Special Needs Trust - Colorado

COLORADO THIRD-PARTY SPECIAL NEEDS TRUST

Before you use this: Fund this version only with property belonging to someone other than the beneficiary or the beneficiary's spouse. A trust funded with either person's assets needs a different instrument and eligibility review. Have a Colorado attorney review the beneficiary's current benefits before funding.

This Irrevocable Special Needs Trust is made on [__/__/____] by [SETTLOR FULL LEGAL NAME] of [ADDRESS] (Settlor) and [TRUSTEE FULL LEGAL NAME] of [ADDRESS] (Trustee). The Settlor now delivers the cash identified in Schedule A to the Trustee, who accepts it as trust property.

1. Creation, purpose, and funding

The trust is named [TRUST NAME]. The Trustee shall hold the Schedule A cash, any later contributions properly transferred and accepted, and their proceeds for [BENEFICIARY FULL LEGAL NAME], born [__/__/____], of [ADDRESS] (Beneficiary). The Settlor owns the initial property, is not the Beneficiary or the Beneficiary's spouse, and intends the trust to supplement the Beneficiary's care and quality of life. The Trustee's signed receipt in Schedule A confirms actual delivery. Listing an asset alone does not transfer title.

The Trustee shall not accept property belonging to the Beneficiary or the Beneficiary's spouse into this third-party trust. The Settlor retains no power to revoke or amend the trust and no right to distributions. The Beneficiary has no power to revoke, assign, or direct distributions from the trust.

2. Distributions during the Beneficiary's life

The Trustee may distribute income or principal for the Beneficiary's health, education, care, housing, recreation, and other needs as the Trustee determines in good faith. Payments may be made to providers or directly to the Beneficiary. The Trustee should consider how a proposed distribution will affect means-tested benefits, obtain current program guidance when needed, and document the decision. If a distribution may reduce benefits, the Trustee may still make it when the Trustee determines it serves the Beneficiary's interests after weighing that effect. No provision guarantees benefit eligibility or prevents an agency from applying its own rules.

The Beneficiary has no right to a fixed payment amount. Undistributed income is added to principal. A nonbinding letter of intent may help the Trustee understand the Beneficiary's preferences but cannot change the dispositive terms here.

3. Spendthrift

No beneficiary may voluntarily transfer an interest before receipt, and no creditor may involuntarily reach the interest before receipt, except to the extent applicable law permits. Colorado's special needs rule in C.R.S. § 15-5-503(2.5) and any other applicable exceptions control. The Trustee shall apply distributions for the Beneficiary's benefit when advisable.

4. Trustee's administration and reports

The Trustee shall act in good faith, prudently manage trust property, and keep it separate from personal property. Subject to fiduciary duties, the Trustee may retain, invest, insure, sell, and manage assets, hire advisers, pay reasonable expenses, and exercise powers allowed by C.R.S. § 15-5-815. The Trustee shall maintain records of property, receipts, expenses, and distributions.

The Trustee shall give the notices required by C.R.S. § 15-5-813, including notice of trusteeship acceptance and the irrevocable trust's existence to qualified beneficiaries within the statutory periods. At least annually and at termination, the Trustee shall report to distributees or permissible distributees of income or principal, and to other qualified beneficiaries who request a report, as required by that section. A report shall include trust property, liabilities, receipts, disbursements, compensation, and an asset list with market values if feasible.

5. Successor trustees

The Trustee may resign on at least thirty days' notice to qualified beneficiaries, the living Settlor, and any cotrustee, or with court approval. A Settlor, cotrustee, or beneficiary may petition for removal under C.R.S. § 15-5-706.

If the Trustee dies, resigns, becomes unable to serve, or is removed, [FIRST SUCCESSOR TRUSTEE FULL NAME] of [ADDRESS] shall serve. If unavailable, [SECOND SUCCESSOR TRUSTEE FULL NAME] of [ADDRESS] shall serve. If no named successor can serve and no cotrustee remains, a successor may be selected by unanimous agreement of the qualified beneficiaries or appointed by the court, in that order, under C.R.S. § 15-5-704(3). A successor shall sign a written acceptance and take control of trust property and records.

6. Death distribution and termination

The trust terminates when the Beneficiary dies or the trust estate is exhausted. On the Beneficiary's death, the Trustee shall pay proper final trust expenses and distribute 100% of the balance to [PRIMARY REMAINDER BENEFICIARY FULL LEGAL NAME] of [ADDRESS], if living or in existence. If that recipient cannot take, the Trustee shall distribute 100% of the balance to [ALTERNATE REMAINDER BENEFICIARY OR CHARITY FULL LEGAL NAME] of [ADDRESS]. Complete the alternate recipient before signing. The Trustee may retain a reasonable reserve for debts, expenses, and taxes, then distribute any unused reserve under this Section. This third-party trust imposes no automatic Medicaid payback.

7. Liability and governing law

Colorado law governs this trust. The Trustee is not excused for breach committed in bad faith or with reckless indifference to the purposes of the trust or interests of beneficiaries. An exculpatory term inserted through abuse of a fiduciary or confidential relationship is unenforceable under C.R.S. § 15-5-1008. Trustee personal liability for trust administration torts or property obligations is determined under C.R.S. § 15-5-1010(2), including whether the Trustee was personally at fault.

8. Signatures

The Settlor and Trustee intend this signed instrument and the delivered Schedule A cash to create the trust now.

Settlor signature: ______________________________ Date: [__/__/____]

Printed name: [SETTLOR FULL LEGAL NAME]

Trustee signature and acceptance: ______________________________ Date: [__/__/____]

Printed name: [TRUSTEE FULL LEGAL NAME]

Schedule A — Initial property and Trustee receipt

Cash amount delivered to Trustee: $[AMOUNT]

Delivery method and date: [METHOD], [__/__/____]

Trust account or holding location: [ACCOUNT OR LOCATION]

The Trustee acknowledges actual receipt of the cash identified above as trust property.

Trustee receipt signature: ______________________________ Date: [__/__/____]