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Rick DeMichele Published in American Journal of Family Law

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The firm is again honored to announce that Rick DeMichele was published in the American Journal of Family Law. Frequent readers of this website may recall that Rick article, Domestic Violence Trials: Winning the Case and Minimizing the Impact on Children was published by the American Journal of Family Law in the Fall of 2012.  This time Mr. DeMichele teamed up with noted probate litigator, Brenda Eutsler, to write Child Support for Adult Children.  The article analyzes the New Jersey case of J.B. vs W.B, it impact on adult child support and the implementation of Special Needs Trusts.

The full text of the article is below:

Child Support for Adult Children

By Richard A. DeMichele, Jr., Esquire Brenda Lee Eutsler, Esquire

When representing an “adult” child in need of support, a Special Needs Trust (SNT) should be considered as an option.  This article discusses the legal authority for an SNT, allowable expenditures from an SNT and the impact of a recent New Jersey decision (the state in which we practice law).  An Appendix presents a sample SNT document.

LEGAL AUTHORITY FOR A SPECIAL NEEDS TRUST

Federal law authorizes the creation of a trust by a court in order to preserve a disabled individual’s assets while maintaining such individual’s eligibility for needs-based government benefits, including Medicaid.  Congress amended the Medicaid statute in the 1993 Omnibus Budget Reconciliation Act (OBRA), 42 U.S.C. 1396p(d)(4)(A), to recognize the use of special needs settlement trusts, or “Payback Trusts.”  These trusts have two purposes.  One purpose is to ensure that the funds allocated to the claimant with the disability are not subject to exploitation or waste.  The other purpose is to preserve the claimant’s eligibility for local, state or federal benefit programs.  Specifically, an individual can maintain eligibility for Medicaid benefits under the “Payback Trust” provisions if he has:

A trust containing the assets of an individual under age 65 who is disabled … and which is established for the benefit of such individual by a parent, grandparent, legal guardian of the individual, or a court if the State will receive all amounts remaining in the trust up the death of such individual up to an amount equal to the total medical assistance paid on behalf of the individual under a State plan under this subchapter.  42 U.S.C.A. §1396p (d)(4)(A),     See also 42 U.S.C.A. § 1382b(e)(5)/

SNTs are usually established by court order with funds that would otherwise pass into the possession of a disabled claimant/beneficiary.  See Rev. Rule 83-25, IRD 1983-6, Page 6.  The Health Care Financing Administration (HFCA) issued a Release on “Treating Disability Trusts under Transfer of Assets, Trust Estate Recovery, and Third Party Rules,” dated June 5, 1996.  The Release states that special needs trusts are exempt from the general rules that cause principal of a trust, interest on the principal and payments from the trust to be considered as available resources to the disabled individual.  A special needs trust may be established if the following criteria are met:

  • The trust is irrevocable.
  • It can only be established for a person under 65 years old.
  • The trustee must have sole and absolute discretion over the use of the trust income and corpus.
  • The trust can be established only by a parent, grandparent, legal guardian of the individual or a court.
  • OBRA-93 requires that the trust be funded with the individuals own assets, including assets recovered in a tort action.
  • The beneficiary of the trust must be disabled as defined in 42 U.S.C. 1382c(a)3A.
  • The trust must contain a provision that upon the death of the beneficiary, any state which has provided medical payments under its Medicaid program for the disabled individual is entitled to be reimbursed (paid back) from the remaining assets in the trust.
  • The Medicaid reimbursement must be an amount equal to the total medical assistance paid on behalf of the individual by any state which has made such payments.
  • The purpose of the trust will be to supplement, not replace, public benefits so as to improve the overall quality of life of the beneficiary.
  • The trustee needs to make distributions which do not violate the income or resource rules of the applicable benefit programs.    See below, for a discussion of the allowable expenditures from an SNT.

New Jersey law allows for the establishment of an OBRA ’93 trust (SNT) under N.J.S.A. 3B:11-37(b) “for a person who is disabled as defined in section 1614(a)(3) of the federal Social Security Act (42 U.S.C. s.1382c (a)(3)), whether or not the person is an incapacitated person as defined in N.J.S.3B:1-2, and may direct that the assets of the person with a disability be placed in the OBRA ’93 trust.”
 

ALLOWABLE EXPENDITURES FROM AN SNT

Specified below are some of the expenses allowed from an SNT in New Jersey.   Since Medicaid is state specific, there could be some variations from state to state on allowable expenses.  Further, the allowable expenditures may depend upon the type of public benefits being received by the SNT beneficiary (i.e. SSI, SS Disability, Medicaid).  Confirmation of these benefits can be determined from a review of the eligibility determination letters provided to the beneficiary.  The SSA’s  Program Operations Manual System (POMS) (https://secure.ssa.gov/apps10/poms.nsf) provides information on the nature of the benefits.

An SNT cannot make expenditures which would constitute food or shelter for the beneficiary as these needs are covered by government benefits.   If such expenses are paid by the trust, the beneficiary’s benefits could be jeopardized either in whole or part.  Prohibited expenses which constitute shelter consist of mortgage and rent payments, property taxes, homeowner’s insurance, gas/electric/heating bills and water/sewer bills.   It is extremely important to maintain detailed and accurate receipts for all expenses from the SNT.

  • Funeral and burial expenses paid prior to date of death, including pre-paid funeral arrangements (must be irrevocable plans), burial plot (gravesite, crypt, mausoleum), casket or urn, headstone, and arrangements for the opening and closing of the gravesite.
  • Education, including tuition, fees and other expenses related to education, seminars, workshops and education transportation expenses; excluding meals and housing costs.
  • Entertainment/Music/Tickets/Exercise, including movies, theatre, concerts, sporting events, hobbies, arts, crafts, health club membership, swim club, lessons, exercise equipment, musical instruments, iTunes, CD’s, books, newspapers and magazines, cable TV.
  • Vacations/camp or other recreational program, including accommodation expenses for disabled person and one travel companion whose services are required to attend to the needs of the disabled person during the vacation or to transport the disabled person to the destination.
  • Health care costs, including diagnostic, preventive, therapeutic and palliative medical care and treatment, dental, chiropractor, visiting nurses, dental, optometrist, psychiatrist, plastic surgery, prosthetics, seeing-eye dog (including maintenance, veterinarian, dog food).
  • Caregiver services, including services through agency. Note:  When parents and/or family members are providing care services for compensation, it is essential that the need for such services be confirmed by a physician and there be a written contract between the caregiver and the Trustee of the SNT detailing the services to be performed, the hours, the compensation rate and payment periods.  The compensation rate should be in line with market rates in the applicable area at the time services are being rendered.  A time log should be maintained by the caregiver and remitted to the Trustee for each pay period.  The Trustee should regularly monitor the services to assure compliance with the contract.
  • Household furnishings and appliances, including, but not limited to, televisions, computers, furniture, cooking equipment and utensils, dishes, all kitchen appliances, washer/dryer, linens, window treatments, carpeting.
  • Renovations to home or vehicle to accommodate needs to disabled person.
  • Personal or household services, including lawn care, housecleaning, grocery shopping or delivery, babysitting, plumbing and electrical services and repairs.
  • Vocational rehabilitation or social services intended to provide assistance to disabled person so he/she can better function in society.
  • Transportation, including public transportation, airfares, etc. Note:  One automobile per household is allowed, provided it is used for transportation of the disabled individual.
  1. SNTs FOLLOWING RECENT NEW JERSEY CASE OF J.B. V. W.B.

In August 2013, the New Jersey Supreme Court handed down its decision in J.B. v. W.B., 215 N.J. 305, 73 A.3d 405 (2013).  The movant in the case sought to set aside a portion of the child support provisions of a property settlement agreement (“PSA”) in favor of a special needs trust (“SNT”). The state high court ultimately modified but affirmed the appellate court’s denial of the motion. The net result of the decision is that special needs trusts can be established for a disabled adult child if (1) the movant presents a specific plan and (2) demonstrates how the plan will benefit the child.

Factual Background

In order to understand the impact of the JB decision, a recitation of the facts of that case is necessary. The plaintiff and defendant were divorced parents of two children, one of which was an autistic child with special needs. Their divorce litigation took over two years to complete and the resulting PSA left some issues to be determined at a later time. One of the issues was the financial responsibility for the education of their special needs son whom both parties agreed may never be emancipated.  The parties had jointly met with an estates and trusts attorney to plan for the best way pay for their son’s ongoing care. The preliminary plan involved, in part, obtaining government benefits for their son.

When the mother enrolled their son in an out-of-state postsecondary school, the father filed a motion to establish finance responsibility for their son’s education and to establish a special needs trust. The father contended that, with the establishment of a special needs trust, government benefits including Social Security and Medicare would be available for their son. The father/movant, as part of his certification, submitted a copy of the letter that he received from the estate and trust planning attorney that outlined the benefits of having a special needs trust. The mother opposed the motion because it used child support payments which were paid directly to the mother to fund the special needs trust.

The trial court denied the fathers motion to redirect his support payments into a special needs trust. The basis of the denial was a lack of changed circumstances and the lack of specificity for terms of the trust. An intermediate appellate court affirmed for fundamentally the same reasons that were given by the trial court. The New Jersey Supreme Court granted certiorari and its decision provides a comprehensive roadmap of what to do and, of equal importance, what not to do when handling child support issues for adult children.

The Decision

The New Jersey Supreme Court ultimately upheld the intermediate appellate court. However, the state high court was clear that the applicant need not demonstrate “changed circumstances”, as per the case of  Lepis v. Lepis, 83 N.J. 139, 416 A.2d 45 (1980), to permit consideration of the merits of the application when the parties have deferred future financial arrangements to a later date.  The court affirmed because the father’s motion did not sufficiently present a specific plan to demonstrate how the proposed special needs trust would benefit the child. This decision seemingly allows the father to file a motion in the future to have his child support payments placed into a special needs trust. To succeed, the motion would have to sufficiently detail the needs of the child and how the funding of a special needs trust meets these needs, and whether it is ultimately in the child’s best interest.

role of sNT for an adult child

Special needs trusts by their very nature are designed to allow disabled people to maintain their eligibility for certain needs based government benefits. It is permissible to have child support paid directly into a SNT. The most significant benefit of an SNT is that income from the trust is not calculated in determining eligibility for government benefits. A properly drafted SNT will shield income and assets from consideration in determining both federal and state benefits that may be available to a disabled person.

Special needs planning and the creation of an SNT for an adult child can be especially beneficial, and this type of planning can be beneficial to a disabled adult regardless of individual or family wealth.  Even a modest amount of assets or income can be protected by an SNT. Practitioners would be well-advised to incorporate their SNT into the PSA.

Inclusion in PSA

It is also highly advisable to have the trusts created and at least partially funded prior to (or funded at the time of) the execution of the PSA. This important step may require the consultation of an estate planning attorney during the divorce or dissolution process. The parties in the JB case decided to defer the decision of their relative financial responsibilities for their son; this deferral of the determination of relative financial responsibility in JB lead to further litigation. Unfortunately, as with most deferrals in PSAs, future litigation should be anticipated.

By incorporating the SNT into the terms of the PSA, litigants will avoid having to prepare and file a motion in the future to establish a SNT for a dependent child. The incorporation of the SNT into the PSA also avoids any potential conflict between the two documents. The potential conflict between the undefined terms of the proposed SNT and the PSA was precisely the causation that led to the litigation in the JB case.

SNT Limitations

It should be noted that an SNT has limitations.  For example, money held in an SNT cannot be used for the benefit of others, including but not limited to the siblings of the disabled child.  By way of illustration, if the SNT provided funding for a vacation for the dependent child, then the SNT could not provide funding for a sibling who may be traveling with the dependent child. In that situation, the PSA should explicitly provide a mechanism for funding the needs of any sibling of the dependent child. In drafting the PSA, it is critical to know which benefits would be paid for and made available out of the SNT and which benefits would need to be provided for in the PSA.

The incorporation of an SNT into a PSA has another benefit, it requires divorcing parents to anticipate the needs of a dependent child beyond the present circumstances and needs.  In documenting the anticipated needs of a disabled dependent child, the PSA and SNT should significantly detail the physical, psychological, educational, vocational, and recreational needs of the child. This prudent anticipatory outlook affords a baseline for evaluation in any future application to the court. Careful consideration as to anticipated needs may also lead to an investigation and determination of government benefits available to the child.

This is not to suggest that every need can be anticipated simply by incorporating a SNT into a PSA. Obviously, the SNT must be flexible enough to accommodate the needs of the child that may not be anticipated and which may develop over the course of time.  However, anticipating the future needs of the child and sufficiently detailing and documenting them in a special needs trust is probably the most efficient way to avoid post judgment litigation.

A special needs trust that incorporates a plan to allow eligibility for receipt of government benefits such as Medicaid, SSI and/or Division of Developmental Disability (DDD) programs allows for the redistribution of a family’s collective assets to financially provide for a disabled, dependent child. By preserving government program eligibility for a disabled dependent child, the parents’ financial contribution to their child can be spent on benefits for the child that are not otherwise available through government programs.

Making a post judgment application for a SNT

 

As discussed above, it is often preferable to have a special needs trust created in advance of, or contemporaneously with, the property settlement agreement.  However, the reality is that many times one party will seek to create an SNT after the PSA has been executed and final judgment of divorce was entered.

The movant’s certification should have a recitation of the child’s current situation and needs. This recitation should include a detailed description of the child’s physical, psychological, educational, vocational, and recreational needs. In addition to outlining the needs of the dependent disabled child, the certification should include the costs of fulfilling the needs. These costs should be reflected in the case information statement that is filed along with the motion. However, the movant should not rely solely upon the expenses as listed in the case information statement but should outline the costs and how they are paid in their certification.

Having the source of funds for meeting the child’s needs described in the certification is important because the certification also needs to illustrate any government benefits that would be available to the child. This step can prove particularly critical when asking a judge to order that a special needs trust should be created for the benefit of a disabled child. The court needs to see how creating a special needs trust increases the total amount of resources available to the child.

Lastly, the movant’s certification must specifically describe the proposed SNT. As a practical consideration, it is often advisable to attach the text of the proposed SNT as an exhibit to the certification. The certification should outline the eligibility rules for benefits due to the child and how the creation of the trust will enhance or protect the eligibility for the benefits. The certification should also explain why the desired benefit is necessary and appropriate for the disabled child.

The timing of eligibility for benefits is an important consideration for the court so the certification should necessarily describe the timing associated with the assignment and disbursement of eligibility benefits. The selection of a trustee and the reason for the selection of the trustee should also be outlined in the movant’s certification. Most importantly, the certification should describe the terms and conditions for disbursement of funds from the trust.

In preparing a certification for a movant, the practitioner should keep in mind any potential opposition to the creation of an SNT, for example, the argument that the SNT is in conflict with property settlement agreement. In order to avoid this obvious pitfall, the movant’s certification should demonstrate how the proposed SNT furthers the intent of the property settlement agreement and  how any conflict with the property settlement agreement is minimal or overcome by the benefits of the SNT.

Suffice it to say that the court must be convinced it is in the disabled child’s best interest for a litigant to be successful with a post judgment motion seeking the creation of an SNT. The court cannot make that determination if it cannot ascertain whether the benefits available through a SNT are appropriate and beneficial for the disabled child.

______________________________________________

 

APPENDIX

SPECIAL NEEDS TRUST – SAMPLE DOCUMENT

 

Pertinent sample facts for inclusion in SNT document:

 

  1. Name of court, judge and date of court order allowing establishment of SNT: March 1, 2014, Superior Court of New Jersey, Law Division, Camden County, Docket No. 1234-2013.

 

  1. Beneficiary’s name and address: James J. Jones, 123 Main Street, Anytown, New Jersey, 08666.

 

  1. Beneficiary’s date of birth and age: February 1, 1979, 35.

Note:  SNT beneficiary must be under the age of 65.

 

  1. Grantor’s name and address: Samantha Jones, mother of James J. Jones, 468 Lantern Lane, Anytown, New Jersey, 08666.

 

  1. Trustee’s name: Samantha Jones

Note:  Court order usually requires the Trustee to post a surety bond in the amount of the funds received.   It is important to determine in advance of the application to establish an SNT that no issues exist which may prevent the proposed Trustee from being able to qualify for a surety bond such as bankruptcy, mortgage foreclosure, judgments, lack of employment, or other financial concerns.

 

  1. Source and amount of funds to be received by Trustee: Net settlement proceeds in the amount of $100,000 from personal injury suit in which Beneficiary was Plaintiff.

 

  1. Person or entity remitting funds to Trustee. ABC Insurance Company.

Note:    The settlement proceeds cannot be distributed directly to the Beneficiary and then turned over to the Trustee by the Beneficiary as the receipt of proceeds by the Beneficiary will constitute resources for the Beneficiary who will lose eligibility for programs and services which are based upon an economic means trust.   The proceeds must be remitted directly to the Trustee.

 

 

IRREVOCABLE DECLARATION OF SPECIAL NEEDS TRUST
AND TRUST AGREEMENT FOR JAMES J. JONES, BENEFICIARY

 

THIS IRREVOCABLE TRUST AGREEMENT is created pursuant to an Order of the Superior Court of New Jersey, Law Division, Camden County, Docket No.  1234-2013, entered on the 1st day of  March, 2014, by the Honorable Henry C. Judge, J.S.C., and is hereby entered into by Samantha Jones as Grantor and Samantha Jones as the Trustee pursuant to the fiduciary appointments and authorizations set forth in the aforesaid order.    This trust is intended to be an OBRA 93 Special Needs Trust for the sole benefit of JAMES J. JONES (hereafter “Beneficiary”), a person with a disability under the age of sixty-five (65), and established under authority of 42 U.S.C. § 1396p(d)(4)(A) and N.J.S. 3B:11-36 et seq.  All provisions of this trust shall be interpreted to qualify this trust under this provision of federal and state law.  Any provision of this trust which may prevent this trust from satisfying full compliance with 42 U.S.C. § 1396p(d)(4)(A) and N J.S. 38:1 I -36 et seq. shall be null and void.

The Court has determined the following facts and special circumstances exist on behalf of the Beneficiary:

The Beneficiary resides at 123 Main Street, Anytown, New Jersey, 08666 and is thirty five (35) years of age, having been born on February 1, 1979.  The Beneficiary has been determined to be disabled by the Social Security Administration as defined at 42 U.S.C. §1382c(a)(3). As a result of his disability, the Beneficiary would be qualified to receive and does receive Supplemental Security Income (SSI) and Medicaid.  The Beneficiary is entitled to receive the net settlement proceeds from a personal injury lawsuit in the amount of $100,000.

The Court has determined it to be in the Beneficiary’s best interest to establish a trust with discretionary and spendthrift provisions to enhance the quality of the Beneficiary’s life, both now and in the future.   Therefore, the Court has directed through the aforesaid order that ABC Insurance Company, the insured for the Defendant in the personal injury lawsuit, shall deliver to the herein designated Trustee the net settlement proceeds.

It is expressly intended that this trust will provide benefits to supplement those which may otherwise be available to the Beneficiary from various sources, including insurance benefits and governmentally sponsored programs. This trust will also satisfy the requirements of Title 42 of the United States Code § 1396p(d) (4) (A), and N J.S.A.  3B: l 1-36 of the State of New Jersey which relate to the establishment of a “special needs trust.”

ARTICLE ONE:  NAME OF THE TRUST

This trust shall be known as the “JAMES J. JONES IRREVOCABLE SPECIAL NEEDS TRUST, DATED MARCH 1, 2014

ARTICLE TWO:  TRUST FUNDING

Grantor hereby orders the transfer and delivery of the property listed on the attached Schedule “A” to the trustee. The trustee acknowledges receipt of the property and agrees to hold all property transferred to trustee until the termination of the trust and agrees to administer such pursuant to the express terms and conditions in this agreement.

Other property, real or personal, may be transferred to trustee by anyone with the consent of trustee. All property held by trustee shall constitute the “Trust Estate.”  Any property transferred to trustee by a third party is a gift to Beneficiary and cannot be reclaimed by the third party.  No additions shall be made to the trust after Beneficiary attains the age of 65 years. Any additions to the trust shall be reported to the appropriate eligibility determination agency.

ARTICLE THREE:  IRREVOCABLE AGREEMENT

This trust shall be irrevocable. Neither the Grantor, the trustee nor the Beneficiary shall have any right or power, whether alone or in conjunction with others, in whatever capacity, to alter, amend, revoke or terminate this trust agreement, in whole or in part, or to designate the persons who shall possess or enjoy the trust Estate except that the Grantor or the trustee is given the power to amend the trust to comply with the requirements of 42 U.S.C. §1396p and/or State law. The form of the trust may not be altered from an individual trust to a “Pooled Trust” under 42 U.S.C. § 1396p(d)(4)(C).

ARTICLE FOUR:  TRUSTEESHIP

  1. Appointment of

Samantha Jones, residing at 468 Lantern Lane, Anytown, New Jersey, 08666, shall be the initial Trustee.  The Trustee shall post and maintain a bond with corporate surety in the amount of $100,000.   In the event the initial Trustee should be unable to discharge her duty as trustee due to resignation, death or incapacity, as “Incapacity” is hereinafter defined in Paragraph C below, then subject to the provisions which hereinafter follow regarding selection of a successor Trustee, a successor Trustee shall be selected or appointed.   The successor Trustee shall execute a written acceptance of the appointment and deliver same to the resigning Trustee and those individuals upon whom notice of resignation must be provided.

  1. Any individual serving as a Trustee of this trust may select, subject to the provisions of this trust, a successor Trustee to succeed him or her as Trustee. In the event a serving Trustee fails to appoint a successor Trustee, then a successor Trustee shall be selected by a court with jurisdiction over this matter. In doing so, the court shall consider any recommendations made by the prior or acting Trustee(s) as to qualified candidates to serve as successor Trustee and may appoint such successor Trustee, to include a corporate Trustee, as the court determines will be in the best interests of Beneficiary.
  • A candidate for successor Trustee shall be prima facie qualified if the individual is over age thirty (30), is able and willing to maintain a meaningful and harmonious relationship with Beneficiary, and is knowledgeable of the needs and issues of persons with physical, mental and/or emotional disabilities such as those which affect Beneficiary, and is preferably acquainted with the Beneficiary individually. One or more of Beneficiary’s siblings shall be preferred as successor Trustee(s).
  • A serving Trustee or a court of competent jurisdiction may select, in conjunction with an individual Trustee who shall also serve, a corporate entity to serve as Trustee of this trust. The joint Trustees shall be subject to the terms and conditions set forth herein. In the event a corporate Trustee is chosen, the fee to be paid to that Trustee shall be in keeping with that entity’s then existing fee schedule unless otherwise prohibited by law.
  • It is a requirement of this trust that there always is an individual Trustee to protect the interests and well-being of the Beneficiary.
  • Appointment of a corporate Trustee is optional. A corporate Trustee, if appointed, shall at all times serve as a co-Trustee with an individual Trustee. At no time may a corporate Trustee serve without an individual Trustee. An individual Trustee may, however, serve alone and without a corporate Trustee.
  • The individual Trustee, as set forth in Section E Removal of Corporate Successor Trustee, is empowered to, in the sole and absolute discretion of the individual Trustee, remove the corporate Trustee. The decision of whether or not to replace the corporate Trustee shall also be in the sole and absolute discretion of the individual Trustee.
  • The Bureau of Administrative Control, Division of Medical Assistance and Health Services, State of New Jersey, and the Beneficiary’s Guardian, if different from the Trustee, shall be given prior notice (of at least 30 days), if there is to be a change in Trustee.
  • The term “Trustee” as used throughout this agreement shall apply to the initial Trustee and to any successor Trustee(s) who signify their acceptance in writing. The term “Trustee” shall be construed as singular, plural, masculine or feminine, or as is appropriate, although the singular is used throughout this agreement.

A court of competent jurisdiction may, if requested or if otherwise appointing a successor Trustee, determine whether or not to require a bond of any successor Trustee(s).

  1. Incapacity of Trustee.
  2. If a Trustee cannot administer the trust because of incapacity, then during any period of incapacity, the successor Trustee named herein (or appointed by a court with jurisdiction over this trust if no successor Trustee has been named) shall act as Trustee, having all rights and powers granted to a Trustee by this instrument.
  3. Incapacity shall mean any physical or mental condition of the Trustee which is probable to extend for a period greater than ninety (90) days and which renders the Trustee unable to conduct the regular affairs of the trust estate, including but not limited to the endorsement for receipt of funds and writing checks for disbursement of funds from the trust estate.
  4. Incapacity shall be conclusively established if either the Trustee’s regularly attending physician or two doctors, authorized to practice medicine in the State of New Jersey (or in any State or country in which the Trustee is then residing), issue written certifications to the effect that the Trustee is incapacitated.
  5. In the absence of certifications, a successor Trustee or the beneficiary hereunder may petition the court having jurisdiction over this trust to remove a Trustee and, if there is no other designated successor Trustee, replace him or her with a successor Trustee. A Trustee or beneficiary who so petitions the court shall not incur liability to any beneficiary of the trust or to the removed Trustee as a result of this petition, provided the petition is filed in good faith and in the reasonable belief that the Trustee to be removed is incapacitated or otherwise cannot act.
  6. A determination that a Trustee has returned to capacity shall proceed in the manner set forth in Paragraph 3 and 4, above.
  7. Resignation by Trustee and Appointment of Successor Trustee.
  8. Any Trustee may resign by sending written Notice of Resignation, setting forth the effective date thereof, delivered personally or sent by registered mail at least thirty (30) days prior to the effective date to Beneficiary, to her legal representative, to the acting and any named successor Trustee.
  9. An individual Trustee who has tendered his or her resignation as Trustee may appoint a successor Trustee pursuant to the terms of Article 4, paragraph A of this document. The successor Trustee shall execute a written acceptance of the appointment and deliver same to the resigning Trustee and those individuals to whom notice of resignation must be provided.
  10. On or before the effective date of the resignation, the departing Trustee shall deliver to the successor Trustee and to those person(s) who are entitled to Notice of Resignation, a statement of all receipts and disbursements of the trust, together with an inventory of the assets belonging to the trust. In addition, the resigning Trustee shall transfer physical possession of the assets of the trust to his or her successor. Thereafter, the resigning Trustee shall be discharged of all of his or her duties and obligations and may, at the option of the resigning Trustee, obtain approval of his or her resignation and of the inventory of assets from a court having jurisdiction over this trust. The successor Trustee shall have the identical powers, rights, duties, and obligations of the Initial Trustee.
  11. If, for any reason, a successor Trustee is not appointed by the resigning Trustee by the effective date of his or her resignation, then a court having jurisdiction over this trust shall appoint a qualified successor Trustee. All costs incurred in such proceedings shall be paid for by the trust.
  12. Removal of Corporate Successor Trustee.

An individual, non-corporate, Trustee, shall have the right to remove any acting corporate Trustee by sending written notice of such removal to the corporate Trustee, setting

forth the effective time and date thereof, which notice shall be delivered personally or by registered mail, return receipt requested, to the corporate Trustee at least thirty (30) days prior to the effective date of removal. Upon the removal of any corporate Trustee the individual, non-corporate Trustee may, at the Trustee’s sole and absolute discretion, appoint a successor corporate Trustee.

  1. Trustee Compensation.

Any person, other than a corporate fiduciary serving as Trustee, shall be entitled to receive as compensation for services rendered in the administration of the trust created hereunder annual commissions payable to a non-testamentary Trustee on the income and principal of such trust, together with reimbursement of the disbursements incurred in connection with the administration of the trust, as provided under N J.S. 3B:18-2 et seq. Any corporate fiduciary serving as Trustee from time to time shall be entitled to receive, as compensation for services rendered in the administration of the trust, fees consistent with its usual and customary fee schedule, as adjusted from time to time unless otherwise prohibited by the laws of the State of New Jersey, together with reimbursement of the disbursements incurred in connection with the administration of the trust, as permitted under N.J.S. 3B:18-2

  1. Voting Power.

In the event there is more than one Trustee serving at any given time, each Trustee shall have one vote in all matters. In the event the Trustees are deadlocked on any matter, then any Trustee may petition a court of competent jurisdiction for a resolution of the matter.

  1. Prohibited Trustee.

Under no circumstances shall the Beneficiary serve as a Trustee or successor Trustee of this trust.

ARTICLE FIVE: 

ADMINISTRATION DURING BENEFICIARY’S  LIFETIME

During the Beneficiary’s lifetime any portion of the net income or principal of this trust may, at the sole and uncontrolled discretion of the Trustee, be paid for the Beneficiary’s benefit. Any and all discretionary distributions shall be based primarily upon Beneficiary’s best interest and in accordance with the terms of this agreement.

All distributions for Beneficiary’s benefit, and as further set forth herein, are in the sole, absolute and uncontrolled discretion of the Trustee and without any regard to any successor beneficiary. This is a purely discretionary trust and is not a support trust.

  1. Purpose of the Trust for the Benefit of Beneficiary

The sole purpose of this trust is to provide for the greatest degree of security (as defined in ARTICLE TWELVE, 1 E.1) for Beneficiary, who is an individual with disabilities. The greatest degree of security can be afforded the Beneficiary if this trust is administered and managed so as to maximize and protect any insurance or other governmental and/or private assistance benefits for which Beneficiary is or may become eligible to receive in the future. Beneficiary will benefit from the protection and financial management this trust agreement provides.

  1. Administration of the Trust for Beneficiary’s Benefit
  2. This trust is intended to benefit the Beneficiary by permitting the use of trust assets to supplement, and not supplant, impair or diminish any benefits or assistance of any private, federal, state or other governmental entity for which the Beneficiary may otherwise be eligible or which the Beneficiary may be receiving as a result of her physical needs. All decisions regarding distributions shall be made at the sole and absolute discretion of the Trustee and in the best interests of the Beneficiary.
  3. This trust is also intended to encourage the Beneficiary’s independence and abilities to the maximum extent possible and practical. This trust shall not be construed as a support trust and is established as a pure discretionary trust.
  4. Because this trust is intended for the sole benefit of the Beneficiary, it is only incidentally for the benefit of those who will receive the balance of the trust property, if any, remaining upon the Beneficiary’s death.
  5. If expenditures from the trust incidentally provide a benefit to other persons, those persons shall contribute a pro rata share to the trust to compensate for the benefit received.
  6. Power of Trustee to Prefer Distribution to the Beneficiary over Remaindermen.
  7. The Trustee has the continuing, absolute and discretionary power to deal with the funds, both income and principal, of this trust, with the unfettered ability to expend funds on the Beneficiary’s behalf, as the Trustee deems appropriate and necessary. No person dealing with the Trustee shall be required to inquire into the propriety of the Trustee’s actions.
  8. The Beneficiary is the preferred beneficiary, and his interests shall be given priority over the interests of any remaindermen. The Trustee is granted the sole discretion to accumulate the net income or to pay so much of the net income and/or principal of this trust as Trustee deems appropriate for the Beneficiary’s benefit in order to maximize total benefits available to her from any public or private assistance programs for which she is or may be eligible.
  9. Distributions from Trust.
  10. The Trustee is specifically empowered during the Beneficiary’ lifetime to distribute from the income, principal or both, of this trust, such amounts which Trustee, in Trustee’s sole, absolute and unfettered discretion, may from time-to-time deem reasonable or advisable. In this regard, Trustee is authorized and empowered to make expenditures on behalf of Beneficiary for goods and services furnished to the Beneficiary by third party providers, or to loan trust funds or property under terms that are enforceable under New jersey law and the policies and procedures of applicable governmental benefit programs, including by way of illustration, but not limitation: expenses for medical, health care and/or dental treatments which are not otherwise provided for the Beneficiary by existing insurance or benefit programs, for the Beneficiary’s private rehabilitative training, adaptive equipment and therapy, for tutoring and educational expenses, for entertainment and recreation, including travel and arrangements for holiday seasons with family members and friends, for regular vacations and periodic outings (including costs for a companion for Beneficiary, if the Trustee deems same appropriate), for prepaid funeral and burial arrangements, for advocacy on the Beneficiary’s behalf, to purchase a home (or an interest in one), to provide technological support, to purchase a vehicle, arrange transportation, acquire furnishings, make home improvements, and for regular household assistance for Beneficiary, and for expenditures which are designed to maximize the Beneficiary’s potential and the quality of her life.
  • In the event this trust comes to own realty, the Trustee may permit Beneficiary’s occupancy or use without charge in such manner as, in the opinion of the Trustee, best serves her needs, without the necessity of turning such property into cash or gaining an income
  • The Trustee is authorized to pay out of the income or principal of this trust any taxes, insurance and maintenance expenses as well as all other expenses needed to keep the residential or any replacement property or any portion of either in suitable repair. If the trust owns residential real estate pursuant to this provision, any person living therein, to include family members, with the exception of those employed to care for or otherwise assist Beneficiary, shall pay, to the trust, a pro rata share of the expenses associated with their use of the property. These powers may be exercised for the benefit of the Beneficiary, even if she is residing with a family member(s) who may also be serving as a Trustee.
  1. Under no circumstances shall the Beneficiary have the power or authority to demand any distribution from the Trustee, who is under no obligation, implied or otherwise, to make any distributions to the Beneficiary. Further, the Trustee may withhold distributions to the Beneficiary or on her behalf if, in the Trustee’s sole discretion, such distributions would not be consistent with the intentions expressed in this agreement. The Trustee, in Trustee’s absolute discretion, shall use her best efforts to avoid distributions that may cause disqualification for any public or private benefits which Beneficiary is or may be eligible to receive during the term of this trust.
  2. To the extent the Beneficiary is eligible for any public or private benefits to provide for her basic support and maintenance, then distributions from this trust shall be used solely for supplementing those benefits which are available to the Beneficiary. As much as possible, the Trustee in her absolute discretion is to administer this trust so the Beneficiary’s eligibility for public governmental assistance programs or private contractual benefits is not endangered.
  3. Trust Advisors.

The Trustee may request the advice of knowledgeable legal counsel or other knowledgeable advocacy sources. Such advice may include counsel on the appropriateness of a distribution from or expenditure of the trust, especially when such matters (including matters relating to unearned income accruing to Beneficiary) relate to the effect on the Beneficiary’s right to continued governmental or other entitlement benefits or coverage.

The Trustee is authorized and directed to seek assistance and counsel from independent specialized health care professionals and care managers in order to maximize and enhance  the Beneficiary’s medical care and treatment.

  1. Emergency or Material Change of Circumstances.

In the event of an emergency or any other condition which the Trustee reasonably believes threatens the life, safety or security of the Beneficiary, or any material change of circumstance (for example, upon Beneficiary securing full-time, competitive employment and/or a significant change in Beneficiary’s status, or in the laws or regulations affecting him), the Trustee has full and unrestricted discretion to administer this trust so as to alleviate the condition and address the change of circumstances. In exercising the discretion granted under this agreement, the Trustee shall always be guided by the Beneficiary’s best interest, which is of prime importance in the administration of this trust.

  1. Regular Contact with Beneficiary

The Trustee is requested to personally visit or contact Beneficiary at her residence at regular monthly intervals (or otherwise as determined appropriate by the Trustee), to inspect her living conditions, to inquire of care providers and, to the extent possible, to inquire of the Beneficiary regarding her treatment by care providers. The Trustee should also let the Beneficiary know that she has a friend and advocate in addition to her family members. The Trustee should ascertain that the Beneficiary is receiving available educational and recreational programs, and insure that governmental assistance, private contractual benefits and trust funds are in fact being expended on or for her benefit.

  1. Trustee Compensation for Visits and Expenses.

Reasonable reimbursement shall be made to the Trustee for these visits and for all reasonable expenses of travel, meals and lodging incurred in connection with the discharge of Trustee’s duties under this trust agreement.

ARTICLE SIX:  ASSET ALLOCATION

AND DISTRIBUTION UPON TERMINATION

This trust shall terminate upon the happening of any of the following events:

  1. Beneficiary’s death;
  2. At such time as all trust funds are expended on the Beneficiary’s behalf;
  3. At such time as the Beneficiary is no longer “disabled” as such term is defined under 42 U.S.C. §382c(a)(3)(A).
  1. Payment to State(s) for Medical Assistance

Upon the termination date of this trust, the Trustee shall pay over and distribute the then remaining principal and undistributed income of the trust as follows:

  1. The Trustee shall notify and first reimburse the State of New Jersey pursuant to N.J.A.C. 10:71-4.11 {g) I .xii, or the applicable regulations then in effect, from the then remaining principal and income of the trust, to the extent that it has a valid right of recovery under any state or federal statute or regulation for funds expended up to the total value of all medical assistance paid on behalf of the Beneficiary; provided, however, that if the Medicaid program of more than one State has a valid right of recovery hereunder and the then remaining principal and income of the trust is insufficient to satisfy all such rights of recovery, then each State’s Medicaid program shall be paid a pro rata share of the then remaining principal and income of the trust; and provided, further, however, that such right of recovery shall be satisfied in accordance with the applicable law then in effect.

Payment to New Jersey for Division of Medical Assistance and Health Services shall be made to the Treasurer, State of New Jersey, and shall be sent to N.J.D.M.A.H.S. – Medicaid,  Division of Revenue, 200 Wooverton Street, Building 200, Lockbox 656, Trenton, New Jersey, 08646.     The Trustee is directed to obtain a payoff statement from the State Medicaid agency and to carefully review the statement for accuracy. The Trustee is encouraged to obtain professional help to review the statement and verify its accuracy. The cost of such professional help shall be paid from the trust assets as an administrative expense.

  1. The Trustee shall thereafter pay any other public assistance program which has a valid and enforceable secondary right of recovery under any state or federal statute or regulation for cash benefits paid to Beneficiary and/or funds expended for the medical care, home health care or nursing home care of Beneficiary, in an amount equal to the cash benefits paid and/or funds expended by such public assistance program; provided, however, that if the public assistance programs of more than one State have a valid secondary right of recovery hereunder and the then remaining principal and income of the trust is insufficient to satisfy all such secondary rights of recovery, then each State’s public assistance programs shall be paid a pro rata share of the then remaining principal and income of the trust after all Medicaid rights of recovery as provided in Paragraph 1, of this Sixth Article, have been satisfied; and provided, further, however, that any such secondary right of recovery shall be satisfied in accordance with applicable law then in effect.
  2. The remaining principal and undistributed income of the trust, after the dispositions hereinabove provided for in Paragraphs 1 and 2 of this Sixth Article, shall be paid over and distributed as follows:
  • If Beneficiary shall be then living and not then disabled as defined under 42 U.S.C. § I 382c (a) (3) (A), the Trustee of the trust shall pay over and distribute the then remaining principal and undistributed income to the Beneficiary.
  • If the Beneficiary shall not be then living, the Trustee shall pay over and distribute the then remaining principal and undistributed income, subject to the terms and conditions of paragraph C. of this Article Sixth, pursuant to the Last Will and Testament of Beneficiary or in the absence thereof to the intestate takers, as same are defined by the laws of the State of New jersey or, as the case may be, the laws of intestacy of the state in which Beneficiary, at the time of her death, shall then be domiciled.
  1. Payment of Debts or Obligations:

After the State of New Jersey and all other states that may be entitled to payment have been paid, the Trustee is authorized to pay such other expenses and obligations of the Beneficiary’s estate, to include estate, inheritance or other similar taxes which may be imposed upon the Beneficiary’s estate together with any expenses of her last illness, enforceable debts and reasonable administration expenses, as may be due and payable.

ARTICLE SEVEN:  SPENDTHRIFT PROVISION

The Trustee is vested with full and complete title to all property and estate embraced within the trust both as to principal and income. Neither the principal nor the income of this

Trust shall be liable for the debts of the beneficiary, nor shall the same be subject to seizure by any creditor (including any spouse or governmental entity) of the beneficiary under any writ or proceeding at law or equity. No beneficiary of this trust shall have any power to sell, assign, transfer, encumber or in any other manner anticipate or dispose of her interest in this trust or the income it generates. This provision shall not, however, limit the State’s right to reimbursement for Medicaid benefits paid for the Beneficiary nor shall this provision preclude the State from recouping incorrectly paid benefits.

ARTICLE EIGHT:  ADMINISTRATIVE PROVISIONS

Any and all of the trusts or shares created in or by this instrument shall be subject to the following provisions:

  1. Retention in Trust.

If any portion of the principal sum of this trust shall become payable to any individual who has not attained the age of twenty-one (21) years, then that interest shall vest in the beneficiary. Notwithstanding this vesting, the Trustee may retain those funds in trust for the benefit of the individual with all of the investment and administrative powers stated in this agreement. The Trustee shall pay so much of the net income and principal as the Trustee, in Trustee’s sole discretion, shall consider reasonably necessary to provide for the individual’s comfortable support, maintenance, education and welfare. When the individual beneficiary attains twenty-one (21) years of age, the Trustee shall distribute the remaining portion to the individual, free and discharged from all trust. If the individual beneficiary does not survive to receive all of her interest, then the property shall be distributed pursuant to the terms and conditions of her last will and testament or, in the absence thereof, to her intestate takers, as defined by the laws of the State of New Jersey or the state wherein the beneficiary died

resident, who survive, free and clear of all trust.

 

  1. Retention of Assets as Third Party Funded Special Needs Trust for Disabled Remainder Beneficiary

 

In the event any portion of the income or principal of this trust shall become payable to any individual who is determined to be disabled pursuant to standards established in 42 U.S.C. § 1382c(a) (3) and who otherwise qualified (or would qualify if an application were made) for SSI and/or Medicaid, then any portion of this trust which is to be distributed to said individual shall be distributed to, or otherwise retained, by the Trustee hereof, or a successor Trustee, to be held subject to the same terms and conditions set forth herein for Beneficiary as if this trust was created as a Third Party Special Needs Trust for said beneficiary.

In this regard, since the money being distributed to the beneficiary belonged either to this trust or the Beneficiary then all provisions in this trust which relate to reimbursement or payback to Medicaid or other governmental programs shall not apply to any Third Party Special Needs Trust established by this document. All other provisions of this document shall otherwise remain in full force and effect.

  1. Distribution of Income and Principal,

In the event any income or discretionary payments of principal shall become payable to a beneficiary, twenty-one (21) years of age or older who is under a legal disability, other than as set forth in paragraph B. above relating to retention of assets as third party special needs trust, or who is, in the reasonable opinion of the Trustee, unable to properly administer such amounts by reason of physical or mental illness, or disability, then the Trustee is authorized to retain all or part of the income or principal and to distribute all or part of such property for the beneficiary in any of the following ways as determined best by the Trustee:

  1. To the legally appointed Guardian, Conservator or a Trustee for the benefit of the beneficiary;
  2. To the person(s) having the care of the beneficiary, for his or her suitable support, maintenance, welfare and education;
  3. By direct application of such amounts for the suitable support, maintenance, welfare and education of the beneficiary; or
  4. Such other distribution which the Trustee determines is in the best interest of the beneficiary.
  5. Employment of Agents and Payment of Expenses.

The Trustee is authorized to incur and pay from the trust estate all reasonable expenses in connection with the management, preservation and administration of the trust property, including reasonable compensation for the services of the Trustee and Trustee’s counsel. The Trustee is further authorized and encouraged to employ such accountants, custodians, experts, counsel (legal and/or investment) and other agents as Trustee deems reasonable and advisable, and to delegate administrative powers to and rely upon information or advice furnished by such parties. Included in this authorization shall be the power of the Trustee to employ the services of a financial institution or other investment manager(s), to perform those functions delegated to the institution by the Trustee, such as collection, record keeping and/or investment of the trust funds, as an agent on behalf of the Trustee.

ARTICLE NINE:  POWER AND AUTHORITY OF TRUSTEE

  1. General Powers.

In addition to the powers granted by the laws of the State of New jersey, the Trustee shall have the following powers and authority with respect to all property embraced within the trust under this agreement, all of which shall be exercised in a fiduciary capacity:

  1. Take possession of the trust property, collect and receive the monies, interest and income arising there from;
  2. Manage, invest and reinvest the entire trust in any kind of property, personal and real, including for example: annuities, bonds, interest in any amount in common trust funds, mutual funds, stock of any class, mortgages and other investments and property, as, in the discretion of the Trustee, Trustee shall deem most advantageous to the trust and the Beneficiary, as the primary and preferred beneficiary;
  3. Vote, in person or by proxy, with respect to any and all securities;
  4. Exercise or sell conversion rights or privileges to and subscribe for additional securities, and make payments therefore;
  5. Purchase, sell and trade in securities of any nature and for such purposes, maintain and operate accounts (but not margin accounts) with brokers or other financial institutions, and deliver and pledge any securities held or purchased by the trust with such parties, both as security for loans and advances made to the trust;
  6. Consent to or join in any reorganizations, consolidations, voting trusts, mergers, foreclosures and liquidations and, in connection therewith, deposit securities with or under the direction of any protective committee under such terms as the Trustee may deem advisable, and accept and hold any securities or other property received through the exercise of any of the foregoing powers;
  7. Have issued and hold in the name of the Trustee, or in the name of a nominee, securities or any other property;
  8. Retain all property in the form in which received by the Trustee unless herein otherwise directed and to disclaim any gift or other acquisition of property, including real estate, as is deemed advantageous to the trust and its beneficiaries;
  9. Sell any trust property, including real estate, either for cash or part cash and part deferred payments;
  10. Option, convey, exchange or lease any trust property for any length of time and with or without covenants of renewal;
  11. Borrow money on the general credit of the trust or by pledge or mortgage of any of the trust property as security for repayment;
  12. Renew from time to time any note or other obligation and mortgage, pledge, partition, improve, repair, surrender, abandon, distribute or otherwise dispose of or deal with all of the trust property;
  13. Settle, compromise or abandon all claims in favor of or against the trust;
  14. Make distributions or divisions of the trust property except as otherwise provided herein, in cash or in kind, or both, in equal or unequal proportions, at values determined by the Trustee;
  15. To open, close and maintain bank or brokerage accounts and safe deposit boxes with any bank, brokerage house or safe deposit company, including any acting Trustee, with the right to nominate an agent or give power of attorney to any third party of such accounts to deposit or withdraw funds and negotiate instruments in the name of the trust;
  16. Purchase and maintain or improve a home or part of a home where Beneficiary may reside, including any portion of a residence which may be owned by a family member;
  17. Retain unproductive property, as determined appropriate by the Trustee;
  18. The Trustee may, in the Trustee’s sole and absolute discretion, amend this trust to conform with subsequent changes in federal or state law or regulations established there under in order to better effect the purposes of the trust;
  19. Trustee may, and is encouraged to, retain the services of a Professional Care Manager to assist in providing the required care for the Beneficiary. The purpose of the Care Manager would be to coordinate other agencies or professionals or home health aides or personal care providers or homemakers or any other services which the Care Manager and Trustee feel are in the best interests of Beneficiary. The primary purpose of this trust is to provide funds to be spent on behalf of the Beneficiary. It is the intention to benefit the Beneficiary to the fullest extent possible, rather than the Remainder Beneficiary. Trustee shall pay all costs in connection with the Care Manager;
  20. Trustee shall have the power to retain legal and professional assistance in administering this trust and fulfilling its purposes. In particular, in making a determination whether to distribute income or principal to or for the Beneficiary under the provisions of this trust, Trustee may engage a professional advisor knowledgeable on the subject of the availability of funds or benefits from governmental or other sources on account of Beneficiary’s mental or physical disability or handicap, to advise Trustee concerning the availability of such funds or benefits. Trustee shall be entitled to rely upon the advice and information obtained from such advisor and shall not be liable for any act or omission on the part of Trustee attributable thereto;
  21. Employ domestic services;
  22. Expend such amounts as Trustee, in the exercise of Trustee’s sole and absolute discretion, shall determine to maintain the current lifestyle of any beneficiary, including, but not limited to, complete authority to provide for the personal care and comfort of any beneficiary in any manner whatsoever;
  23. Amend the trust from time to time to ensure continuing eligibility for the Beneficiary for the public benefit programs to which she may be entitled. If the law or regulations governing eligibility change, Trustee may amend the trust to ensure continuing eligibility or to secure If any provisions of this original trust fail to meet the requirements of SSI, Medicaid, or any other public benefit program, Trustee may amend the trust to comply with any such provisions.

No person or corporation dealing with the Trustee shall be required to investigate the regularity, validity or propriety of any transaction with respect to the disposition of cash or property of the trust or the application of any of the proceeds of any such transaction.

The reasonable costs and expenses of administering the trust including the retention of

legal and professional assistance shall be paid first out of the trust’s income and then out of principal.

The Trustee shall fully comply with all State laws, including the Prudent Investor Act, NJ.S. 3B:20-11.1 et seq. Further, the Trustee cannot take any actions not authorized by, or without regard to, the laws of the State of New Jersey.

  1. B. Advocacy on Beneficiary’s Behalf.

 

  1. In determining whether the existence of the trust for the benefit of Beneficiary has the effect of rendering him ineligible to receive any governmental assistance benefits to which he is or may be otherwise entitled, the Trustee is granted full and complete discretion to initiate administrative and/or judicial proceedings for the purposes of obtaining, determining or maintaining eligibility for those benefits. In such event, all costs, including reasonable attorney fees, shall be a proper charge to the trust estate.

In this regard it should be remembered that this is a purely discretionary trust, subject to the sole, absolute and unfettered discretion of the Trustee. At no time is this to be considered a support trust. All actions of the Trustee are to be taken in furtherance of the goals and objectives of this document and in what is considered by the Trustee, in the exercise of Trustee’s sole, absolute and unfettered discretion, to be in the Beneficiary’s best interest. At no time is Trustee obligated to make any distributions on the Beneficiary’s behalf.

  1. In the event the Trustee is requested by any governmental or quasi-governmental agency to petition a court of competent jurisdiction or any other administrative agency for the release of principal or income from the trust estate for the support of Beneficiary, the Trustee is authorized to deny such request, further, the Trustee is authorized to expend trust funds to defend any contest or other attack of any nature upon the provisions of this trust.

C           Coordination of Trustee Duties.

  1. The Trustee is authorized to agree from time to time with any bank, trust
    company or other financial institution which may be appointed, as to the manner in which the

deposit or withdrawal of funds or other necessary dealings with such custodian shall be carried on, including access to any safe deposit boxes or brokerage accounts held by the trust.

  1. If more than one Trustee is acting, the Trustees may also agree among themselves from time to time as to the manner in which any other administrative acts are to be performed by the Trustees, including in each instance the performing of such acts by any one, two or more of them, provided, however, that this power of delegation may not be used to delegate to any individual any power which that individual is otherwise precluded from having or exercising

by the provisions of this agreement.

  1. Continuity and Coverage.

Whenever, under the provisions of this trust agreement, one or more separate trusts or shares are created out of the assets of any existing trust, the then acting Trustee(s) of such existing trust shall be the Trustee(s) of such new trusts.

ARTICLE TEN:  TRUST ACCOUNTS

  1. Inventories and

The Trustee shall annually furnish, either formally or informally as Trustee, in Trustee’s sole discretion determines to be appropriate, a complete inventory and accounting of the assets held in trust to the Beneficiary, to her legal representative(s) known to the Trustee, and to the appropriate State of New Jersey eligibility determination agency.

  1. Record Keeping and Trustees Compensation.

The Trustee shall have the entire care and custody of all assets comprising the principal of the trust and shall maintain full and accurate records of assets, receipts and disbursements and other financial transactions relative to the trust property. Trustee shall be entitled to compensation for services rendered, as set forth in this document, in keeping with the provisions of the law of the State of New Jersey.

  1. Notification Requirements.

The Trustee shall notify the State of New Jersey, at least 45 days in advance, of any intention to make an expenditure in excess of $5,000 and of an expenditure in any amount which would substantially deplete the principal of the trust. Notice shall be given to the Division of Medical Assistance and Health Services, Bureau of Administrative Control, P.O. Box 712, Mail Code 6, Trenton, NJ 08625-0712, or any successor agency.

ARTICLE ELEVEN:  TAX AND ADMINISTRATIVE PROVISIONS

  1. Death Tax Clause.

All estate, inheritance and other death taxes, including any interest and penalties with respect to those taxes not caused by negligent delay, payable to any federal, state or foreign taxing authority imposed with respect to all property comprising the gross estate, whether or not such property passes under this trust, shall, as set forth in Article Sixth, paragraph C., be paid out of the principal of the residuary trust estate.

  1. Income Tax.

Trustee hereunder shall pay any income tax liability of the Beneficiary which results from income received by the trust. The funds used to pay any such income tax liability shall be paid directly to the appropriate taxing authority and shall not be available to Beneficiary. Beneficiary shall not have any right to or interest in any such funds paid by Trustee. Any such funds are not a resource of Beneficiary and should not be treated as a distribution of income for purposes of SSI or Medicaid qualification.

  1. Tax Refund.
  2. The amount of any tax refund, if any, resulting from payment of any tax (or potential tax) liability shall be paid directly to Trustee to the extent such refund is attributable

to amounts previously paid by Trustee. For purposes of determining whether an amount is attributable to such prior payments any refund (including interest thereon) shall be attributed to amounts previously paid by Trustee to the extent Trustee made any tax payment for the relevant tax year which has not been previously refunded. For purposes of determining whether an amount previously paid has been previously refunded any interest included as part of a refund shall not be used to offset a previous payment by Trustee.

  1. If any tax refund attributable in whole or part to a prior payment by Trustee is paid directly to Beneficiary or her guardian or other representative, the recipient of such refund or part thereof shall have no interest in or right to such refund or part thereof and shall hold the amount which is attributable to a prior payment by Trustee as an agent of and for Trustee and shall immediately deliver such amount to Trustee.

ARTICLE TWELVE:  GENERAL PROVISIONS

  1. Governing Law

This instrument has been delivered in the State of New Jersey, and the laws of this state shall govern the validity, interpretation and administration, notwithstanding the relocation of the Trustee or of any beneficiary to another jurisdiction.

Captions in this agreement are used for convenience and shall not limit, broaden, or qualify the text.

Wherever in this trust agreement words, including pronouns, are used they shall be construed as singular or plural, masculine, feminine or neutral as the context so requires.

  1. Construction by Trustee.

The Trustee may, in good faith, construe this agreement; any action taken relying upon such construction shall fully protect the Trustee, even though it may subsequently be determined that such construction was erroneous.

E           Definitions used in this Trust Agreement.

  1. The word “security” shall include consideration of the primary beneficiary’s (and if appropriate any successor beneficiary’s) overall circumstances and maximization of her personal, emotional, spiritual, social and financial well-being.
  2. “Financial wellbeing” shall include the integration (as much as possible) of the individual’s extant benefits and programs (which may vary from time to time) with supplementation from this trust of items which will enhance and maximize the quality of the Beneficiary’s life.
  3. As used in this agreement, the “Representativeof an individual shall be the legally appointed Guardian or Conservator of such individual, or any other person designated by a Court to act in that capacity for such individual, or, with the consent of the Trustee, a parent, a spouse, an adult child or an adult sibling or agent under a durable power of attorney authorized by the beneficiary. If a guardian of the person and/or property of any beneficiary are appointed by a court of competent jurisdiction then the guardianship protections for the incapacitated person’s funds which New Jersey law and Court rules require are incorporated by reference thereto into this trust agreement.
  4. Representation of Unknown and Unascertained Parties.

In any proceeding involving the construction, operation or modification of this instrument, the then living beneficiaries shall represent all unknown and undetermined beneficiaries.

In the event any provision of this instrument violates any rule of law, only such invalid provision and not the entire instrument shall be considered void and of no effect, and all of the other provisions shall remain in full force and effect.

  1. Binding Effect.

This trust agreement shall extend to and be binding upon the heirs, executors, administrators, legal representatives and successors of the parties to this agreement.

IN WITNESS WHEREOF, the Grantor and Trustee have executed this Trust Agreement in accordance with the Order of the Superior Court of New Jersey, Law Division, Camden County, Docket No.  1234-2013, entered on the 1st day of March, 2014, and, by so doing, the Trustee accepts all the duties and conditions imposed under this agreement.

 

_____________________________              ___________________________________

WITNESS                                                       SAMANTHA JONES, GRANTOR

 

Date:   ____________________, 2014

 

_____________________________              ____________________________________

WITNESS                                                       SAMANTHA JONES, TRUSTEE

 

Date:  _____________________, 2014

 

STATE OF NEW JERSEY, COUNTY OF CAMDEN:   SS.

 

On this ________ day of _________________, 2014, before me personally appeared SAMATHA JONES who is known to me to be the person described above and who acknowledged to me that she executed this trust agreement as Grantor and Trustee in conformity with an order of the Superior Court of New Jersey, Law Division, Camden County.

 

_________________________________                                                                           NOTARY PUBLIC

Post Author: Administrator