Special Needs Trust Clause
(Will)

Summary

This clause is a special needs trust clause for use in a will to preserve a disabled individual's eligibility for public assistance programs while providing them with additional funds that supplement governmental assistance. It is non-jurisdictional and can be adapted for use in your state. This clause includes practical guidance, drafting notes, and optional clauses. Trusts are generally governed by state law. Many states have adopted some version of the Uniform Trust Code (UTC), a uniform act promulgated by the Uniform Law Commission to provide uniformity to the law of trusts throughout the United States. Thus, this clause's drafting notes mainly refer to related laws under the UTC. The UTC provides that a trust may be created in a will. Unif. Tr. Code § 401. Any trust, including a special needs trust, that is created in a will, is subject to a state's probate court administration. The will becomes a public record. The trustee may be required to provide the entire will to financial institutions, as well as state and federal governmental entities that provide public assistance. An alternative is to create a special needs trust and a pour over will that transfers the assets to the special needs trust, so that only the special needs trust is subject to disclosure after the probate is completed. Alternatively, to avoid probate court altogether, a special needs trust may be created as a subtrust of a revocable living trust or a standalone trust funded prior to death. The terms of the special needs trust set forth within the will can override many default rules in each state. However, certain state trust laws are mandated by statute and cannot be altered by contrary language in the will. For example, for states that follow the UTC, the power of the court to modify or terminate a trust under certain circumstances may not be altered. Unif. Tr. Code § 105(b)(4). Practitioners should refer to the trust laws in the applicable jurisdiction before drafting a special needs trust clause for clients. For additional information on trusts, see Estate Planning Strategies and Devices and Special Needs Trusts and Taxes. For an in-depth discussion of trusts in general, see Characteristics and Uses of Trusts and Requirements and Restrictions on Trust Purposes and Administration. For a 50-state survey that includes information on state trust laws, see Trusts State Law Survey.