The following special needs trust provisions should be included as terms of the standard management trust (see form 11-2) in order for the trust to qualify as a special needs trust under 42 U.S.C. § 1396p(d)(4)(A).
Special Needs Trust Termination Provisions
This Trust shall terminate on the death of [name of beneficiary], Beneficiary, or on a determination of capacity by the court, at which point Trustee, [name of trustee], shall distribute and deliver the remaining principal and undistributed income, free of Trust, as provided in the trust.
1.Payment of Estate Taxes and Administration Expenses. If termination has occurred due to Beneficiary’s death, Trustee is authorized to pay all estate, inheritance, or other similar taxes which may be imposed on Beneficiary’s estate due to the death of Beneficiary. Trustee is authorized to pay reasonable administration expenses associated with the administration of the trust estate, such as an accounting of the trust to a court, completion and filing of documents, or other required action associated with termination and wrapping up the trust.
2.Reimbursement for State Medical Assistance Programs. Pursuant to 42 U.S.C. § 1396p(d)(4)(A), the state of Texas or any other state that has made expenditures on Beneficiary’s behalf shall receive all amounts remaining in the Trust on Beneficiary’s death up to an amount equal to the total medical assistance paid on Beneficiary’s behalf under a state plan administered pursuant to 42 U.S.C., chapter 7, subchapter XIX.
3.Payment of Debts, Funeral Expenses, and Expenses of Last Illness. After the satisfaction of any reimbursement to the state of Texas or any other state from which Beneficiary has received medical assistance payment, if termination has occurred due to Beneficiary’s death, Trustee is authorized to pay any expenses of Beneficiary’s last illness, funeral and burial costs, and enforceable debts.
4.Distribution of Residue. Subsequently, after the state has been reimbursed for the above noted expenditures, Trustee shall distribute and deliver the remaining principal and undistributed income, free of Trust, to Beneficiary if Beneficiary is still living. If Beneficiary is no longer living at the termination of the Trust, Trustee shall distribute the amounts remaining in the Trust to the representative of Beneficiary’s estate.
5.Distribution of Income and Principal. Trustee, [name of trustee], shall pay funds for the benefit of [name of beneficiary], Beneficiary, for [his/her] lifetime, subject to the conditions provided below. Payments will be made from the income or principal, up to and including the whole amount, as Trustee, in Trustee’s sole and complete discretion, may from time to time deem necessary or advisable for the satisfaction of Beneficiary’s supplemental needs as defined in this Trust. Any income not distributed shall be accumulated and added to the principal. As used in this Trust, “supplemental needs” refer to the requisites for maintaining Beneficiary’s good health, safety, and welfare when, in the discretion of Trustee, such requisites are not being provided by any public agency, local or county agency, office or department of the state of Texas, of any other state, or of the United States (a “governmental agency”). Distribution shall be limited so that Beneficiary is not disqualified from receiving public benefits to which [he/she] is otherwise entitled, and this Trust shall be administered so as to SUPPLEMENT AND NOT SUPPLANT such benefits. Notwithstanding any provision in this Trust, Trustee may make distributions that would reduce public benefits without terminating them completely. For example, Trustee may provide food and shelter to Beneficiary when he is eligible for Supplemental Security Income in exchange for a reduction of benefits under the “one-third reduction rule,” when Trustee in its uncontrolled discretion determines such distributions to be in Beneficiary’s best interests. In making distributions, Trustee shall take into consideration applicable resource and income limitations of any public assistance programs for which Beneficiary is eligible when determining whether or not to make any discretionary distributions. Further, and not withstanding any provision in this Trust, Trustee may in its sole discretion, make distributions that would terminate one or more public benefits in the event Trustee determines that such a result is in the best interest of Beneficiary. Trustee is further authorized to make distributions to Beneficiary from the Trust estate without consideration as to whether such distributions would be considered a cost associated with a normal parental obligation, if the distribution is determined by Trustee to be in the best interest of Beneficiary.
6.Disbursements to Be Supplemental. This Trust is created expressly for Beneficiary’s extra and supplemental care, maintenance, support, and education, in addition to the benefits [he/she] otherwise receives or may receive, as a result of [his/her] disability from any governmental agency or from any other private agency that provides services or benefits to persons with situations similar to Beneficiary’s situation. It is [name of applicant]’s, Applicant, express purpose that this Trust be used only to supplement other benefits received by Beneficiary. In making distributions, Trustee shall take into consideration applicable resource and income limitations of any public assistance programs for which Beneficiary is a recipient when determining whether to make any discretionary distributions. This Trust is primarily for the benefit of Beneficiary, and the rights of any remaindermen shall be of secondary importance. Trustee shall not be held accountable to any remainderman if part or all of the principal shall be depleted as a result of distributions in accordance with the terms of the Trust. Any good faith determination made by Trustee as to the manner in which or extent to which the powers granted by this Trust shall be exercised shall be binding and conclusive on all persons who might at any time have or claim any interest in the Trust property.
7.Other Assistance. As long as Beneficiary is unable to maintain and support [himself/herself] independently, Trustee shall ask that a legal guardian or other legal representative or conservator, as appropriate, seek support and maintenance for [him/her] from all available public resources, including, but not limited to, Supplemental Security Income, Social Security Disability Insurance benefits, and Medicaid and Medicaid waiver programs. It is acknowledged that Trustee is neither licensed nor skilled in the field of social services and/or governmental assistance programs. Beneficiary’s legal guardian or other legal representative, if any, shall be responsible for identifying programs that may be of social, financial, developmental, or other assistance to Beneficiary, including seeking the assistance of federal, state, and local agencies that have been established to help the handicapped or disabled and other similar resources. Trustee is authorized to cooperate with and may assist Beneficiary, [his/her] legal guardian, or other legal representative, if any, but shall have no duty or responsibility to determine which programs are available to Beneficiary. Trustee shall not, in any event, be liable to Beneficiary or any other party with respect to any aspect of Beneficiary’s initial eligibility for federal, state, or local public assistance benefits or programs, including, but not limited to, the failure to identify each and every program or resource that might be available to Beneficiary on account of any handicap or disability.
8.Not to Supplant Public Aid. It is Applicant’s further intent that no part of the corpus of this Trust shall be used to supplant or replace public assistance benefits of any governmental agency or governmental program (“public assistance benefits”) that serve persons with the same or similar physical and/or mental condition as Beneficiary. In the event Trustee is requested by any department or agency, during Beneficiary’s lifetime, to release principal or income of the Trust to or on behalf of [him/her] to pay for equipment, medication, or services that other organizations or agencies are authorized to provide, or in the event Trustee is requested by any department or agency administering such benefits to petition the Court or any other administrative agency for the release of Trust principal or income for this purpose, Trustee shall deny such request. Further, Trustee is directed to defend any contest or other attack of any nature of the Trust at the expense of the Trust estate.
9.Prepayment of Allowable Expenses. Subject to the terms and conditions of this Trust, it is not necessary that Beneficiary or [his/her] legal guardian or other legal representative actually pay an allowable expense before requesting payment from Trustee. Beneficiary or [his/her] legal guardian or other legal representative may direct suppliers of allowable goods and services to apply directly to Trustee for payment. Trustee is authorized to make payments from the Trust directly to the providers only to the extent that the distribution is authorized by the terms of this Trust.
10.Denial of Distribution. If Trustee denies a request for distribution in whole or in part, Trustee shall provide a written notice of the decision to Beneficiary and [his/her] legal guardian or other legal representative within a reasonable period of time. The period of time for notice is not to exceed thirty days after the request is made, unless special circumstances require an extension of time for processing the request for distributions. If an extension of time is required, written notice of the extension shall be furnished to Beneficiary and his legal guardian or other legal representative before the termination of the initial thirty-day period. In no event shall an extension exceed a period of fifteen days from the end of the initial period unless it is by order of a court of competent jurisdiction. The extension notice shall indicate the special circumstances requiring an extension of time and the date on which the Trustee expects to render a decision.