Special Needs Trust - Ohio

OHIO SPECIAL (SUPPLEMENTAL) NEEDS TRUST AGREEMENT

This Special (Supplemental) Needs Trust Agreement (“Trust Agreement”) is made effective as of [EFFECTIVE DATE] (“Effective Date”) by and between [SETTLOR FULL LEGAL NAME], an individual residing at [SETTLOR ADDRESS] (“Settlor”), and [TRUSTEE FULL LEGAL NAME], having a mailing address at [TRUSTEE ADDRESS] (“Trustee”). The beneficiary of this Trust is [BENEFICIARY FULL LEGAL NAME], SSN -*-[LAST 4], residing at [BENEFICIARY ADDRESS] (“Beneficiary”).

This is a third-party, non-self-settled special (supplemental) needs trust, funded exclusively with property belonging to the Settlor (and, if applicable, other third-party contributors under § III(B)) and not with any property, income, personal-injury recovery, inheritance, or other assets belonging to the Beneficiary. This Trust is established pursuant to, and shall be administered in accordance with, the Ohio Trust Code, O.R.C. § 5801.01 et seq., and, where applicable, 42 U.S.C. § 1396p and related Social Security Administration Program Operations Manual System (“POMS”) provisions governing supplemental needs trusts, to preserve the Beneficiary’s eligibility for means-tested governmental benefits while providing for the Beneficiary’s supplemental needs. Because this Trust is not funded with the Beneficiary’s own assets, it is not established under, and is not subject to, the first-party/self-settled trust exception and mandatory Medicaid payback requirement of 42 U.S.C. § 1396p(d)(4)(A); no provision of this Agreement requires reimbursement of Medicaid expenditures to the State of Ohio upon the Beneficiary’s death.

TABLE OF CONTENTS

I. Recitals
II. Definitions
III. Creation, Funding & Purpose
IV. Distributions & Standards
V. Trustee Powers & Duties
VI. Representations & Warranties
VII. Covenants & Restrictions
VIII. Default & Remedies
IX. Risk Allocation
X. Dispute Resolution
XI. General Provisions
XII. Termination & Remainder
XIII. Execution Block

I. RECITALS

A. Settlor desires to establish a discretionary, irrevocable trust for the sole benefit of the Beneficiary, who has a disability as defined in 42 U.S.C. § 1382c(a)(3).
B. The Beneficiary currently receives, or is expected to receive, needs-based public benefits including Supplemental Security Income (“SSI”) and/or Medicaid.
C. Settlor intends that Trust assets be used exclusively to supplement, not supplant, governmental benefits, and that Trust assets shall not be considered “available resources” for eligibility purposes.
D. This Trust is a third-party, non-self-settled supplemental needs trust. It is not funded with, and shall never accept, any property, income, personal-injury recovery, inheritance, or other asset belonging to the Beneficiary, except as expressly permitted and conditioned under § III(B). Because the Trust is not self-settled, it is not a trust described in 42 U.S.C. § 1396p(d)(4)(A), and no Medicaid payback provision applies to it.
E. Trustee is willing to hold, administer, and distribute the Trust Estate under the terms and conditions set forth herein.

II. DEFINITIONS

“Accountings” – Has the meaning set forth in § V(H).
“Arbitration Panel” – A single arbitrator selected per § X(B).
“Beneficiary” – Defined in the introductory paragraph.
“Discretionary Distribution” – Any distribution described in § IV(B).
“Governmental Benefits” – SSI, Medicaid, Section 8 housing, SNAP, or any other means-tested benefits for which Beneficiary may qualify.
“IRS Code” – The Internal Revenue Code of 1986, as amended.
“Permissible Disbursement” – Any payment authorized under § IV(A).
“Prohibited Distribution” – Any distribution barred by § IV(C).
“Qualified Disability Trust” – A trust described in IRC § 642(b)(2)(C).
“Trust” or “Trust Estate” – All property transferred to Trustee, together with all accumulations and replacements.
“Trustee” – Defined in the introductory paragraph.

III. CREATION, FUNDING & PURPOSE

A. Irrevocability. This Trust is irrevocable upon execution; Settlor retains no power to alter, amend, or revoke, except as expressly provided herein.
B. Initial Funding. Settlor hereby transfers the property listed on Schedule A to Trustee to constitute the initial Trust Estate. Additional contributions may be made by any person other than the Beneficiary, subject to Trustee’s right to refuse assets that could jeopardize Governmental Benefits. No property, income, personal-injury recovery, inheritance, or other asset belonging to the Beneficiary (or to the Beneficiary’s spouse, or to any person or entity legally obligated to pay damages or other sums to or for the Beneficiary) may be added to the Trust unless (i) this Trust Agreement is first amended, with any court or agency approval required by Applicable Law, to qualify as a first-party trust under 42 U.S.C. § 1396p(d)(4)(A), including a mandatory Medicaid-payback provision reimbursing the State of Ohio for medical assistance paid on the Beneficiary’s behalf, and (ii) such amendment is completed before the asset is accepted.
C. Purpose. The primary purpose is to provide for Beneficiary’s supplemental needs—i.e., needs not met by Governmental Benefits—while preserving eligibility for such benefits.

IV. DISTRIBUTIONS & STANDARDS

A. Permissible Disbursements. Trustee may, in sole and absolute discretion, distribute income and principal for items improving Beneficiary’s quality of life, including but not limited to:

1. Uncovered medical, dental, vision, and mental-health care;
2. Durable medical equipment and assistive devices;
3. Education, training, and habilitation services;
4. Transportation (including vehicle purchase or modification);
5. Personal services, companions, advocates, and case managers;
6. Recreation, vacations, entertainment, and cultural experiences;
7. Insurance premiums (other than basics counted as income); and
8. Housing-related expenses only to the extent they do not reduce SSI, unless Trustee, after consultation with benefits counsel, determines such reduction is in Beneficiary’s best interests.

B. Distribution Methodology. Distributions may be made:
a. Directly to third-party providers; or
b. By reimbursing verifiable expenses incurred for Beneficiary’s benefit.
Under no circumstance shall Trustee make cash distributions directly to Beneficiary.

C. Prohibited Distributions. Trustee shall not:

1. Distribute funds that constitute “countable income or resources” under 20 C.F.R. § 416.1201 and related POMS, unless explicitly permitted under § IV(A)(8);
2. Pay any expense that Settlor or another person is legally obligated to support;
3. Make loans or pledges of Trust assets.

D. Mandatory Considerations. Before approving any Discretionary Distribution, Trustee shall consider:

1. The effect on Governmental Benefits;
2. The availability of other resources;
3. The projected future needs of Beneficiary; and
4. Any written request or budget submitted by Beneficiary’s legal guardian or advocate.

E. Distribution Upon Incapacity. If Beneficiary cannot request distributions, Trustee shall consult with Beneficiary’s guardian and relevant professionals to ascertain supplemental needs.

V. TRUSTEE POWERS & DUTIES

A. General Powers. Trustee shall have all powers granted to trustees under O.R.C. § 5808.01 et seq., including investment, management, and distribution powers, subject to the prudent investor rule.
B. Special Powers. Without limiting § V(A), Trustee may:

1. Engage benefits counsel to monitor regulatory changes;
2. Establish ABLE accounts and transfer funds thereto;
3. Petition the appropriate Ohio Probate Court for instructions or modification.
   C. Duty of Loyalty. Trustee shall administer the Trust solely in Beneficiary’s best interests.
   D. Bond. [SELECT: “Required in the amount of $___” / “Waived”].
   E. Delegation. Trustee may delegate investment functions consistent with O.R.C. § 5808.07.
   F. Compensation. Trustee is entitled to reasonable compensation per O.R.C. § 5807.08, or as otherwise agreed in a separate Trustee Fee Schedule.
   G. Accountings. Trustee shall provide annual written accountings to Beneficiary (or guardian) and Settlor (if living).
   H. Removal & Succession. Settlor (if competent), or a majority of adult remainder beneficiaries thereafter, may remove Trustee with 30 days’ written notice, provided a qualified successor accepts appointment. Corporate fiduciaries must be licensed in Ohio.

VI. REPRESENTATIONS & WARRANTIES

A. Settlor represents that (i) the property transferred is free of liens, (ii) Settlor has full authority to convey such property, and (iii) establishment of this Trust will not render Settlor insolvent.
B. Trustee represents that it (i) has reviewed this Trust Agreement, (ii) is qualified to serve under Ohio law, and (iii) will administer the Trust in accordance with its terms and applicable law.
C. Survival. The warranties in this Article survive acceptance of the Trust property and continue throughout the Trust administration.

VII. COVENANTS & RESTRICTIONS

A. No Commingling. Trustee shall maintain Trust assets separate from personal or other fiduciary assets.
B. Records. Trustee shall keep contemporaneous records sufficient to demonstrate compliance with § IV and applicable benefit rules.
C. Notice of Benefit Changes. Beneficiary (or guardian) shall promptly notify Trustee of any change in Governmental Benefits or eligibility status.
D. Tax Elections. Trustee shall take reasonable steps to qualify the Trust as a Qualified Disability Trust when advantageous, and to file IRS Form 1041 annually.
E. Investment Policy. Trustee shall adopt a written investment policy within 90 days of accepting trusteeship.

VIII. DEFAULT & REMEDIES

A. Events of Default.

1. Breach of fiduciary duty;
2. Failure to render required Accountings within 60 days after written demand;
3. Misappropriation or commingling of assets;

4. Conviction of Trustee (or key personnel) for a crime involving dishonesty.
   B. Cure Period. This Agreement creates no mandatory cure period that delays relief otherwise available under Ohio law.
   C. Remedies. In addition to removal per § V(H), any interested party may seek:

5. Injunctive relief compelling compliance or restraining breach;

6. Surcharge or other relief authorized by applicable law;
7. Attorneys’ fees and costs, payable from the Trust Estate unless the court orders otherwise due to Trustee misconduct.

IX. RISK ALLOCATION

A. Reimbursement. Trustee reimbursement is governed by R.C. § 5807.09. This Agreement creates no broader indemnity for a breach of trust.
B. Limitation of Liability. No term relieves the Trustee of liability for a breach committed in bad faith or with reckless indifference to the Trust's purposes or the Beneficiary's interests under R.C. § 5810.08. Damages and personal liability are governed by §§ 5810.02 and 5810.10; no blanket Trust-assets-only cap applies.
C. Insurance. Trustee may purchase fiduciary liability insurance payable from the Trust Estate.
D. External Events. Events beyond Trustee's control may be considered under the applicable fiduciary standard but do not alter the statutory liability rules.

X. DISPUTE RESOLUTION

A. Governing Law. This Trust Agreement shall be construed in accordance with the laws of the State of Ohio, without regard to conflicts-of-law principles.
B. Forum Selection. Venue for judicial proceedings lies with the [COUNTY] County Probate Court, State of Ohio. Because this Trust is an inter vivos trust, the probate court's jurisdiction over Trust matters is concurrent with, not exclusive of, that of the general division of the Court of Common Pleas, pursuant to R.C. § 2101.24(B)(1)(b).
C. Limited Arbitration. Disputes solely relating to the amount or reasonableness of Trustee’s compensation or Accountings shall, at the election of any party in interest, be resolved by binding arbitration conducted in [CITY, OH] under the Commercial Arbitration Rules of the American Arbitration Association. The arbitrator must be (i) a licensed Ohio attorney with at least 10 years’ trust/estates experience, or (ii) a retired Ohio probate judge.
D. Injunctive Relief. Nothing in § X(C) restricts any party from seeking temporary, preliminary, or permanent injunctive relief in probate court to enforce Trust terms or protect assets.
E. Jury Rights. This Agreement does not waive any jury right. In a probate-court proceeding, R.C. § 2101.31 governs whether questions of fact are determined by the judge or tried before a jury.

XI. GENERAL PROVISIONS

A. Amendments. The Trust may be reformed or amended only by the Probate Court upon petition, notice to interested parties, and a finding that such modification is consistent with preserving Governmental Benefits and the Settlor’s intent.
B. Severability. Any invalid provision shall be severed; the remainder shall be enforceable.
C. Assignment. Interests in the Trust are not subject to voluntary or involuntary alienation, assignment, or anticipation by Beneficiary (spendthrift protection).
D. Merger Clause. This document constitutes the entire agreement regarding the Trust.
E. Counterparts & Electronic Signatures. Executed counterparts, including electronic signatures compliant with the Ohio Uniform Electronic Transactions Act, shall constitute one instrument.
F. Headings. Headings and section titles are for reference only and do not affect interpretation.

XII. TERMINATION & REMAINDER

A. Termination. The Trust shall terminate on the earliest of:

1. Beneficiary’s death;
2. Exhaustion of Trust assets; or
3. Court order terminating or modifying the Trust under R.C. §§ 5804.10 to 5804.13 (e.g., upon a determination that no purpose of the Trust remains to be achieved, upon consent of the beneficiaries where continuance is not necessary to achieve a material purpose, or because of circumstances not anticipated by Settlor).
   B. Disposition of Remainder. Upon termination under § XII(A)(1) or (3), Trustee shall distribute the remaining Trust Estate, free of trust, to [PRIMARY REMAINDER BENEFICIARY], or if such person is not then living, to [ALTERNATE REMAINDER BENEFICIARIES] per stirpes.

XIII. EXECUTION BLOCK

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

__________________________________
[SETTLOR NAME], Settlor

Date: _____________________________

__________________________________
[TRUSTEE NAME], Trustee

Date: _____________________________

STATE OF OHIO )
) SS:
COUNTY OF [____________] )

Acknowledged before me this ____ day of __________, 20__, by [SETTLOR NAME] and [TRUSTEE NAME].

__________________________________
Notary Public
My Commission Expires: ___________

[Seal]

SCHEDULE A – Initial Trust Property

1. [Description of asset]
2. [Description of asset]