Special Needs Trust - Nebraska

NEBRASKA SPECIAL NEEDS TRUST AGREEMENT

(Draft—Professionally Formatted for Immediate Attorney Review)

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

1.01 Title and Parties

This Nebraska Special Needs Trust Agreement (the “Trust Agreement”) is made and entered into effective as of [EFFECTIVE DATE] (the “Effective Date”) by and among:

• [SETTLOR NAME], an individual residing at [ADDRESS] (“Settlor”);
• [TRUSTEE NAME], [individual/State-chartered trust company], whose mailing address is [ADDRESS] (“Trustee”);

for the sole benefit of [BENEFICIARY NAME], born [DOB], Social Security No. [SSN] (the “Beneficiary”).

1.02 Recitals

A. Settlor desires to make irrevocable provision for the Beneficiary, who is a person with a disability as defined under 42 U.S.C. § 1382c(a)(3).
B. The purpose of this Trust is to supplement, and not supplant, any means-tested governmental benefits for which the Beneficiary may be or become eligible.
C. This Trust is intended to qualify as a third-party supplemental needs trust under Neb. Rev. Stat. §§ 30-3801 et seq. (Nebraska Uniform Trust Code), consistent with the state policy declared at Neb. Rev. Stat. § 30-38,111 favoring the use of special needs trusts to preserve funds for needs not met by governmental benefits, and applicable federal law.

1.03 Governing Law & Jurisdiction

This Trust shall be construed in accordance with the laws of the State of Nebraska (“Governing Law”). Nebraska does not maintain a separately named "probate division" of its county courts; the County Court is the forum of primary trust and probate jurisdiction, holding concurrent original jurisdiction with the district court over matters arising under the Nebraska Uniform Trust Code (Neb. Rev. Stat. § 24-517(8); see also § 30-2211). Exclusive jurisdiction and venue for all matters arising hereunder shall lie in the [COUNTY] County Court, State of Nebraska, or, to the extent a matter is not within the county court's jurisdiction, the District Court of [COUNTY] County, Nebraska (either, the “Chosen Forum”).

II. DEFINITIONS

“Accounting Period” – Each calendar year ending December 31, or such shorter period ending on termination of the Trust.

“Beneficiary” – The person identified in §1.01 for whose sole benefit this Trust is established.

“Code” – The Internal Revenue Code of 1986, as amended.

“Government Benefits” – Any public assistance program conditioned on the Beneficiary’s income and/or resource limits, including without limitation Medicaid, Supplemental Security Income (“SSI”), and Section 8 housing assistance.

“Health and Maintenance Needs” – Medical care, special therapies, personal assistance, educational services, adaptive technologies, transportation, recreation, and any other goods or services that enhance the Beneficiary’s quality of life but do not constitute support (food or shelter) within the meaning of 20 C.F.R. § 416.1102.

“Permissible Distributions” – Distributions described in §3.02.

“Trust” – This Trust Agreement, together with all property ever held hereunder (“Trust Estate”).

“Trustee” – The fiduciary acting from time to time as trustee of the Trust, including any Successor Trustee.

III. OPERATIVE PROVISIONS

3.01 Creation and Funding

A. Irrevocable Nature. Settlor hereby transfers the property listed on Schedule A to the Trustee, to hold, manage, and distribute under this Trust. The Trust is irrevocable, and Settlor retains no reversionary interest.
B. Additional Contributions. Any person other than the Beneficiary may, with Trustee’s consent, transfer additional property to the Trust.

For SSI purposes, assets of the Beneficiary's spouse are not third-party assets under SSA POMS SI 01120.200. The Trustee shall not accept them into the third-party portion of this Trust; refer any proposed contribution to benefits counsel for separate planning.

3.02 Distributions During Beneficiary’s Lifetime

A. Sole Benefit Standard. Trustee shall apply or expend so much of the Trust Estate as Trustee, in Trustee’s sole and absolute discretion, deems advisable for the Health and Maintenance Needs of the Beneficiary.
B. Prohibition on Support. Except as Trustee may determine necessary to avoid harm to the Beneficiary, no distribution shall be made for shelter if such distribution would reduce or eliminate the Beneficiary’s Government Benefits. Food is no longer counted as in-kind support and maintenance under the Social Security Administration's final rule, 89 Fed. Reg. 21,199 (Mar. 27, 2024), eff. Sept. 30, 2024; see 20 C.F.R. § 416.1130.
C. No Beneficiary Demand Right. Beneficiary shall have no right to compel distributions and no power to assign, anticipate, or encumber Trust interests.

3.03 Distribution Mechanics

A. Direct Payment to Vendors. Whenever practicable, Trustee shall make payments directly to third-party providers of goods or services.
B. Special Needs Debit Card. Trustee may issue a controlled disbursement card with spending limits consistent with Government Benefit rules.

3.04 Spendthrift Protection

All interests of the Beneficiary are held subject to a spendthrift provision within the meaning of Neb. Rev. Stat. § 30-3847 (UTC 502); no creditor or assignee of the Beneficiary may attach, and no court may compel, a distribution prior to its actual receipt by the Beneficiary, except as otherwise provided in Neb. Rev. Stat. §§ 30-3846 to 30-3852.

3.05 Termination Events

A. The Trust shall terminate upon (i) the death of the Beneficiary; (ii) exhaustion of the Trust Estate; or (iii) a court order under Governing Law.
B. Upon termination, Trustee shall distribute the remaining Trust Estate in accordance with §3.06.

3.06 Remainder Dispositions

A. Primary Remainder Beneficiaries. Upon Beneficiary’s death, Trustee shall distribute the remaining Trust Estate to: [DESIGNATED REMAINDER BENEFICIARIES—INSERT].
B. [OPTIONAL – Medicaid Pay-Back]. If this Trust is converted to a first-party trust, Trustee shall first reimburse the Nebraska Department of Health and Human Services for Medicaid properly paid on behalf of the Beneficiary, to the extent required by 42 U.S.C. § 1396p(d)(4)(A).

IV. REPRESENTATIONS & WARRANTIES

4.01 Settlor Representations

A. Settlor has full legal capacity and unencumbered title to property transferred hereby.
B. Execution of this Trust does not violate any court order or contractual obligation.

4.02 Trustee Representations

A. Trustee has full authority to act and is not under a disability or conflict of interest.
B. Trustee is familiar with, and agrees to administer the Trust consistent with, Government Benefits rules.

4.03 Survival

The above representations and warranties shall survive execution of this Trust.

V. COVENANTS & RESTRICTIONS

5.01 Trustee’s Affirmative Covenants

A. Prudent Administration. Administer the Trust as a prudent person would, considering the purposes, terms, distributional requirements, and other circumstances of the Trust, and exercising reasonable care, skill, and caution, under Neb. Rev. Stat. § 30-3869 (UTC 804), subject to the fiduciary duties imposed by Neb. Rev. Stat. §§ 30-3866 to 30-3868 (UTC 801-803 — duty to administer, duty of loyalty, impartiality).
B. Annual Accountings. Provide written accountings to Settlor (if living) and to the Beneficiary or the Beneficiary’s Guardian within 90 days after each Accounting Period.
C. Benefit Preservation Efforts. Take reasonable steps to maintain the Beneficiary’s eligibility for Government Benefits, including timely filing of any required reports, consistent with Neb. Rev. Stat. § 30-38,113 (state agencies administering means-tested programs may not impose rules on special needs trusts more restrictive than federal law).

5.02 Negative Covenants

A. Trustee shall not (i) loan Trust assets to Settlor; (ii) pledge Trust assets as surety for non-Trust obligations; or (iii) engage in self-dealing, except as expressly permitted by §7.03.
B. Trustee shall not distribute Trust assets directly to the Beneficiary if such distribution would cause countability under applicable Government Benefits rules, unless failure to do so would jeopardize the Beneficiary’s health or safety.

VI. DEFAULT & REMEDIES

6.01 Events of Default

A. Trustee Default. (i) Breach of fiduciary duty; (ii) Conviction of a felony involving dishonesty; (iii) Incapacity; (iv) Failure to provide accountings.
B. Beneficiary Challenge. Any action by the Beneficiary to compel distributions contrary to §3.02 or to revoke the Trust constitutes a default.

6.02 Notice and Cure

A written notice describing the default shall be delivered to the defaulting party, who shall have 30 days to cure.

6.03 Remedies

A. Removal & Replacement. Upon uncured default, an Interested Party may petition the Chosen Forum for removal of the Trustee and appointment of a Successor Trustee.
B. Surcharge. Trustee may be surcharged for damages proximately caused by a willful or reckless breach of duty.
C. Attorney’s Fees. The prevailing party in any action to enforce the Trust is entitled to reasonable attorney’s fees, payable from the Trust Estate unless the court orders otherwise.

VII. RISK ALLOCATION

7.01 Indemnification of Trustee

Except in cases of bad faith, gross negligence, or willful misconduct, Trustee shall be indemnified out of the Trust Estate from and against any liability, claim, or expense incurred in the good-faith administration of the Trust (“Trustee Indemnity”).

7.02 Limitation of Liability

No Trustee, in any capacity, shall be personally liable; recourse for all obligations is limited to the Trust Estate (“Liability Cap”). Settlor and Beneficiary acknowledge this limitation as a material term.

7.03 Permitted Transactions with Trustee

A. Reasonable Compensation. Trustee may pay itself reasonable compensation and reimburse its properly documented expenses.
B. Affiliated Investments. Trustee may invest in mutual funds or pooled investment vehicles from which it derives compensation, provided fees are disclosed in the annual accounting.

7.04 Force Majeure

Trustee shall not be liable for delays or failures resulting from acts of God, war, terrorism, pandemic, or government restriction that materially impair performance.

VIII. DISPUTE RESOLUTION

8.01 Governing Law

Nebraska law governs all questions of validity, construction, and administration.

8.02 Forum Selection

Exclusive jurisdiction and venue lie in the [COUNTY] County Court, State of Nebraska (which holds concurrent original jurisdiction with the district court over matters arising under the Nebraska Uniform Trust Code, Neb. Rev. Stat. § 24-517(8); see also § 30-2211), subject to appeal as provided by Nebraska law.

8.03 Limited Arbitration

A. Scope. Non-core administrative matters (investment allocation disputes, accounting objections under $50,000) shall be resolved by binding arbitration before a single arbitrator under the Nebraska Uniform Arbitration Act.
B. Exclusions. Issues concerning Trust validity, removal of Trustee, or modification/termination may not be arbitrated.
C. Procedure. Arbitration shall occur in [CITY, NE]; the arbitrator’s award may be entered as a judgment in the Chosen Forum.

8.04 Jury Waiver

[Not applicable—probate matters tried without jury pursuant to Neb. Rev. Stat. § 25-1104.]

8.05 Injunctive Relief

Nothing herein shall limit any party’s right to seek temporary or permanent injunctive relief to enforce the terms of this Trust.

IX. GENERAL PROVISIONS

9.01 Amendment

This Trust is irrevocable; no amendment is permitted except (i) to comply with changes in Governing Law or Government Benefit regulations, (ii) by court order modifying or terminating the Trust upon petition under Neb. Rev. Stat. § 30-3837 (UTC 411 — modification or termination of a noncharitable irrevocable trust by consent of the settlor and/or beneficiaries, subject to court approval), or (iii) through decanting by an authorized fiduciary under the Nebraska Uniform Trust Decanting Act, Neb. Rev. Stat. §§ 30-4501 to 30-4529, including the special-needs decanting provisions of § 30-4513.

9.02 Successor Trustees

A. Initial Successor. [NAME] is designated as Successor Trustee.
B. Appointment Mechanism. If no named Successor is able to serve, a majority of the Interested Parties may nominate a qualified corporate fiduciary; absent agreement, the Chosen Forum shall appoint one.

9.03 Merger & Severability

This document constitutes the entire agreement. If any provision is held invalid, the remainder shall be reformed to effectuate the Settlor’s intent.

9.04 Notices

All notices shall be in writing and deemed given three (3) days after deposit with the U.S. Postal Service, certified mail, return receipt requested, or upon confirmed email transmission if the recipient has consented to electronic delivery.

9.05 Counterparts and Electronic Signatures

This Trust may be executed in counterparts, each deemed an original, and signatures transmitted electronically (e.g., DocuSign) shall be effective.

X. EXECUTION BLOCK

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

ACKNOWLEDGMENTS

Acknowledgment given in the statutory short form authorized by Neb. Rev. Stat. § 64-206(1) and satisfying the certificate requirements of Neb. Rev. Stat. §§ 64-203 to 64-205.

State of Nebraska )
County of [COUNTY]) ss.

On this ____ day of __________, 20__, before me, a Notary Public in and for said county and state, personally appeared [SETTLOR NAME] and [TRUSTEE NAME], known to me or satisfactorily proven to be the persons whose names are subscribed to the within instrument, and acknowledged that they executed the same for the purposes therein contained.

_____________________________
Notary Public
My Commission Expires: __________

Schedule A – Initial Trust Property

[INSERT DETAILED LIST OF CASH, SECURITIES, INSURANCE, ETC.]