SPECIAL NEEDS TRUST AGREEMENT
State of Oklahoma
[// GUIDANCE: This template is drafted as a third-party irrevocable supplemental needs trust designed to preserve a disabled beneficiary’s eligibility for means-tested government benefits under Oklahoma and federal law. If the trust is instead to be funded with assets of the Beneficiary (a “first-party” SNT), insert the optional Medicaid Payback language in § 3.10 and confirm compliance with 42 U.S.C. § 1396p(d)(4)(A). Carefully review all bracketed placeholders and tailor fiduciary, tax, and administrative provisions to the specific matter.]
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 (Optional)
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:
- [NAME OF SETTLOR], a resident of the State of Oklahoma, (“Settlor”);
- [NAME OF TRUSTEE], whose address is [ADDRESS] (“Trustee”); and
- [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 applicable Oklahoma law and 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.
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 support, food, or shelter unless such items are not otherwise provided by Government Benefits and the distribution will not jeopardize eligibility.
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 Oklahoma’s Uniform Prudent Investor Act.
(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, 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) 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 (Optional—First-Party SNT Only)
[// GUIDANCE: Include this paragraph ONLY if the Trust is funded with Beneficiary’s own assets.]
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).
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.
[// GUIDANCE: Insert contingent beneficiary scheme; avoid naming the Beneficiary’s estate to maintain public-benefit safeguards.]
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
Any interested party may deliver written notice specifying the default. Trustee shall have 30 days to cure, unless the default involves misappropriation, in which case immediate action may be taken.
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
To the extent permissible under Oklahoma law, Trustee and its agents shall be indemnified and held harmless out of the Trust Assets against any liability, loss, or expense incurred in the administration of the Trust, except for losses arising from Trustee’s gross negligence, willful misconduct, or bad faith.
7.2 Limitation of Liability
Trustee’s liability shall be limited to the value of the Trust Assets under Trustee’s control at the time of the claim.
7.3 Insurance
Trustee may purchase fiduciary liability insurance, the premiums for which shall be an expense of the Trust.
7.4 Force Majeure
Trustee shall not be liable for failure to perform duties when prevented by acts of God, war, pandemic, or other events beyond Trustee’s reasonable control.
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
Exclusive jurisdiction and venue for all proceedings relating to the Trust shall lie in the District Court of [COUNTY] County, Oklahoma, sitting in probate.
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
Because Oklahoma probate proceedings are tried to the court, the parties waive any right to a jury trial to the fullest extent permitted by law.
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.
| ____ | ____ |
| [NAME OF SETTLOR], Settlor | Date |
| ____ | ____ |
| [NAME OF TRUSTEE], Trustee | 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.
| ____ | ____ |
| [OFFICER NAME & TITLE] | Date |
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: ___
[// GUIDANCE: Verify Oklahoma witnessing requirements and record retention policies. Where minor beneficiaries or guardians are involved, obtain court approval as necessary. File a Memorandum of Trust (short form) if public recording is desired without disclosing confidential terms.]
Schedule A – Initial Corpus
[List cash amounts, securities, life insurance proceeds, etc.]
End of Document