ALASKA SPECIAL NEEDS TRUST AGREEMENT

(Draft Template – For Attorney Review)

[// GUIDANCE: This template is designed for a stand-alone, third-party or self-settled special needs trust governed by Alaska law. Customize all bracketed fields, delete inapplicable alternatives, and add schedules as needed. Confirm compliance with current federal and Alaska statutes before execution.]

TABLE OF CONTENTS

1. Document Header & Recitals
2. Definitions
3. Trust Creation, Funding & Irrevocability
4. Purpose; Special Needs Compliance
5. Trustee Provisions
6. Distributions & Supplemental Needs Standards
7. Payback / Remainder Provisions
8. Administrative Provisions
9. Representations & Warranties
10. Covenants & Restrictions
11. Default, Removal & Remedies
12. Risk Allocation
13. Dispute Resolution
14. General Provisions
15. Execution Block

1. DOCUMENT HEADER & RECITALS

1.1 Parties.
This Alaska Special Needs Trust Agreement (“Agreement”) is made as of [EFFECTIVE DATE] (the “Effective Date”) by and between:

• Settlor: [SETTLOR NAME], residing at [ADDRESS] (“Settlor”);
• Trustee: [TRUSTEE NAME], having its principal address at [ADDRESS] (“Trustee”); and
• Beneficiary: [BENEFICIARY NAME] (the “Beneficiary”).

1.2 Recitals.
A. The Beneficiary is an individual with disabilities as defined under 42 U.S.C. § 1382c(a)(3) and is, or is expected to become, eligible for means-tested governmental benefits, including Supplemental Security Income (“SSI”) and Medicaid (collectively, “Government Assistance”).
B. Settlor desires to establish an irrevocable trust governed by the laws of the State of Alaska to hold property for the sole benefit of the Beneficiary while preserving the Beneficiary’s eligibility for Government Assistance.
C. Trustee is willing to accept the trust and to administer the Trust Estate in accordance with the terms herein, the Alaska Uniform Trust Code, AS 13.36 et seq., and applicable federal law, including 42 U.S.C. § 1396p(d)(4).

NOW, THEREFORE, in consideration of the mutual covenants herein, the parties agree as follows:

2. DEFINITIONS

For purposes of this Agreement, the following capitalized terms have the meanings set forth below. Defined terms apply equally to singular and plural forms and include all correlative forms. Cross-references in parentheses indicate primary section usage.

“Accounting Period” – each calendar year ending December 31, or such other period selected by Trustee (§ 8.2).

“Agreement” – this Alaska Special Needs Trust Agreement, including all schedules, exhibits, amendments, and restatements.

“Beneficiary” – [BENEFICIARY NAME] (§ 1.1).

“Disability Determination” – a final determination by the Social Security Administration or a court of competent jurisdiction that the Beneficiary meets the disability criteria under 42 U.S.C. § 1382c(a)(3).

“Government Assistance” – any federal, state, local, or tribal program that provides needs-based benefits or services, including SSI, Medicaid, SNAP, and Section 8 housing (§ 4).

“Grantor Trust Rules” – Subpart E, Part I, Subchapter J, Chapter 1 of the Internal Revenue Code of 1986, as amended (§ 8.5).

“Payback Provision” – the mandatory reimbursement to the State of Alaska or any state that has provided Medicaid benefits to the Beneficiary, as required under 42 U.S.C. § 1396p(d)(4)(A), if this is a self-settled trust (§ 7.1).

“Supplemental Needs” – goods and services that enhance the Beneficiary’s quality of life but are not covered, or are only partially covered, by Government Assistance (§ 6.2).

“Trust” or “Trust Estate” – all property transferred to or acquired by the Trust, together with all accumulations, earnings, and substitutions (§ 3.2).

“Trustee” – the person or institution acting as trustee of the Trust from time to time (§ 5).

[// GUIDANCE: Add additional defined terms as needed for complex assets.]

3. TRUST CREATION, FUNDING & IRREVOCABILITY

3.1 Creation. Settlor hereby irrevocably creates the “[NAME OF TRUST]” (the “Trust”) for the sole benefit of the Beneficiary under Alaska law.

3.2 Funding. Settlor hereby transfers and delivers to Trustee the property described on Schedule A attached hereto, receipt of which Trustee acknowledges. Additional property may be added to the Trust by Settlor or any other person at any time, subject to Trustee’s written acceptance.

3.3 Irrevocability. This Trust is irrevocable. Settlor retains no right or power, whether alone or in conjunction with others, to alter, amend, revoke, or terminate this Agreement, except as expressly provided in § 14.2.

3.4 Spendthrift. To the maximum extent permitted by law, no interest of the Beneficiary in the Trust shall be subject to voluntary or involuntary transfer, assignment, or anticipation, nor to legal or equitable process.

4. PURPOSE; SPECIAL NEEDS COMPLIANCE

4.1 Primary Purpose. The Trust is established to supplement, and not supplant, Government Assistance for the Beneficiary. Distributions shall be made only in a manner that does not jeopardize the Beneficiary’s eligibility for such assistance, unless Trustee determines, in its sole discretion, that such eligibility should be intentionally waived (§ 6.3).

4.2 Sole Benefit Requirement. All Trust assets shall be used for the sole benefit of the Beneficiary during the Beneficiary’s lifetime, consistent with 42 U.S.C. § 1396p(d)(4).

5. TRUSTEE PROVISIONS

5.1 Acceptance & Standard of Care. Trustee accepts the trusteeship and shall administer the Trust with the care, skill, and caution of a prudent person familiar with special needs trusts, in accordance with AS 13.36 and this Agreement.

5.2 Successor Trustee.
a. Designation. [NAME SUCCESSOR TRUSTEE] is designated as first successor trustee. Additional successors may be appointed in writing by Settlor (if living) or by majority vote of the Adult Remainder Beneficiaries.
b. Qualification. Any successor trustee must be eligible to serve under Alaska law and qualified to administer special needs trusts.
c. Assumption of Office. A successor trustee shall assume office upon written acceptance and filing of a notice of assumption with the currently acting trustee or, if none, with the Alaska probate court of proper jurisdiction.

5.3 Trustee Powers. Trustee shall have all powers granted under AS 13.36, subject to the limitations of this Agreement, including but not limited to:
1. Invest and reinvest Trust assets.
2. Employ agents, custodians, and professionals.
3. Compromise claims.
4. Make tax elections and allocations.
5. Execute instruments and delegate powers where prudent (§ 5.4).

5.4 Delegation. Trustee may delegate investment functions in compliance with AS 13.36.063, provided Trustee exercises reasonable care in selecting and monitoring the delegatee.

5.5 Compensation & Reimbursement. Trustee is entitled to reasonable compensation in accordance with a written fee schedule delivered to Settlor (if living) and shall be reimbursed for properly incurred expenses (§ 12.3).

6. DISTRIBUTIONS & SUPPLEMENTAL NEEDS STANDARDS

6.1 Discretionary Distributions. Trustee shall have sole and absolute discretion to distribute so much of the net income and principal of the Trust as Trustee deems advisable for the Beneficiary’s Supplemental Needs. The Beneficiary shall have no right to demand distributions.

6.2 Supplemental Needs Definition. Supplemental Needs include, but are not limited to: medical and dental services not covered by Government Assistance; rehabilitation; personal care attendants; vocational training; transportation; technological aids; adaptations to housing; recreation; travel; and any other goods or services that enhance the Beneficiary’s quality of life without compromising Government Assistance.

6.3 Benefit Preservation.
a. Trustee shall ascertain the effect of any proposed distribution on the Beneficiary’s Government Assistance before making or authorizing such distribution.
b. Trustee may make direct payments to vendors or providers rather than to the Beneficiary.
c. Trustee may refuse any distribution request that could reduce or eliminate Government Assistance, unless Trustee determines the benefit of the distribution outweighs such loss.

6.4 Prohibited Distributions. Trustee shall not make distributions that constitute “food and shelter” expenses creating in-kind support and maintenance (ISM) that would reduce SSI, unless Trustee first obtains competent benefits counsel and concludes the distribution is in the Beneficiary’s best interests.

6.5 Emergency Distributions. In emergencies threatening the Beneficiary’s health or safety, Trustee may make immediate distributions even if Government Assistance is reduced, provided Trustee documents the rationale in the Trust records.

7. PAYBACK / REMAINDER PROVISIONS

[// GUIDANCE: Select Option A for self-settled trusts; Option B for third-party trusts. Delete the unused option in final draft.]

OPTION A – Self-Settled (Payback) Trust
7.1 Medicaid Reimbursement. Upon the Beneficiary’s death, Trustee shall first pay from the remaining Trust Estate to the State(s) of Alaska (and any other state that has provided Medicaid) an amount equal to the total medical assistance paid on behalf of the Beneficiary, up to the residual Trust balance, consistent with 42 U.S.C. § 1396p(d)(4)(A).
7.2 Remainder Beneficiaries. After full satisfaction of § 7.1, any remaining Trust assets shall be distributed outright, per stirpes, to [DESIGNATED REMAINDER BENEFICIARIES].

OPTION B – Third-Party Trust (No Payback)
7.1 Remainder Distribution. Upon the Beneficiary’s death, the Trust shall terminate and the remaining Trust Estate shall be distributed outright, per stirpes, to [DESIGNATED REMAINDER BENEFICIARIES].

8. ADMINISTRATIVE PROVISIONS

8.1 Accounting & Reporting. Trustee shall keep full and accurate books and records and shall provide annual written accountings to (i) the Beneficiary or the Beneficiary’s legal representative, and (ii) the Alaska probate court if required by statute or court order.

8.2 Tax Treatment. Unless otherwise elected, the Trust shall be treated as a grantor trust under the Grantor Trust Rules. Trustee may obtain taxpayer identification numbers as needed and is authorized to file all required tax returns.

8.3 Bond & Insurance. No bond shall be required of any Trustee unless demanded by a court of competent jurisdiction, provided Trustee maintains errors-and-omissions coverage of at least [AMOUNT] per claim.

8.4 Investments. Trustee shall follow a prudent, diversified investment strategy suitable for a long-term supplemental needs trust.

9. REPRESENTATIONS & WARRANTIES

9.1 Settlor Representations. Settlor represents and warrants that:
a. Settlor has the legal capacity and authority to establish this Trust.
b. Assets transferred to the Trust are not subject to creditor claims or encumbrances except as disclosed on Schedule A.
c. This Agreement does not violate any court order or eligibility requirement applicable to the Beneficiary.

9.2 Trustee Representations. Trustee represents and warrants that:
a. Trustee is qualified and willing to serve and is not disqualified under Alaska law.
b. Trustee has reviewed the obligations herein and possesses the expertise to administer special needs trusts.

9.3 Survival. The representations and warranties in this Article 9 shall survive the execution of this Agreement and remain in effect while any obligations or liabilities hereunder exist.

10. COVENANTS & RESTRICTIONS

10.1 Fiduciary Duty. Trustee shall act solely in the interests of the Beneficiary and in compliance with AS 13.36.

10.2 Notice of Change in Circumstances. The Beneficiary or the Beneficiary’s legal representative shall promptly notify Trustee of any material change in the Beneficiary’s health, residence, or eligibility for Government Assistance. Trustee shall similarly notify the Beneficiary of any material Trust changes (§ 10.3).

10.3 Amendment Procedure.
a. Trustee may amend this Agreement solely to (i) comply with changes in federal or state law affecting special needs trusts, or (ii) correct administrative errors, provided that any amendment shall not affect the Trust’s irrevocability or increase Trustee compensation without required consents.
b. Amendments must be in a written instrument executed by Trustee and, if living and competent, Settlor, and delivered to the Beneficiary or the Beneficiary’s legal representative.

11. DEFAULT, REMOVAL & REMEDIES

11.1 Events of Default. An “Event of Default” occurs if Trustee:
1. Commits gross negligence, willful misconduct, or fraud;
2. Misapplies Trust funds; or
3. Fails to provide required accountings and, after 30 days’ written notice and opportunity to cure, continues such failure.

11.2 Removal. Upon an Event of Default, the Beneficiary (if competent), Settlor (if living), or a majority of the Remainder Beneficiaries may petition the Alaska probate court to remove Trustee and appoint a successor.

11.3 Remedies. In addition to removal, the court may surcharge Trustee, order injunctive relief, or require any other equitable remedy to protect the Trust. Trustee shall not be liable for losses absent gross negligence or willful misconduct (§ 12.2).

11.4 Attorneys’ Fees. In any proceeding concerning the Trust, the court may award reasonable attorneys’ fees and costs from the Trust Estate or against a party personally, as justice and equity require.

12. RISK ALLOCATION

12.1 Indemnification of Trustee. To the extent not caused by Trustee’s gross negligence or willful misconduct, Trust assets shall indemnify and hold Trustee harmless from all claims, liabilities, and expenses, including reasonable attorneys’ fees, arising out of the administration of the Trust.

12.2 Limitation of Liability. Trustee’s liability shall be limited to the Trust Estate; no personal liability shall attach to Trustee for any action taken in good faith and with reasonable care.

12.3 Insurance. Trustee may purchase fiduciary liability insurance with premiums payable from the Trust.

12.4 Force Majeure. Trustee shall not be liable for failure to perform due to acts of God, governmental restrictions, or other events beyond Trustee’s reasonable control.

13. DISPUTE RESOLUTION

13.1 Governing Law. This Agreement and all Trust matters shall be governed by and construed in accordance with the laws of the State of Alaska (“state_trust_law”), without regard to conflict-of-law principles.

13.2 Forum Selection. Exclusive jurisdiction and venue for all Trust proceedings shall lie in the [NAME OF ALASKA SUPERIOR COURT] Probate Division (“state_probate_court”).

13.3 Limited Arbitration. Notwithstanding § 13.2, any dispute solely between current and former Trustees concerning fees or indemnification shall, at the election of any party, be resolved by binding arbitration administered by the American Arbitration Association under its Commercial Rules, conducted in [CITY, ALASKA]. The arbitral award may be confirmed by the state probate court.

13.4 Jury Waiver. No party shall demand a jury trial in the probate court with respect to any matter arising under this Agreement (“no_jury_probate”).

13.5 Injunctive Relief. Nothing herein shall prevent the probate court from issuing temporary, preliminary, or permanent injunctive relief to enforce this Agreement (“trust_enforcement”).

14. GENERAL PROVISIONS

14.1 Assignment. No party may assign or delegate any rights or obligations under this Agreement except as expressly provided herein.

14.2 Amendment & Waiver. Except as permitted under § 10.3, no amendment or waiver shall be effective unless in a written instrument signed by Trustee and, if living and competent, Settlor. No waiver shall constitute a waiver of any subsequent breach.

14.3 Severability. If any provision is held unenforceable, the remainder shall be given maximum effect consistent with the intent of the parties and applicable law.

14.4 Entire Agreement. This Agreement constitutes the entire understanding of the parties with respect to the subject matter and supersedes all prior agreements or understandings.

14.5 Counterparts; Electronic Signatures. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original. Facsimile, PDF, and electronic signatures shall be deemed originals for all purposes.

15. EXECUTION BLOCK

IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.

[// GUIDANCE: For corporate or institutional trustees, add officer title and authority statement.]

NOTARY ACKNOWLEDGMENTS

[// GUIDANCE: Insert Alaska statutory acknowledgment forms for each signatory.]

SCHEDULE A – INITIAL TRUST PROPERTY

[LIST OR ATTACH]

SCHEDULE B – SUCCESSOR TRUSTEE FEE SCHEDULE

[ATTACH, IF ANY]