DISTRICT OF COLUMBIA
SUPPLEMENTAL (SPECIAL) NEEDS TRUST AGREEMENT
(Third‐Party Funded)
[// GUIDANCE: This template is designed for use in the District of Columbia and is drafted to preserve a Beneficiary’s eligibility for means-tested government benefits such as SSI and Medicaid. Customize all bracketed terms and review carefully for client-specific facts before execution.]
TABLE OF CONTENTS
- Document Header
- Definitions
- Operative Provisions
- Representations & Warranties
- Covenants & Restrictions
- Default & Remedies
- Risk Allocation
- Dispute Resolution
- General Provisions
- Execution Block
1. DOCUMENT HEADER
1.1 Title
DISTRICT OF COLUMBIA SUPPLEMENTAL (SPECIAL) NEEDS TRUST AGREEMENT
1.2 Parties
This Trust Agreement (“Agreement”) is made effective as of [EFFECTIVE DATE] (“Effective Date”) by and between:
(a) [SETTLOR NAME], residing at [ADDRESS] (“Settlor”); and
(b) [TRUSTEE NAME], residing at [ADDRESS] or having a principal office at [ADDRESS] (“Trustee”).
The Beneficiary is [BENEFICIARY NAME], born [DOB], SSN [SSN], who has been determined to be disabled within the meaning of 42 U.S.C. § 1382c(a)(3).
1.3 Recitals
A. Settlor desires to establish an irrevocable trust for the sole benefit of the Beneficiary to supplement, and not supplant, any federal, state, or local government benefits.
B. The Trustee is willing to accept the trusteeship on the terms set forth herein.
C. This Agreement is intended to qualify as a “supplemental needs trust” under applicable District of Columbia law and federal law, including 42 U.S.C. § 1396p.
D. All property transferred to the Trust shall constitute the “Trust Estate” and shall be held, administered, and distributed in accordance with this Agreement.
2. DEFINITIONS
For purposes of this Agreement:
“Accountings” – Defined in § 5.3.
“Alternate Trustee” – Any successor trustee appointed under § 3.9.
“Beneficiary” – The individual identified in § 1.2 whose disability qualifies under 42 U.S.C. § 1382c(a)(3).
“Code” – The Internal Revenue Code of 1986, as amended.
“Distribution Standard” – The discretionary standard set forth in § 3.4.
“Government Benefits” – Supplemental Security Income (SSI), Medicaid, SNAP, Section 8 housing, or any similar means-tested public assistance program.
“Probate Court” – The Probate Division of the Superior Court of the District of Columbia.
“Qualified Expenses” – Goods or services that enhance the Beneficiary’s quality of life but are not covered by Government Benefits, as more fully enumerated in § 3.5.
“Special Needs” – The Beneficiary’s supplemental requirements beyond basic support and maintenance.
“State” – The District of Columbia.
“Trust” – This Supplemental Needs Trust created by this Agreement.
“Trust Assets” – All property, tangible or intangible, now or hereafter transferred to the Trust, together with all increments and replacements thereof.
“Trustee” – The trustee identified in § 1.2 and any properly appointed successor.
3. OPERATIVE PROVISIONS
3.1 Funding
3.1.1 Initial Funding. Settlor hereby transfers [DESCRIPTION OF PROPERTY/CASH] to the Trustee to be held as Trust Assets.
3.1.2 Additional Contributions. Any person other than the Beneficiary may, with Trustee’s consent, contribute additional assets; all such contributions shall be subject to the terms of this Agreement.
3.2 Irrevocability
This Trust is irrevocable. Settlor expressly relinquishes all retained incidents of ownership and any right to alter, amend, revoke, or terminate the Trust except as provided herein.
3.3 Spendthrift Protection
Pursuant to D.C. Code §§ 19-1305.01–.05, the Trust shall be a spendthrift trust. No interest of the Beneficiary shall be subject to assignment, garnishment, or attachment prior to actual distribution.
3.4 Trustee’s Discretion; Distribution Standard
The Trustee shall have sole and absolute discretion to make or withhold distributions of income and/or principal for the Beneficiary’s Special Needs. No distribution shall be made that would:
(a) Count as “income” or “resource” under 20 C.F.R. §§ 416.1102, 416.1201, or successor regulations, if such counting would reduce or eliminate Government Benefits; or
(b) Disqualify or reduce the Beneficiary’s eligibility for Government Benefits unless the Trustee, after consultation with benefits counsel, determines such distribution is in the Beneficiary’s best interests.
3.5 Qualified Expenses
Qualified Expenses may include, without limitation: medical equipment not otherwise covered; therapy, education, transportation, personal care attendants, specialized furniture, recreation, vacations accompanied by a caregiver, legal and advocacy services, and other supplemental items.
[// GUIDANCE: Consider appending a schedule of sample Qualified Expenses for administrative ease.]
3.6 Prohibited Expenditures
The Trustee shall not distribute Trust Assets for food or shelter if such payments would be treated as “in-kind support and maintenance” under 20 C.F.R. § 416.1130, unless the Trustee determines, after consulting benefits counsel, that the resulting reduction in benefits is acceptable.
3.7 Trust Accounting & Records
The Trustee shall keep accurate records and furnish annual Accountings to:
(a) The Beneficiary (or court-appointed guardian);
(b) The Settlor, during Settlor’s lifetime; and
(c) The Probate Court upon request.
3.8 Tax Matters
3.8.1 Grantor Trust Status. Unless elected otherwise, the Trust shall be treated as a grantor trust under Subpart E, Part I, Subchapter J, Chapter 1 of the Code.
3.8.2 Tax Identification. The Trustee shall obtain and use a separate EIN unless grantor status is elected.
3.9 Trustee Succession
3.9.1 Resignation. The Trustee may resign upon 30-days’ written notice to the Settlor (if living) and Beneficiary.
3.9.2 Removal. The Probate Court, Settlor (if living), or a majority of the Advisory Committee (if appointed) may remove a Trustee for cause.
3.9.3 Appointment of Successor. Upon vacancy, [SUCCESSOR APPOINTMENT MECHANISM] shall designate a qualified Alternate Trustee.
3.10 Termination
3.10.1 Lifetime Termination. The Trust shall terminate upon the Beneficiary’s death or earlier exhaustion of Trust Assets.
3.10.2 Remainder Beneficiaries. Upon termination, remaining Trust Assets shall be distributed to [REMAINDER BENEFICIARIES], subject to § 3.10.3.
3.10.3 Medicaid Pay-Back (if Required). If federal or State law requires reimbursement for Medicaid benefits correctly paid on behalf of the Beneficiary, the Trustee shall satisfy such obligations prior to any remainder distribution.
4. REPRESENTATIONS & WARRANTIES
4.1 Settlor represents that:
(a) Settlor is the legal owner of property conveyed;
(b) No litigation or liens encumber the contributed assets; and
(c) The Beneficiary is expected to remain eligible for Government Benefits if the Trust is administered as herein provided.
4.2 Trustee represents that:
(a) Trustee is duly qualified under D.C. Code § 19-1307.01;
(b) Trustee is not an excluded person under any federal or State program affecting special needs trusts; and
(c) Trustee has received and reviewed this Agreement and will administer the Trust in conformity with applicable law.
4.3 Survival. The foregoing representations and warranties shall survive execution of this Agreement and the transfer of assets to the Trust.
5. COVENANTS & RESTRICTIONS
5.1 Trustee’s Affirmative Covenants
(a) Administer the Trust solely in the Beneficiary’s best interests and in compliance with applicable law;
(b) File all required tax returns;
(c) Maintain adequate insurance on Trust Assets as prudent.
5.2 Negative Covenants
The Trustee shall not:
(a) Lend Trust Assets to Settlor or Trustee;
(b) Purchase non-prudent or speculative investments;
(c) Commingle Trust Assets with personal assets.
5.3 Notice & Reporting
The Trustee shall provide written notice to the Beneficiary at least 30 days before any proposed change of situs or governing law. Accountings shall be delivered within 120 days after each calendar year-end.
6. DEFAULT & REMEDIES
6.1 Events of Default
(a) Material breach of fiduciary duties;
(b) Failure to provide required Accountings within 60 days after written demand;
(c) Misappropriation or self-dealing.
6.2 Cure Period
The Trustee shall have 30 days from receipt of notice of default to cure unless the default is incapable of cure or constitutes willful misconduct.
6.3 Remedies
If a default is not cured:
(a) Immediate removal of Trustee and appointment of Alternate Trustee;
(b) Surcharge against Trustee to the extent of damages, limited to Trust Assets;
(c) Injunctive relief from the Probate Court to prevent dissipation of assets.
6.4 Attorneys’ Fees
Reasonable attorneys’ fees and costs incurred to enforce this Agreement shall be paid from Trust Assets, except where the Trustee is found to have engaged in willful misconduct, in which case such fees shall be the personal obligation of the Trustee.
7. RISK ALLOCATION
7.1 Indemnification of Trustee
To the fullest extent allowed by law, the Trustee and its agents shall be indemnified and held harmless from any claim, demand, loss, or expense arising out of the administration of this Trust, except for willful misconduct or gross negligence. Indemnification shall be limited to Trust Assets.
7.2 Limitation of Liability
The Trustee’s liability shall in no event exceed the value of the Trust Assets under Trustee’s control at the time the cause of action arises.
7.3 Insurance
The Trustee may, at Trust expense, purchase fiduciary liability insurance.
7.4 Force Majeure
The Trustee shall not be liable for any delay or failure in performance caused by acts of God, governmental action, pandemic, war, civil disturbance, or any event beyond the Trustee’s reasonable control.
8. DISPUTE RESOLUTION
8.1 Governing Law
This Agreement and all disputes hereunder shall be governed by the laws of the District of Columbia, including the District of Columbia Uniform Trust Code (D.C. Code §§ 19-1301.01 et seq.).
8.2 Forum Selection
Exclusive jurisdiction and venue shall lie in the Probate Division of the Superior Court of the District of Columbia.
8.3 Limited Arbitration
(a) Scope. Disputes solely relating to investment performance or discretionary distribution decisions shall, upon written demand by any interested party, be submitted to binding arbitration administered by [ARBITRATION ADMINISTRATOR] in Washington, DC, under its [RULES] in effect at the time.
(b) Exclusions. Matters involving removal of a Trustee, trust termination, or court supervision are expressly excluded and shall remain under Probate Court jurisdiction.
(c) Confirmation. Any arbitration award may be confirmed in the Probate Court.
8.4 Jury Waiver
Not applicable—matters within Probate Court jurisdiction shall be tried without a jury.
8.5 Injunctive Relief
Nothing herein shall impair any party’s right to seek temporary, preliminary, or permanent injunctive relief from the Probate Court to enforce this Agreement or prevent irreparable harm.
9. GENERAL PROVISIONS
9.1 Amendment & Waiver
The Trust may be amended only:
(a) To comply with changes in federal or State law affecting Government Benefits; and
(b) By written instrument executed by the Trustee and, if living, the Settlor, with Probate Court approval. No waiver of any provision shall be deemed a continuing waiver unless so stated in writing.
9.2 Assignment
No party may assign rights or delegate duties under this Agreement except as expressly provided.
9.3 Successors & Assigns
This Agreement shall bind and inure to the benefit of the parties’ permitted successors and assigns.
9.4 Severability
If any provision is held invalid by a court of competent jurisdiction, the remaining provisions shall remain enforceable, and the invalid provision shall be reformed to the minimum extent necessary to achieve the original intent.
9.5 Entire Agreement
This document constitutes the entire agreement regarding the Trust and supersedes all prior oral or written agreements.
9.6 Counterparts; Electronic Signatures
This Agreement may be executed in one or more counterparts, each deemed an original, together constituting one instrument. Signatures transmitted electronically (e.g., via DocuSign) shall be deemed originals.
10. EXECUTION BLOCK
IN WITNESS WHEREOF, the Settlor and Trustee have executed this District of Columbia Supplemental Needs Trust Agreement as of the Effective Date.
SETTLOR:
[SETTLOR NAME]
Date: _____
TRUSTEE:
[TRUSTEE NAME], Trustee
Date: _____
NOTARY ACKNOWLEDGEMENT
District of Columbia, ss:
On this _ day of _, 20__, before me, the undersigned notary public, personally appeared [SETTLOR NAME] and [TRUSTEE NAME], known to me (or satisfactorily proven) to be the persons whose names are subscribed to the foregoing instrument, and acknowledged that they executed the same for the purposes therein contained.
Notary Public
My Commission Expires: _______
[// GUIDANCE: DC does not require witnesses for trust instruments, but you may add witness lines if lender/benefit agencies prefer additional formality.]
END OF DOCUMENT