Special Needs Trust

IRREVOCABLE SUPPLEMENTAL (SPECIAL) NEEDS TRUST AGREEMENT

(Louisiana – La. Rev. Stat. § 9:1721 et seq.; 42 U.S.C. § 1396p(d)(4)(A))

TABLE OF CONTENTS

1. Document Header
2. Definitions
3. Establishment and Purpose of Trust
4. Trust Corpus and Funding
5. Irrevocability; Spendthrift Protection
6. Distributions for Supplemental Needs
7. Prohibitions on Certain Distributions
8. Trustee Powers, Duties, and Standards of Care
9. Accounts, Records, and Tax Matters
10. Bond; Insurance
11. Successor Trustees; Resignation and Removal
12. Indemnification; Limitation of Liability
13. Default and Remedies
14. Dispute Resolution
15. Miscellaneous Provisions
16. Execution Block

1. DOCUMENT HEADER

1.1 Parties.
This Irrevocable Supplemental (Special) Needs Trust Agreement (“Agreement”) is made and entered into effective as of [EFFECTIVE DATE] (“Effective Date”) by and among:

a. Settlor: [SETTLOR FULL LEGAL NAME], a resident of the State of Louisiana (“Settlor”);
b. Initial Trustee: [TRUSTEE FULL LEGAL NAME], whose mailing address is [TRUSTEE ADDRESS] (“Trustee”); and
c. Beneficiary: [BENEFICIARY FULL LEGAL NAME], born [DOB], a person with a disability as defined under 42 U.S.C. § 1382c(a)(3) (“Beneficiary”).

1.2 Recitals.
A. Settlor desires to establish an irrevocable trust under the Louisiana Trust Code, La. Rev. Stat. §§ 9:1721 et seq., for the primary purpose of providing for Beneficiary’s supplemental needs without impairing Beneficiary’s eligibility for means-tested governmental assistance programs, including Medicaid and Supplemental Security Income (“SSI”).
B. Trustee is willing to serve pursuant to the terms of this Agreement.
C. The parties intend this Trust to qualify as a “third-party” supplemental needs trust; however, Section 6.7 contains an optional payback provision if conversion to a first-party trust becomes necessary.

NOW, THEREFORE, in consideration of the mutual covenants herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Settlor hereby irrevocably assigns, transfers, and delivers to Trustee the property described in Schedule A attached hereto, to hold, manage, and distribute as provided below.

2. DEFINITIONS

For ease of reference, capitalized terms have the meanings set forth below. Undefined capitalized terms shall have the meanings ascribed in the Louisiana Trust Code.

“Accounting Period” – Each calendar year ending December 31, or such other period designated by Trustee consistent with Section 9.1.

“Applicable Law” – Collectively, (i) the Louisiana Trust Code, La. Rev. Stat. §§ 9:1721–2252; (ii) federal statutes and regulations governing Medicaid and SSI, including 42 U.S.C. § 1396p; (iii) the Social Security Administration’s Program Operations Manual System (“POMS”); and (iv) any successor or related laws.

“Arbitrable Dispute” – Any dispute arising under this Agreement that is not exclusively within the jurisdiction of the District Court for the Parish of [PARISH] and is not a “Court-Reserved Matter” under Section 14.2.

“Court-Reserved Matter” – Any matter concerning construction, interpretation, modification, or termination of this Trust, or the removal or appointment of a Trustee, for which the Louisiana District Courts have exclusive succession or trust jurisdiction under La. Code Civ. Proc. art. 2811 et seq. and the Louisiana Trust Code.

“Discretionary Distribution” – A distribution solely within the Trustee’s discretion, pursuant to Article 6, to or for the benefit of Beneficiary.

“Government Benefits” – Medicaid, SSI, and any other means-tested public benefits for which Beneficiary is, or may become, eligible.

“Necessary Expenditure” – An expenditure required to preserve Trust property, comply with Applicable Law, or satisfy Trustee’s fiduciary duties.

“Supplemental Needs” – Those special needs of Beneficiary that are not provided by Government Benefits and that Trustee, in Trustee’s sole and absolute discretion, deems advisable to promote Beneficiary’s health, safety, welfare, and quality of life.

“Trust Assets” – All property held in trust from time to time, including income and principal.

3. ESTABLISHMENT AND PURPOSE OF TRUST

3.1 Creation. Settlor hereby establishes the “[BENEFICIARY NAME] Supplemental Needs Trust” (“Trust”) pursuant to La. Rev. Stat. §§ 9:1761 and 9:2001, effective upon Settlor’s execution of this Agreement and Trustee’s acceptance of the Trust Assets listed on Schedule A.

3.2 Purpose. The primary purpose of this Trust is to supplement, not supplant, Government Benefits available to Beneficiary and to enhance Beneficiary’s quality of life, consistent with Applicable Law.

3.3 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Louisiana, without regard to conflict-of-laws principles.

3.4 Situs and Administration. The situs of the Trust is [PARISH] Parish, Louisiana. Trustee shall maintain the principal place of administration in Louisiana unless otherwise agreed in writing by Settlor (if living) and approved by the District Court.

4. TRUST CORPUS AND FUNDING

4.1 Initial Funding. The property described in Schedule A, valued at approximately $[AMOUNT], constitutes the initial Trust corpus.

4.2 Additional Contributions. Settlor, and any other person with Trustee’s consent, may at any time contribute additional property to the Trust, provided such contributions are irrevocable and clearly designated as additions to Trust principal.

4.3 Separate Accounting. Trustee shall maintain a segregated accounting for any property contributed by Beneficiary or Beneficiary’s legal representative to ensure compliance with 42 U.S.C. § 1396p(d)(4)(A) if applicable.

5. IRREVOCABILITY; SPENDTHRIFT PROTECTION

5.1 Irrevocability. This Trust is irrevocable. Settlor expressly relinquishes all rights and powers, whether alone or in conjunction with others, to alter, amend, revoke, or terminate this Trust, except as provided in Section 15.2.

5.2 Spendthrift Clause. No interest of Beneficiary in the Trust shall be subject to voluntary or involuntary transfer, pledge, anticipation, or assignment, and shall not be liable for Beneficiary’s debts or obligations.

5.3 No Right to Demand Distributions. Beneficiary shall have no right to compel distributions from Trustee, and any attempted assignment of a beneficial interest shall be null and void.

6. DISTRIBUTIONS FOR SUPPLEMENTAL NEEDS

6.1 Discretionary Distributions. Trustee may, in Trustee’s sole and absolute discretion, make Discretionary Distributions of income or principal for Beneficiary’s Supplemental Needs, considering the availability of Government Benefits and Beneficiary’s other resources.

6.2 Prohibited Distributions. Trustee shall not make any distribution that would:
a. Render Beneficiary ineligible for Government Benefits, unless Trustee determines that the benefits of the distribution outweigh the loss of eligibility;
b. Satisfy a legal support obligation of any person; or
c. Be payable directly to Beneficiary except for de minimis amounts permitted under Applicable Law.

6.3 Priority of Expenditures. Necessary Expenditures shall take priority over Discretionary Distributions.

6.4 Purchase of Goods and Services. Trustee may purchase goods or services for Beneficiary’s benefit without distributing cash directly to Beneficiary.

6.5 Emergency Expenditures. In the event of a bona fide emergency affecting Beneficiary’s life or health, Trustee may make distributions notwithstanding Section 6.2, provided Trustee promptly seeks to restore eligibility or benefits thereafter.

6.6 Termination of Government Benefits. If Beneficiary becomes ineligible for Government Benefits for reasons unrelated to a distribution under this Trust, Trustee may, but is not required to, provide for Beneficiary’s full support and maintenance from Trust Assets.

6.7 OPTIONAL Payback Provision. Upon Beneficiary’s death, Trustee shall, prior to any other distribution, reimburse the Louisiana Department of Health, or any other state(s) that have provided Medicaid benefits to Beneficiary, to the extent required by 42 U.S.C. § 1396p(d)(4)(A) or successor law.

7. PROHIBITIONS ON CERTAIN DISTRIBUTIONS

7.1 Cash to Beneficiary. Except as expressly permitted by Applicable Law (currently up to $2,000 in countable resources for SSI), Trustee shall avoid distributing cash or cash-equivalent items directly to Beneficiary.

7.2 Food and Shelter. Trustee shall consult current POMS guidelines before paying for food or shelter expenses, and may elect to offset any resulting reduction in SSI benefits.

7.3 Taxes and Support Obligations of Others. Trust Assets shall not be used to discharge any legal obligation of Settlor or any third party.

8. TRUSTEE POWERS, DUTIES, AND STANDARDS OF CARE

8.1 Fiduciary Standard. Trustee shall administer the Trust as a prudent person would, consistent with La. Rev. Stat. § 9:2090 and the Louisiana Prudent Investor Rule, exercising reasonable care, skill, and caution.

8.2 Enumerated Powers. In addition to statutory powers, Trustee may:
a. Invest and reinvest Trust Assets;
b. Employ professionals and delegate powers as permitted by La. Rev. Stat. § 9:2091;
c. Settle or compromise claims;
d. Create reserves for taxes or expenses;
e. Execute instruments necessary or convenient to carry out Trustee’s duties; and
f. Exercise all powers reasonably necessary to accomplish the purposes of this Trust.

8.3 Duty to Inform and Account. Trustee shall provide an annual written accounting to Beneficiary (or Beneficiary’s legal representative) and, upon request, to the District Court for the Parish of [PARISH].

8.4 Compensation. Trustee shall be entitled to reasonable compensation as permitted by La. Rev. Stat. § 9:2088 and set forth on Schedule B, subject to court approval if required.

9. ACCOUNTS, RECORDS, AND TAX MATTERS

9.1 Accounting Period; Method. Trustee shall maintain books and records on a calendar-year basis in accordance with generally accepted accounting principles.

9.2 Tax Identification Number. Unless otherwise advised by counsel or certified public accountant, Trustee shall obtain a separate employer identification number for the Trust.

9.3 Income Tax Treatment. This Trust is intended to be a “complex trust” for federal income tax purposes unless otherwise indicated on Schedule C.

9.4 Tax Returns. Trustee shall cause all required tax returns and informational filings to be prepared and filed timely.

10. BOND; INSURANCE

10.1 Bond Requirement. Trustee [SHALL / SHALL NOT] be required to furnish bond in the amount of $[AMOUNT] or such other amount as the District Court may order.

10.2 Liability Insurance. Trustee shall maintain fiduciary liability insurance with limits not less than $[LIMIT] per claim.

11. SUCCESSOR TRUSTEES; RESIGNATION AND REMOVAL

11.1 Designation of Successor. If the office of Trustee becomes vacant, [SUCCESSOR TRUSTEE NAME] is nominated to serve as successor. Additional successors may be listed on Schedule D.

11.2 Resignation. Trustee may resign upon sixty (60) days’ written notice to Settlor (if living), Beneficiary’s legal representative, and the District Court.

11.3 Removal. The District Court may remove Trustee for cause pursuant to La. Rev. Stat. § 9:1788.

11.4 Acceptance. Successor Trustee shall accept the office in writing and shall succeed to all rights, powers, duties, and immunities of the original Trustee.

12. INDEMNIFICATION; LIMITATION OF LIABILITY

12.1 Trustee Indemnity. To the fullest extent permitted by Applicable Law, Trustee shall be indemnified and held harmless from the Trust Assets against any and all claims, liabilities, and expenses (including reasonable attorneys’ fees) arising from Trustee’s administration of the Trust, except for acts of willful misconduct or gross negligence.

12.2 Liability Cap. Any liability of Trustee in connection with this Trust shall be limited to the value of the Trust Assets and shall not extend to Trustee’s separate assets.

12.3 No Exculpation for Bad Faith. Nothing in this Agreement shall exculpate Trustee from liability for bad-faith actions or intentional breach of fiduciary duty.

13. DEFAULT AND REMEDIES

13.1 Events of Default. An “Event of Default” occurs if Trustee:
a. Fails to make a required Necessary Expenditure after written demand and thirty (30) days’ opportunity to cure;
b. Breaches a material fiduciary duty; or
c. Becomes insolvent or subject to a conservatorship.

13.2 Remedies. Upon an Event of Default, Beneficiary (or Beneficiary’s legal representative) may:
a. Petition the District Court for accounting, surcharge, or removal;
b. Seek injunctive relief to protect Trust Assets; and/or
c. Recover reasonable attorneys’ fees and costs as determined by the court.

14. DISPUTE RESOLUTION

14.1 Governing Law. This Agreement and any dispute hereunder shall be governed by Louisiana substantive law.

14.2 Forum Selection. Exclusive jurisdiction and venue for Court-Reserved Matters shall lie in the District Court for the Parish of [PARISH], Louisiana.

14.3 Limited Arbitration. Any Arbitrable Dispute shall be resolved by binding arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules, conducted in [CITY], Louisiana. The arbitration award may include injunctive relief consistent with Section 14.4.

14.4 Injunctive Relief. Notwithstanding Section 14.3, a party may seek temporary, preliminary, or permanent injunctive relief in the District Court to enforce fiduciary duties or protect Trust Assets.

14.5 No Jury Trial. To the extent a dispute is heard in court, the parties waive any right to trial by jury, consistent with La. Code Civ. Proc. art. 1732(1) (probate matters not triable by jury).

15. MISCELLANEOUS PROVISIONS

15.1 Amendments. This Agreement may be amended only:
a. By written instrument executed by Trustee and approved by the District Court for the sole purpose of complying with changes in Applicable Law or preserving Beneficiary’s eligibility for Government Benefits; or
b. As otherwise authorized under La. Rev. Stat. § 9:2026.

15.2 Severability. If any provision of this Agreement is held invalid or unenforceable, the remaining provisions shall remain in full force and effect.

15.3 Integration. This Agreement, together with all attached Schedules, constitutes the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements.

15.4 Headings. Headings are for convenience only and shall not affect interpretation.

15.5 Counterparts; Electronic Signatures. This Agreement may be executed in multiple counterparts and by electronic signature, each of which shall be deemed an original and all of which together constitute one instrument.

16. EXECUTION BLOCK

IN WITNESS WHEREOF, the parties hereto have executed this Irrevocable Supplemental Needs Trust Agreement as of the Effective Date.

WITNESSES

1. ___________________________ Date: __________
2. ___________________________ Date: __________

NOTARY PUBLIC
State of Louisiana
Parish of __________________

Subscribed and sworn before me this ___ day of __________, 20__, by [SETTLOR NAME] and [TRUSTEE NAME].

_____________________________
Notary Public
My Commission Expires: __________

SCHEDULE A – Initial Trust Corpus

SCHEDULE B – Trustee Compensation

SCHEDULE C – Tax Elections

SCHEDULE D – Successor Trustees

1. [NAME, ADDRESS, PHONE, EMAIL]
2. [NAME, ADDRESS, PHONE, EMAIL]