NORTH DAKOTA SUPPLEMENTAL NEEDS TRUST AGREEMENT

(Irrevocable Discretionary “Special Needs” Trust)

[// GUIDANCE: This template is drafted as a third-party funded special needs trust compliant with federal Medicaid/SSI rules, the North Dakota Uniform Trust Code (N.D.C.C. tit. 59), and 42 U.S.C. § 1396p(d). If first-party funding (i.e., assets of the Beneficiary) is contemplated, insert the optional Payback Clause in § III(8)(b)(ii) and confirm the Beneficiary is < 65 at funding, per 42 U.S.C. § 1396p(d)(4)(A).]

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. Title. North Dakota Supplemental Needs Trust Agreement (this “Agreement” or “Trust”).
2. Parties.
   a. Settlor(s): [SETTLOR NAME(S)] (“Settlor”).
   b. Initial Trustee: [TRUSTEE NAME] (“Trustee”).
   c. Beneficiary: [BENEFICIARY NAME], born [DOB], a person with a “Disability” (as defined below).
3. Recitals.
   A. Settlor desires to establish an irrevocable trust for the sole benefit of Beneficiary to supplement, not supplant, Beneficiary’s Government Benefits.
   B. This Trust is intended to qualify as a “supplemental needs trust” under 42 U.S.C. § 1396p(d) and applicable North Dakota law.
   C. Trustee is willing to serve under the terms set forth herein.
4. Effective Date. This Trust is executed and effective as of [DATE] (“Effective Date”).
5. Governing Law. This Agreement and the administration of the Trust shall be governed by the laws of the State of North Dakota (“Governing Law”).
6. Forum Selection. Exclusive jurisdiction lies with the [COUNTY] County Probate Court, State of North Dakota (“Forum Court”).

II. DEFINITIONS

For ease of reference, capitalized terms are listed alphabetically.

“Act” – 42 U.S.C. § 1396p(d) and related federal statutes protecting Government Benefits.
“Agreement” – This North Dakota Supplemental Needs Trust Agreement.
“Arbitration Provision” – The limited arbitration mechanism in § VIII(3).
“Beneficiary” – The individual identified in § I(2)(c).
“Disability” – A disability as defined in 42 U.S.C. § 1382c(a)(3).
“Distribution Standard” – The discretionary, supplemental-needs standard in § III(4).
“Government Benefits” – Means-tested public benefits, including but not limited to Medicaid and Supplemental Security Income (“SSI”).
“Settlor” – The person(s) identified in § I(2)(a).
“Special Needs” – Needs that enhance Beneficiary’s quality of life but are not basic support (food, shelter) provided by Government Benefits.
“Trust” / “Trust Estate” – All property, tangible or intangible, held under this Agreement, including additions and accretions.
“Trustee” – The individual or corporate trustee acting from time to time under this Agreement.
“Trustee Indemnified Parties” – Trustee, its affiliates, officers, directors, employees, and agents.

III. OPERATIVE PROVISIONS

1. Establishment & Irrevocability.
   a. Settlor hereby irrevocably transfers the property described in Schedule A (attached) to Trustee, to be held, managed, and distributed under this Agreement.
   b. Except as expressly allowed herein, this Trust is irrevocable; Settlor reserves no reversionary interest.

2. Additional Contributions. Settlor or any third party may make additional, irrevocable contributions, subject to Trustee’s acceptance and § III(8).

3. Purpose. To provide for Beneficiary’s Special Needs while preserving eligibility for Government Benefits.

4. Distribution Standard.
   a. Sole Discretion. Trustee may distribute so much of the Trust Estate as Trustee, in sole and absolute discretion, deems advisable for Beneficiary’s Special Needs.
   b. Prohibited Distributions. Absent prior written confirmation from qualified benefits counsel:
   i. No distributions for Beneficiary’s basic food or shelter;
   ii. No distributions paid directly to Beneficiary;
   iii. No distributions that would reduce or eliminate Government Benefits.
   c. Permitted Distributions (non-exhaustive): therapy, education, adaptive equipment, transportation, home modifications, recreation, vacations with caregiver, and insurance premiums.

5. Spendthrift Protection. All interests under this Trust are subject to a spendthrift provision pursuant to N.D.C.C. § 59-13-03; neither Beneficiary nor any remainder beneficiary may voluntarily or involuntarily transfer, assign, or encumber any interest herein.

6. Trustee Powers. Subject to § III(4) and Governing Law, Trustee shall have all powers granted under N.D.C.C. ch. 59-16, including but not limited to:
   a. Invest and reinvest;
   b. Employ professionals and delegate authority;
   c. Compromise claims;
   d. Lend or borrow;
   e. Lease, sell, or exchange Trust assets;
   f. Determine income and principal allocations.

7. Trustee Succession.
   a. Resignation. Trustee may resign on 30 days’ written notice to Settlor (if living) and Beneficiary’s legal representative.
   b. Removal. The Forum Court, Settlor (if living), or a majority of the “Adult Remainder Beneficiaries” may remove Trustee for cause.
   c. Successor Appointment. [NAME ORDER OF SUCCESSOR TRUSTEES]; if none, the Forum Court shall appoint a licensed professional or corporate trustee experienced in managing special needs trusts.

8. Termination; Remainder.
   a. Standard Termination. This Trust terminates on Beneficiary’s death.
   b. Distribution of Remainder. Upon termination:
   i. Third-Party Funded Trust (Default). Trustee shall distribute remaining assets to [NAME OF REMAINDER BENEFICIARIES] or their estates, per stirpes.
   ii. Optional Payback Clause – First-Party Funding Only. Notwithstanding § III(8)(b)(i), if any Trust corpus consists of assets belonging to Beneficiary, Trustee shall first repay the North Dakota Department of Health & Human Services (and any other state Medicaid agency) up to the total amount of medical assistance paid on Beneficiary’s behalf, as required by 42 U.S.C. § 1396p(d)(4)(A).
   c. Early Termination. Trustee may petition the Forum Court for early termination only if continued administration is impossible or contrary to Beneficiary’s interests and Government Benefits can be preserved.

9. Administrative Matters.
   a. Accountings. At least annually, Trustee shall deliver a written accounting to Beneficiary’s legal representative and any co-trustee.
   b. Compensation. Trustee’s compensation shall be the lesser of (i) Trustee’s published fee schedule, or (ii) [PERCENTAGE]% of Trust assets per annum.
   c. Bond. [REQUIRED / WAIVED] unless ordered by the Forum Court.

IV. REPRESENTATIONS & WARRANTIES

1. Settlor.
   a. Settlor has full legal capacity and title to transfer the assets listed in Schedule A;
   b. Transfer of such assets does not violate any agreement or law;
   c. The Trust’s establishment is not a fraudulent conveyance.

2. Trustee.
   a. Trustee is duly qualified and, if an entity, in good standing under applicable law;
   b. Trustee has reviewed this Agreement and understands fiduciary duties under North Dakota law;
   c. Trustee is not under any conflict of interest that would impair independent judgment.

3. Survival. The foregoing representations and warranties survive execution and remain in effect for the duration of the Trust.

V. COVENANTS & RESTRICTIONS

1. Trustee Covenants.
   a. Administer the Trust exclusively for Beneficiary’s sole benefit;
   b. Maintain records adequate to satisfy federal and state reporting requirements;
   c. File all required tax returns (EIN-based) and obtain professional tax advice;
   d. Notify Beneficiary’s benefits caseworker in writing within 30 days of any change that could affect eligibility.

2. Settlor Covenants.
   a. Deliver any additional contributions free and clear of liens;
   b. Execute all documents reasonably requested by Trustee.

3. Restrictions. No amendment or action shall:
   a. Divest Beneficiary of beneficial enjoyment during lifetime;
   b. Authorize distributions contrary to § III(4);
   c. Eliminate the Spendthrift Protection in § III(5).

VI. DEFAULT & REMEDIES

1. Events of Default.
   a. Trustee breach of fiduciary duty, willful misconduct, or gross negligence;
   b. Trustee failure to provide required accountings within 60 days after written demand;
   c. Trustee insolvency or incapacity.

2. Notice & Cure. Any interested party may give written notice specifying the default; Trustee has 30 days to cure before remedies attach.

3. Remedies.
   a. Removal and appointment of a successor trustee per § III(7);
   b. Surcharge against Trustee to restore losses;
   c. Injunctive relief from the Forum Court to prevent further harm;
   d. Recovery of reasonable attorney’s fees and costs from the Trust Estate (or personally from Trustee in cases of willful misconduct or gross negligence).

VII. RISK ALLOCATION

1. Indemnification. Trustee Indemnified Parties shall be indemnified and held harmless out of the Trust Estate against any liability, loss, or expense, except to the extent arising from Trustee’s willful misconduct or gross negligence.

2. Limitation of Liability. Any liability of Trustee Indemnified Parties is strictly limited to the value of the Trust Estate; no personal liability shall attach.

3. Insurance. Trustee is authorized to purchase fiduciary liability insurance at Trust expense.

4. Force Majeure. Trustee shall not be liable for failure or delay in performance caused by events beyond reasonable control, including but not limited to acts of God, war, epidemics, or changes in law affecting administration.

VIII. DISPUTE RESOLUTION

1. Governing Law. This Agreement is governed by North Dakota law without regard to conflict-of-laws principles.

2. Forum Selection. Exclusive jurisdiction lies with the Forum Court for all matters relating to the Trust.

3. Limited Arbitration.
   a. Scope. Non-fiduciary disputes solely between remainder beneficiaries that do not affect Government Benefits may be submitted to binding arbitration under the North Dakota Uniform Arbitration Act, by written agreement of all affected parties.
   b. Reservation of Rights. Matters involving Trustee’s fiduciary duties, distributions, or interpretation of § III(4) shall not be subject to arbitration.

4. Jury Waiver. No jury trial is available in probate proceedings; any permitted civil action shall be tried by the Forum Court sitting without a jury.

5. Injunctive Relief. The Forum Court may issue temporary or permanent injunctive relief to enforce the Trust’s terms or preserve Trust assets.

IX. GENERAL PROVISIONS

1. Amendment & Reformation. Only the Forum Court may amend or reform this Agreement, and then solely to:
   a. Conform to changes in federal or state law governing Special Needs Trusts; or
   b. Correct scrivener’s errors;
   provided that Beneficiary’s eligibility for Government Benefits is not impaired.

2. Waiver. No waiver of any provision shall be effective unless in writing and signed by the waiving party.

3. Assignment. Rights hereunder are personal and may not be assigned except as expressly provided.

4. Successors & Assigns. This Agreement binds and benefits the parties and their respective successors and permitted assigns.

5. Severability. If any provision is invalid or unenforceable, remaining provisions shall remain in full force; the invalid provision shall be reformed to the minimum extent necessary.

6. Integration. This Agreement (including Schedule A) is the entire agreement of the parties regarding the Trust and supersedes all prior writings.

7. Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which is an original; electronic signatures shall be deemed originals for all purposes.

X. EXECUTION BLOCK

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

Settlor

[SETTLOR NAME] – Settlor
Date: ______

Trustee

[TRUSTEE NAME] – Trustee
Date: ______

[// GUIDANCE: Add additional signature blocks for Co-Trustees if any.]

Notarization (Recommended)

State of North Dakota )
County of [COUNTY] ) ss.

On this ___ day of ____, 20__, before me, a Notary Public, personally appeared [SETTLOR NAME and/or TRUSTEE NAME], known to me or satisfactorily proven to be the person(s) whose name(s) are subscribed to this instrument, and acknowledged that they executed the same for the purposes therein contained.

Notary Public
My Commission Expires: ____

SCHEDULE A – INITIAL TRUST PROPERTY

[Detailed description of cash, securities, real property, or other assets transferred to the Trust.]