[TRUST NAME]

SPECIAL (SUPPLEMENTAL) NEEDS TRUST AGREEMENT

State of Maine

[// GUIDANCE: This template creates a Third-Party Irrevocable Special (Supplemental) Needs Trust for the sole benefit of a beneficiary with a disability who receives or may in the future receive means-tested public benefits (e.g., SSI, MaineCare/Medicaid). It is drafted to comply with Maine trust law (Title 18-C, M.R.S.) and federal benefit preservation rules. Customize bracketed terms and review jurisdiction-specific execution requirements before use.]

TABLE OF CONTENTS

1. Document Header
2. Definitions
3. Creation & Funding of the Trust
4. Trust Purpose & Beneficiary Rights
5. Distributions & Supplemental Needs Standard
6. Trustee Powers & Duties
7. Trustee Compensation, Indemnification & Liability Caps
8. Successor, Resignation & Removal of Trustee
9. Spendthrift & Creditor Protection
10. Default, Remedies & Dispute Resolution
11. Tax & Reporting Matters
12. Termination & Remainder Disposition
13. General Provisions
14. Execution Block

1. DOCUMENT HEADER

This Special (Supplemental) Needs Trust Agreement (the “Agreement”) is made as of [EFFECTIVE DATE] (the “Effective Date”) by and between:

(a) [SETTLOR NAME] of [ADDRESS] (“Settlor”); and
(b) [TRUSTEE NAME], having an address at [ADDRESS] (“Trustee”).

Recitals
A. Settlor desires to establish an irrevocable trust for the sole benefit of [BENEFICIARY NAME] (“Beneficiary”), who is disabled as defined under 42 U.S.C. § 1382c(a)(3).
B. The intent of Settlor is to supplement, not supplant, any governmental or charitable benefits available to Beneficiary, preserving eligibility for such programs.
C. Trustee is willing to hold, manage, and distribute the trust estate under the terms set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants herein, Settlor and Trustee agree as follows:

2. DEFINITIONS

Unless the context clearly indicates otherwise, the capitalized terms below shall have the following meanings:

“Accountings” – Periodic written statements of the trust’s receipts, disbursements, and holdings prepared in accordance with Section 6.8.
“Agreement” – This Special Needs Trust Agreement, together with all schedules, amendments, and exhibits.
“Applicable Law” – The laws of the State of Maine governing trusts and all controlling federal statutes and regulations, including but not limited to the Social Security Act and the MaineCare program.
“Beneficiary” – [BENEFICIARY NAME], and no other person, during his/her lifetime.
“Distribution Committee” – If appointed per Section 5.7, the persons empowered to consult on distributions.
“Public Benefits” – Means-tested federal, state, or local assistance programs, including but not limited to Supplemental Security Income (“SSI”) and MaineCare (Medicaid).
“Supplemental Needs” – Goods, services, or expenses that improve Beneficiary’s quality of life beyond basic support and maintenance, as further described in Section 5.2.
“Trust” – The trust created by this Agreement, known as the “[TRUST NAME] Special Needs Trust.”
“Trust Estate” – All property contributed to the Trust and all accumulated income and accretions.

3. CREATION & FUNDING OF THE TRUST

3.1 Establishment. Settlor hereby irrevocably transfers to Trustee the property listed on Schedule A attached hereto, to be held in trust for the uses and purposes herein. Additional contributions from any person other than Beneficiary may be accepted at Trustee’s discretion.

3.2 Irrevocability. This Trust is irrevocable. Settlor expressly waives any right to revoke, alter, or amend except as permitted under Section 13.2 solely to maintain Public Benefits eligibility.

3.3 Separate Property. All property transferred shall be the separate property of the Trust and not of Beneficiary, and shall be managed independent of Settlor’s estate.

3.4 Governing Law & Situs. The Trust shall be construed under and governed by the substantive laws of the State of Maine without regard to conflict-of-law rules. The situs shall initially be [COUNTY], Maine, but Trustee may change situs pursuant to Section 6.11.

4. TRUST PURPOSE & BENEFICIARY RIGHTS

4.1 Sole Benefit. All distributions shall be made solely for the primary benefit of Beneficiary and in a manner that does not jeopardize Public Benefits.

4.2 No Mandatory Distributions. Beneficiary shall have no right to compel distributions and no power of appointment over the Trust Estate.

4.3 No Support Obligation Discharge. This Trust shall not be deemed to satisfy any legal support obligation of any person.

5. DISTRIBUTIONS & SUPPLEMENTAL NEEDS STANDARD

5.1 Discretionary Distributions. Trustee may, in Trustee’s sole and absolute discretion, distribute income or principal for Beneficiary’s Supplemental Needs as defined herein.

5.2 Supplemental Needs Defined. Examples include:
a. Medical, dental, vision, and mental health care not covered by Public Benefits;
b. Rehabilitation, therapy, assistive technology, and adaptive equipment;
c. Education, training, and vocational services;
d. Transportation, including vehicle purchase, modification, and maintenance;
e. Personal care attendants and companion services;
f. Recreational, cultural, and social activities;
g. Travel and vacation expenses with necessary companions;
h. Computer equipment, internet service, and other communication aids;
i. Housing-related costs permissible under SSI/MaineCare rules (e.g., property taxes, insurance);
j. Any other goods or services enhancing Beneficiary’s comfort, independence, or quality of life.

[// GUIDANCE: Revise subsection (i) if the trust will pay shelter costs, as such payments may reduce SSI benefits.]

5.3 Prohibited Distributions. Trustee shall not distribute cash or pay for items that would be considered “food or shelter” under SSI rules unless Trustee first evaluates and accepts any potential reduction in Public Benefits.

5.4 Distribution Methodology. Trustee may make distributions: (a) directly to third-party vendors; (b) through a dedicated prepaid card or special account; or (c) via in-kind purchases, but generally not by direct cash to Beneficiary.

5.5 Governing Benefit Regulations. Trustee shall stay informed of changes to benefit eligibility rules and may retain specialized counsel. Costs are a proper charge to the Trust.

5.6 Emergency Exception. Trustee may, if absolutely necessary for Beneficiary’s welfare, make distributions that temporarily affect eligibility; Trustee shall document rationale and seek restoration of benefits promptly.

5.7 Optional Distribution Committee. Settlor may appoint a Distribution Committee in Schedule B to advise Trustee; all decisions remain Trustee’s legal responsibility.

6. TRUSTEE POWERS & DUTIES

6.1 Standard of Care. Trustee shall exercise the judgment and care under the circumstances then prevailing that prudent persons acting in a like capacity and familiar with such matters would use.

6.2 Enumerated Powers. Subject to Applicable Law and the limitations herein, Trustee shall have all powers granted under the Maine Uniform Trust Code, including but not limited to the power to:

a. Hold, invest, reinvest, and diversify Trust Estate assets;
b. Open and maintain bank, brokerage, or custodial accounts;
c. Employ investment managers, attorneys, accountants, and advisors;
d. Settle, compromise, or litigate claims for or against the Trust;
e. Purchase real or personal property for Beneficiary’s use;
f. Borrow, encumber, or pledge Trust assets;
g. Execute proxies, participate in reorganizations, or exercise corporate rights;
h. Allocate receipts and disbursements between income and principal;
i. Distribute property in cash or in-kind and make non-pro-rata distributions.

6.3 Duty to Avoid Reduction of Benefits. Trustee shall coordinate investments and distributions with benefit eligibility.

6.4 Bond. Unless waived in Schedule C, Trustee shall furnish a fiduciary bond in the amount of [BOND AMOUNT OR “WAIVED”].

6.5 Co-Trustees. If co-trustees serve, actions require unanimous consent unless otherwise provided in Schedule C.

6.6 Delegation. Trustee may delegate investment functions consistent with 18-C M.R.S. §7-302, retaining oversight.

6.7 Accounting & Records. Trustee shall maintain complete and accurate books and shall provide Accountings at least annually and on termination, or more frequently as ordered by the [COUNTY] Probate Court.

6.8 Right to Information. Beneficiary (or Beneficiary’s legal representative) may request Accountings in writing. Requests shall not compromise the Trust’s protective purposes.

6.9 Confidentiality. Trustee shall maintain confidentiality of Beneficiary’s medical and financial information except as required for administration or by law.

6.10 Relocation of Situs. Trustee may move trust situs if advisable for tax efficiency or benefit compliance, provided the new jurisdiction recognizes spendthrift provisions compatible with Beneficiary protection.

6.11 Meetings. Trustee may act without meeting by written consent or virtual meeting.

7. TRUSTEE COMPENSATION, INDEMNIFICATION & LIABILITY CAPS

7.1 Compensation. Trustee shall be entitled to reasonable compensation in accordance with standard fiduciary fee schedules or as set forth in Schedule D.

7.2 Expense Reimbursement. Trustee shall be reimbursed for all proper expenses incurred in administration, including expert fees.

7.3 Indemnification. To the extent permitted by Applicable Law, the Trust shall indemnify Trustee against all liabilities, claims, and expenses (including attorneys’ fees) arising from administration, except those resulting from Trustee’s willful misconduct or gross negligence.

7.4 Liability Cap. Any liability of Trustee to Beneficiary or others shall be limited to the value of the Trust Estate; no personal assets of Trustee shall be subject to satisfaction of such liability.

[// GUIDANCE: The liability cap aligns with “trust_assets” metadata. Maine law does not prohibit such caps but will not shield intentional breaches.]

8. SUCCESSOR, RESIGNATION & REMOVAL OF TRUSTEE

8.1 Successor Trustee Appointment. Upon Trustee’s resignation, incapacity, or removal, the next-named successor in Schedule C shall serve. If none, a successor shall be appointed by: (a) a majority of the Distribution Committee; or (b) order of the [COUNTY] Probate Court.

8.2 Resignation. Trustee may resign by written notice to Settlor (if living) and Beneficiary’s representative, effective 30 days after notice or on acceptance by a successor, whichever occurs first.

8.3 Removal. Settlor (if living) or Beneficiary’s legal representative may petition the Probate Court for removal for cause, including breach of fiduciary duty or conflict of interest.

8.4 Transfer of Assets. A resigning or removed Trustee shall promptly transfer all Trust property and records to the successor Trustee and sign all documents necessary to vest title.

9. SPENDTHRIFT & CREDITOR PROTECTION

9.1 Spendthrift Clause. To the maximum extent permitted by 18-C M.R.S. §505 (or successor provision), the interests of Beneficiary are not subject to voluntary or involuntary transfer, assignment, or encumbrance, nor to claims of Beneficiary’s creditors.

9.2 No Attachment. No part of the Trust Estate shall be subject to garnishment, levy, or attachment.

10. DEFAULT, REMEDIES & DISPUTE RESOLUTION

10.1 Events of Default. For purposes of this Article, “Event of Default” means:
a. Trustee’s failure to perform a material fiduciary duty;
b. Material breach of this Agreement;
c. Misappropriation or self-dealing.

10.2 Notice & Cure. Beneficiary’s representative shall give written notice specifying the default. Trustee shall have 30 days to cure, or a reasonable extension if cure is diligently pursued.

10.3 Remedies. Upon uncured default, Beneficiary or Settlor may:
a. Petition the Probate Court for removal, surcharge, or injunctive relief;
b. Seek an accounting or restitution;
c. Recover attorneys’ fees and costs from the Trust Estate (or from Trustee personally if misconduct found).

10.4 Limited Arbitration. Accounting and fee disputes only may be submitted to binding arbitration under the AAA Commercial Rules. The arbitrator must have at least 10 years of trust & estates experience. Venue shall be [COUNTY], Maine.

10.5 Injunctive Relief. Nothing herein limits a party’s right to seek provisional or injunctive relief from the Probate Court to preserve the Trust Estate.

10.6 Jury Waiver. Pursuant to Maine Probate Court practice (bench trials), jury trial is waived to the extent permitted by law.

11. TAX & REPORTING MATTERS

11.1 Grantor Status. This Trust [IS / IS NOT] intended to be treated as a grantor trust for federal income tax purposes. If grantor trust status is desired, insert appropriate IRC § 671-679 language in Schedule E.

11.2 Tax Identification. Trustee shall obtain a separate EIN unless the Trust is a grantor trust.

11.3 Income & Deductions. Trustee shall file all required federal and state fiduciary income tax returns and pay tax liabilities from the Trust Estate.

11.4 GST Planning. If GST exemption allocation is desired, Settlor shall so elect on Form 709.

12. TERMINATION & REMAINDER DISPOSITION

12.1 Termination Events. The Trust shall terminate upon the first to occur of:
a. Beneficiary’s death; or
b. Complete exhaustion of the Trust Estate.

12.2 Remainder. Upon termination, Trustee shall:
a. Pay any outstanding Trust expenses, taxes, and fees; then
b. Distribute the remaining principal and undistributed income to [REMAINDER BENEFICIARIES] outright or per stirpes as described in Schedule F.

12.3 Power to Terminate Small Trust. If the Trust Estate’s fair market value falls below [MINIMUM VALUE, e.g., $50,000], Trustee may, after consulting with Beneficiary’s representative, terminate the Trust and distribute remaining assets consistent with Section 12.2, provided such action will not negatively impact Public Benefits more than it would benefit Beneficiary.

13. GENERAL PROVISIONS

13.1 Amendment for Benefit Compliance. Trustee may amend this Agreement, with court approval if required, solely to ensure or restore Public Benefits eligibility, provided the amendment is consistent with Settlor’s intent.

13.2 Severability. Any provision determined invalid shall be severed, and the remainder enforced.

13.3 Integration. This Agreement constitutes the entire understanding regarding the Trust, superseding all prior writings.

13.4 Headings. Section headings are for reference only and shall not affect interpretation.

13.5 Gender & Number. Words of any gender include all genders; singular includes plural and vice versa.

13.6 Notices. All notices shall be in writing and deemed given upon personal delivery or three (3) business days after mailing by certified mail, return receipt requested, to the last known address of the recipient.

13.7 Counterparts & Electronic Signatures. This Agreement may be executed in counterparts and by electronic signature, each of which shall be deemed an original.

14. EXECUTION BLOCK

IN WITNESS WHEREOF, Settlor and Trustee have executed this Special Needs Trust Agreement as of the Effective Date.

Date: _____

NOTARY ACKNOWLEDGMENT

State of Maine }
County of [COUNTY] } 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 as their free act and deed.

Notary Public, State of Maine
My Comm. Expires: ____

SCHEDULE A – Initial Trust Property

[Describe cash, securities, real property, life insurance, etc.]

SCHEDULE B – Distribution Committee (Optional)

1. [NAME] – Relationship: [ ]
2. [NAME] – Relationship: [ ]

SCHEDULE C – Successor Trustee Provisions

Primary Successor Trustee: ____
Secondary Successor Trustee: ________
Bond Waived: [YES/NO]

SCHEDULE D – Trustee Compensation

[Insert fee schedule or reference corporate fiduciary tariff.]

SCHEDULE E – Grantor Trust Election Language (if applicable)

[Insert IRC §§ 671-679 provisions.]

SCHEDULE F – Remainder Beneficiaries & Shares

1. ________ – ___ %
2. ________ – ___ %

[// GUIDANCE:
1. Review Maine Medicaid (MaineCare) policy manuals for current treatment of shelter expenses before enabling the Trust to pay housing costs.
2. Confirm whether trust should be classified as grantor or non-grantor for income tax purposes given funding sources and Settlor’s objectives.
3. If any real estate is contributed, add a separate conveyance deed and consider recording a Memorandum of Trust (18-C M.R.S. § 1013).
4. Replace bracketed placeholders and update schedules before client execution.
]