Special Needs Trust - Oregon

SPECIAL NEEDS TRUST AGREEMENT

(Oregon)

I. DOCUMENT HEADER

Trust Name: “[TRUST NAME] Special Needs Trust”
Settlor/Grantor: [GRANTOR FULL LEGAL NAME] (“Settlor”)
Initial Trustee: [TRUSTEE FULL LEGAL NAME] (“Trustee”)
Primary Beneficiary: [PRIMARY BENEFICIARY FULL LEGAL NAME], DOB [MM/DD/YYYY] (“Beneficiary”)
Effective Date: [MONTH DAY, YEAR]
Governing Law: The laws of the State of Oregon, including the Oregon Uniform Trust Code, and applicable federal law.
Forum for Judicial Proceedings: Circuit Court for [COUNTY] County, State of Oregon (ORS 130.060, 130.065). Oregon law does not create a separate statewide "Probate Court"; some counties maintain an internal probate docket as a matter of local administrative practice only.

Recitals
A. Settlor desires to establish an irrevocable trust for the sole benefit of Beneficiary, who has a disability as defined by 42 U.S.C. § 1382c(a)(3).
B. The purpose of this Trust is to supplement, and not supplant, government benefits, preserving Beneficiary’s eligibility for needs-based programs such as Supplemental Security Income (“SSI”) and Medicaid.
C. Settlor is funding the Trust with the property described in Schedule A, and may make additional contributions from time to time.

D. Trustee is willing to hold, manage, and distribute the Trust Estate pursuant to the terms of this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants herein, Settlor hereby delivers the property described in Schedule A to Trustee, who accepts the same in trust, to hold, administer, and distribute as follows:

II. TABLE OF CONTENTS

1 Definitions
2 Creation, Purpose, and Funding
3 Trustee Provisions
4 Distribution Standards
5 Government-Benefit Protection Measures
6 Spendthrift & Creditor Protection
7 Accounting & Reporting
8 Risk Allocation; Indemnification & Liability Caps
9 Termination & Final Distribution
10 Dispute Resolution
11 General Provisions
12 Execution Block
Schedule A – Funding Schedule
Schedule B – Trustee Fee Schedule

1. DEFINITIONS

For ease of reference, capitalized terms used in this Agreement have the meanings set forth below. Definitions apply equally to singular and plural forms.

“Accounting Period” – The twelve-month period ending each [MONTH/DAY], or such shorter period as may result upon termination of the Trust.

“Beneficiary” – The individual identified in Section I who is the sole lifetime beneficiary of this Trust.

“Government Benefits” – Any means-tested or needs-based public assistance program, including but not limited to SSI, Medicaid, SNAP, and housing subsidies, for which Beneficiary is now or may become eligible.

“Qualified Disability Expense” (“QDE”) – A good or service that enhances Beneficiary’s health, safety, welfare, or quality of life and is permitted to be paid by a special needs trust without compromising Government Benefits.

“Trust Estate” – All property, real or personal, tangible or intangible, and all additions and accretions thereto, wherever located, held from time to time in this Trust.

“Trustee” – The person or entity acting from time to time as trustee, including any Successor Trustee.

[Add additional defined terms as needed.]

2. CREATION, PURPOSE, AND FUNDING

2.1 Irrevocability. This Trust is irrevocable. Settlor retains no power to alter, amend, revoke, or terminate the Trust except as expressly provided herein.

2.2 Supplemental Purpose. The Trust is intended to supplement, not supplant, Beneficiary’s Government Benefits. Distributions shall be made in the sole and absolute discretion of Trustee, subject to the standards in Article 4.

2.3 Funding. The Trust is initially funded with the assets listed on Schedule A. Additional property may be added by Settlor or any third party with Trustee’s consent; all such property shall become part of the Trust Estate and be administered under this Agreement.

For any third-party funding option, assets of the Beneficiary's spouse are not third-party assets for SSI purposes under SSA POMS SI 01120.200. The Trustee shall not accept them under that option; refer any proposed contribution to benefits counsel for separate planning.

2.4 Tax Characterization. [Drafting attorney: specify whether this Trust is to be treated as a grantor trust or a complex (non-grantor) trust for federal and Oregon income tax purposes, and identify the taxpayer identification number to be used for Trust income reporting, based on the particular funding source and tax objectives of Settlor and Beneficiary.]

3. TRUSTEE PROVISIONS

3.1 Acceptance. By executing this Agreement, Trustee accepts the appointment and all duties herein.

3.2 General Powers. Subject to the limitations of Article 5, Trustee shall have all powers granted to trustees under Oregon law, including the general powers of a trustee under ORS 130.720 (UTC 815) and the specific powers enumerated in ORS 130.725 (UTC 816), together with any additional powers reasonably necessary to administer the Trust.

3.3 Investment Standards. Trustee shall invest Trust assets prudently, taking into account the Trust’s purposes, terms, distribution requirements, and other relevant circumstances.

3.4 Successor Trustee. If the office of Trustee becomes vacant, [SUCCESSOR TRUSTEE NAME] shall serve. If no named successor is willing or able, a successor may be appointed by (i) majority of adult remainder beneficiaries, or (ii) the Circuit Court pursuant to ORS 130.615.

3.5 Bond. [Insert requirement or waiver of fiduciary bond.]

3.6 Compensation. Trustee shall receive compensation in accordance with Schedule B, plus reimbursement of reasonable expenses.

4. DISTRIBUTION STANDARDS

4.1 Sole Benefit. All distributions must be for the sole benefit of Beneficiary.

4.2 Discretionary Distributions. Trustee may, but is not required to, distribute so much of the net income and principal as Trustee, in sole and absolute discretion, deems advisable for any QDE that will not jeopardize Beneficiary’s Government Benefits.

4.3 Prohibited Distributions. Trustee shall not make any distribution that would be considered “income” or “support and maintenance” for purposes of SSI or Medicaid unless (i) the impact on benefits has been fully considered, and (ii) Trustee determines the distribution is in Beneficiary’s best interests notwithstanding such impact.

4.4 Third-Party Payments. Where practicable, Trustee shall make distributions directly to the provider of goods or services rather than to Beneficiary.

4.5 Emergency Distributions. If denying a distribution would endanger Beneficiary’s health or safety, Trustee may distribute funds even if benefits are reduced or suspended, provided Trustee documents the rationale.

4.6 No Mandatory Withdrawals. Beneficiary shall have no right to compel distributions; no part of the Trust Estate shall be deemed available to Beneficiary.

5. GOVERNMENT-BENEFIT PROTECTION MEASURES

5.1 Compliance Intent. This Trust is intended to qualify as a “supplemental needs trust” under applicable SSI and Medicaid regulations, including 42 U.S.C. § 1396p and corresponding regulations. It shall be interpreted and administered accordingly.

5.2 Notice & Reporting. Trustee shall (i) give required notices to the Oregon Department of Human Services or the Social Security Administration upon Trust establishment and upon material changes; (ii) provide annual accountings upon request.

5.3 Payback (Include ONLY if this is a first-party/self-settled trust funded with Beneficiary's own assets under 42 U.S.C. § 1396p(d)(4)(A); delete this Section 5.3 in its entirety for a third-party trust, which has no Medicaid payback obligation).
Upon Beneficiary’s death, Trustee shall repay to the State(s) providing Medicaid benefits an amount equal to the total medical assistance paid on Beneficiary’s behalf, prior to any other distribution, as required by 42 U.S.C. § 1396p(d)(4)(A).

5.4 Modification to Preserve Benefits. If changes in law could disqualify the Trust, Trustee or the Circuit Court may amend the Trust in the least restrictive manner necessary to maintain compliance.

6. SPENDTHRIFT & CREDITOR PROTECTION

6.1 Spendthrift Clause. To the maximum extent allowed by law, no interest in the Trust Estate shall be subject to voluntary or involuntary transfer, assignment, pledge, or seizure by legal or equitable process.

6.2 Trustee Obligations and Trust Claims. Contract, tort, and property-related liability are governed by ORS 130.845. A properly disclosed fiduciary contract generally does not impose personal liability on Trustee, but tort or property-related liability may be personal when Trustee is personally at fault. No beneficiary or Settlor is personally liable solely by reason of that status.

7. ACCOUNTING & REPORTING

7.1 Annual Accounting. Within 90 days after each Accounting Period, Trustee shall furnish an accounting to Beneficiary’s legal representative and, if required, to the Circuit Court.

7.2 Right to Review. Objections must be made in writing within 120 days after receipt; otherwise the accounting shall be deemed approved.

7.3 Records Retention. Trustee shall retain Trust records for at least seven (7) years after termination.

8. RISK ALLOCATION; INDEMNIFICATION & LIABILITY CAPS

8.1 Standard of Care. Trustee shall exercise reasonable care, skill, and caution, consistent with a prudent person acting in a like capacity.

8.2 Exculpation. To the fullest extent permitted by ORS 130.835 (exculpation of trustee), Trustee shall not be liable for any loss to the Trust Estate, except to the extent the loss arises from a breach of trust committed by Trustee in bad faith or with reckless indifference to the purposes of the Trust or the interests of the Beneficiary.

8.3 Reimbursement. Trustee reimbursement is governed by ORS 130.640. This Agreement creates no broader indemnity for a breach of trust.

8.4 Liability Standards. Remedies, damages, exculpation, and personal liability are governed by ORS 130.800, 130.805, 130.835, and 130.845; no blanket Trust-assets-only cap applies.

8.5 Insurance. Trustee may purchase fiduciary liability insurance, premiums payable from the Trust Estate.

9. TERMINATION & FINAL DISTRIBUTION

9.1 Termination Events. The Trust shall terminate upon the earliest of:
(a) Beneficiary’s death;
(b) Exhaustion of the Trust Estate;
(c) Court order or amendment under Section 5.4 that calls for termination.

9.2 Distribution Upon Beneficiary’s Death. After payment of taxes, administrative expenses, and any Medicaid payback required under Section 5.3, Trustee shall distribute the remaining Trust Estate to the remainder beneficiaries:
(i) [NAME] – [percentage];
(ii) [NAME] – [percentage];
or, if none survive, to Settlor’s heirs-at-law.

9.3 Early Termination for De Minimis Value. If the Trust Estate falls below [$ 25,000] and Trustee determines continued administration is impractical, Trustee may terminate the Trust and distribute the remaining assets as set forth in Section 9.2, subject to Medicaid payback obligations (if any).

10. DISPUTE RESOLUTION

10.1 Exclusive Jurisdiction. Pursuant to ORS 130.060 and 130.065, the Circuit Court for [COUNTY] County shall have primary jurisdiction over all matters concerning this Trust, except as provided in Section 10.3.

10.2 Non-Judicial Settlement. Parties may enter into a binding non-judicial settlement agreement on matters allowed under Oregon law.

10.3 Limited Arbitration. Any controversy relating solely to Trustee compensation or investment performance, and not requiring court supervision, shall be submitted to binding arbitration administered by the American Arbitration Association under its Commercial Rules then in effect. Venue shall be [CITY, Oregon]. Judgment may be entered in any court of competent jurisdiction. Injunctive relief to protect Trust assets may still be sought in the Circuit Court.

10.4 Jury Rights. This Agreement does not waive any jury right that otherwise exists and does not treat a trust proceeding as categorically identical to a probate proceeding.

10.5 Attorney Fees. Under ORS 130.815, the court may award attorney fees and costs as justice and equity require; this Agreement creates no automatic prevailing-party entitlement.

11. GENERAL PROVISIONS

11.1 Amendment. Except as expressly provided in Sections 5.4 and 10.2, this Trust may not be altered or amended.

11.2 Severability. If any provision is held invalid, the remaining provisions shall remain in full force, and the Trust shall be construed to effectuate Settlor’s intent.

11.3 Spendthrift Savings Clause. If any spendthrift provision is deemed invalid, Trustee shall have discretion to create equivalent protective provisions to fulfill the intent of Article 6.

11.4 Headings. Headings are for convenience only and do not affect interpretation.

11.5 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which is an original. Electronic signatures are binding to the same extent as originals.

11.6 Entire Agreement. This instrument constitutes the entire agreement of the parties concerning the Trust. No extrinsic evidence may be used to vary its terms.

12. EXECUTION BLOCK

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

SETTLOR:
_________________________________
[GRANTOR NAME], Settlor
Date: ___________________________

TRUSTEE:
_________________________________
[TRUSTEE NAME], Trustee
Date: ___________________________

STATE OF OREGON )
: ss.
COUNTY OF __________ )

On this ___ day of __________, 20__, before me, a Notary Public, personally appeared [GRANTOR NAME] and [TRUSTEE NAME], personally known to me (or proved to me on the basis of satisfactory evidence) to be the persons whose names are subscribed to the within instrument, and acknowledged that they executed the same for the purposes therein contained.

_________________________________
Notary Public for Oregon
My Commission Expires: ______________

SCHEDULE A

Initial Funding Property

1. [Description of asset – e.g., “$100,000 cash transferred by wire on Effective Date”]
2. [Description of additional assets]

SCHEDULE B

Trustee Fee Schedule
• Annual fiduciary fee: [___]% of first $___ of assets; [___]% thereafter.
• Extraordinary services billed at [$___]/hour.
• Reimbursement of reasonable out-of-pocket expenses.