Special Needs Trust - Texas

SUPPLEMENTAL NEEDS TRUST AGREEMENT

(TEXAS)

TABLE OF CONTENTS

1. Document Header
2. Definitions
3. Creation of Trust & Funding
4. Purpose; Special Needs Compliance
5. Distributions
6. Trustee Provisions
7. Representations & Warranties
8. Covenants & Restrictions
9. Default & Remedies
10. Risk Allocation
11. Dispute Resolution
12. General Provisions
13. Execution Block

1. DOCUMENT HEADER

Trust Name: “[TRUST NAME] Supplemental Needs Trust”

Grantor(s): [GRANTOR FULL LEGAL NAME(S)] (“Grantor”)

Trustee: [TRUSTEE FULL LEGAL NAME(S)] (“Trustee”)

Beneficiary: [BENEFICIARY FULL LEGAL NAME] (“Beneficiary”)

Effective Date: [EFFECTIVE DATE]

Governing Law: The laws of the State of Texas, including Texas Property Code Title 9, Subtitle B (the “Texas Trust Code”), and, as applicable, 42 U.S.C. § 1396p(d).

Forum Selection: Exclusive jurisdiction and venue in the district court of the county in Texas in which this Trust is administered (or, in a county maintaining a statutory probate court under Tex. Gov't Code Ch. 25, that statutory probate court), pursuant to Tex. Prop. Code §115.001.

Recitals
A. Grantor desires to establish an irrevocable trust for the sole benefit of the Beneficiary, who is a person with a disability as defined in 42 U.S.C. § 1382c(a)(3).
B. It is Grantor’s intent that the Trust qualify as a third-party supplemental needs trust so that Trust assets are not considered available resources for means-tested government benefit programs.
C. Trustee is willing to hold, manage, and distribute the Trust Estate in accordance with the terms of this Agreement.

2. DEFINITIONS

For ease of reference, capitalized terms used herein have the meanings set forth below.

“Accountings” – Periodic financial reports prepared by Trustee pursuant to Section 6.7.

“Approved Government Benefits” – Any federal, state, or local need-based assistance program including, without limitation, Supplemental Security Income (“SSI”) and Medicaid.

“Beneficiary” – The individual identified in the Document Header who is intended to benefit from this Trust.

“Distribution Request” – A written request delivered to Trustee describing the purpose and amount of a desired distribution.

“Qualified Disability Expenses” – Expenses related to the Beneficiary’s health, safety, maintenance, education, recreation, and quality of life that are not inconsistent with the preservation of Approved Government Benefits.

“Remainder Beneficiary(ies)” – Those person(s) or charity(ies) designated in Section 5.6 to receive any remaining Trust Estate upon termination.

“Special Needs” – Needs that supplement, and do not supplant, benefits otherwise available to the Beneficiary from any governmental or private source.

“Trust Estate” – All property, real or personal, tangible or intangible, and any substitutions, accretions, or proceeds thereof, held from time to time by Trustee under this Agreement.

3. CREATION OF TRUST & FUNDING

3.1 Establishment. Grantor hereby irrevocably transfers the property described in Schedule A, and any additional property delivered to Trustee, to hold in trust under the terms of this Agreement.

3.2 Additional Contributions. A person other than the Beneficiary or the Beneficiary's spouse may, with Trustee’s consent, add property to this third-party Trust, provided that such property shall vest irrevocably and be subject to all provisions herein.

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.

3.3 Irrevocability. This Trust is irrevocable. Grantor shall have no power, whether alone or in conjunction with others, to alter, amend, revoke, or terminate this Trust.

4. PURPOSE; SPECIAL NEEDS COMPLIANCE

4.1 Primary Purpose. The primary purpose of this Trust is to provide for the Beneficiary’s Special Needs without disqualifying or reducing Approved Government Benefits.

4.2 Compliance with 42 U.S.C. § 1396p(d). The Trust shall be administered in a manner consistent with the requirements of 42 U.S.C. § 1396p(d) and applicable Texas Medicaid rules so that Trust assets are not deemed available resources.

4.3 Spendthrift Protection. To the maximum extent permitted by law, the interest of the Beneficiary shall be free from voluntary or involuntary transfer, assignment, or attachment.

5. DISTRIBUTIONS

5.1 Sole Discretion of Trustee. Trustee shall have absolute discretion to distribute so much of the income and principal of the Trust Estate as Trustee deems advisable for the Beneficiary’s Special Needs.

5.2 No Mandatory Right. The Beneficiary shall have no right to compel distributions; any distribution is intended to be a mere expectancy.

5.3 Prohibited Distributions. Trustee shall not make any distribution that would (a) render the Beneficiary ineligible for Approved Government Benefits, or (b) violate applicable program resource limits.

5.4 Priority of Payments.
a. Qualified Disability Expenses;
b. Medical or dental expenses not otherwise covered;
c. Adaptive equipment, housing modifications, educational programs, travel companions, and other quality-of-life enhancements;
d. Taxes and Trust administration expenses.

5.5 Distribution Procedures. Trustee may require a Distribution Request and, when prudent, consultation with benefits counsel or program administrators.

5.6 Remainder Interest. Upon the Beneficiary’s death or Trust termination, the Trust Estate shall be distributed to:
(i) [REMAINDER BENEFICIARY 1 PERCENTAGE],
(ii) [REMAINDER BENEFICIARY 2 PERCENTAGE],
subject to payment of proper administrative expenses and taxes.

6. TRUSTEE PROVISIONS

6.1 Acceptance & Standard of Care. Trustee accepts the duties herein and shall administer the Trust as a prudent person would, consistent with Texas Trust Code standards.

6.2 General Powers. Trustee shall have all powers granted under the Texas Trust Code, including, without limitation, the power to invest, reinvest, exchange, lease, sell, pledge, and otherwise manage the Trust Estate.

6.3 Investment Strategy. Trustee shall employ a total-return strategy balancing growth and preservation, taking into account liquidity needs for the Beneficiary’s Special Needs.

6.4 Delegation. Trustee may delegate investment functions to qualified professionals pursuant to a written agreement in compliance with the Texas Trust Code.

6.5 Bond. [SELECT : ☐ Waived | ☐ Required in the amount of $[AMOUNT]].

6.6 Compensation. Trustee is entitled to reasonable compensation in accordance with Texas law or any separate fee schedule executed by Grantor and Trustee.

6.7 Accountings. Trustee shall provide annual Accountings to (a) the Beneficiary (if legally competent), (b) the Beneficiary’s guardian or agent, and (c) any protector or advisory committee established herein.

6.8 Resignation & Removal.
a. Resignation upon 30 days’ written notice to Grantor (if living), the Beneficiary, and the successor Trustee.
b. Removal by a Texas probate court for cause or upon a majority vote of the Protector Committee, if established.
c. Successor Trustee shall execute an Acceptance of Trust and file same with the Trust records.

6.9 Trustee Liability. Trustee shall not be liable for any loss to the Trust Estate except for losses resulting from Trustee’s gross negligence, willful misconduct, or bad faith.

6.10 Indemnification. Trustee shall be indemnified out of the Trust Estate against any claim, liability, or expense arising from the proper administration of the Trust, limited to the value of Trust assets.

7. REPRESENTATIONS & WARRANTIES

7.1 Grantor Representation. Grantor has full legal capacity and authority to establish this Trust and to transfer property thereto.

7.2 Trustee Representation. Trustee has reviewed the duties imposed by this Agreement and applicable law and is qualified and willing to act.

7.3 Survival. The representations and warranties herein shall survive execution and continue in effect for the term of the Trust.

8. COVENANTS & RESTRICTIONS

8.1 Notice of Benefit Changes. Beneficiary (or legal representative) shall promptly notify Trustee of any change in Approved Government Benefits status.

8.2 Prohibited Action. No party shall take any action inconsistent with the purpose of preserving the Beneficiary’s eligibility for Approved Government Benefits.

8.3 Cooperation. All parties shall execute such further documents and take such further actions as may be reasonably necessary to carry out the intent of this Trust.

9. DEFAULT & REMEDIES

9.1 Events of Default.
a. Material breach by Trustee of fiduciary duties;
b. Failure to provide required Accountings;
c. Misappropriation of Trust assets.

9.2 Notice & Cure. Any interested party shall provide written notice specifying the default. Trustee shall have 30 days to cure.

9.3 Remedies. Failing cure, interested parties may seek (a) removal of Trustee, (b) surcharge, (c) injunctive relief, or (d) any other remedy available under the Texas Trust Code. Reasonable attorney fees and costs shall be recoverable from the Trust Estate or the breaching party as the court may direct.

10. RISK ALLOCATION

10.1 Indemnification of Trustee. As set forth in Section 6.10.

10.2 Limitation of Liability. Any liability of Trustee, Protector, or Advisor is limited to the Trust assets; no personal liability is intended.

10.3 Insurance. Trustee may purchase fiduciary liability insurance at Trust expense.

10.4 Force Majeure. Trustee shall not be liable for delays or failures resulting from events beyond the Trustee’s reasonable control, including acts of God, natural disasters, or changes in law affecting administration.

11. DISPUTE RESOLUTION

11.1 Governing Law. This Agreement shall be construed in accordance with Texas law without regard to conflicts-of-law principles.

11.2 Forum Selection. The parties consent to exclusive jurisdiction of the district court of [COUNTY, TEXAS] (or, in a county maintaining a statutory probate court under Tex. Gov't Code Ch. 25, that statutory probate court) for all proceedings relating to this Trust, pursuant to Tex. Prop. Code §115.001.

11.3 Limited Arbitration. Non-fiduciary disputes involving amounts less than $50,000 may be submitted to binding arbitration under the Texas General Arbitration Act, Tex. Civ. Prac. & Rem. Code Ch. 171, upon mutual written agreement of the parties; fiduciary duty claims and requests for injunctive relief are expressly excluded.

11.4 Jury Waiver. None—jury trials remain available as required by Texas probate practice.

11.5 Injunctive Relief. Nothing herein shall impair any party’s right to seek temporary or permanent injunctive relief to enforce the terms of this Trust.

12. GENERAL PROVISIONS

12.1 Amendment. This Trust is irrevocable and may not be amended except (a) by court order to conform with changes in governing benefits law, or (b) by decanting in accordance with Texas Property Code Chapter 112, Subchapter D (Sections 112.071–112.087), if such amendment does not impair the Beneficiary’s eligibility for benefits.

12.2 Severability. If any provision is held invalid, the remaining provisions shall remain in full force and effect.

12.3 Headings. Descriptive headings are for convenience only and shall not control or affect the meaning of any provision.

12.4 Integration. This Agreement constitutes the entire understanding among the parties with respect to the subject matter and supersedes all prior agreements.

12.5 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original.

12.6 Electronic Signatures. Signatures delivered electronically or by facsimile shall be deemed original signatures for all purposes.

13. EXECUTION BLOCK

IN WITNESS WHEREOF, Grantor and Trustee have executed this Supplemental Needs Trust Agreement effective as of the date first written above.

NOTARY ACKNOWLEDGMENT – GRANTOR

State of Texas )
County of [________________________________] )

On this ____ day of ____________, 20__, before me, the undersigned notary public, personally appeared [GRANTOR NAME], known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged that (he/she) executed the same for the purposes therein contained.

Seal: ___________________________
Notary Public, State of Texas
My commission expires: __________

NOTARY ACKNOWLEDGMENT – TRUSTEE

[Repeat block as above for Trustee]