Special Needs Trust - Connecticut

CONNECTICUT SPECIAL NEEDS TRUST

(Discretionary Supplemental Care Trust – Third-Party Funded)

TABLE OF CONTENTS

I. Document Header
II. Definitions
III. Operative Provisions
IV. Representations & Warranties
V. Covenants & Restrictions
VI. Default & Remedies
VII. Risk Allocation
VIII. Dispute Resolution
IX. General Provisions
X. Execution Block

I. DOCUMENT HEADER

1.1 Trust Name. This trust shall be known as the “[TRUST NAME] Special Needs Trust” (the “Trust”).

1.2 Parties.
a. Grantor: [GRANTOR NAME], of [ADDRESS] (“Grantor”).
b. Trustee: [TRUSTEE NAME], of [ADDRESS] (“Trustee”).
c. Primary Beneficiary: [DISABLED BENEFICIARY NAME], d/o/b [DATE] (the “Beneficiary”).

1.3 Effective Date. This Trust is established and becomes irrevocable on [EFFECTIVE DATE] (the “Effective Date”).

1.4 Governing Law & Jurisdiction. This Trust shall be governed by and construed in accordance with the laws of the State of Connecticut pertaining to trusts and estates, without regard to its conflict-of-laws rules. Because this Trust is an inter vivos trust, the Superior Court has original jurisdiction over all matters relating to it pursuant to Conn. Gen. Stat. § 45a-499o(d); a Probate Court has concurrent jurisdiction only over the matters specified by statute, including compelling or approving a Trustee's account, removing a Trustee, and appointing a Successor Trustee. Probate Court venue is determined under Conn. Gen. Stat. § 45a-499p(c), which uses probate districts rather than counties.

1.5 Recitals.
a. The Beneficiary is a person with a disability as defined in 42 U.S.C. § 1382c(a)(3).
b. The Grantor desires to provide for the Beneficiary’s supplemental needs without disqualifying the Beneficiary from means-tested government benefits.
c. The Trustee is willing to hold and administer the Trust Estate subject to the terms set forth herein.

II. DEFINITIONS

Unless the context clearly requires otherwise, the following terms shall have the meanings set forth below. Capitalized terms used but not defined have the meanings assigned elsewhere in this Trust.

“Accounting” – A written statement of receipts, disbursements, assets, and liabilities of the Trust prepared in accordance with Section V.2.

“Beneficiary” – The individual identified in Section 1.2(c).

“Code” – The Internal Revenue Code of 1986, as amended.

“Discretionary Distribution” – Any distribution from the Trust made in the sole and absolute discretion of the Trustee pursuant to Section III.3.

“Government Benefits” – Any means-tested or needs-based federal, state, or local public assistance program, including but not limited to Supplemental Security Income (“SSI”), Medicaid (HUSKY C in Connecticut), Section 8 housing, SNAP, and similar programs.

“Supplemental Needs” – Expenses that enhance the Beneficiary’s quality of life but are not covered, or are inadequately covered, by Government Benefits, including but not limited to education, medical and dental care not otherwise provided, therapies, transportation, entertainment, and personal services.

“Trust Assets” – All property, real, personal, or mixed, tangible or intangible, transferred to the Trustee, including all additions, earnings, and proceeds.

III. OPERATIVE PROVISIONS

3.1 Creation & Funding. The Grantor hereby transfers the property listed on Schedule A (attached) to the Trustee, accepting no consideration other than the Trustee’s agreement to hold, manage, and distribute such property pursuant to this Trust. Additional assets may be added to the Trust at any time by the Grantor or any third party, subject to the Trustee’s written acceptance.

For any third-party funding option, assets of the Beneficiary's spouse are not third-party assets for SSI purposes under SSA POMS SI 01120.200. The Trustee shall not accept them under that option; refer any proposed contribution to benefits counsel for separate planning.

3.2 Purpose. The primary purpose of this Trust is to provide for the Beneficiary’s Supplemental Needs while preserving the Beneficiary’s eligibility for Government Benefits. The Trust shall be administered so as to supplement, not supplant, impair, or diminish such benefits.

3.3 Discretionary Distributions.
a. Standard. The Trustee shall have sole, absolute, and uncontrolled discretion to make or withhold Discretionary Distributions for the Beneficiary’s Supplemental Needs.
b. Prohibited Distributions. The Trustee shall not make any distribution that the Trustee knows or reasonably should know would:

1. Reduce or eliminate the Beneficiary’s eligibility for Government Benefits; or
 2. Be considered “income” or a “countable resource” under 20 C.F.R. §§ 416.1102–1201, except as permitted under applicable regulations.
c. Payment Method. Whenever feasible, the Trustee shall pay third-party vendors directly to avoid in-kind support and maintenance issues.

3.4 Spendthrift Protection. This Trust is a discretionary support trust for the Beneficiary, and, pursuant to Conn. Gen. Stat. § 52-321, no interest of the Beneficiary in the income or principal of the Trust shall be transferable or subject to the claims of creditors or governmental entities, except as expressly provided herein or by mandatory law.

3.5 Irrevocability. This Trust is irrevocable. The Grantor retains no power to alter, amend, revoke, or terminate the Trust, except as provided under Section IX.1 (Amendment for Compliance).

3.6 Termination. The Trust shall terminate upon the earliest to occur of:
a. The exhaustion of Trust Assets; or
b. The Beneficiary’s death.

3.7 Distribution on Termination.
a. Upon the Beneficiary’s death, after payment of any enforceable and non-exempt expenses permitted by applicable law, the remaining Trust Assets shall be distributed to the following remainder beneficiaries:

1. [REMAINDER BENEFICIARY 1] – [%]
 2. [REMAINDER BENEFICIARY 2] – [%]
 (collectively, the “Remainder Beneficiaries”).
b. If no Remainder Beneficiary survives the Beneficiary, the remainder shall pass to the Beneficiary’s estate.

3.8 Trustee Succession.
a. Initial Trustee. [TRUSTEE NAME] shall serve as Trustee.
b. Resignation. The Trustee may resign without court approval by giving at least thirty (30) days’ notice to the qualified beneficiaries, the Grantor (if living), and all cotrustees, or may resign with approval of a court having jurisdiction, as provided in Conn. Gen. Stat. § 45a-499vv(a).
c. Successor Trustee. If the Trustee resigns, is removed, or ceases to serve, the following individuals are nominated, in order, to serve as Successor Trustee:

1. [NOMINEE 1];
 2. [NOMINEE 2].
d. Corporate Fiduciary. If no individual qualifies, a licensed Connecticut corporate fiduciary may serve.
e. Bond. No bond shall be required of any Trustee unless a court finds that a bond is needed to protect the beneficiaries or is required by the Trust and has not been dispensed with, as provided in Conn. Gen. Stat. § 45a-499ss.

IV. REPRESENTATIONS & WARRANTIES

4.1 Grantor. The Grantor represents and warrants that:
a. The Grantor owns all property transferred to the Trust free of liens and adverse claims (except as disclosed to the Trustee);
b. The Grantor has full authority to establish this Trust; and
c. The establishment of this Trust does not constitute a fraudulent conveyance under applicable law.

4.2 Trustee. The Trustee represents and warrants that:
a. The Trustee accepts the fiduciary duties imposed by this Trust and Connecticut law;
b. The Trustee is not disqualified from serving under any law, regulation, or court order; and
c. The Trustee will administer the Trust in good faith, in the interests of the Beneficiary, and in accordance with the Connecticut Uniform Trust Code, Conn. Gen. Stat. §§ 45a-499a et seq., including the duty of good faith administration under § 45a-499e(b)(2), the duty of loyalty under § 45a-499bbb, and the duty of prudent administration under § 45a-499ddd.

4.3 Survival. The representations and warranties in this Article survive execution and continue throughout the Trust administration.

V. COVENANTS & RESTRICTIONS

5.1 Affirmative Covenants of Trustee. The Trustee shall:
a. Comply with all applicable federal and Connecticut fiduciary laws, including the Connecticut Uniform Prudent Investor Act (Conn. Gen. Stat. § 45a-541 et seq.);
b. Maintain accurate books and records;
c. Obtain professional advice (legal, tax, investment) when prudent; and
d. File all tax returns required under federal or state law.

5.2 Annual Reports. The Trustee shall send at least annual reports satisfying Conn. Gen. Stat. § 45a-499kkk(c) to the current beneficiaries and to other qualified beneficiaries who request them. The Trustee shall also deliver the report to the Beneficiary’s legal representative, if any, and the Grantor, if living. No routine Probate Court filing is required by this clause; an account shall be filed if ordered or submitted in a judicial accounting proceeding.

5.3 Negative Covenants. The Trustee shall not:
a. Engage in self-dealing or transactions prohibited by the duty of loyalty under Conn. Gen. Stat. § 45a-499bbb;
b. Loan Trust Assets to the Trustee or related parties;
c. Pledge Trust Assets as security for personal obligations; or
d. Use Trust Assets for any purpose other than as authorized in this Trust.

5.4 Notice of Benefit Changes. The Beneficiary (or legal representative) shall promptly notify the Trustee of any change in Government Benefits or disability status.

5.5 Opportunity to Cure. Before seeking removal of the Trustee for breach, the notifying party should provide written notice specifying the alleged breach and allow thirty (30) days to cure when practicable. This informal process does not restrict a person’s right to petition under Conn. Gen. Stat. § 45a-499ww or the court’s statutory powers, and it need not be followed when delay may cause harm.

VI. DEFAULT & REMEDIES

6.1 Events of Default. Each of the following constitutes a “Default”:
a. Material breach of fiduciary duty by the Trustee;
b. Failure to provide required Accountings within sixty (60) days after written request;
c. Misappropriation or gross mismanagement of Trust Assets; or
d. Insolvency or conviction of the Trustee of a crime involving dishonesty.

6.2 Remedies. Upon Default, the following remedies are available, cumulatively and not exclusively:
a. Removal of Trustee by a court having jurisdiction under Conn. Gen. Stat. §§ 45a-499o and 45a-499ww;
b. Appointment of a Successor Trustee;
c. Surcharge against the Trustee personally (limited by Article VII); and
d. Specific performance or injunctive relief to enforce Trust terms.

6.3 Attorney’s Fees. Attorney’s fees and costs may be charged to a party or the Trust Assets only to the extent awarded by a court, authorized by this Trust and applicable law, or properly reimbursable under Conn. Gen. Stat. § 45a-499zz.

VII. RISK ALLOCATION

7.1 Indemnification of Trustee. To the fullest extent permitted by law, the Trustee and each Successor Trustee are entitled to indemnification or reimbursement from the Trust Assets for liabilities and expenses properly incurred in administering or defending the Trust. This provision does not relieve a Trustee from liability to the extent an exculpatory term would be unenforceable under Conn. Gen. Stat. § 45a-499uuu or other applicable law.

7.2 Limitation of Liability. A Trustee’s personal liability is governed by Conn. Gen. Stat. § 45a-499www and other applicable law. A Trustee generally is not personally liable on a contract properly entered into in a disclosed fiduciary capacity unless the contract provides otherwise, and is personally liable for a tort or an obligation arising from ownership or control of Trust property only if personally at fault. This section does not create a blanket Trust-Assets cap for breach of trust or every other claim.

7.3 Insurance. The Trustee may purchase fiduciary liability insurance payable from Trust Assets if deemed prudent.

7.4 Force Majeure. Circumstances beyond the Trustee’s reasonable control may be considered in evaluating the Trustee’s conduct, but do not excuse the mandatory duty to act in good faith and in accordance with the terms and purposes of the Trust. The Trustee shall use reasonable efforts to protect Trust property and resume affected administration promptly.

VIII. DISPUTE RESOLUTION

8.1 Governing Law. Connecticut law governs all disputes.

8.2 Court and Venue. The Superior Court has original jurisdiction over all matters relating to this Trust pursuant to Conn. Gen. Stat. § 45a-499o(d). A Probate Court has concurrent jurisdiction only over the matters listed in that subsection. Any Probate Court petition shall identify a proper probate district under Conn. Gen. Stat. § 45a-499p(c); this Trust does not select a county-based Probate Court or confer subject-matter jurisdiction.

8.3 Limited Arbitration. Notwithstanding Section 8.2, purely financial accountings-related disputes exceeding $[AMOUNT] may, upon mutual written agreement made after the dispute arises, be resolved by binding arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules. The arbitrator shall apply Connecticut law. This clause does not displace mandatory court jurisdiction or powers under Conn. Gen. Stat. §§ 45a-499e and 45a-499o, and does not bar provisional relief from a court having jurisdiction. The award may be confirmed in any court of competent jurisdiction.

8.4 Jury Rights. This Trust contains no contractual jury waiver. Any right to a jury is determined by the claims, forum, and applicable law.

8.5 Injunctive Relief. Nothing in this Article restricts a party from seeking available temporary, preliminary, or permanent relief in the Superior Court or, for a matter within its concurrent statutory jurisdiction, the proper Probate Court.

IX. GENERAL PROVISIONS

9.1 Modification or Reformation for Compliance. If a governmental agency asserts that a provision of this irrevocable Trust affects the Beneficiary’s eligibility for Government Benefits, the Trustee may petition a court having jurisdiction for modification or reformation only on a ground and subject to the findings authorized by Conn. Gen. Stat. §§ 45a-499ee to 45a-499kk. No retroactive effect or benefits determination is guaranteed, and any agency retains its authority to apply governing program law.

9.2 Assignment. No party may assign, delegate, or transfer any right or obligation hereunder except as expressly permitted.

9.3 Severability. If any provision is held invalid or unenforceable, the remaining provisions shall remain in full force and effect, and the invalid provision shall be construed, to the maximum extent possible, in a manner consistent with the original intent.

9.4 Entire Agreement. This Trust constitutes the entire understanding among the parties and supersedes all prior oral or written agreements concerning its subject matter.

9.5 Counterparts. This Trust may be executed in one or more counterparts, each of which is deemed an original, and all of which together constitute one instrument. Signatures delivered by electronic means shall be deemed effective to the fullest extent permitted by law and the Connecticut Uniform Electronic Transactions Act, Conn. Gen. Stat. § 1-266 et seq.

X. EXECUTION BLOCK

IN WITNESS WHEREOF, the parties execute this Trust as of the Effective Date.

GRANTOR:
_______________________________
[GRANTOR NAME]
Date: _________________________

TRUSTEE:
_______________________________
[TRUSTEE NAME]
Date: _________________________

WITNESS 1:
_______________________________
Name: _________________________
Date: _________________________

WITNESS 2:
_______________________________
Name: _________________________
Date: _________________________

State of Connecticut, County of ______________, ss: [COUNTY], on this ___ day of __________, 20___

On this date, before me, the undersigned, a Notary Public in and for said State, personally appeared [GRANTOR NAME] and [TRUSTEE NAME], each personally known to me or proved by satisfactory evidence to be the persons whose names are subscribed to the within instrument, and acknowledged that they executed the same for the purposes therein contained.

_______________________________
Notary Public
My Commission Expires: _____________

Schedule A – Initial Trust Corpus