Marital Deduction Trust – Trust A and Bypass Trust B
This Trust Agreement is made , between , who
(Date) (Name of Trustor)
presently resides at , hereinafter called
(Street Address, City, County, State, Zip Code)
Trustor and , of ,
(Name of Trustee) (Street Address, City, County, State, Zip Code)
hereinafter called Trustee.
For and in consideration of the mutual covenants contained in this Agreement, and other good
and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
I. Establishment of Trust
A. Name of Trust . This Trust shall be known as the
(Name)
Trust.
B. Trust Corpus . Trustor has transferred and delivered to Trustee all the property
described in the attached Schedule A, which, together with all other property
subsequently transferred and delivered to Trustee, shall constitute the Trust Estate, and
shall be held, administered, and distributed as provided in this Agreement.
C. Registration of Trust . This Trust shall be exempt from registration and no
person or corporate entity shall be required to register this Trust.
D. Certificate of Trust Existence and Authority . Trustee may, at any time, record,
file, or deliver a Certificate of Trust existence and authority with or to any clerk,
register of deeds, transfer agent, or other similar agency or office to any person dealing
with Trustee. The Certificate may contain a verbatim synopsis of certain provisions of
this Agreement and shall be executed by Trustee. Any purchaser or person dealing with
Trustee shall be entitled to rely on the Certificate as a full statement of the provisions of
this Agreement which are pertinent to the particular transaction. Machine copies of the
executed Certificate shall have the same effect and authority as the executed Certificate.
The form of the Certificate of Trust attached hereto as Exhibit A is deem to satisfy this
Subsection D.
II. Reservations
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A. Amendment and Revocation . Trustor may, during Trustor's lifetime and without
the consent of anyone, by written instrument filed with Trustee, revoke this Trust in
whole or in part (at which point the Trust property or the part affected by the revocation
shall be distributed in accordance with Trustor's instructions), on paying the sums due to
Trustee for Trustee's service, or may from time to time alter or divest the interest of or
change the Beneficiaries of this Trust without limitation in any respect, and may
otherwise modify this Trust, except that the duties and compensation of Trustee shall not
be materially changed by any amendment without Trustee's written approval.
B. Reservation of Special Power of Appointment . Trustor reserves the power,
exercisable as often as Trustor may choose, by an instrument deposited with Trustee, to
appoint any part or all of the principal and income of the Trust, outright or on Trusts,
conditions, or limitations, to any one or more of Trustor' issue, or the then current or
surviving spouses of such issue, to charitable organizations, or Trustor's siblings, or
unrelated persons. This power, under this provision, shall not be exercisable by Trustor in
favor of Trustor, Trustor's creditors, Trustor's Estate, or creditors of Trustor's Estate.
C. Insurance . Trustor retains all of Trustor's rights, benefits, and options under
Trustor's insurance policies payable to or assigned to Trustee, including the right to
change beneficiaries, to receive dividends and surrender values, to borrow, to sell, to
exercise options and elections, and to assign or hypothecate any policies to any lender,
including any Trustee, as security for any loan, with the rights of the lender then being
superior to Trustee. At Trustor's request Trustee shall, without incurring any personal
liability, approve such an assignment or hypothecation. Trustee shall have no
responsibility for the payment of premiums or the repayment of any loans secured by the
policies.
III. Lifetime Management
A. Income . Trustee shall pay to Trustor the net income, if any, in any installments
and amounts as Trustor directs, or in the absence of direction, quarter-annually. Net
income not distributed shall be accumulated and become a part of the principal.
B. Invasion of Principal . Trustor reserves the right, from time-to-time, to direct
Trustee to pay to Trustor, or for the benefit of Trustor, any principal as will, when
combined with other income, support and maintain Trustor so that Trustor might, as near
as possible with due regard to Trustor's total estate and the future financial requirements
for Trustor and Trustor's dependents known to Trustee, continue to enjoy the standard of
living to which Trustor has become accustomed; provided, however, that no funds of
property shall be expended by Trustee under this provision to provide for any goods or
services the means for acquisition of which are available from other sources, including,
but not limited to, insurance or governmental benefits. This power shall be liberally
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construed without regard to interests of remaindermen and shall also include amounts for
premiums on life insurance on Trustor's life, whether or not such policies are assigned to
or payable to Trustee, and all sums necessary to preserve and protect Trustor's property.
C. Absence or Incapacity of Trustor . Trustor wishes to be sure that if Trustor is
taken ill or is away, or, for any reason, is unable to attend to Trustor's affairs, that not
only Trustor's business matters but also Trustor's personal care, comfort, and well-being
will be carefully and promptly looked after without the necessity of court proceedings.
For this reason, if Trustee is of the opinion that Trustor is unable, for any reason, to
attend to Trustor's personal or business affairs, Trustee shall make whatever arrangements
Trustee considers necessary or desirable and pay to or use for the benefit of Trustor any
part of the income and principal of the Trust Estate as Trustee believes to be a desirable,
reasonable, and proper for Trustor's care, support, comfort, and well-being; provided,
however, that no funds or property shall be expended by Trustee under this provision to
provide for any goods or services the means for acquisition of which are available from
other sources, including, but not limited to, insurance or governmental benefits. Under
such circumstances, Trustee shall have authority to do the same things in connection with
Trustor's business, household, and personal affairs as Trustor could do if Trustor were
then able to act in person. In addition to the fees for Trustee's conventional services,
Trustee shall be reasonably compensated for assuming the additional responsibilities and
duties contemplated by this Paragraph.
IV. Consequences of Trustor’s Death
A. Death of Trustor . At the death of Trustor, this Agreement shall be irrevocable.
Trustee shall receive and hold as part of this Trust all the then remaining principal and
undistributed net income as well as any proceeds of any insurance on Trustor's life and all
other property received by Trustee at Trustor's death or at any later time from any source.
After Trustor's death Trustee shall administer and distribute this Trust in accordance with
the provisions of Section V.
B. Collection of Insurance .
1. On the death of Trustor, Trustee shall collect as part of the Trust the
proceeds of any policies of life insurance assigned Trustee or on which Trustee
has been named beneficiary. Trustee shall have full authority to take any action
regarding collection of the life insurance policy proceeds Trustee deems best and
pay the expenses out of the Trust, but Trustee shall not be required to commence
or maintain any litigation to enforce payment until Trustee shall have been
indemnified to Trustee's satisfaction against all liabilities and expenses to which
Trustee might, in Trustee's judgment, be subjected on account of the litigation.
2. Trustee shall have full authority to make compromises or settlement with
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respect to any such life insurance policy proceeds as Trustee may deem expedient
and to give to any insurance company and other parties all necessary releases,
acquittances, and discharges.
3. No insurance company which makes payment of life insurance policy
proceeds to Trustee shall be required to inquire into or take notice of any of the
provisions of this Agreement or to see to the application or disposition of the
proceeds, and the receipt of Trustee shall be effectual to release and discharge the
insurance company for any payment so made and shall be binding on every
beneficiary of the Trust.
V. Duration and Distribution of Trust
A. Dealings with Trustor's Estate . On the death of Trustor, Trustee shall pay out of
the Trust Estate the expenses of Trustor's last illness, taxes, burial expenses, and expenses
of estate administration, to the extent that these items shall not be paid or responsibility
for their payment assumed by some other person, governmental unit, insurance, estate, or
Trustor's Estate. Without liability for loss, Trustee shall have the power to lend money to
Trustor's Estate, with or without security, and to purchase property of any character from
Trustor's Estate, and to retain the property so long as Trustee deems advisable, whether or
not the property is of the class in which Trustees are authorized by law to invest Trust
funds. It is Trustor's intent by this provision to specifically authorize the purchases or
loans even though the personal representative of Trustor's Estate and Trustee may be the
same person or corporation.
B. Special Benefits Trust . Trustee shall place in a separate special benefits Trust
pursuant to this Paragraph all payments or benefits received by Trustee after Trustor's
death from a qualified retirement plan or any other source described in Section 2039 of
the United States Internal Revenue Code of 1986, as amended, or any corresponding
section of any future United States law, which are paid in a form as to be exempt from
federal estate tax at Trustor's death so long as they are not paid to the personal
representative of Trustor's Estate or used for the payment of taxes, debts, or
administration expenses in Trustor's Estate. This Trust shall continue until all tax matters
in Trustor's Estate have been settled to the satisfaction of Trustee, at which time the assets
of this Trust shall be distributed to the general Trust. No portion of the income or
principal of this Trust shall be paid to Trustor's personal representative or used for the
payment of taxes, debts, or administration expenses in Trustor's Estate.
C. Trust Administration and Distribution . On the death of Trustor, this Trust shall
be held, administered, and distributed as provided in this Section V .
Trust A – The Marital Trust
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AA. Allocation of Property to Trust . Trustee shall set aside and allocate to the
Marital Trust, referred to subsequently as Trust A , all amounts which have not been
specifically allocated to the By-Pass Trust , referred to subsequently as Trust B, under
Sub-Paragraph BA, below, and subject to the following limitations:
1. Only assets which qualify for the marital deduction allowable in
determining the federal estate tax for Trustor's Estate shall be allocated to Trust
A.
2. All assets distributed to Trust A shall have an aggregate fair market value
at the date, or dates, of distribution which amount to no less than the amount of
Trust A as finally determined for federal estate tax purposes.
3. To the extent that other assets qualifying for the marital deduction are
available, Trust A shall not be funded with:
a. Assets with respect to which credit for foreign taxes paid is
allowable under the Internal Revenue Code of 1986, as amended;
b. Assets which may be subject to both income and estate taxes and
which may be eligible for a credit or deduction;
c. United States Treasury bonds eligible for redemption at par in
payment of federal estate taxes;
d. Assets which are not included in determining Trustor's gross estate
for federal estate tax purposes or assets which do not qualify for the
federal marital deduction; or
e. Shares of stock which otherwise would qualify for redemption
under Section 303 of the Internal Revenue Code of 1986, as amended.
AB. Qualifications of Trust A for Marital Deduction . Trustor intends that the
amount of property allocated to Trust A shall qualify (without reduction by the payment
of any estate, inheritance, and similar taxes) for the marital deduction allowable under
any state and federal estate tax applicable to Trustor's Estate, and that all questions
relating to this Trust be resolved accordingly. To this end, the powers and discretions
given to Trustee shall not be exercised or exercisable with respect to the property in
Trust A, except in a manner consistent with Trustor's intention as expressed in the
preceding sentence.
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AC. Disposition of Income and Principal during Surviving Spouse's Lifetime .
Trust A shall be for the exclusive benefit of Trustor's Spouse, and during such period as
the Spouse shall survive Trustor:
1. Trust A: Payment of Income to Spouse. Trustee shall pay to the Spouse
the entire net income of the Trust in any installments as the Spouse may direct,
but no less frequently than quarterly.
2. Trust A: Payment of principal to Spouse. From time-to-time and at any
time, any amounts from principal as Trustee in Trustee's discretion shall deem
necessary or advisable for the Spouse's comfort, support, and maintenance, or in
cases of illness or emergency; provided, however, that no funds or property shall
be expended by Trustee under this provision to provide for any goods or services
the means for acquisition of which are available from other sources, including, but
not limited to, insurance or governmental benefits.
3. Trust A: Payment of Principal on Demand of Spouse . Trustor's Spouse
shall have the power to withdraw free of any Trust any amounts of the principal
of Trust A , even to the point of exhausting the same, as the Spouse may request
in writing from time-to-time and at any time; but, no one purporting to act on
behalf of Trustor's Spouse shall have the authority to compel distribution of
principal under this provision.
AD. Construction of Payment Provisions; Unproductive Property . It is Trustor's
wish that Trustor's Spouse be adequately provided for during the period that the Spouse
shall survive Trustor, and that any principal payments made in the discretion of Trustee
to the Spouse after Trustor's death be made, so far as possible, from Trust A , before
being made from any portion of Trust B, below. Unproductive property shall not be held
as an asset of Trust A for more than a reasonable time during the lifetime of Trustor's
Spouse without the written consent of the Spouse.
AE. Termination of Trust A; Surviving Spouse's General Power of Appointment .
Unless sooner terminated pursuant to the terms of Sub-Paragraph AC, above, Trust A
shall terminate on the death of Trustor's Spouse. On termination, the entire principal of
Trust A then remaining, or any part of the principal, together with any undistributed and
accrued income, shall be transferred, assigned, and paid over free and discharged of all
Trusts under this instrument, to and among such appointee or appointees and in any
amounts or proportions, outright or in Trust, as Trustor's Spouse, by the Spouse's last
Will and by specific reference to this power, may direct and appoint. The general power
of appointment which is conferred on Trustor's Spouse by this provision shall be
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exercisable in the manner provided by the Spouse alone and shall be exercisable in favor
of the Spouse's estate as well as in favor of any other person or persons, individual or
corporate.
AF. Transfer to Trust B in Default of Exercise of General Power of Appointment .
If Trustor's Spouse shall fail to effectively exercise, in whole or in part, the power of
appointment conferred in Sub-Paragraph AE , above, or in default of the appointment,
that portion of Trust A not so appointed shall be paid over free and discharged of this
Trust to the Trustee of Trust B , below, to be held, administered and distributed as if
originally part of Trust B. Trustor's Spouse may also disclaim all or any part of Trust A
with the same affect; and, Trustor's Spouse shall not be deemed to have predeceased
Trustor by reason of the disclaimer.
AG. Trustee's Authority to Pay Certain Taxes . If Trustor's Spouse shall not
effectively exercise the power of appointment conferred on the Spouse under Sub-
Paragraph AE , above, or in default of the appointment, Trustee is authorized in
Trustee's discretion to pay from the then principal of Trust A to the legal representative
of Trustor's Spouse, or directly to the official or officials authorized to receive and receipt
for the same, any additional federal estate tax or any other tax however designated that
may be due and payable by the legal representative of Trustor's Spouse by reason of the
inclusion in the Spouse's estate for federal estate tax or any other tax purposes of any
remainder at the Spouse's death of Trust A over which the Spouse had the power of
appointment.
Trust B – The By-Pass Trust
BA. Allocation of Property to Trust . On the death of Trustor, Trustee shall allocate
to the By-Pass Trust , subsequently referred to as Trust B , the maximum amount of
property which Trustor could retain without payment of federal estate taxes giving effect
to the maximum unified credit available to Trustor as of the date of Trustor's death. In
allocating property to Trust B, Trustee shall give first consideration to any property
which would not qualify for inclusion in the property allocated to Trust A, as provided in
Sub-Paragraph AA, above.
BB. Supplemental Allocation of Property to Trust . In addition to the property
allocated to Trust B as provided in Sub-Paragraph BA, above, Trustee shall allocate to
Trust B any property which remains and which does not qualify for allocation to Trust
A as provided in Sub-Paragraph AA, above. If, on the death of Trustor, Trustor is not
survived by a Spouse, then all of Trustor's property shall be allocated to Trust B.
BC. Disposition of Income and Principal . Trust B shall be held and disposed of, as
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follows:
1. Trust B: Payment of Income to Spouse. Commencing with the death of
Trustor, Trustee shall pay the net income from Trust B, at least quarterly, to
Trustor's surviving Spouse, for so long as the Spouse survives.
2. Trust B: Payment of Principal to Spouse. Trustee shall pay to Trustor's
surviving Spouse so much of the principal of Trust B, as Trustee, in Trustee's
sole discretion, from time-to-time believes desirable for the Spouse's reasonable
support, medical care, and education, taking into account, however, other
resources available to the Spouse which are known to Trustee; provided, however,
that no funds or property shall be expended by Trustee under this provision while
Trust A continues to be funded; or, to provide for any goods or services the
means for acquisition of which are available from other sources, including, but
not limited to, insurance or governmental benefits. Should two or more persons,
whether individual or corporate, serve as Trustee, and Trustor's Spouse serve as
one of those Trustees, the decision to pay principal from Trust B to Trustor's
Spouse shall be made by Trustee or Trustees other than Trustor's Spouse, and
without Trustor's Spouse taking part in that decision.
3. Trust B: Surviving Children. Trustee shall pay so much or all of the net
income and principal of this Trust, even to its exhaustion, to each child under age
, hereinafter called the termination age as required, in the judgment of
Trustee to (i) provide proper care and support, including housing, food, clothing,
and medical and dental expenses; (ii) provide an education, including tuition,
books, fees, housing, board, spending money, travel, camp, and including public
or private school, college, university, graduate, professional or technical school,
during the time that the child shall pursue his or her education in good faith; (iii)
provide funds for a wedding and other necessary social expenses; (iv) meet
extraordinary or emergency expenses which arise through illness or other
misfortune; (v) pay expenses arising out of last illness and burial; or (vi) provide
for general welfare and well being. In making income and principal distributions,
Trustee may, but is not required to, consider any other income or property
available to a child from any other source (including any self-help ability) known
to Trustee. Net income not distributed shall be accumulated and become part of
the principal. Trustee shall govern aid and assistance to a child with due regard to
the future financial requirements of Trustor's other children under the termination
age, and for their support, care, and completion of their education. It is Trustor's
intent that Trustor's children have equal opportunity but not that Trustee
necessarily expend equal dollar amounts on behalf of each child. A child's right to
net income and principal, as provided above, terminates when the child attains the
termination age, provided however, that Trustee may pay so much or all of the net
income and principal of this Trust, even to its exhaustion, as required in the
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judgment of Trustee, to (a) meet extraordinary or emergency expenses which arise
through illness or other misfortune of a child who has already attained the
termination age, or (b) provide a child with an education even though the child
has already attained the termination age if Trustee shall determine the child has
been unavoidably prevented (e.g., military draft, illness, or similar reason) from
taking advantage of education opportunities available to children under the
termination age. Any child who shall receive any net income or principal, under
this provision, shall not be required to repay the same to this Trust nor shall any
such payment be set off against the distributive share of the child.
4. Trust B: Loans to Children. Trustee may also make loans to any child
for any of the six purposes specified above or for such purposes as purchasing a
home, starting a business, or other similar purposes at any time, regardless of his
or her age, provided all such loans shall be made with due regard to the future
financial requirements of Trustor's other children under the termination age for
their support, care, and completion of their education. All loans shall be repaid as
Trustee shall determine and may be secured or unsecured and with or without
interest.
5. Trust B: Family Home. In the event that the family home of Trustor's
children shall become an asset of this Trust, the family home may be retained for
the benefit of all, some, or one of Trustor's children at the expense of the Trust. In
addition, Trustee may provide financial assistance by outright grant (without
obligation for repayment), investment, loan, or otherwise, to the guardian or any
other person having the care and custody of Trustor's children for the purpose of
providing funds for the purchase, expansion, alteration, or rental of living
accommodations for the children, it being Trustor's intent to protect the guardian
or any other person having the care and custody of Trustor's children from any
significant economic burden by reason of their appointment and to give Trustee
broad discretion in assisting the guardian or any other person having the care and
custody of Trustor's children in providing living accommodations for Trustor's
children.
6. Trust B: Distribution to Children . When the last of Trustor's children
attains the termination age, or if all Trustor's children have attained the
termination age at Trustor's death, Trustee shall divide all principal and
undistributed net income of this Trust into equal shares, one for each child
surviving, and one for each child not surviving but leaving a child of his or her
own, share and share alike, per stirpes and not per capita. These shares shall be
continued in Trust and Trustee shall distribute each child's separate share as
follows: % at age , % of the original balance at age ,
and the balance at age . Nevertheless, if Trustee determines any share is so
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small that its continuation is impractical or inefficient, Trustee may terminate and
distribute the Trust.
BD. Death of Child . If any child dies before complete distribution of that child's
separate share and leaves no descendants surviving, that child's share shall be divided into
equal shares for Trustor's remaining children and be continued in Trust or distributed as
provided in this Agreement. If any child dies before complete distribution of that child's
separate share and leaves descendants surviving, that child's share shall be distributed to
his or her surviving issue per stirpes; provided, the share of any issue who is under age
shall be paid to the guardian or conservator of the issue for the benefit of the issue.
BE. Residuary Distribution . If, at any time following the creation of this Trust,
Trustor and Trustor's Spouse and issue should all die without having acquired the rights
to immediate payment of all the property held in Trust for them, Trustee shall terminate
this Trust immediately and pay all property held by Trustee to the following named
beneficiaries, or to their respective heirs, by right of representation, per stirpes and not
per capita:
1. To Trustor's , of
(e.g., Niece or Nephew)
, ,
(Street Address) (City, County, State, Zip Code)
;
( Dollar amount / Percentage)
2.
(Set forth additional beneficiaries and dollar amount or percentage distribution.)
BF. Income Payments . Whenever an income beneficiary dies, any accrued but
undistributed net income shall be paid, when distributed, to those beneficiaries receiving
the principal of the Trust.
BG. Termination of Trust . Notwithstanding any other provision of this Agreement,
no interest in the Trust created pursuant to this Agreement or any Trust or interest
established by the exercise of a power of appointment shall (1) continue to remain
contingent beyond twenty-one (21) years after the death of the last to die of any
beneficiary who is living on the date on which this Trust becomes irrevocable, or (2)
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continue beyond the time at which their continued existence would violate the Rule
Against Perpetuities. On the expiration of either of these periods, any Trust or interest in
a Trust or any Trust or interest established by the exercise of a power of appointment
shall terminate and the assets shall be distributed outright in equal shares to the income
beneficiaries, or if any income beneficiary shall be deceased, that beneficiary's share to
his or her descendants per stirpes .
VI. Release and Limitation of Powers
A. All powers created in this Agreement are releasable in whole or in part. In
addition to any other method of release recognized by law, the power may be released by
a writing declaring the donee's intention (or the intention of the appointor of the power of
appointment) to release, signed, and delivered in conformance with Section VII,
regarding the exercise of rights.
B. In disposing of any property subject to a testamentary power of appointment,
Trustee shall be fully protected in relying on any Will which shall have been admitted to
probate in any jurisdiction as the last Will of the donee ( or appointor) of the power of
appointment or in acting on the assumption that the donee died intestate without
exercising the power of appointment if Trustee does not receive notice of the existence of
a Will of the donee which has been admitted to probate within months from the
(Number)
date of death of the donee.
C. Notwithstanding any other provision of this Agreement, the donee of a special
power of appointment shall have the right to appoint property which has been added to
this Trust by the exercise by Trustor or any other person of an earlier power of
appointment in such a manner that it will postpone the vesting of any estate or interest in
the property, or suspend the absolute ownership or power of alienation of the property,
for a period ascertainable without regard to the creation of the earlier power, the exercise
of which brought the property into this Trust. This paragraph is intended to preclude the
inclusion of the property in Trustor's Estate (or such other appointer) for federal estate tax
purposes under the provisions of Section 2041(a)(3) of the United States Internal
Revenue Code of 1986, as amended, or any corresponding section of any future United
States Law.
VII. Trustee
A. Rights of Trustee and Successor Trustee . Trustor grants to Trustee, and to any
Successor Trustee, the following rights, which shall be exercised in the sole and absolute
discretion of Trustee or Successor Trustee:
1. Right to inspection of real estate. Within days following:
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(Number)
a. A Trustee's, or Successor Trustee's, appointment and notice that
the Trust contains any interest in real estate, wherever situated, and
however previously owned; or
b. The receipt of a document or documents following the
appointment of a Trustee or Successor Trustee, purporting to transfer to
the Trust any interest in real estate, wherever situated, and however
previously owned;
Trustee, or Successor Trustee, may conditionally become acting Trustee, vested with all
title, powers, and discretion given to a Trustee without any act of conveyance or transfer
and without the necessity of a court appointment, and is authorized to employ, at the
expense of Trustor or at the expense of the Trust, a technical consultant to perform
reasonable environmental assessments of such real estate. Trustee, or Successor Trustee,
shall be permitted to condition acceptance of the appointment or acceptance of the real
estate as an asset of the Trust on results from such an assessment satisfactory to Trustee,
or Successor Trustee.
If, during the period of time provided in this Subparagraph A(1), Trustee, or Successor
Trustee, shall have timely commenced to employ a technical consultant as provided in
this Subparagraph A(1), the time provided in this Subparagraph A(1) shall terminate
on the later of the following alternative dates:
a. The days provided in this Subparagraph A(1) ; or
(Number)
b. days after receipt by Trustee, or Successor Trustee, of the
(Number)
report from the technical consultant.
2. Right to Withdraw as Trustee. If Trustee, or any Successor Trustee,
should determine, as a consequence of the receipt of an environmental assessment
of any real estate then in, or coming into, the Trust, that Trustee, or Successor
Trustee, is dissatisfied with the environmental condition of the Trust Estate or any
real estate in the Trust Estate, or any real estate purporting to be transferred into
the Trust Estate, then Trustee, or Successor Trustee, may:
a. Disclaim all title, powers, and duties with respect to the Trust by
delivery of written notice to Trustor, if then living, or to the then living
income beneficiaries of the Trust; or
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b. Continue as Trustee, subject to the removal of the questioned real
estate as an asset of the Trust Estate, prior to the expiration of the period
provided in Subparagraph A(1), above, including any extensions
provided in such subparagraph, as the case may be. Any such disclaimer
or removal shall be effective as of and relate back to the date of the event
which commenced the running of the time period provided in
Subparagraph A(1), above.
3. Failure to withdraw as Trustee. In the event Trustee, or any Successor
Trustee, should fail to act as provided in Subparagraph A(1), above; or, in the
event Trustee, or any Successor Trustee, should fail to withdraw as Trustee, as
provided in Subparagraph A(2), above, then Trustee, or any Successor Trustee,
shall be deemed to be Trustee of this Trust, without the necessity of any further
act of conveyance or transfer or evidence of appointment. Trustee, or any
Successor Trustee, may, during the time prescribed in Subparagraph A(1),
above, affirmatively waive the right to withdraw provided in Subparagraph
A(2), above, by a written instrument delivered to Trustor, if then living, or to the
then living income beneficiaries of the Trust, acknowledging the waiver of the
right to withdraw.
B. Successor Trustee . In the event that Trustee in this Agreement named shall cease
to act, , presently of ,
(Name of Successor Trustee) (Street Address)
, is appointed Successor Trustee.
(City, County, State, Zip Code)
C. Resignation and Succession . Any Trustee shall have the right to resign at any
time by giving days' notice to Trustor, if Trustor is then living and legally
(Number)
capable of acting, otherwise to those of Trustor's adult children who are then living and
legally capable of acting, or if none of them are then living and legally capable of acting,
to all beneficiaries then eligible to receive income from the Trust established in this
Agreement. If Trustee resigns, a Successor may be appointed by Trustor during Trustor's
lifetime, but, if Trustor fails to do so within days after receipt of the resignation
(Number)
notice or is deceased or is legally incapable of acting, then the resigning Trustee shall
arrange for the appointment as Trustee, of a state or national bank or Trust Company, or
of some suitable individual or company. A Successor Trustee shall qualify by filing,
within days of appointment, a signed and acknowledged acceptance of Trust with
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(Number)
those parties who received notice of the resignation of the prior Trustee. A Successor
Trustee shall have all the rights, title, powers, and discretions in this Agreement conferred
on Trustee. In the event that no Successor Trustee can be located as provided in this
Section, the resigning Trustee shall have the power to petition a court of competent
jurisdiction for the appointment of a Successor Trustee.
D. Exculpatory . No Successor Trustee shall be liable for any act or failure to act of
any predecessor. With the approval of the person making the appointment of Trustee, the
Successor Trustee shall not be required to review the accounts, acts, or omissions of
predecessor Trustees or to take action against predecessor Trustees for breaches of Trust
and may accept whatever assets are turned over without further inquiry.
F. Liability of Trustee . Trustee shall be liable only for the use of ordinary care in
the execution of this Trust and is relieved from giving bond or making any inventory,
return, or report to any court or person, except those as are specifically in this Agreement
provided. Trustee shall not be liable for any claims, damages, or expenses, including, but
not limited to, loss or diminution in value of any property comprising the Trust Estate
arising from Trustee's exercise or failure to exercise the powers granted in Paragraph A
of this Section VII.
G. Indemnification for Environmental Contamination of Real Estate . Trustor
agrees to defend, indemnify, and hold harmless Trustee, or any Successor Trustee, and
any of Trustee or Successor Trustee's officers, directors, employees, agents, Successors,
and assigns, from any and all liabilities, expenses, costs, claims, damages, and penalties,
including, but not limited to, expert and attorney fees, attributable to any environmental
contamination on or from any property comprising the Trust Estate at the time Trustee or
Successor Trustee accepts and enters on the duties and responsibilities of Trustee or
Successor Trustee, or in the event Trustor directs, whether directly or indirectly, the Trust
to accept real estate tendered to the Trust Estate, as well as any and all acts, errors, and
omissions in connection with the administration of any property comprising the Trust
Estate, whether presently present or subsequently acquired, except such liabilities,
expenses, costs, claims, damages, and penalties resulting from the negligence or
intentional misdeeds of Trustee or Successor Trustee or its officers, directors, employees,
agents, Successors, and assigns. In the event a court of competent jurisdiction determines
that this Section is unenforceable, then such court shall reform the scope of this Section
to any as is necessary for the obligation to be held valid and enforceable; but, no such
reformation shall expand or extend the liabilities of Trustor beyond the terms provided in
this Section. Neither Trustor nor the beneficiaries of the Trust shall impose or assert any
obligation as to the enforceability of this indemnification obligation.
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H. Corporate Merger . If Trustee merges or consolidates, the corporation formed by
a merger or consolidation shall act as Trustee and shall possess and exercise all powers
and authority in this Agreement provided.
I. Fees . Except as otherwise agreed upon, Trustee shall be compensated annually for
its services according to its schedule of standard fees for services as Trustee in living
Trusts as amended from time to time. In addition, Trustee shall be reimbursed for all
expenses and charges incurred in the performance of its duties or by reason of its office
as Trustee.
J. Beneficiary as Trustee . Notwithstanding any other provision of this Agreement,
if a beneficiary (other than Trustor) is also acting as a Trustee of this Trust, then that
beneficiary shall in no event participate in the exercise of any discretion which might
benefit that beneficiary or anyone to whom he or she owes a legal obligation. It is
Trustor's intent that any person serving as such a beneficiary-trustee be precluded from
participating in any decision to distribute income or principal to that person, that person's
creditors, that person's estate or the creditors of that person's estate or acting as Trustee in
any manner which would cause that person's position as Trustee to be construed as a
general power of appointment under the applicable provisions of the Internal Revenue
Code or which would cause the assets of this Trust to be included in that person's estate
for federal estate tax purposes. In addition, the beneficiary-Trustee shall not exercise any
of the incidents of ownership as to any insurance on that person's life which is or will
become an asset of the Trust.
K. Majority Vote . If there are three or more Trustees eligible to participate with
respect to the exercise of any power, decisions, or other matters involving the
administration, operation, payment, or distribution of this Trust, and Trustees are unable
to agree unanimously with respect to these matters, then the will of the majority of
Trustees of this Trust then serving who are eligible to participate shall govern. Any
Trustee voting against the decision of the majority shall be relieved of all liability and
responsibility arising out of or which is a consequence of the will of the majority.
VIII. Accounting
A. Books and Records . All records, inventories, and accountings required for the
administration of this Trust shall be prepared by Trustee, and Trustee shall be responsible
for the care and safekeeping of all Trust monies, documents, titles, and securities. All
notices, objections, withdrawals, and other communications shall be served on and
received by Trustee. Where more than one Trustee is designated, and one of those
Trustees is a corporate Trustee, the corporate Trustee shall be responsible for the duties
set forth in this paragraph; and, the individual Trustee, if any are serving, shall be
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relieved of all liability and responsibilities for the duties delegated to the corporate
Trustee by this Paragraph.
B. Access to Books and Records . The books and records of Trustee shall be open
during business hours for inspection by Trustor or any beneficiary of this Trust or the
person's duly-appointed attorney, accountant, agent, or other representative.
C. Trust Participation . During any time as Trustor's issue are adult beneficiaries of
the Trust, Trustee shall encourage them and give them the opportunity, to the extent of
their interest, to observe and be advised of the investment asset management decisions of
the Trust.
D. Periodic Accounting . Trustee shall keep a true account of all the affairs
pertaining to the Trust or any division of the Trust, and shall render, no less frequently
than annually, and send to Trustor and/or Trustor's guardian during the lifetime of any
Trustor and, after the death of the last surviving Trustor then to each income beneficiary,
an accounting statement showing all receipts, disbursements, and distributions for the
preceding period, together with a statement of all of the property then in Trustee's
possession belonging to the Trust. The accounting statement shall be approved and be
final and binding on Trustor and on each beneficiary (1) when the same is approved in
writing by the beneficiary, or (2) unless the same is objected to by the beneficiary by
delivery of written objections to Trustee, within months from the date of sending
(Number)
by ordinary mail or the delivery of the accounting statement.
E. Final Accounting . On the termination of the Trust, Trustee shall render and send
to each beneficiary a final accounting statement showing all receipts, disbursements, and
distributions since the last previous statement, together with a statement of all of the
property then in Trustee's possession and belonging to the Trust. The final accounting
statement shall be approved and be final and binding on each beneficiary (1) when the
same is approved in writing by the beneficiary, or (2) unless the same is objected to by
the beneficiary by delivery of written objections to Trustee, within months from
(Number)
the date of sending by ordinary mail or the delivery of the final accounting statement.
After approval of the final accounting statement and the payment of all of the obligations
of the Trust and distribution of the principal and accumulated net income of the Trust to
the beneficiaries entitled to the same, Trustee shall be released and discharged from all
liability for Trustee's acts and obligations under this Agreement.
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F. Accounting for Securities Transactions . It is agreed that transactions in
securities as reflected on periodic statements or final statements provided to Trustor or
beneficiaries by Trustee, will serve in lieu of copies of broker confirmations, as adequate
notice to Trustor or beneficiaries of completed securities transactions.
G. Approval of Account by Beneficiary under Legal Disability . If any beneficiary
shall be a minor or under legal disability, a living parent, guardian, or other person having
physical custody of the beneficiary may act for the beneficiary in approving accounts
with the same effect as if the beneficiary had been of full age or without legal disability
and as if the beneficiary had approved the accounts. Nothing contained in this paragraph
shall be deemed to give the person acting in conjunction with Trustee the power or right
to enlarge, shift, or restrict the beneficiary interest of any beneficiary in this Trust.
H. Judicial Settlement of Accounting . Trustee may, in the discretion of Trustee,
seek a judicial settlement of Trustee's account at any time.
IX. Powers of Trustee : The Trustor does hereby grant to the Trustee all powers necessary to
deal with any and all property of the Trust as freely as the Trustor could do individually. The
Trustee shall at all times and in all actions act as a fiduciary in good faith. Trustee is hereby
granted all powers contained herein and all powers conferred upon Trustee under the applicable
statutes and laws of the State of Florida, to the broadest extent possible, including, but not
limited to all of the powers authorized by Florida Code Sections 736.0815 and 736.0816. All
powers granted to the Trustee by this Trust Agreement are ministerial in nature and are not
intended to create or alter substantial rights. Without limiting the foregoing general statement of
powers, the Trustee powers include, but shall not be limited to the following:
A. Trust Assets: The Trustee is hereby authorized and granted all powers necessary
to retain as a permanent investment of the Trust, or for such time as the Trustee shall
deem advisable, the original assets of the Trust and all other property later transferred,
devised or bequeathed to the Trustee, without liability for loss or depreciation resulting
from such retention.
B. Nonproductive Assets: The Trustee is hereby granted all powers and authority
necessary to hold uninvested cash, and to retain, acquire, and hold unproductive realty
or personalty for any periods deemed advisable by the Trustee, even though the total
amount so held is disproportionate under trust investment law or would not be permitted
without this section.
C. Investment Powers: The Trustee is hereby granted all powers necessary to invest
and reinvest any and all of the property of the Trust in any and all types of property,
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security or other asset deemed by the Trustee to be in the best interests of the Trust as a
whole, without limitation or regard to yield rates or income production.
D. Securities: The Trustee is specifically authorized, in his or her discretion, to
maintain brokerage margin accounts, to buy, sell or transfer options, warrants, puts, calls,
commodities, futures contracts, and repurchase contracts, and to exercise any options,
rights, and conversion privileges pertaining to any securities held by the Trustee as Trust
assets.
E. Additional Property: The Trustee is specifically authorized to receive additional
property from any source and to hold and administer this property as part of the Trust
Estate.
F. Sell and Lease: The Trustee is hereby granted all powers necessary to sell,
convey, lease, transfer, exchange, grant options to purchase or otherwise dispose of any
Trust asset on any terms deemed by the Trustee to be in the best interests of the Trust, to
execute and deliver deeds, leases, bills of sale, and other instruments of whatever
character, and to take or cause to be taken all action deemed necessary or proper by the
Trustee in furtherance of this authority.
G. Insurance: The Trustee is specifically authorized to insure Trust property and
assets with any insurer against any hazards, foreseeable or unforeseeable, including
public liability, and to use insurance proceeds to repair or replace the asset insured, at
the discretion of the Trustee. In addition, the Trustee may carry or purchase life
insurance on the life of any Trust beneficiary, and may exercise or release any rights
with regard to such policy.
H. Borrowing and Lending:
1. The Trustee is specifically authorized to lend Trust funds to any borrower,
on any terms deemed advisable, and to change the terms of these loans at any time
and for any reason. This authorization includes the power to extend loans beyond
maturity with or without renewal and without regard to the existence or value of
any security, and to facilitate payment, to change the interest rate, to consent to
the modification of any guarantee, and to forgive loans in their entirety.
2. The Trustee is further granted all powers necessary to borrow whatever
money the Trustee deems desirable for any Trust on any terms from any lender,
and to mortgage, pledge or otherwise encumber as security any assets of the
borrowing Trust.
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I. Modification of Terms : The Trustee is specifically authorized, incident to the
exercise of any power, to initiate or change the terms of collection or of payment of any
debt, security, or other obligation of or due to any Trust, upon any terms and for any
period, including a period beyond the duration or the termination of any or all Trusts.
J. Claims: The Trustee is hereby granted all powers necessary to compromise,
adjust, arbitrate, sue on, defend, or otherwise deal with any claim, upon whatever terms
the Trustee deems advisable, against or in favor of any Trust, and to abandon any asset
the Trustee deems of no value or of insufficient value to warrant keeping or protecting.
The Trustee is further authorized, in his or her sole and absolute discretion, to refrain
from paying taxes, assessments, or rents, and from repairing or maintaining any asset;
and to permit any asset to be lost by tax sale or other proceeding.
K. Distributions: The Trustee is specifically authorized to distribute any shares of
the Trust in cash or in property, or partly in each, and the Trustee's valuations of and
selection of assets upon making distribution shall, if made in good faith, be final and
binding on all beneficiaries.
L. Nominee: The Trustee is specifically authorized to hold any or all of the Trust
assets, real or personal, in the Trustee's own name, the name of any Co-Trustee,
corporation, partnership, or any other person as the Trustee's nominee for holding the
assets, with or without disclosing the fiduciary relationship. A corporate Trustee does
hereby have the power necessary to appoint a Trustee to administer property in any
jurisdiction in which it shall fail to qualify.
M. Foreclosure: The Trustee is specifically authorized to foreclose on any
mortgage, to bid on the mortgaged property at the foreclosure sale, or acquire mortgaged
property from the mortgagor without foreclosure, and to retain or dispose of the property
upon any terms deemed advisable by the Trustee.
N. Encumbrances: The Trustee may pay off any encumbrance on any Trust asset
and may invest additional amounts of money in the asset, as the Trustee deems
appropriate, to preserve the asset or to increase its productivity.
O. Voting: The Trustee may vote stock for any purpose, either in person or by
proxy, may enter into a voting trust, and may participate in corporate activities related to
a trust in any capacity as permitted by law, including service as officer or director.
P. Reorganization: The Trustee is hereby granted all powers necessary to unite
with other owners of property similar to any property held in this Trust in carrying out the
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foreclosure, lease, sale, incorporation, dissolution, liquidation, reincorporation,
reorganization, or readjustment of the capital or financial structure of any association or
corporation in which any Trust has a financial interest; to serve as a member of any
protective committee; to deposit Trust securities in accordance with any plan agreed
upon; to pay any assessments, expenses, or other sums deemed expedient for the
protection or furtherance of the interests of the beneficiaries; and to receive and retain as
Trust investments any new securities issued pursuant to the plan, even though these
securities would not constitute authorized Trust investments without this provision.
Q. Purchase from Estate or Trust: The Trustee is specifically authorized to
purchase property of any type, whether real or personal, from a Trustor or beneficiary's
estate or Trust for their benefit upon such terms and conditions, price and terms of
payment as the Trustee and the respective personal Representative shall agree upon, and
may hold any property so purchased in Trust although it may not qualify as an authorized
Trust investment except for this provision, and may dispose of such property as and when
the Trustee shall deem advisable.
R. Assistants and Agents: The Trustee is hereby granted all powers necessary to
employ any person or persons the Trustee deems advisable for the proper administration
of any Trust, including but not limited to: attorneys-at-law, accountants, financial
planners, brokers, investment advisors, realtors, managers for businesses or farms,
technical consultants, attorneys-in-fact, agents and any other consultants and assistants.
S. Reserves: The Trustee is hereby authorized to set aside and maintain reserves for
the payment of present or future expenses, including but not limited to: taxes,
assessments, insurance premiums, debt amortizations, repairs, improvements,
depreciation, obsolescence, maintenance, fees, salaries and wages, as well as to provide
for the effects of fluctuations in gross income, and to equal or apportion payments for the
benefit of income beneficiaries under the Trust.
T. Management of Realty: The Trustee is specifically authorized to deal with real
and personalty, including oil, gas, and mineral rights in any manner lawful to an owner
on any terms and for any period, including periods beyond the duration or termination of
any Trusts.
U. Business: With respect to any business that is part of or may become part of any
Trust, no matter how such business may be organized, the Trustee is hereby granted the
authority to:
1. Hold, retain and continue to operate such business solely at the risk of the
Trust estate and without liability to the Trustee for any resulting losses;
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2. Incorporate, dissolve, liquidate, or sell such business at any time and upon
any terms as the Trustee deems advisable. In exercise of this authority, the
Trustee may obtain a qualified appraisal, although the Trustee is not obligated in
any way to seek other offers in contracting for sale to any person including
another shareholder, trust, or beneficiary; mortgage, pledge or otherwise
encumber any assets of any Trust to secure loans for any business purposes;
3. Engage in the redemption of stock and to take such actions as are
necessary to qualify the redemption under IRC Sections 302 or 303 and the
applicable requirements of state law.
4. Create a special lien for the payment of deferred death taxes under IRC
Section 6324, or similar provisions of state law.
5. Create, continue, or terminate an S-Corporation election.
Except as otherwise provided herein by provisions inconsistent therewith, the Trust shall
be administered by the Trustee in accordance with the provisions of the Florida Title 42,
Chapter 738, and Sections 738.101 through 738.804.
X. Authority to Act: The approval of any court, the Trustor, or any beneficiary of any
Trust created by this Trust shall not be required for any dealings with the Trustee of this Trust,
and any person so dealing with the Trustee of this Trust shall assume that the Trustee has the
same power and authority to act as any individual does in the management of his or her own
affairs. Further, upon presentation of a copy of this page and any other page of this Trust, any
person shall accept same as conclusive proof of the terms and authority granted by this Trust,
and shall assume that no conflicting terms or directions are contained in any of the omitted
pages.
XI. Diversification . Trustee shall not be required to diversify assets and is authorized to
receive and retain in the Trust any one or more securities or other property, whether or not the
security or other property shall constitute a larger share of the Trust than would be appropriate
for a fiduciary to receive and retain apart from this provision.
XII. Receipts . No purchaser or other person dealing with Trustee shall be responsible for the
application of any money or other thing of value paid or delivered to Trustee. The receipt of
Trustee shall be a full acquittance and no purchaser or other person dealing with Trustee and no
issuer, transfer agent, or other agent dealing with Trustee shall be under any obligation to
ascertain or inquire into the power of Trustee to purchase, sell, exchange, transfer, mortgage,
pledge, distribute, or otherwise in any manner dispose of or deal with any property held by
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Trustee. The certificate of Trustee that Trustee is acting in conformance with the terms of this
Agreement shall protect all persons dealing with Trustee.
XIII. Application of Payments . With respect to all payments of income and principal from
this Trust to a minor, or any other person, including any Trustor, under legal disability or to a
person, including any Trustor, not adjudged incompetent but who, by reason of illness or mental
or physical disability, is, in the opinion of Trustee, unable to properly administer such amounts,
Trustee may retain all or part of such income or principal and distribute all or part of the income
or principal for the suitable support, care, and maintenance of the person: (1) directly to the
person; (2) to the legally appointed guardian of the person; (3) to a custodian under any Uniform
Transfers ( or Gifts) to Minors Act where permitted by law; (4) to some person or persons having
the care of the person for his or her suitable support, maintenance, welfare, and education; or (5)
by direct application of such amounts for the suitable support, maintenance, welfare, and
education of the person, as Trustee deems advisable.
XIV. Reduction or Release of Power . Trustor gives to Trustee the power to release or
renounce any power, privilege, or right (including this power) or the power to reduce the scope
and extent of any power, privilege, or right (including this power). If there is more than one
Trustee of this Trust, this power may be exercised by any one Trustee individually or by all of
Trustees collectively.
XV. Tax Elections . Trustee shall have the power to select a tax year and make, or refrain
from making, all other decisions and elections permitted under any applicable income, estate, or
inheritance tax law, including the imposition of a lien on Trust assets to secure tax payments,
without regard to the effect, if any, on any beneficiary of this Trust and, if any such decision or
election shall be made, to apportion or refrain from apportioning among the respective interests
of the beneficiaries of this Trust, all in a manner as Trustee shall deem appropriate. If Trustee is
responsible for preparing and filing a federal estate tax return in Trustor's Estate and determines
there is uncertainty as to the inclusion of a particular item of property in Trustor's gross estate for
federal estate tax purposes, then the property may, in the discretion of Trustee, be excluded from
Trustor's gross estate in Trustor's federal estate tax return. Similarly, if Trustee is responsible for
preparing and filing a federal estate tax return in Trustor's Estate, then the decision of Trustee as
to the valuation date for federal estate tax purposes shall be conclusive on all concerned.
XVI. Business Interests . Trustor leaves to the discretion of Trustee the retention, continuance,
sale, liquidation, or other disposition of any business or business interest, partnership, corporate,
or otherwise, which may become an asset of this Trust. Trustee may take all steps Trustee deems
necessary or advisable in connection with any business or business interest and shall be exempt
from any liability for any loss for its acts or decision in good faith. Trustee or any affiliate is
authorized to lend money to or borrow money for the business or business interests or to or for
any corporation representing the same and to vote the shares of stock in any such corporation as
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Trustee may in good faith determine to be reasonable.
XVII. Qualified Benefits . Trustee shall have the discretion to elect the time and manner of
payment of all benefits payable to Trustee after Trustor's death from a qualified retirement plan
or any other source described in Section 2039 of the United States Internal Revenue Code of
1986, as amended, or any corresponding section of any future United States law.
XVIII. Purchase of Treasury Bonds . During Trustor's lifetime Trustee is authorized to
purchase and retain as an asset of this Trust, or to receive from Trustor or any other person(s),
United States Treasury Bonds which may be redeemed at par for the payment of federal estate
tax which is expected to be imposed on Trustor's Estate. Trustee is authorized to borrow funds
for the purpose of purchasing such bonds, and is authorized to secure any such borrowing by a
pledge of the bonds so purchased, or pledge of any other Trust assets, or by any other security
arrangement which Trustee determines to be feasible. The discretion granted in this paragraph
shall be freely exercised at any time or from time to time, when information is received making it
appear that such a tax will likely be imposed, that the bonds are available to be acquired, and the
circumstances are such that the acquisition of the bonds and the proximity of their use would
make their acquisition a reasonable investment under the circumstances prevailing at the time of
their acquisition.
XIX. Creditors’ Clause: With respect to all payments and distributions to be made pursuant to
the Trust established in this Agreement, no beneficiary shall have any right to or interest in the
income or principal of the Trust until the same has been paid to him or her. Both principal and
income of the Trusts shall be free from interference and control of the creditors of any
beneficiary and neither the principal nor income of the Trusts shall be subject to assignment or
other anticipation by any beneficiary unless Trustee, in Trustee's sole and uncontrolled
discretion, determines that such an assignment or anticipation is clearly and unequivocally in the
best interest of the beneficiary. Both principal and income of this Trust shall be free from seizure
under any legal, equitable, or other process whatsoever. If Trustee believes the foregoing may be
violated or if Trustee believes the protection of any beneficiary requires it, Trustee may withhold
any part or all of the income and principal payments to which a beneficiary may be entitled and
use and
