Special Needs Trust - New Mexico

Special Needs Trust

This third-party irrevocable supplemental needs trust is made on [DATE] by [SETTLOR FULL NAME], of [SETTLOR ADDRESS] (Settlor), and [TRUSTEE FULL NAME], of [TRUSTEE ADDRESS] (Trustee). It is named [TRUST NAME] and has its principal place of administration at [NEW MEXICO COUNTY AND ADDRESS].

1. Establishment and funding

Settlor transfers $[AMOUNT] in cash owned by Settlor to Trustee now. Trustee accepts the trusteeship and acknowledges receipt. Schedule A records this actual transfer. This is a present lifetime transfer to a separate trustee under NMSA 1978 §§ 46A-4-401(A) and 46A-4-402(A); merely listing a later asset on a schedule will not transfer its title.

Settlor states that Settlor has capacity to create this trust, owns the transferred cash, and is neither the Beneficiary nor the Beneficiary's spouse. Trustee shall accept later contributions only from persons other than the Beneficiary or the Beneficiary's spouse, after determining that the contributor owns and effectively transfers the property. Trustee shall reject any proposed contribution of the Beneficiary's assets, including an inheritance or settlement already owned by Beneficiary, and refer it for separate legal and benefits review. SSA POMS SI 01120.200 defines a third-party trust by the source of its assets and warns that a trust said to be third-party may in fact contain beneficiary property. This instrument makes no promise about benefit eligibility or tax treatment.

2. Beneficiary and discretionary purpose

The sole current beneficiary is [BENEFICIARY FULL NAME], born [DATE OF BIRTH], of [ADDRESS] (Beneficiary). This trust supplements resources available to Beneficiary. Trustee may distribute income or principal in Trustee's discretion for Beneficiary's medical, personal, educational, housing, recreational, or other needs. Trustee may pay a provider directly or acquire goods or services for Beneficiary. Trustee shall consider the current rules of each benefit program before a cash, housing, or other potentially countable distribution, and may choose a distribution even if it reduces a benefit when Trustee determines that it serves Beneficiary's interests. Undistributed income remains trust property.

Beneficiary may request a distribution but has no power to compel one, revoke or amend this trust, direct Trustee, or withdraw trust property. Trustee shall not make distributions to Settlor or the Beneficiary's spouse to satisfy their own obligations. Trustee shall keep a record of each distribution and its purpose. The trust is irrevocable by unilateral act of Settlor or Beneficiary; statutory modification and termination routes, including NMSA 1978 § 46A-4-411, remain available when their requirements are met.

3. Spendthrift provision

A beneficiary's interest is restrained from both voluntary and involuntary transfer before receipt of a distribution. No beneficiary may assign, pledge, or transfer that interest before distribution, and a creditor may not compel its transfer before receipt except as New Mexico law allows. The exceptions in NMSA 1978 § 46A-5-503 remain effective; this clause does not override them. See also § 46A-5-502. If any property attributable to Settlor could be distributed for Settlor's benefit, § 46A-5-505(A)(2) supplies a separate creditor rule; this instrument grants Settlor no such interest.

4. Trustee administration and information

Trustee shall administer the trust in good faith, for its stated purposes and Beneficiary's interests, with reasonable care, skill, and caution. Trustee may retain, invest, sell, insure, or distribute trust property and employ advisers as appropriate to administration, subject to fiduciary duties and NMSA 1978 § 46A-8-815. Trustee shall keep adequate records and separate trust property from Trustee's own property. Trustee may receive compensation of [REASONABLE METHOD OR “NONE”] and reimbursement of properly incurred administration expenses under § 46A-7-709.

Trustee shall comply with the qualified-beneficiary notices, requested information, and annual and termination reporting duties in § 46A-8-813. This includes the applicable notices within 60 days of accepting trusteeship and learning of this irrevocable trust's creation. Trustee shall send reports to the recipients specified by the statute, including permissible distributees and requesting beneficiaries. Nothing here waives a statutory information right.

5. Successor trustees

If Trustee ceases to serve, [FIRST SUCCESSOR FULL NAME] is first successor and [SECOND SUCCESSOR FULL NAME] is next. A successor accepts by signing a written acceptance and taking custody of the records and property. Trustee may resign on the notice or court-approval route in NMSA 1978 § 46A-7-705. If no named successor accepts, a successor shall be selected by unanimous agreement of the qualified beneficiaries or appointed by the district court under § 46A-7-704(C). The outgoing trustee shall deliver trust property and records to the accepting successor and provide the vacancy report required by § 46A-8-813(C), when applicable.

6. Termination and entire remainder

The trust ends on Beneficiary's death or when no trust property remains. Trustee may reserve reasonable amounts for properly incurred trust administration expenses and shall distribute 100% of the remaining property as follows:

If a remainder recipient does not survive Beneficiary by 30 days, that recipient's share goes to [ALTERNATE FOR THAT SHARE]. If the alternate also does not survive, that share passes proportionately to the other surviving named remainder recipients. If none survives, the whole remainder passes to [NAMED CHARITY LEGAL NAME]. Fill every recipient and alternate, and make the stated shares total 100%; write “none” and 0% in an unused row. The trust receives no property of Beneficiary or Beneficiary's spouse under Section 1, and this instrument does not direct a first-party Medicaid reimbursement. If such property reaches Trustee despite Section 1, Trustee shall identify it separately and obtain benefits and legal review before administering or distributing it.

7. Governing law and enforcement

New Mexico law governs. This instrument neither excuses a breach committed in bad faith or with reckless indifference nor imposes an automatic limit equal to trust assets. The statutory remedies for breach remain available under NMSA 1978 § 46A-10-1001. Trust proceedings fall within the district court's jurisdiction under § 46A-2-203; venue follows § 46A-2-204. No arbitration, jury waiver, mandatory cure period, or automatic attorney-fee award is created here.

8. Signatures and trustee acceptance

Settlor signs to create and fund this trust. Trustee signs to accept the trusteeship and confirms receipt of the cash in Section 1 and Schedule A.

Settlor signature: __________________________ Date: [DATE]

Printed name: [SETTLOR FULL NAME]

Trustee signature: __________________________ Date: [DATE]

Printed name: [TRUSTEE FULL NAME]

Schedule A — Initial property delivered

Settlor-owned cash delivered to Trustee: $[AMOUNT]

Delivery method and date: [METHOD AND DATE]

Trustee acknowledgment of receipt: __________________________

Sources and References

• New Mexico Compilation Commission, official law database
• NMSA 1978, Chapter 46A, Uniform Trust Code
• SSA POMS SI 01120.200, third-party trust guidance