercising such powers, the Trustees shall be bound to do only what a reasonably prudent person would do in like circumstances and to make prudent investments.
The Trustee(s) of each Trust established hereunder (including any Successor Trustee(s)) shall have the continuing, absolute, discretionary power to deal with any property, real or personal, held in such Trusts. Such power may be exercised independently and without the prior or subsequent approval of any court or judicial authority, and no person dealing with such Trustees shall be required to inquire into the propriety of any of the actions of such Trustees. The Trustees shall not be limited to the type, amount and character of investments in which the Trustees may invest the funds of this Trust, so long as the Trustees use reasonable prudence and judgment in the selection of investments. The Trustees shall have the following general powers, in addition to, and not by way of limitation of, the powers provided by law:
| (1) | Retention: To retain any property for any period whether or not the same be of the character permissible for investments by fiduciaries under any applicable law, and without regard to any effect the retention may have upon the diversification of the investments. |
| (2) | Sell: To sell, transfer, exchange, convert, or otherwise dispose of, or grant options with respect to any security or property, real or personal, including homestead property, held as part of the Trust Estate, at public or private sale, with or without security, in such manner, at such time or times, for such purposes, for such prices and upon such terms, credits and conditions as the Trustees may deem advisable. |
| (3) | Invest: To invest and reinvest all or any part of the Trust Estate in any property and undivided interests in property, wherever located, including bonds, debentures, notes, secured or unsecured, stocks of corporations regardless of class, interests in limited partnerships, real estate or any interest in real estate whether or not productive at the time of investment, interests in trusts, investment trusts, whether of the open and/or closed fund types, and insurance contracts on the life of any beneficiary or annuity contracts for any beneficiary, without being limited by any statute or rule of law concerning investments by fiduciaries. |
| To exercise any stock options which the trustee may receive; to borrow such funds from any source as the trustee may deem necessary for the exercise of such options; and to pledge assets as trustee deems appropriate for this purpose. |
| (4) | Liquidity: To render liquid the Trust Estate or any trust made hereunder, in whole or in part at any time or from time to time, and hold cash or readily marketable securities of little or no yield for such period as the Trustees may deem advisable. |
| (5) | Lease: To lease any such property beyond the period fixed by statutes for leases made by a Trustee and beyond the duration of the Trust Estate or any Trust made hereunder. |
| (6) | Securities: To join in or become a party to, or to oppose, any reorganization, readjustment, recapitalization, foreclosure, merger, voting trust, dissolution, consolidation, or exchange, and to deposit any securities with any committee, depository, or trustee, and to pay any and all fees, expenses, and assessments incurred in connection therewith, and to charge the same to principal, to exercise conversion, subscripting, or other rights, and to make any necessary payments in connection therewith, or to sell any such privileges. |
| (7) | Vote: To vote in person at meetings of stock or security holders, or any adjournment of such meetings, or to vote by general or limited proxy with respect to any such shares of stock or other securities held by the Trust. |
| (8) | Nominee: To hold securities in the name of a nominee without indicating the trust character of such holding, or unregistered, or in such form as will pass by delivery. |
| (9) | Claims: To pay, compromise, compound, adjust, submit to arbitration, sell, or release any claim or demands of the Trust Estate, or any Trust made hereunder, against others, or of others against the same as the Trustees may deem advisable, including the acceptance of deeds of real property in satisfaction of bonds and mortgages, and to make any payments in connection therewith which the Trustees may deem advisable. |
| (10) | Real Property: To possess, manage, sell, insure against loss by fire or other casualties, develop, subdivide, control, partition, mortgage, lease, or otherwise deal with any and all real property, including homestead property; to satisfy and discharge or extend the term of any mortgage thereon; to execute the necessary instruments and covenants to effectuate the foregoing powers, including the giving or granting of options in connection therewith; to make improvements, structural or otherwise, or abandon the same if deemed to be worthless or not of sufficient value to warrant keeping or protecting; to abstain from the payment of taxes, water rents, assessments, repairs, maintenance, or upkeep of the same; to permit to be lost by tax sale or other proceeding or to convey the same for a nominal consideration or without consideration; to set up appropriate reserves out of income for repairs, modernization, and upkeep of buildings, including reserves for depreciation and obsolescence, and to add such reserves to principal, and, if the income from the property itself should not suffice for such purposes, to allowable in determining the federal estate tax payable by Grantor's estate, to advance any income of the Trust for the amortization of any mortgage on property held in the Trust. To permit the Beneficiary to occupy any real estate forming part of any trust without rent or on such other terms and conditions as the Trustee shall determine. |
| (11) | Instruments: To execute and deliver any and all instruments in writing which are deemed advisable to carry out any of the foregoing powers. No party to any such instrument in writing signed by the Trustees shall be obliged to inquire into its validity. |
| (12) | Trust Funds: To invest any part or all of the principal of the Trust Estate in any common trust fund, legal or discretionary, which may be established and operated by and under the control of the Trustees. |
| (13) | Allocations: To determine, irrespective of statute or rule of law, what shall be fairly and equitably charged or credited to income and what to principal notwithstanding any determination by the courts or by any custom or statute, and whether or not to establish depreciation reserves. |
| (14) | Possession: To allow temporary possession by and make available personal property for the personal use of any beneficiary hereof; if any item(s) of personal property are held in trust by the Trustees for the benefit of such beneficiary. |
| (15) | Employ Experts: To employ legal counsel, accountants, and agents deemed advisable by the Trustee and to pay them reasonable compensation. |
| (16) | Discretionary Distributions: Make discretionary distribution of income, or principal, to or for the benefit of such Trustee if otherwise provided in this Agreement; and make discretionary allocations of receipts or expenses as between principal and income. |
. SHARES
Notwithstanding anything herein to the contrary, the Trustees shall administer any and all Trusts made herein as separate and distinct, but commonly administered shares.
. COMPENSATION AND ACCOUNTING
| (1) | To the extent consistent with the stated purpose and intent of this Trust, |
| (2) | Timely accounting shall be made available upon written request by the Beneficiary or . Additionally, each Trustee shall provide to , , and each other Trustee, if applicable, a full accounting of such act, payment, distribution, or investment made under the provisions of this trust. The will provide an accounting on a(n) basis, or as provided by law. |
. REMOVAL
| (1) | The may remove any Trustee by notice to that Trustee. |
| (2) | Any Trustee (including who acts as Trustee(s)) shall be automatically discharged and removed from authority and duties of a fiduciary or trustee should they be deemed disabled or incompetent. A Trustee or Grantor (the questionable trustee) shall be deemed so disabled or incompetent to act as a trustee if any other Trustee hereunder shall receive in his possession any one of the following: (a) a writing from the questionable trustee's physician and a writing from a member of the questionable trustee's immediate family or another Trustee stating that the questionable trustee is too disabled or incompetent to make rational or prudent judgments or handle his personal affairs; (b) a court order which he deems jurisdictionally proper and currently applicable holding that the questionable trustee is legally incompetent to act in his own behalf or appointing a guardian or conservator of his person and/or property to act for him; (c) duly executed, witnessed and acknowledged written certificates of two (2) licensed physicians (each of whom represents that he or she is certified by a recognized medical board), each certifying that he has examined the questionable trustee and has concluded that, by reason of accident, physical or mental illness, progressive or intermittent physical or mental deterioration, or other similar cause, the questionable trustee is incompetent or disabled to act rationally and prudently in the questionable trustee's best interests, the interests of the or the interest of other beneficiaries hereunder; (d) evidence deemed credible and currently applicable that the questionable trustee has disappeared, is unaccountably absent or is being detained under duress and, thus, unable to effectively and prudently look after his financial interests or that of the or other beneficiaries hereunder; (e) proof that the questionable trustee is an inmate of or has entered into confinement, residence or daily care of a skilled or custodial nursing home, mental institution, jail, or prison; or (f) proof that the questionable trustee (or someone in his behalf) has applied for, is being considered for, intends to apply for or is entitled to receive (but for availability of payments or distributions to be made or which may be made under this Agreement) governmental assistance funds based on financial need of such questionable trustee, by reason of the questionable trustee's health, physical or mental condition. |
| (3) | The individual shall have the right to remove any then serving corporate Trustee(s) by written notice to such corporate Trustee of such removal and the designation of a successor corporate Trustee. Any such removal shall not be effective until the designated successor has been qualified to so serve. The may revoke any such appointment before it is accepted by the appointee, and may specify in the instrument of appointment whether it may be revoked by a subsequent trustee. In the event that two or more instruments of appointment or revocation by the same Trustee exist and are inconsistent, the latest by date shall control. |
| (4) | If any of the writings, proofs, certificates or order as noted above in this Subparagraph D be negated, changed, canceled, or abrogated to the benefit of the questionable trustee, the questionable trustee (even if it is Grantor) who was removed from fiduciary authority shall automatically be restored to full fiduciary power and authority and rights of decision or election reserved to him by this Agreement. |
IN WITNESS WHEREOF, the parties specified above as and the have signed and sealed this Trust Agreement as of .
____________________________________
, Grantor
____________________________________
,
STATE OF ,
DISTRICT OF COLUMBIA, ss:
The foregoing instrument was acknowledged before me this _____ day of ____________________, ______ by , who is personally known to me or who has produced ________________________________ as identification.
Before me, a Notary Public (or justice of the peace) in and for said county, personally appeared the above named , ________________________________, and ________________________________, who acknowledged that they did sign the foregoing instrument, and that the same is their free act and deed. In testimony whereof, I have hereunto subscribed my name at ________________________________, this _____ day of ____________________, ______.
The foregoing instrument was acknowledged before me, by means of ☐ physical presence or ☐ online notarization, this _____ day of ____________________, ______ by , who is personally known to me or who has produced ________________________________ as identification.
This instrument was acknowledged before me on this _____ day of ____________________, ______ by .
Subscribed, sworn to and acknowledged before me by , the , this ________ day of _____________.
On this _____ day of ____________________, ______, before me personally appeared , to me known to be the person described in and who executed the foregoing instrument, and acknowledged that he/she executed same as his/her free act and deed.
On this _____ day of ____________________, ______, before me, ________________________________, personally appeared , known to me (or satisfactorily proven) to be the person whose name is subscribed to the within instrument and acknowledged that he/she executed the same as for the purposes therein contained.
On this _____ day of ____________________, ______, before me, the undersigned, Notary Public for the State of Vermont, personally appeared , to me known (or to me proved) to be the identical person named in and who executed the above Trust, and acknowledged that such person executed it as such person's voluntary act and deed.
The foregoing instrument was acknowledged before me this _____ day of ____________________, ______, by .
In witness whereof, I hereunto set my hand and official seal.
Signature of person taking acknowledgment
Notary Public
_________________________________
Name typed, printed, or stamped
My commission expires _____________
Notary Address:
_________________________________
_________________________________
_________________________________
_________________________________
ACCEPTANCE BY TRUSTEES
The undersigned hereby accept the trust imposed by this Trust Agreement and agree to serve as Trustees upon the terms and conditions therein set forth.
SIGNED, SEALED, AND DELIVERED IN THE PRESENCE OF:
________________________________________
(Trustee)
,
