Special Needs Trust - Oklahoma

SPECIAL NEEDS TRUST AGREEMENT

State of Oklahoma

TABLE OF CONTENTS

I. Document Header
II. Definitions
III. Operative Provisions
    3.1 Creation and Funding
    3.2 Statement of Purpose
    3.3 Distributions for Supplemental Needs
    3.4 Distribution Standards and Limitations
    3.5 Government Benefit Preservation
    3.6 Investments and Administration
    3.7 Accounting, Records, and Reports
    3.8 Spendthrift Protection
    3.9 Termination Events
    3.10 Medicaid Payback (First-Party Only)
IV. Representations & Warranties
V. Covenants & Restrictions
VI. Default & Remedies
VII. Risk Allocation
VIII. Dispute Resolution
IX. General Provisions
X. Execution Block

I. DOCUMENT HEADER

THIS SPECIAL NEEDS TRUST AGREEMENT (this “Agreement” or “Trust”) is made and entered into as of [EFFECTIVE DATE] (the “Effective Date”) by and among:

1. [NAME OF SETTLOR], a resident of the State of Oklahoma, (“Settlor”);
2. [NAME OF TRUSTEE], whose address is [ADDRESS] (“Trustee”); and
3. [NAME OF BENEFICIARY], (“Primary Beneficiary” or “Beneficiary”), whose date of birth is [DOB] and who is disabled within the meaning of 42 U.S.C. § 1382c(a)(3).

The parties agree as follows:

A. Settlor desires to create an irrevocable trust to hold and manage property for the sole benefit of the Beneficiary.
B. The Trust is intended to qualify as a supplemental needs trust under the Oklahoma Discretionary and Special Needs Trust Act, 60 O.S. §§ 175.81-175.92, and applicable federal law, preserving the Beneficiary’s eligibility for means-tested public assistance.
C. Trustee accepts the duties herein on the terms and conditions set forth below.
D. [CHECK ONE — Trust Funding Source; this designation controls § 3.10]
    ☐ Third-Party Special Needs Trust. This Trust is funded exclusively with property belonging to Settlor and/or other third-party contributors, and at no time with Beneficiary’s own assets, income, or entitlements. Because the Trust holds no property of Beneficiary, it is not a “self-settled” trust, and the Medicaid payback requirement of 42 U.S.C. § 1396p(d)(4)(A) does not apply; § 3.10 is inapplicable and does not apply to this Trust.

    ☐ First-Party (Self-Settled) Special Needs Trust. This Trust is funded, in whole or in part, with assets belonging or attributable to Beneficiary (e.g., a personal injury settlement, inheritance, or accumulated benefits) and is established for Beneficiary, who is under sixty-five (65) years of age, by a parent, grandparent, legal guardian, or court of competent jurisdiction, as required by 42 U.S.C. § 1396p(d)(4)(A). The Medicaid payback provision at § 3.10 applies to this 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.

II. DEFINITIONS

For ease of reference, capitalized terms shall have the meanings set forth below:

“Accounting Period” – Each calendar year ending December 31, or such other period selected by Trustee consistent with § 3.7.
“Agreement” – This Special Needs Trust Agreement, as amended from time to time.
“Beneficiary” or “Primary Beneficiary” – [NAME OF BENEFICIARY].
“Code” – The Internal Revenue Code of 1986, as amended.
“Disability” – A condition meeting the definition of disability under 42 U.S.C. § 1382c(a)(3).
“Distribution” – Any payment from Trust Assets for the benefit of the Beneficiary.
“Expenses of Administration” – Costs described in § 3.6.
“Government Benefits” – Medicaid, Supplemental Security Income (“SSI”), housing assistance, or any other means-tested public assistance program.
“Person” – Any individual, corporation, partnership, trust, or other entity.
“Settlor” – [NAME OF SETTLOR].
“Special Needs” or “Supplemental Needs” – Those needs not otherwise met by Government Benefits, including, without limitation, medical care, therapies, education, transportation, and quality-of-life enhancements.
“State” – The State of Oklahoma.
“Successor Trustee” – A trustee appointed pursuant to § 5.3.
“Trust” – The trust created under this Agreement.
“Trust Assets” – All property transferred to, held by, or acquired by the Trust, including all income and appreciation thereon.
“Trustee” – [NAME OF TRUSTEE] and any Successor Trustee.

III. OPERATIVE PROVISIONS

3.1 Creation and Funding

(a) Irrevocable Trust. Settlor hereby irrevocably transfers and delivers to Trustee the property described in Schedule A (the “Initial Corpus”), to be held, administered, and distributed in accordance with this Agreement.
(b) Additional Contributions. Settlor or any other Person may, with Trustee’s consent, transfer additional property to the Trust, provided that any such contribution shall be subject to all terms herein.

3.2 Statement of Purpose

The Trust is established exclusively for the supplemental care and maintenance of the Beneficiary. Distributions shall be made only to enhance the Beneficiary’s quality of life and shall not supplant nor replace Government Benefits.

3.3 Distributions for Supplemental Needs

(a) Discretionary Standard. Trustee may, in Trustee’s sole and absolute discretion, make Distributions for the Beneficiary’s Supplemental Needs. Beneficiary shall have no right to compel any Distribution.
(b) Direct Payment. Where practicable, Trustee shall make payments directly to providers of goods and services rather than to the Beneficiary.
(c) Prohibited Distributions. Trustee shall not make any Distribution that Trustee reasonably believes would (i) render the Beneficiary ineligible for Government Benefits, or (ii) be treated as income or resource under benefit regulations, unless Trustee determines that the benefit of the Distribution outweighs the potential loss or reduction of such benefits.

3.4 Distribution Standards and Limitations

(a) Needs-Based Hierarchy. In evaluating requests, Trustee shall consider:
    1. Preservation of Government Benefits;
    2. Beneficiary’s foreseeable future needs; and
    3. Fiscal prudence of the Trust.
(b) Written Requests. Trustee may require written substantiation for any requested Distribution.
(c) No Support Obligation. Distributions are intended to be supplemental and not for basic shelter costs (e.g., rent, mortgage payments, real property taxes, homeowner's or renter's insurance required by a lender, and utilities) unless such items are not otherwise provided by Government Benefits and the distribution will not jeopardize eligibility. Consistent with the Social Security Administration's final rule Omitting Food From In-Kind Support and Maintenance Calculations, 89 Fed. Reg. 21199 (Mar. 27, 2024), effective September 30, 2024, food expenses are excluded from the ISM amount, but whether others provide all meals can still affect which shelter valuation rule applies under 20 C.F.R. § 416.1130(b)(2). Trustee shall review the household facts and other benefit rules before treating a food payment as benefits-neutral.

3.5 Government Benefit Preservation

Trustee shall administer the Trust consistent with all statutes, regulations, and program manuals governing Medicaid, SSI, and any other Government Benefits. Trustee may consult with benefits counsel and shall be reimbursed from Trust Assets for related professional fees.

3.6 Investments and Administration

(a) Prudent Investor Rule. Trustee shall invest and manage Trust Assets as a prudent investor, consistent with the Oklahoma Uniform Prudent Investor Act, 60 O.S. §§ 175.60-175.72.
(b) Expenses of Administration. Trustee may pay reasonable expenses, including taxes, legal and accounting fees, investment management fees, and Trustee compensation.
(c) Bond. [CHECK ONE] ☐ Required ☐ Waived. [If required, state amount/conditions.]

3.7 Accounting, Records, and Reports

(a) Annual Accountings. Within 90 days after each Accounting Period, Trustee shall deliver to Settlor (if living), Beneficiary, and any court having jurisdiction an accounting of Trust receipts, disbursements, and assets.
(b) Court Review. Trustee shall submit accountings to the [NAME OF COUNTY] County District Court sitting in probate when required by law or ordered by the court.

3.8 Spendthrift Protection

To the maximum extent permitted by law, including the spendthrift provision authorized by 60 O.S. § 175.85 and the creditor-protection provisions of the Oklahoma Discretionary and Special Needs Trust Act, 60 O.S. §§ 175.81-175.92, the Beneficiary’s interest in the Trust shall be involuntary-alienation and assignment-proof. No creditor or governmental agency (other than as expressly provided in § 3.10, and then only if this Trust is designated first-party/self-settled under Document Header Item D) shall have any lien, claim, or right to reach Trust Assets.

3.9 Termination Events

(a) Death of Beneficiary. Upon the Beneficiary’s death, Trustee shall distribute the remaining Trust Assets pursuant to § 3.11.
(b) Exhaustion of Trust Assets. The Trust shall terminate when Trust Assets are exhausted.
(c) Court Order or Statutory Mandate. Trustee shall comply with any final, non-appealable court order or statutory requirement necessitating termination.

3.10 Medicaid Payback (Applicable ONLY if First-Party/Self-Settled per Document Header Item D)

(a) First-Party Trusts. If, and only if, this Trust has been designated a First-Party (Self-Settled) Special Needs Trust under Document Header Item D, then, notwithstanding any contrary provision, upon termination during Beneficiary’s lifetime or at death, Trustee shall first reimburse the Oklahoma Health Care Authority or any other state Medicaid agency for all medical assistance paid on behalf of the Beneficiary, up to the total amount of such medical assistance, consistent with 42 U.S.C. § 1396p(d)(4)(A).

(b) Third-Party Trusts — No Payback. If this Trust has instead been designated a Third-Party Special Needs Trust under Document Header Item D, this § 3.10 does not apply. Because the Trust is funded exclusively with property of Settlor and/or other third-party contributors and holds no assets of Beneficiary, no Medicaid payback obligation arises under 42 U.S.C. § 1396p(d)(4)(A) or otherwise, and Trustee shall proceed directly to the remainder distribution in § 3.11.

3.11 Remainder Distribution

After satisfaction of § 3.10 (if applicable) and payment of all costs and taxes, Trustee shall distribute any remaining Trust Assets to the following takers:

1. [NAME] – [Relationship], or if not then living,
2. [NAME], per stirpes.

IV. REPRESENTATIONS & WARRANTIES

4.1 Settlor represents that:
(a) Settlor has full legal capacity and authority to establish this Trust;
(b) Assets transferred are free of liens or adverse claims; and
(c) Establishment of the Trust does not constitute a fraudulent transfer.

4.2 Trustee represents that:
(a) Trustee is duly qualified to serve and is not disqualified under Oklahoma law; and
(b) Trustee will faithfully discharge its duties in accordance with this Agreement and applicable law.

All representations and warranties shall survive the execution of this Agreement.

V. COVENANTS & RESTRICTIONS

5.1 Affirmative Covenants
(a) Fiduciary Duty. Trustee shall administer the Trust solely in the interest of the Beneficiary.
(b) Compliance. Trustee shall comply with all laws affecting the Trust.
(c) Notice. Trustee shall promptly notify Beneficiary (or legal representative) of any event materially affecting Government Benefits.

5.2 Negative Covenants
(a) No Self-Dealing. Trustee shall not engage in transactions that would constitute self-dealing or conflicts of interest, except with court approval.
(b) No Commingling. Trust Assets shall be kept separate from Trustee’s own assets.

5.3 Successor Trustee
(a) Designation. Upon the resignation, incapacity, or removal of Trustee, [NAME OF SUCCESSOR TRUSTEE] shall serve. Additional successors may be appointed by majority vote of adult remainder beneficiaries or by the probate court.
(b) Acceptance. Successor Trustee shall accept in writing and shall receive all trust records.

VI. DEFAULT & REMEDIES

6.1 Events of Default
(a) Material breach of fiduciary duties;
(b) Failure to provide required accountings;
(c) Misappropriation of Trust Assets; or
(d) Insolvency, conviction of a crime of dishonesty, or incapacity of Trustee.

6.2 Notice and Cure
An interested party may deliver written notice describing an alleged default, but this Agreement creates no mandatory cure period that delays relief available under Oklahoma law.

6.3 Remedies
(a) Removal and appointment of a Successor Trustee;
(b) Surcharge, restitution, and recovery of misapplied assets;
(c) Injunctive relief to prevent further harm; and
(d) Award of attorneys’ fees and costs to prevailing parties.

VII. RISK ALLOCATION

7.1 Indemnification of Trustee
Trustee reimbursement is governed by 60 O.S. § 1607.9. This Agreement creates no broader indemnity for a breach of trust.

7.2 Limitation of Liability
No term relieves Trustee from liability for a breach committed in bad faith or with reckless indifference to the Trust's purposes or the Beneficiary's interests under 60 O.S. § 175.57(F). Damages and personal liability are governed by § 175.57(C) and (H) and § 1609.5; no blanket Trust-assets-only cap applies.

7.3 Insurance
Trustee may purchase fiduciary liability insurance, the premiums for which shall be an expense of the Trust.

7.4 Force Majeure
Events beyond Trustee's control may be considered under the applicable fiduciary standard but do not alter the statutory liability rules.

VIII. DISPUTE RESOLUTION

8.1 Governing Law
This Agreement shall be governed by and construed in accordance with the laws of the State of Oklahoma, without regard to conflict-of-law principles.

8.2 Forum Selection
Oklahoma does not maintain a separate statutory probate court or probate division; the district court is a single court of general jurisdiction that also exercises original jurisdiction over trust proceedings under 60 O.S. § 175.23 and probate jurisdiction and venue under 58 O.S. § 1. Exclusive jurisdiction and venue for all proceedings relating to the Trust shall therefore lie in the District Court of [COUNTY] County, Oklahoma, sitting in probate, or any successor court with equivalent jurisdiction.

8.3 Limited Arbitration
Notwithstanding § 8.2, disputes solely concerning accountings, fees, or investment performance may be submitted to binding arbitration administered by the American Arbitration Association under its Commercial Rules, provided (i) all interested parties consent in writing, and (ii) the arbitral award is subject to confirmation by the probate court.

8.4 No Jury Trial
This Agreement does not waive any jury right that otherwise exists.

8.5 Injunctive Relief
Nothing herein shall limit a party’s right to seek temporary or permanent injunctive relief from the probate court to enforce any provision of this Agreement.

IX. GENERAL PROVISIONS

9.1 Amendment and Waiver
Settlor reserves no power to amend; however, Trustee may petition the probate court for judicial modification to comply with changes in law or to preserve Government Benefits. No waiver shall be effective unless in writing and approved by the court.

9.2 Assignment
Beneficiary’s interests are non-assignable. Trustee may not delegate fiduciary duties except to qualified agents consistent with § 3.6.

9.3 Successors and Assigns
This Agreement shall bind and inure to the benefit of the heirs, representatives, successors, and permitted assigns of the parties.

9.4 Severability
If any provision is held invalid or unenforceable, the remaining provisions shall remain in full force, and the court is authorized to reform the Agreement to effectuate its primary purpose.

9.5 Entire Agreement
This document constitutes the entire understanding of the parties and supersedes all prior agreements concerning the subject matter.

9.6 Counterparts; Electronic Signatures
This Agreement may be executed in counterparts, each deemed an original, and signatures transmitted electronically or by facsimile shall be deemed valid and binding.

X. EXECUTION BLOCK

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

[OPTIONAL – CORPORATE TRUSTEE ATTESTATION]
I, __________________________________, certify that I am an authorized officer of [CORPORATE TRUSTEE] and that I execute this Agreement on its behalf.

NOTARY ACKNOWLEDGMENT

State of Oklahoma )
County of ________ ) ss.

On this ____ day of __________, 20__, before me, the undersigned Notary Public, personally appeared ____________________________________, satisfactorily proven to me to be the person(s) whose name(s) is/are subscribed to the foregoing instrument, and acknowledged that he/she/they executed the same for the purposes therein contained.

_____________________________________
Notary Public
Commission No.: _____________________
My Commission Expires: _______________

Schedule A – Initial Corpus
[List cash amounts, securities, life insurance proceeds, etc.]

End of Document