IMPORTANT DISCLAIMER
This template is provided for general informational purposes only and does not constitute legal advice, tax advice, or create an attorney–client relationship. Because a special-needs trust must be custom-tailored to the beneficiary’s circumstances and current federal and Indiana law, a qualified attorney licensed in Indiana should review, adapt, and approve this document before it is executed or relied upon.
THIRD-PARTY SUPPLEMENTAL NEEDS TRUST AGREEMENT
(Indiana Governed – Trust Assets Only Liability)
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. Third-Party Supplemental Needs Trust Agreement (the “Trust”).
1.2 Date of Agreement. [● Effective Date] (“Effective Date”).
1.3 Settlor(s). [Full Legal Name(s), Address(es)] (“Settlor”).
1.4 Primary Beneficiary. [Full Legal Name, DOB, SSN-last-4] (“Beneficiary”), a person with a disability as defined under applicable law.
1.5 Trustee. [Full Legal Name, Address] (“Trustee”).
1.5.1 Initial Co-Trustee(s) (if any): [●].
1.5.2 Successor Trustee(s): [●].
1.6 Governing Law & Forum. This Trust is governed by the laws of the State of Indiana (without regard to conflict-of-law rules). Exclusive jurisdiction and venue for all judicial proceedings lie in the [County] Probate Court of Indiana.
[// GUIDANCE: Insert county of domicile of Beneficiary or principal place of trust administration for venue clarity.]
2. DEFINITIONS
(Alphabetical; cross-references are to section numbers.)
“Accounting Period” – each calendar year ending December 31 unless Trustee selects another annual period (§ 5.2).
“Administration Expenses” – all ordinary and necessary expenses of trust administration, including without limitation taxes, filing fees, and professional compensation (§ 7.3).
“Available Public Benefits” – Supplemental Security Income (SSI), Medicaid, Section 8 housing, SNAP, TANF, or any comparable program (§ 3.3).
“Beneficiary” – the individual named in § 1.4.
“Distribution Standard” – the discretionary standard set out in § 3.3.
“Government Benefits Agency” – any federal, state, or local authority administering Available Public Benefits (§ 3.6).
“Remainder Beneficiary(ies)” – the person(s) or entity(ies) entitled to receive the Trust Estate upon termination (§ 3.7).
“Special Needs” – needs that enhance the Beneficiary’s quality of life but are not regularly provided by Available Public Benefits (§ 3.3).
“Spendthrift Clause” – the restriction in § 3.5.
“Trust” – this trust agreement as amended from time to time.
“Trust Assets” – all property transferred to the Trust, together with reinvestments and accretions (§ 3.1).
“Trustee” – the person(s) serving from time to time pursuant to § 5.1.
3. OPERATIVE PROVISIONS
3.1 Creation & Funding.
(a) Settlor hereby transfers to Trustee the property described on Schedule A attached hereto, to hold in trust under the terms of this Agreement.
(b) Additional irrevocable gifts may be added at any time by Settlor or any third party with Trustee’s consent, provided no contributions are made by Beneficiary or Beneficiary’s spouse.
3.2 Irrevocability. This Trust is irrevocable. Settlor retains no reversionary interest.
3.3 Distribution Standard (Supplemental Needs).
(a) Sole Discretion. Trustee shall apply such amounts of net income and principal as Trustee, in Trustee’s sole and absolute discretion, determines are advisable for the Beneficiary’s Special Needs.
(b) Prohibition on Support Obligation. No distribution shall be made that would supplant or replace Available Public Benefits, or be considered “countable” income or resources under 42 U.S.C. § 1382b or comparable regulations, unless Trustee determines that (i) such distribution is clearly in the Beneficiary’s best interest, and (ii) the potential loss or reduction of benefits is immaterial.
(c) Non-Exhaustion. Trustee is not required to treat income and principal equally and may elect to distribute principal before income or vice-versa.
3.4 Direct Payments to Vendors. Where practicable, Trustee shall pay vendors of goods or services directly on behalf of Beneficiary to avoid in-kind support and maintenance reductions.
3.5 Spendthrift Protection. To the maximum extent permitted by law, no interest of any Beneficiary, whether principal or income, shall be subject to voluntary or involuntary assignment, alienation, pledge, attachment, or creditors’ claims.
3.6 Government Reporting. Trustee shall make such reports, notices, and accountings to any Government Benefits Agency as may be required to maintain Beneficiary’s eligibility.
3.7 Termination & Remainder.
(a) Automatic Termination. This Trust shall terminate upon the first to occur of (i) Beneficiary’s death, or (ii) exhaustion of Trust Assets.
(b) Remainder Distribution. Upon termination, Trustee shall distribute remaining Trust Assets to the following Remainder Beneficiaries free of trust:
(i) [NAME] – [Percentage]
(ii) [NAME] – [Percentage]
[Add rows as needed]
(c) No Medicaid Payback. Because no Trust Assets will have originated from Beneficiary, no state payback is required; provided, however, Trustee shall satisfy any valid liens lawfully imposed on the Trust itself before making remainder distributions.
3.8 Trustee Compensation & Reimbursement. Trustee is entitled to reasonable compensation in accordance with Indiana Code § [placeholder] or prevailing institutional fee schedules and shall be reimbursed for properly incurred Administration Expenses.
3.9 Delegation & Professional Assistance. Trustee may retain investment advisers, care managers, and other professionals and may delegate investment functions consistent with Indiana’s prudent investor standard.
4. REPRESENTATIONS & WARRANTIES
4.1 Settlor.
(a) Authority. Settlor possesses full legal capacity to execute and fund this Trust.
(b) No Contravention. Execution and funding do not violate any agreement or court order binding on Settlor.
4.2 Trustee.
(a) Qualification. Trustee is qualified and willing to serve in Indiana.
(b) Fiduciary Commitment. Trustee accepts the fiduciary duties imposed by Indiana law and this Agreement.
4.3 Survival. The representations and warranties in this Article IV survive execution and are deemed reaffirmed upon each subsequent transfer to the Trust.
5. COVENANTS & RESTRICTIONS
5.1 Acceptance & Successor Trustees.
(a) Written Acceptance. Each Trustee must execute a written Acceptance of Trust and file it with the Trust records.
(b) Successor Appointment. If no named successor is able or willing to serve, a majority of adult Remainder Beneficiaries may appoint a qualified successor; failing appointment, the [County] Probate Court may do so.
5.2 Accounting & Reporting.
(a) Annual Account. Within 90 days after each Accounting Period, Trustee shall deliver a written account to Beneficiary (if legally competent), Conservator/Guardian, and each Remainder Beneficiary who has attained age 18.
(b) Objection Period. Any objection must be delivered within 60 days after receipt of the account; failure to object constitutes approval.
5.3 Investment Standard. Trustee shall invest and reinvest Trust Assets in good faith, exercising the judgment of a prudent investor, taking into account the unique supplemental needs purpose of the Trust.
5.4 Bond. No bond shall be required of any individual Trustee unless all adult Remainder Beneficiaries unanimously request it or a court of competent jurisdiction orders it.
5.5 Notices. Written notices under this Agreement must be sent by certified mail or equivalent traceable delivery service to the recipient’s last known address.
6. DEFAULT & REMEDIES
6.1 Events of Default. Each of the following constitutes a “Trustee Default”:
(a) Breach of fiduciary duty;
(b) Incapacity, resignation without qualified successor, or death of individual Trustee;
(c) Failure to account or distribute as required in § 5.2 or § 3.3 after 30 days’ written notice and opportunity to cure.
6.2 Remedies. Upon a Trustee Default and failure to cure, any Interested Party (Beneficiary, legal guardian, or adult Remainder Beneficiary) may:
(a) Petition the Probate Court for suspension, removal, or surcharge;
(b) Seek injunctive relief to protect Trust Assets and Beneficiary’s eligibility;
(c) Recover reasonable attorney fees and court costs from the Trust Assets, subject to court approval.
7. RISK ALLOCATION
7.1 Indemnification of Trustee. To the fullest extent allowed by Indiana law, Trustee and its agents are indemnified out of the Trust Assets against all claims, liabilities, and expenses (including reasonable attorney fees) arising out of proper administration, except to the extent caused by Trustee’s willful misconduct or gross negligence.
7.2 Limitation of Liability. Trustee’s liability is limited to the extent of the Trust Assets; no personal liability attaches for obligations incurred in a fiduciary capacity.
7.3 Insurance. Trustee may purchase fiduciary liability insurance payable from the Trust Assets.
7.4 Force Majeure. Trustee is excused from performance delays caused by events beyond Trustee’s reasonable control, including without limitation acts of God, natural disasters, or governmental actions affecting financial markets.
8. DISPUTE RESOLUTION
8.1 Governing Law. Indiana substantive law governs all matters.
8.2 Forum Selection. Exclusive forum is the [County] Probate Court of Indiana.
8.3 Limited Arbitration.
(a) Scope. Non-equitable disputes involving monetary surcharges not exceeding $100,000 shall be resolved by binding arbitration administered by the American Arbitration Association, held in [City], Indiana.
(b) Carve-Out. Issues relating to trust reformation, removal of Trustee, injunctive relief, or matters requiring court supervision remain within Probate Court jurisdiction.
(c) Costs. Arbitration costs are payable from the Trust unless the arbitrator reallocates them.
8.4 Jury Trial Waiver. Consistent with probate practice, the parties knowingly waive any right to a jury trial in any matter arising under this Trust.
8.5 Injunctive Relief. Nothing herein limits the Probate Court’s equitable power to issue temporary, preliminary, or permanent injunctive relief to enforce this Trust or protect Beneficiary’s government-benefit eligibility.
9. GENERAL PROVISIONS
9.1 Amendments. This Trust may be amended only (a) by written instrument executed by Trustee and Settlor prior to Settlor’s death or incapacity, and (b) with court approval if required to preserve Beneficiary’s eligibility or to comply with future statutory or regulatory changes.
9.2 Waiver. No waiver of a provision is effective unless in writing; a waiver of one occasion is not a waiver of any subsequent occasion.
9.3 Assignment. Interests in this Trust are non-assignable except as expressly provided.
9.4 Successors & Assigns. The terms bind and inure to the benefit of all successors, personal representatives, and permitted assigns.
9.5 Severability. If any provision is held invalid, the remaining provisions remain enforceable, and the invalid provision shall be reformed to the minimum extent necessary to effect the original intent.
9.6 Entire Agreement. This document constitutes the entire agreement concerning the Trust; all prior oral or written statements are merged herein.
9.7 Counterparts; Electronic Signatures. This Trust may be executed in counterparts, each of which is an original. Signatures transmitted via facsimile, PDF, or verified e-signature platform will be treated as originals.
10. EXECUTION BLOCK
IN WITNESS WHEREOF, the Settlor and Trustee have executed this Trust on the Effective Date.
SETTLOR
[NAME], Settlor
TRUSTEE
[NAME], Trustee
INDIVIDUAL CO-TRUSTEE (if any)
[NAME], Co-Trustee
(Additional signature blocks for co-trustees as needed)
STATE OF INDIANA )
) SS:
COUNTY OF [●] )
On this ___ day of ____, 20__, before me, the undersigned Notary Public, personally appeared [Settlor / Trustee] who acknowledged the execution of the foregoing instrument for the purposes therein contained.
Notary Public
My Commission Expires: _
County of Residence: ____
[// GUIDANCE: Verify Indiana notarial wording and witness requirements under Ind. Code § 33-42-9; insert additional witness lines if local practice or institutional trustee policy requires.]
SCHEDULE A
(Property Transferred to Trust)
- Cash: $[●] deposited to Trust Account #[●] at [Institution].
- Brokerage Account: [●].
- Life Insurance Policy on Settlor (# [●]); Trustee named as owner and beneficiary.
- [Add items as applicable.]
[// GUIDANCE: Attach physician’s letter or Social Security disability determination to confirm Beneficiary’s disability status, if available, for administrative convenience.]
END OF DOCUMENT