SPECIAL NEEDS TRUST AGREEMENT

(South Carolina – Third-Party, Irrevocable)

[// GUIDANCE: This template is drafted as a third-party supplemental (“special”) needs trust intended to protect a disabled Beneficiary’s eligibility for needs-based governmental benefits (e.g., SSI, Medicaid) while providing discretionary supplemental support. If the trust will be funded with the Beneficiary’s own assets, insert the OPTIONAL Payback Provision contained in § 4.09 and confirm compliance with 42 U.S.C. § 1396p(d)(4)(A). Always tailor to the client’s specific circumstances and current South Carolina & federal law.]

TABLE OF CONTENTS

1. Article I ‒ Establishment of Trust
2. Article II ‒ Definitions
3. Article III ‒ Administration; Trustee Powers
4. Article IV ‒ Distribution Standards
5. Article V ‒ Spendthrift; Government Benefit Preservation
6. Article VI ‒ Trustee Provisions; Indemnification
7. Article VII ‒ Risk Allocation & Liability Limitation
8. Article VIII ‒ Dispute Resolution; Governing Law
9. Article IX ‒ General Provisions
10. Article X ‒ Execution & Acknowledgment

ARTICLE I

ESTABLISHMENT OF TRUST

§ 1.01 Parties

(a) Settlor: [SETTLOR NAME], residing at [ADDRESS] (“Settlor”).
(b) Initial Trustee: [TRUSTEE NAME], residing at [ADDRESS] (“Trustee”).
(c) Beneficiary: [BENEFICIARY NAME], date of birth [DATE], Social Security No. xxx-xx-[LAST 4] (“Beneficiary”).

§ 1.02 Trust Name

This trust shall be known as the “[BENEFICIARY NAME] Supplemental Needs Trust” (the “Trust”).

§ 1.03 Effective Date

The Trust is created on the Effective Date of execution shown in Article X.

§ 1.04 Irrevocability

The Trust is irrevocable. Settlor retains no reversionary interest and no power to alter, amend, revoke, or terminate except as expressly provided herein.

§ 1.05 Governing Instrument

This Agreement, together with any duly executed amendments, constitutes the complete terms of the Trust.

ARTICLE II

DEFINITIONS

Alphabetical key terms used throughout this Agreement:

“Accounting Period” – each calendar year ending 31 December, or shorter period ending on Trust termination.

“Applicable Government Assistance Program(s)” – any federal, state, or local needs-based benefit program including, without limitation, Supplemental Security Income (“SSI”) and Medicaid.

“Discretionary Distribution” – a distribution made in the sole and absolute discretion of the Trustee, not subject to a standard enforceable by the Beneficiary or any third party.

“Qualified Disability” – a physical or mental impairment that results in marked and severe functional limitations and that is expected to last not less than twelve (12) months or result in death, as determined under 42 U.S.C. § 1382c(a)(3), or any successor provision.

“SC Probate Court” – the Probate Court of the county in South Carolina in which this Trust is administered or such other South Carolina Probate Court having jurisdiction.

“Special Needs” – non-support, non-maintenance goods or services that enhance the Beneficiary’s quality of life, including but not limited to medical, dental, therapeutic, educational, recreational, and technological items not otherwise provided by Applicable Government Assistance Programs.

“Trust Assets” – the Trust capital and all income and accretions thereto.

ARTICLE III

ADMINISTRATION; TRUSTEE POWERS

§ 3.01 Funding the Trust

(a) Initial corpus: [DESCRIPTION OR $AMOUNT].
(b) Additional contributions from any person other than the Beneficiary may be accepted so long as consistent with Article V.

[// GUIDANCE: If accepting Beneficiary assets, include § 4.09 Payback Provision and coordinate with Medicaid agency.]

§ 3.02 Situs & Governing Law

The Trust shall be administered in South Carolina and governed by the South Carolina Trust Code, S.C. Code Ann. § 62-7-101 et seq., and other applicable South Carolina law, except as pre-empted by controlling federal law (including 42 U.S.C. § 1396p).

§ 3.03 Trustee Powers

Trustee shall have all powers granted under S.C. Code Ann. § 62-7-815 and any successor statute, together with the following illustrative powers, each to be exercised in a fiduciary capacity:

1. Invest and reinvest Trust Assets in any prudent investment;
2. Employ and compensate attorneys, accountants, advisors, and care managers;
3. Distribute income or principal pursuant to Article IV;
4. Participate in pooled investment vehicles;
5. Prosecute or defend claims in the name of the Trust or Trustee;
6. Execute documents, open accounts, and otherwise act to carry out Trust purposes.

§ 3.04 Bond & Accounting

(a) Bond: [REQUIRED / WAIVED] pursuant to S.C. Code Ann. § 62-7-702.
(b) Annual Accounting: Trustee shall deliver a written accounting for each Accounting Period to the Beneficiary (if legally competent) and to [DESIGNATED RECIPIENT(S)]. Objections must be filed with the SC Probate Court within ninety (90) days after delivery; otherwise the accounting is deemed approved.

ARTICLE IV

DISTRIBUTION STANDARDS

§ 4.01 Purpose

The Trust is intended to provide for the Supplemental Needs of the Beneficiary and to prevent disqualification from Applicable Government Assistance Programs. Distributions shall be wholly discretionary; no portion of the Trust shall be considered a resource available to the Beneficiary.

§ 4.02 Trustee’s Sole Discretion

The Trustee may, but shall never be required to, make Discretionary Distributions of income and/or principal for the Beneficiary’s Special Needs. The Beneficiary possesses no right to compel any distribution.

§ 4.03 Priority of Expenditures

1. Trust administration expenses;
2. Taxes attributable to the Trust;
3. Beneficiary’s Supplemental Needs.

§ 4.04 Prohibited Distributions

The Trustee shall not:
(a) Make cash distributions directly to the Beneficiary except as de minimis amounts permissible under SSI resource rules;
(b) Pay for any item that would reduce or eliminate the Beneficiary’s eligibility for needs-based benefits unless the Trustee, in good-faith discretion, determines the benefit of such payment outweighs the loss of assistance.

§ 4.05 Payments to Third Parties

Distributions shall, whenever feasible, be made directly to service providers or vendors and not to the Beneficiary.

§ 4.06 Suspension of Distributions

If necessary to maintain eligibility for benefits, the Trustee may suspend distributions temporarily without court order.

§ 4.07 Emergency Distributions

Notwithstanding the foregoing, the Trustee may distribute funds for the Beneficiary’s health, safety, or welfare in an emergency, even if such distribution may affect benefit eligibility, but only after reasonable efforts to obtain alternative resources.

§ 4.08 Termination & Final Distribution

The Trust shall terminate upon the earliest of:
(a) The Beneficiary’s death;
(b) The exhaustion of Trust Assets; or
(c) The Trustee’s reasonable determination that the Trust is no longer necessary or advisable to accomplish its purpose, subject to SC Probate Court approval.

Upon termination, remaining Trust Assets shall be distributed to the Remainder Beneficiaries identified in Schedule A.

§ 4.09 OPTIONAL – Payback Provision (for Self-Settled SNT)

[INCLUDE IF APPLICABLE] Upon the Beneficiary’s death, and after payment of allowable administrative expenses, the Trustee shall reimburse the South Carolina Department of Health and Human Services or any other state Medicaid agency that has provided medical assistance to the Beneficiary, up to an amount equal to the total Medicaid benefits paid on behalf of the Beneficiary which have not previously been repaid, consistent with 42 U.S.C. § 1396p(d)(4)(A).

ARTICLE V

SPENDTHRIFT; GOVERNMENT BENEFIT PRESERVATION

§ 5.01 Spendthrift Provision

Pursuant to S.C. Code Ann. § 62-7-502, the Trust Assets, including any right to current or future distributions, shall not be subject to the Beneficiary’s voluntary or involuntary transfer, assignment, or pledge, nor to legal process, creditor claims, or seizure.

§ 5.02 No Support Obligation

This Trust is intended to supplement, not replace, any statutory or common-law duty of support owed to the Beneficiary. The Trustee shall not consider any such duty or outside resources when exercising discretion unless required to preserve benefits.

§ 5.03 Interaction with Public Benefits

The Trustee shall coordinate distributions with government benefit rules; engage qualified benefits counsel as needed; and provide requested reports to benefit agencies.

§ 5.04 Amendment to Preserve Benefits

The Trustee, with written consent of a Trust Protector (if appointed) or upon order of the SC Probate Court, may amend the Trust to maintain or achieve compliance with federal or state benefit eligibility requirements, provided the Trust’s material purpose remains intact.

ARTICLE VI

TRUSTEE PROVISIONS; INDEMNIFICATION

§ 6.01 Successor Trustee

(a) Order of Succession: [LIST SUCCESSOR TRUSTEES].
(b) A successor shall accept appointment in writing and shall be vested with title to Trust Assets without further act.

[// GUIDANCE: Consider corporate fiduciary or pooled trust as backup.]

§ 6.02 Trustee Compensation

Trustee shall be entitled to reasonable compensation in accordance with S.C. Code Ann. § 62-7-708 or as otherwise agreed in writing.

§ 6.03 Standard of Care

Trustee shall administer the Trust as a prudent person would, consistent with the purposes of the Trust and the needs of the Beneficiary, and in accordance with S.C. Code Ann. § 62-7-804.

§ 6.04 Indemnification of Trustee

To the fullest extent permitted by law, the Trustee shall be indemnified out of the Trust Assets against any liability, claim, or expense (including reasonable attorneys’ fees) incurred by reason of serving as Trustee, except for liability arising from the Trustee’s bad faith, gross negligence, or intentional misconduct.

§ 6.05 Liability of Trustee

No Trustee shall be personally liable to any person for any action taken in good faith reliance on this Agreement.

§ 6.06 Trustee Removal & Resignation

(a) Removal: The SC Probate Court, or the Trust Protector if appointed, may remove a Trustee for cause, including substantial breach of trust.
(b) Resignation: A Trustee may resign by giving at least thirty (30) days’ written notice to the Settlor (if living), the Beneficiary, and the SC Probate Court, unless the Court waives notice.

ARTICLE VII

RISK ALLOCATION & LIABILITY LIMITATION

§ 7.01 Limitation of Liability

Any liability of the Trustee, in any capacity, shall be limited to the Trust Assets; no party shall seek recovery from the personal assets of the Trustee or from any settlor or beneficiary.

§ 7.02 Insurance

The Trustee may obtain fiduciary liability insurance payable from Trust Assets.

§ 7.03 Force Majeure

The Trustee shall not be liable for failure to act when prevented by events beyond reasonable control, including natural disaster, war, governmental action, pandemics, or similar force majeure circumstances.

ARTICLE VIII

DISPUTE RESOLUTION; GOVERNING LAW

§ 8.01 Governing Law

This Agreement and any dispute hereunder shall be governed by and construed in accordance with the laws of the State of South Carolina (without regard to conflict-of-laws rules), except as pre-empted by federal law.

§ 8.02 Exclusive Forum

The South Carolina Probate Court shall have exclusive jurisdiction over all matters concerning the Trust, except as provided in § 8.03.

§ 8.03 Limited Arbitration

(a) Scope: Any dispute solely concerning the reasonableness of Trustee compensation or the Trust’s annual accounting may, at the election of the Trustee or a majority of qualified beneficiaries, be submitted to binding arbitration under the South Carolina Uniform Arbitration Act.
(b) Procedure: A single arbitrator with at least five (5) years’ fiduciary-law experience shall decide the matter; the arbitrator may award fees as justice requires.
(c) Exclusions: Issues of Trust validity, construction, or removal of Trustee are reserved to the SC Probate Court.

§ 8.04 Jury Waiver

Because matters of trust administration fall within the equitable jurisdiction of probate courts, no party shall be entitled to a trial by jury.

§ 8.05 Injunctive Relief

The Trustee, Settlor, Trust Protector, or any qualified beneficiary may seek injunctive relief from the SC Probate Court to enforce the terms of this Trust.

ARTICLE IX

GENERAL PROVISIONS

§ 9.01 Amendments

Except as otherwise provided, only the SC Probate Court may amend this Agreement to (i) comply with changes in applicable law, or (ii) further the Trust’s purpose without adversely affecting the Beneficiary’s benefits.

§ 9.02 No Merger

Legal and equitable titles shall not merge in any circumstance so as to cause the Trust to terminate by operation of law.

§ 9.03 Assignment

No interest in the Trust may be assigned or encumbered except as expressly permitted herein.

§ 9.04 Severability

If any provision is held invalid, the remaining provisions shall continue in full force to the maximum extent permitted.

§ 9.05 Entire Agreement

This instrument constitutes the entire agreement of the parties with respect to the Trust and supersedes all prior statements, whether oral or written.

§ 9.06 Counterparts; Electronic Signatures

This Agreement may be executed in multiple counterparts, each deemed an original. Electronic or facsimile signatures shall be treated as originals for all purposes.

ARTICLE X

EXECUTION & ACKNOWLEDGMENT

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

10.01 Signatures

Settlor:

[SETTLOR NAME]

Trustee:

[TRUSTEE NAME]

10.02 Witnesses

(Required under S.C. Code Ann. § 62-2-503)

1. _____ Date: __
2. _____ Date: __

10.03 Notary Acknowledgment (South Carolina)

State of South Carolina )
County of _______ ) SS

On this __ day of __, 20__, before me, the undersigned Notary Public, personally appeared [SETTLOR NAME] and [TRUSTEE NAME], known to me (or satisfactorily proven) to be the person(s) whose name(s) are subscribed to the foregoing instrument, and acknowledged that they executed the same for the purposes therein contained.

Notary Public for South Carolina
My Commission Expires: ____

SCHEDULE A

Remainder Beneficiaries

1. [NAME], relationship: [RELATION], share: [PERCENTAGE]
2. [NAME], relationship: [RELATION], share: [PERCENTAGE]
   (If any Remainder Beneficiary predeceases the Beneficiary, that share shall lapse and pass pro rata to surviving Remainder Beneficiaries unless otherwise provided.)

[// GUIDANCE: Attach additional schedules for (i) Successor Trustee order, (ii) Trust Protector designation, or (iii) specific bequests. Review with tax counsel regarding gift-tax treatment and potential generation-skipping transfer tax issues. Confirm Medicaid compliance language with latest agency guidance before finalizing.]