Special Needs Trust - Wyoming

THIRD-PARTY DISCRETIONARY SPECIAL NEEDS TRUST AGREEMENT

(State of Wyoming)

TABLE OF CONTENTS

1. Document Header
2. Definitions
3. Creation of Trust & Identification of Parties
4. Trust Purpose & Governing Principles
5. Funding the Trust
6. Administration & Distribution Standards
7. Trustee Powers & Duties
8. Representations & Warranties
9. Covenants & Restrictions
10. Events of Default; Removal & Succession of Trustee
11. Risk Allocation
12. Termination of Trust & Remainder Distribution
13. Dispute Resolution
14. General Provisions
15. Execution & Acknowledgment

1. DOCUMENT HEADER

THIS THIRD-PARTY DISCRETIONARY SPECIAL NEEDS TRUST AGREEMENT (the “Agreement”) is entered into and made effective as of [EFFECTIVE DATE] (the “Effective Date”) by and among:

• [SETTLOR LEGAL NAME], an individual residing at [ADDRESS] (“Settlor”);
• [INITIAL TRUSTEE LEGAL NAME], whose principal address is [ADDRESS] (“Trustee”); and
• [BENEFICIARY LEGAL NAME], a person with a disability as defined in 42 U.S.C. § 1382c(a)(3) (“Beneficiary”).

The trust created hereby shall be known as the “[NAME OF TRUST]” (the “Trust”) and shall be administered in accordance with the laws of the State of Wyoming, including the Wyoming Uniform Trust Code, Wyo. Stat. Ann. § 4-10-101 et seq., Wyoming's statutory treatment of special needs and pooled trusts for Medicaid eligibility purposes at Wyo. Stat. Ann. § 42-2-403(f), and applicable federal law governing supplemental needs trusts, including 42 U.S.C. § 1396p(d)(4)(A).

2. DEFINITIONS

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

“Accountant” – The independent certified public accountant engaged by the Trustee pursuant to Section 7.04.

“Administrative Expenses” – All ordinary and necessary expenses incurred in the administration of the Trust, including without limitation tax preparation fees, reasonable legal fees, accounting fees, and Trustee compensation authorized in Section 7.06.

“Applicable Law” – Collectively, (a) the Wyoming Uniform Trust Code, (b) Title 42 of the United States Code and implementing regulations affecting public assistance programs, and (c) any other federal, state, or local statute, regulation, or guidance governing special needs trusts or public benefits eligibility that is in effect from time to time.

“Beneficiary” – The individual identified in Article 1 who is intended to benefit from this Trust.

“Distribution Advisor” – Any person appointed under Section 7.03 to provide non-binding recommendations to the Trustee concerning distributions.

“Governmental Assistance” – Means-tested or needs-based public assistance programs, including but not limited to Supplemental Security Income (“SSI”), Medicaid, Section 8 housing, and Supplemental Nutrition Assistance Program (“SNAP”), for which the Beneficiary is or may become eligible.

“Supplemental Needs” – Expenses that enhance the Beneficiary’s quality of life and are not covered by Governmental Assistance, including but not limited to medical and dental care not otherwise provided, adaptive equipment, education, transportation, recreation, vacations, and other items permitted under Applicable Law.

“Trust Assets” – All property, real or personal, tangible or intangible, transferred to the Trust, together with all earnings, replacements, and increments thereon.

“Trustee” – The person or entity then serving as trustee of the Trust.

3. CREATION OF TRUST & IDENTIFICATION OF PARTIES

3.01 Creation. Settlor hereby irrevocably transfers and delivers to Trustee the property described in Schedule A attached hereto (the “Initial Corpus”) to hold in trust, together with any additional property subsequently transferred to the Trust, subject to the terms herein.

3.02 Irrevocability. This Trust is irrevocable. Settlor expressly waives all rights and powers, whether alone or in conjunction with others, to alter, amend, revoke, or terminate the Trust except as expressly provided herein.

3.03 Acceptance. Trustee hereby accepts the Trust and agrees to administer the same strictly in accordance with the terms of this Agreement and Applicable Law.

4. TRUST PURPOSE & GOVERNING PRINCIPLES

4.01 Primary Purpose. The Trust is established to provide for the Beneficiary’s Supplemental Needs while preserving the Beneficiary’s continuing eligibility for Governmental Assistance.

4.02 No Support Obligation. Distributions are intended to be supplementary and discretionary; they shall not be available for the Beneficiary’s basic support if such availability would disqualify or reduce Governmental Assistance, except as permitted in Section 6.05.

4.03 Spendthrift Protection. To the maximum extent permitted by law, the Trust shall be a spendthrift trust; neither the Beneficiary nor any creditor shall have any right to anticipate, encumber, or compel distributions.

5. FUNDING THE TRUST

5.01 Sources. In addition to the Initial Corpus, any person other than the Beneficiary may, with Trustee’s consent, transfer property to the Trust by lifetime gift, will, beneficiary designation, or other legal instrument.

5.02 Prohibited Contributions. No assets owned by the Beneficiary may be added unless (a) the Trust is first amended to qualify under 42 U.S.C. § 1396p(d)(4)(A), including any required Medicaid payback, and (b) such amendment is approved by any court or agency whose consent is mandated by Applicable Law.

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 this third-party Trust; refer any proposed contribution to benefits counsel for separate planning.

6. ADMINISTRATION & DISTRIBUTION STANDARDS

6.01 Absolute Discretion. Except as compelled by Section 6.05, Trustee shall have absolute and unfettered discretion to make or withhold distributions of income and principal for the Beneficiary’s Supplemental Needs. The Beneficiary has no right to demand distributions.

6.02 Supplemental Needs. Trustee may pay for or provide goods and services that improve the Beneficiary’s comfort, welfare, and happiness, including but not limited to:
a. Medical, dental, vision, and mental-health care not otherwise covered;
b. Therapies, habilitation, and assistive technology;
c. Education, training, and tutoring;
d. Transportation (including vehicle purchase and maintenance);
e. Recreation, hobbies, vacations, and travel companions;
f. Personal services, guardianship fees, or case-management services; and
g. Home modifications, furnishings, and electronics.

6.03 Prohibited Payments. Trustee shall not distribute cash directly to the Beneficiary. Under 20 C.F.R. § 416.1130 et seq., as amended effective September 30, 2024 (89 Fed. Reg. 21,199 (Mar. 27, 2024)), food is no longer counted as “in-kind support and maintenance” (“ISM”) for SSI purposes; only shelter-related expenses (e.g., rent, mortgage, real property taxes, heating fuel, gas, electricity, water, sewer, and garbage collection) remain subject to ISM reduction. Trustee may accordingly pay for or provide the Beneficiary’s food without restriction, but shall not pay for shelter items in a manner that would be considered ISM unless Trustee first determines that any resulting reduction in benefits is in the Beneficiary’s best interest.

6.04 Distribution Methodology. Whenever practicable, Trustee shall make payments directly to providers of goods and services.

6.05 Emergency Exception. In emergencies threatening the Beneficiary’s health or safety, Trustee may make distributions for basic support even if such distributions adversely affect benefits, provided Trustee documents the emergency and consults the Distribution Advisor if time permits.

6.06 Accounting & Reporting. Trustee shall maintain accurate books and records and provide (i) an annual accounting to the Beneficiary (or legal guardian) and Settlor, and (ii) any reports required by state or federal agencies.

7. TRUSTEE POWERS & DUTIES

7.01 General Fiduciary Standard. Trustee shall act as a prudent person would in managing similar property, consistent with the Wyoming Prudent Investor Rule, Wyo. Stat. Ann. § 4-10-901 et seq., unless expressly modified herein.

7.02 Enumerated Powers. Without limiting general fiduciary powers, Trustee may:
a. Invest and reinvest Trust Assets;
b. Open and maintain bank, brokerage, and other financial accounts;
c. Buy, sell, lease, or encumber real or personal property;
d. Engage agents, attorneys, investment advisors, and other professionals;
e. Borrow money and pledge Trust Assets;
f. Prosecute or defend claims;
g. Execute all instruments necessary to administer the Trust.

7.03 Distribution Advisor. Settlor (or, after Settlor’s death, a majority of adult remainder beneficiaries) may appoint a Distribution Advisor by written instrument. The Advisor’s recommendations are advisory and non-binding.

7.04 Accountant. Trustee shall engage an independent certified public accountant to prepare federal and state fiduciary income tax returns and to assist with other tax matters.

7.05 Bond. [SELECT ONE:]
• ☐ Bond Waived. Trustee shall serve without bond.
• ☐ Bond Required in the penal sum of $[AMOUNT] issued by a surety licensed in Wyoming.

7.06 Compensation. Trustee is entitled to reasonable compensation consistent with market rates for trusts of similar size and complexity, plus reimbursement of Administrative Expenses.

8. REPRESENTATIONS & WARRANTIES

8.01 Settlor. Settlor represents and warrants that:
a. Settlor owns the Initial Corpus free and clear of adverse claims;
b. Settlor has full legal capacity and authority to establish this Trust; and
c. Establishment of the Trust does not violate any court order or contract.

8.02 Trustee. Trustee represents and warrants that:
a. Trustee is qualified under Applicable Law to serve;
b. Trustee has reviewed the duties imposed by this Agreement and Applicable Law; and
c. Trustee is not currently suspended or removed from fiduciary service in any jurisdiction.

8.03 Survival. All representations and warranties survive the execution of this Agreement and remain in force for the duration of the Trust.

9. COVENANTS & RESTRICTIONS

9.01 Compliance Covenant. Trustee shall administer the Trust in strict compliance with Applicable Law governing special needs trusts and Governmental Assistance.

9.02 Notice of Material Events. Trustee shall notify the Beneficiary (or legal guardian) and, if living, Settlor within thirty (30) days after (i) any change in Trustee, (ii) any litigation involving the Trust, or (iii) receipt of any governmental notice that could affect benefits eligibility.

9.03 Audit & Inspection. Beneficiary (or legal guardian) may, upon thirty (30) days’ written notice, inspect Trust records at reasonable times.

9.04 Investment Restrictions. Trust Assets shall not be invested in margin accounts, derivatives, or other high-risk financial products inconsistent with the preservation of capital absent written consent of all adult remainder beneficiaries.

10. EVENTS OF DEFAULT; REMOVAL & SUCCESSION OF TRUSTEE

10.01 Events of Default. The following constitute defaults:
a. Breach of fiduciary duty;
b. Failure to provide required accountings within sixty (60) days after written demand;
c. Conviction of a felony or crime of moral turpitude;
d. Incapacity or insolvency of Trustee.

10.02 Removal. Upon default, any Interested Party may petition the District Court of [COUNTY] County, Wyoming, sitting in probate pursuant to Wyo. Stat. Ann. § 2-2-101 (the “Probate Court”), for removal. Trustee may also be removed without cause by a unanimous written instrument of Settlor (if living) and adult remainder beneficiaries.

10.03 Successor Trustee. If the office of Trustee becomes vacant, (i) the Person(s) named in Schedule B shall serve in the order listed, or (ii) if no named successor is willing and able, the Probate Court shall appoint a corporate fiduciary authorized to do trust business in Wyoming.

10.04 Transition Duties. A resigning or removed Trustee shall:
a. Deliver all Trust Assets and records to the successor within thirty (30) days; and
b. Provide a final accounting through the date of transfer.

11. RISK ALLOCATION

11.01 Indemnification. Trustee and its officers, directors, employees, and agents (collectively, the “Indemnified Parties”) shall be indemnified out of the Trust Assets against any loss, liability, or expense (including reasonable attorney fees) incurred in the administration of the Trust, except to the extent caused by gross negligence, willful misconduct, or fraud.

11.02 Limitation of Liability. In no event shall any Indemnified Party be personally liable for any claim arising from the administration of the Trust beyond the extent of the Trust Assets.

11.03 Insurance. Trustee may purchase fiduciary liability insurance payable from Trust Assets.

11.04 Force Majeure. Trustee shall not be liable for failure to perform due to acts of God, war, terrorism, pandemic, governmental restrictions, or other events beyond its reasonable control.

12. TERMINATION OF TRUST & REMAINDER DISTRIBUTION

12.01 Termination Events. The Trust shall terminate upon the earliest of:
a. Beneficiary’s death;
b. Expenditure or distribution of all Trust Assets;
c. Judicial determination that the Trust is no longer necessary for its stated purpose.

12.02 Remainder Distribution. Upon termination, after payment of (i) Administrative Expenses, (ii) any outstanding taxes, and (iii) amounts due under Section 11.01, Trustee shall distribute the remaining principal and undistributed income to the following persons in the percentages indicated:

• [REMAINDER BENEFICIARY 1] – [___]%
• [REMAINDER BENEFICIARY 2] – [___]%
• Etc.

13. DISPUTE RESOLUTION

13.01 Governing Law. This Agreement, and all rights and obligations hereunder, shall be governed by and construed in accordance with the laws of the State of Wyoming, without regard to its conflict-of-laws principles.

13.02 Forum Selection. Exclusive jurisdiction and venue for all trust administration matters shall lie in the Probate Court.

13.03 Limited Arbitration. Any controversy (other than eligibility for Governmental Assistance or interpretation of trust-related tax issues) with an amount in controversy not exceeding $[THRESHOLD] shall be resolved by binding arbitration under the Wyoming Uniform Arbitration Act, Wyo. Stat. Ann. § 1-36-101 et seq., conducted in [CITY], Wyoming, before a single arbitrator mutually agreed upon by the parties.

13.04 Injunctive Relief. Nothing herein limits any party’s right to seek injunctive or other equitable relief from the Probate Court to protect Trust Assets or enforce fiduciary duties.

13.05 Jury Waiver. Because trust matters are heard in probate, no jury trial right exists or is waived to the extent one might otherwise be asserted.

14. GENERAL PROVISIONS

14.01 Amendment. This Agreement may be amended only by (i) written instrument executed by Settlor (if living) and Trustee, and (ii) order of the Probate Court confirming that the amendment will not adversely affect the Beneficiary’s eligibility for Governmental Assistance.

14.02 Waiver. No waiver of any provision shall be deemed a waiver of any other provision or subsequent breach.

14.03 Assignment. Except as expressly provided, no party may assign its rights or obligations hereunder.

14.04 Successors & Assigns. This Agreement binds and inures to the benefit of the parties and their respective successors and permitted assigns.

14.05 Severability. If any provision is held invalid or unenforceable, the remaining provisions shall remain in full force, and the invalid provision shall be reformed to the minimum extent necessary to effectuate the parties’ intent.

14.06 Entire Agreement. This Agreement constitutes the entire understanding among the parties concerning the subject matter and supersedes all prior agreements or representations.

14.07 Counterparts; Electronic Signatures. This Agreement may be executed in one or more counterparts, each deemed an original and all constituting one instrument. Signatures delivered by PDF or equivalent electronic means shall be binding and effective.

15. EXECUTION & ACKNOWLEDGMENT

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

NOTARY ACKNOWLEDGMENT

State of Wyoming )
County of [________________________________] ) ss.

On this ___ day of __________, 20__, before me, the undersigned Notarial Officer, personally appeared [SETTLOR NAME] and [INITIAL TRUSTEE NAME], known to me or proven to me on the basis of satisfactory evidence to be the individuals who executed the foregoing instrument and who acknowledged to me that they executed the same for the purposes therein stated.

_________________________________
Notary Public
My Commission Expires: _____________

SCHEDULE A

Initial Corpus

1. Cash: $[AMOUNT] deposited to [BANK & ACCOUNT #]
2. [DESCRIPTION OF ANY SECURITIES OR PROPERTY]

SCHEDULE B

Successor Trustees (in order of priority)

1. [NAME, ADDRESS]
2. [NAME, ADDRESS]
3. [CORPORATE FIDUCIARY NAME & ADDRESS]