SPECIAL NEEDS (SUPPLEMENTAL NEEDS) TRUST AGREEMENT
(New York)
[// GUIDANCE: This template is designed for either a Third-Party SNT or a First-Party “(d)(4)(A)” SNT. Insert the appropriate bracketed options and delete inapplicable text before execution.]
TABLE OF CONTENTS
- Document Header
- Definitions
- Establishment of Trust & Funding
- Trust Purpose & Supplemental Needs Distribution Standard
- Trustee Provisions
- Distributions & Government Benefit Compliance
- Representations & Warranties
- Covenants
- Default & Remedies
- Risk Allocation
- Dispute Resolution
- General Provisions
- Execution Block
- Schedules
1. DOCUMENT HEADER
1.1 Title.
This Special Needs (Supplemental Needs) Trust Agreement (the “Agreement”) is made as of [EFFECTIVE DATE] (the “Effective Date”) by and between:
(a) [GRANTOR NAME], [individual/corporation], whose principal address is [ADDRESS] (“Grantor”); and
(b) [TRUSTEE NAME], with an address of [ADDRESS] (“Trustee”), solely in its fiduciary capacity;
for the exclusive benefit of [BENEFICIARY NAME], born [DOB], a person with a Qualified Disability (the “Beneficiary”).
1.2 Recitals.
A. Grantor desires to create a trust under the laws of the State of New York and in accordance with New York Estates, Powers and Trusts Law (“EPTL”) § 7-1.12 to provide for the Beneficiary’s supplemental care without disqualifying the Beneficiary from means-tested Government Benefits.
B. The Trustee is willing to accept the office of trustee and to hold, administer, and distribute the Trust Property strictly in accordance with this Agreement.
1.3 Governing Law; Situs.
This Trust shall be governed by and construed in accordance with the laws of the State of New York. The situs shall be [COUNTY], New York, and the Surrogate’s Court of that county (the “Probate Court”) shall have primary supervisory jurisdiction.
2. DEFINITIONS
(All definitions apply equally to singular and plural forms.)
“Accounting Period” – Each calendar year ending December 31, or such shorter period as may be required by law.
“Administrator” – The agency administering Medicaid, SSI, or other Government Benefits to the Beneficiary.
“Agreement” – This Special Needs Trust Agreement, including all Schedules and amendments.
“Beneficiary” – The individual identified in Section 1 whose Qualified Disability renders him/her eligible for Government Benefits.
“Disability Determination” – A determination by the Social Security Administration or other competent authority confirming disability under 42 U.S.C. § 1382c(a)(3).
“Government Benefits” – Medicaid, SSI, SSDI, SNAP, Section 8 housing assistance, or any similar program of federal, state, or local assistance based on need.
“Permissible Distribution” – A distribution described in Sections 4 and 6 that supplements but does not replace Government Benefits.
“Qualified Disability” – The Beneficiary’s medical condition as defined in Section 2.
“Trust” – The legal entity created by this Agreement; also referred to as the “Supplemental Needs Trust” or “SNT.”
“Trust Assets” or “Trust Property” – All property transferred to and held by the Trust, including any earnings and accretions.
“Trustee” – The initial Trustee and any Successor Trustee acting under this Agreement.
3. ESTABLISHMENT OF TRUST & FUNDING
3.1 Establishment. The Grantor hereby irrevocably transfers and delivers to the Trustee the property described in Schedule A (the “Initial Contribution”). Title to the Initial Contribution and all future additions shall vest in the Trustee in trust, subject to the terms of this Agreement.
3.2 Additional Contributions. Any person may, with the Trustee’s written consent, contribute additional property to the Trust, provided that such contribution does not void or impair the Trust’s status as a Supplemental Needs Trust under applicable law.
3.3 Nature of Trust.
[Select one:]
(a) Third-Party SNT. None of the Trust Assets constitute assets to which the Beneficiary is legally or equitably entitled. No Medicaid payback is required.
(b) First-Party SNT. The Trust is established pursuant to 42 U.S.C. § 1396p(d)(4)(A); the Beneficiary is under age 65 at establishment; and, upon the Beneficiary’s death, the Trust shall repay, to the extent then required by law, the State(s) for correctly paid Medicaid benefits (the “Medicaid Payback Provision”).
[// GUIDANCE: Retain only the subsection that applies.]
4. TRUST PURPOSE & SUPPLEMENTAL NEEDS DISTRIBUTION STANDARD
4.1 Primary Purpose. The Trust’s primary purpose is to provide for the Beneficiary’s supplemental needs—that is, special expenses not covered by Government Benefits—without disqualifying or reducing those benefits.
4.2 Sole Benefit Rule. All distributions shall be for the sole benefit of the Beneficiary.
4.3 Supplemental Needs Defined. “Supplemental needs” include, by way of illustration and without limitation:
• Medical, dental, psychological, or therapeutic services not otherwise provided;
• Adaptive equipment, assistive technology, and mobility aids;
• Education, training, and vocational services;
• Transportation, vehicle purchase or modification, and insurance;
• Personal care attendants;
• Recreational, cultural, or religious activities;
• Residence-related expenses other than direct payment of food or shelter (unless the Trustee, after considering potential reduction of SSI, determines such payment is in the Beneficiary’s best interest).
4.4 Trustee’s Absolute Discretion. The Trustee shall have sole and absolute discretion to make or withhold distributions. The Beneficiary shall have no right to compel a distribution, and no standard other than that stated herein shall apply.
5. TRUSTEE PROVISIONS
5.1 Acceptance & Fiduciary Capacity. The Trustee accepts the trust and agrees to act in a fiduciary capacity.
5.2 General Powers. Except as limited by this Agreement or mandatory law, the Trustee shall have all powers set forth in New York EPTL § 11-1.1 and the New York Uniform Prudent Investor Act to manage property of the Trust.
5.3 Specific Powers. The Trustee may:
a. Invest and reinvest Trust Assets;
b. Employ and compensate agents, advisors, and professionals;
c. Settle claims;
d. Borrow money and encumber Trust Property;
e. Purchase life insurance on the Beneficiary;
f. Create reserves for taxes and expenses;
g. Do all other acts necessary or advisable in managing the Trust.
5.4 Bond. [REQUIRED / WAIVED].
5.5 Compensation. The Trustee shall be entitled to reasonable compensation in accordance with New York Surrogate’s Court Procedure Act (“SCPA”) § 2309, unless the Grantor and Trustee have executed a written fee schedule, attached as Schedule B.
5.6 Resignation; Removal; Successor Trustee.
a. Resignation. The Trustee may resign upon 30 days’ written notice to the Grantor (if living) and to the Probate Court.
b. Removal. The Grantor (if living and competent) or, thereafter, a majority of Remainder Beneficiaries may petition the Probate Court for removal of the Trustee for cause, including gross negligence, willful misconduct, or failure to comply with Section 6.
c. Successor Trustee. Upon vacancy, [SUCCESSOR TRUSTEE DESIGNATION], or, if none, a successor appointed by the Probate Court, shall serve. Each Successor Trustee shall have all rights, powers, and immunities of the original Trustee.
6. DISTRIBUTIONS & GOVERNMENT BENEFIT COMPLIANCE
6.1 Method of Payment. Distributions shall, whenever practicable, be made in-kind or directly to the provider of goods or services to avoid Beneficiary’s receipt of countable income.
6.2 Prohibited Distributions. The Trustee shall not:
a. Make distributions that would (i) otherwise qualify for coverage by Government Benefits and (ii) cause loss or reduction of such benefits, unless the Trustee determines that the benefits of such distribution clearly outweigh the adverse effect.
b. Distribute Trust principal to any person other than the Beneficiary during the Beneficiary’s lifetime.
6.3 Reporting & Cooperation. The Trustee shall maintain records sufficient to satisfy the reporting requirements of Medicaid, SSI, and any other Administrator and shall timely submit any required accountings.
6.4 Restitution for Improper Distributions. If any distribution impermissibly reduces or eliminates Government Benefits, the Trustee is authorized to seek reinstatement, including repayment to the Administrator, using Trust Assets.
7. REPRESENTATIONS & WARRANTIES
7.1 Grantor Representations. The Grantor warrants that:
a. The Grantor has full legal capacity and authority to establish this Trust;
b. The property transferred is not subject to any lien or encumbrance inconsistent with this Agreement;
c. The Trust, as drafted, complies with the requirements of EPTL § 7-1.12 and, if self-settled, 42 U.S.C. § 1396p(d)(4)(A).
7.2 Trustee Representations. The Trustee represents that:
a. It is authorized and competent to serve;
b. It will administer the Trust in good faith and in accordance with New York law;
c. It will obtain any licenses or bonding required by law.
7.3 Survival. All representations and warranties shall survive execution and continue for the duration of the Trust.
8. COVENANTS
8.1 Grantor Covenants. Grantor shall execute such other instruments and take such further action as may reasonably be required to effectuate this Agreement.
8.2 Trustee Covenants. The Trustee shall:
a. Exercise prudent investment judgment;
b. Maintain comprehensive, accurate books and records;
c. Provide annual accountings to the Probate Court and to [INTERESTED PARTIES];
d. Cooperate fully with all eligibility reviews conducted by Administrators.
8.3 Beneficiary Covenant. The Beneficiary shall promptly inform the Trustee of any change in financial circumstances or benefit status.
9. DEFAULT & REMEDIES
9.1 Events of Default.
a. Trustee’s failure to comply with fiduciary obligations;
b. Material breach by Grantor (if living) of covenants under Section 8;
c. Any act jeopardizing the Trust’s special needs status.
9.2 Notice & Cure. The non-defaulting party shall provide written notice specifying the nature of default. The defaulting party shall have 30 days to cure.
9.3 Remedies. If default is uncured, the Probate Court may:
a. Remove or suspend the Trustee;
b. Order restitution to the Trust;
c. Issue injunctive relief to preserve Trust Assets;
d. Award attorneys’ fees and costs to the prevailing party.
10. RISK ALLOCATION
10.1 Trustee Indemnification. The Trustee (including its officers, employees, and agents) shall be indemnified, solely from the Trust Assets, against any claim, liability, or expense arising from administration of the Trust, except to the extent caused by the Trustee’s gross negligence, willful misconduct, or breach of fiduciary duty.
10.2 Limitation of Liability. The Trustee’s liability shall not exceed the value of the Trust Assets under its control at the time liability is determined.
10.3 Insurance. The Trustee may purchase fiduciary liability insurance at Trust expense.
10.4 Force Majeure. The Trustee shall not be liable for delays or failures resulting from events reasonably beyond its control, including acts of God, governmental actions, or market disruptions.
11. DISPUTE RESOLUTION
11.1 Governing Law. This Agreement shall be governed by the substantive laws of the State of New York without regard to conflict-of-law principles.
11.2 Forum Selection. Exclusive jurisdiction and venue for all proceedings concerning this Trust shall lie in the Surrogate’s Court of [COUNTY], New York, except as provided in Section 11.3.
11.3 Limited Arbitration.
a. Scope. Any dispute solely between (i) the Trustee and (ii) a Remainder Beneficiary or other person claiming an interest in future distributions, arising out of this Agreement and not involving the Beneficiary’s eligibility for Government Benefits, shall be resolved by binding arbitration administered by [ARBITRATION ORGANIZATION] in accordance with its trust-law rules.
b. Injunctive Relief. Nothing herein limits any party’s right to seek temporary or permanent injunctive relief in the Probate Court for Trust enforcement.
11.4 No Jury Trial. Because matters relating to trust administration fall within equitable jurisdiction, no party shall demand a jury trial.
12. GENERAL PROVISIONS
12.1 Amendment & Waiver.
a. Amendment. This Agreement may be amended only (i) by written instrument executed by the Grantor (if living and competent) and the Trustee, and (ii) with Probate Court approval, and only if the amendment does not jeopardize the Trust’s qualification as a Supplemental Needs Trust.
b. Waiver. No waiver shall be effective unless in writing and signed by the waiving party.
12.2 Assignment. Except as expressly provided herein, no interest in the Trust may be voluntarily or involuntarily assigned, transferred, or encumbered.
12.3 Spendthrift Clause. The Beneficiary’s interest is not subject to the claims of creditors and may not be attached, garnished, or otherwise reached.
12.4 Successors & Assigns. This Agreement is binding upon and inures to the benefit of the parties and their respective successors and permitted assigns.
12.5 Severability. Any invalid provision shall be severed and the remainder reformed to effectuate the parties’ intent to the maximum lawful extent.
12.6 Entire Agreement. This document constitutes the entire understanding regarding the Trust and supersedes all prior agreements.
12.7 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which shall be deemed an original, and signatures delivered by electronic means shall be equally effective.
13. EXECUTION BLOCK
IN WITNESS WHEREOF, the parties have executed this Special Needs Trust Agreement on the dates written below.
| _______ | _______ |
| [GRANTOR NAME] | Date |
| _______ | _______ |
| [TRUSTEE NAME], Trustee | Date |
[// GUIDANCE: Add additional signature blocks for Co-Trustees, if any.]
ACKNOWLEDGMENT (Notary)
State of New York )
County of ____ ) ss.:
On the _ day of _, 20__, before me, the undersigned, a Notary Public in and for said State, personally appeared ______ personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person on behalf of which the individual(s) acted, executed the instrument.
Notary Public
14. SCHEDULES
Schedule A – Initial Contribution
Schedule B – Trustee Fee Schedule (if any)
Schedule C – Medicaid Payback Provision (First-Party SNT only)
[// GUIDANCE: Prior to execution, ensure:
1. All placeholders are completed;
2. The correct SNT type is selected;
3. Court approval is obtained when required;
4. If First-Party, attach Schedule C with the payback clause exactly as required by Medicaid rules;
5. Review EPTL § 7-1.12 and current NY DSS/Medicaid directives for any updates;
6. File any necessary notices with the NYS Office of the Attorney General (Charities Bureau) if a pooled trust is used or if otherwise required.]