Sample Forms The American College of Trust and Estate

Termination of Grantor Retained Annuity Trust in Favor of Existing Life Insurance Trust

Trust Agreement made on (date), between

, of , hereinafter called the Grantor, and , of , hereinafter called the Trustee.

I. Trust Created and Purposes.

A. The Trustee has received from the Grantor the assets listed on the attached Schedule A, made a part of this Agreement by this reference, to be administered according to the terms of this Agreement. No one may transfer any additional assets to the Trust. The Grantor retains no right, title, or interest in any Trust property, except as specifically provided in Section III.

B. This Paragraph B contains a statement of the Grantor's reasons for establishing this Trust. Every provision of this instrument shall be construed consistently with these expressed intentions and purposes.

1. The Grantor intends by this Trust to make a completed gift to the , dated , of a remainder in the Trust property, subject only to the Grantor's retention of a right to the annuity described in Section III for years and a contingent power of appointment. The Grantor intends that, except as may be provided in this instrument, interest in this Trust shall give only those rights which are ordinarily associated with an annuity interest in Trust for a term for years and that it endow with no rights inconsistent with the same.

2. The Grantor intends that annuity interest in this Trust constitute a qualified interest under the applicable regulations of the United States Department of the Treasury promulgated with respect to Code Section 2702, and all terms used in this instrument shall have the same meaning in this instrument as they do in the Code and the applicable regulations.

II. Irrevocability. This Trust and all interests in it are irrevocable, and the Grantor has no power to alter, amend, revoke, or terminate any Trust provision or interest, whether under this instrument or any statute or rule of law.

III. During Trust Term.

A. From the date of this instrument until the anniversary of it, the Trustee shall pay to the Grantor an Annuity Amount equal to % of the initial value of the Trust fund. The Annuity Amount shall be paid in equal quarterly installments from income and, to the extent income is insufficient, from principal.

1. In determining the Annuity Amount, the Trustee shall prorate the Annuity Amount on a daily basis for short taxable years, including (if applicable) the year of the Grantor's death.

2. Any Trust income not distributed to the Grantor as part of the Annuity Amount shall be added to principal.

3. The Trustee may distribute neither income nor corpus to anyone other than the Grantor before the termination of the Trust.

4. If the initial net fair market value of the Trust assets is incorrectly determined by the Trustee, then within a reasonable period after the final determination of the correct value, the Trustee shall pay to the Grantor, in case of an undervaluation, or the Grantor shall pay to the Trustee, in the case of an overvaluation, an amount equal to the difference between the Annuity Amount properly payable and the Annuity Amount actually paid, plus interest on such amounts computed at the rate required by the applicable Treasury Department regulations or, if there are no such regulations, the rate used for valuing Annuity Interests under Code Section 664, compounded annually.

5. The Grantor's interest in this Trust may not be commuted.

B. If the Grantor dies before the anniversary of the date of this instrument, the Trustee shall distribute the Trust funds to those persons and in those shares as the Grantor shall designate by specific reference to this power of appointment in last will. The Grantor may appoint these Trust funds to any of descendants, any Trust created for any of descendants, , any Trust created for , and to estate, as chooses. The Grantor may exercise this power to appoint the Trust funds outright or in Trust, and either equally or unequally among these potential appointees, and may exclude some altogether. The Grantor intends that this power of appointment be a general power of appointment as defined for federal estate tax purposes, and all provisions of this instrument shall be construed consistently with this intent. The Trustee shall distribute any unappointed Trust funds to the Trustee of the , dated , to be held and administered as part of that Trust.

C. On the anniversary of the date of this instrument, if the Grantor is then living, the Trustee shall distribute the Trust funds to the Trustee of the , dated , to be held and administered as part of that Trust.

IV. The Trustee.

A. is the initial Trustee of this Trust. The Grantor may, at any time and from time to time, remove the then-serving Trustee and appoint instead as successor Trustee any corporation authorized to render Trust services. This power to remove a corporate Trustee shall be exercised by a writing delivered to the then-serving corporate Trustee, indicating the removal's effective date, the name of the successor Trustee, and the successor Trustee's Agreement to serve.

B. Any Trustee may resign by giving written notice specifying the effective date of the resignation to the Grantor or legal guardian. Whenever there shall be a vacancy in the office of Trustee, a successor Trustee shall be named by the Grantor or legal guardian.

C. No Trustee shall be required to obtain the order of any court to exercise any power or discretion under this Trust.

D. No Trustee shall be required to file any accounting with any public official. The Trustee must, however, maintain accurate records concerning the Trust. Each year, furthermore, the Trustee shall furnish an annual accounting of the Trust's condition, including receipts and disbursements, to the Grantor or legal guardian. This required accounting may be satisfied by a copy of the Trust's federal income-tax return, if one is required, or by the usual accountings of the Trustee, if there is one.

E. Each Trustee is entitled to compensation based on its published fee schedule in effect at the time its services are rendered.

V. Powers of Trustee. The Trustee is exclusively empowered to do the following:

A. To hold and retain all or any property received from any source, without regard to diversification.

B. To invest and reinvest the Trust funds in any type of property and every kind of investment, including (but not limited to) corporate obligations of every kind, preferred or common stocks, securities of any regulated investment trust, state and local bonds, and partnership interests.

C. To participate passively in the operation of any productive business or other enterprise, and to incorporate, dissolve, or otherwise change the form of such business, but the Trustee shall do nothing that would constitute the conduct of an active trade or business by the Trust.

D. To deposit Trust funds in any commercial interest-bearing savings or savings and loan accounts.

E. To borrow money for any reasonable Trust purpose and upon such terms, including (but not limited to) interest rates, security, and loan duration, as the Trustee deems advisable.

F. To lend Trust funds to such persons and on such terms including (but not limited to) interest rates, security, and loan duration, as the Trustee deems advisable, but it may not lend Trust funds without an adequate rate of interest.

G. To sell or otherwise dispose of Trust assets, including (but not limited to) Trust real property, for cash or credit, at public or private sale, and with such warranties or indemnifications as the Trustee deems advisable.

H. To buy assets of any type from any person on such terms, including (but not limited to) cash or credit, interest rates, and security, as the Trustee deems advisable.

I. To improve, develop, manage, lease, or abandon any Trust assets, as the Trustee deems advisable.

J. To hold property in the name of any Trustee or any custodian or nominee, without disclosing this Trust, but it is responsible for the acts of any custodian or nominee it so uses.

K. To pay and advance money for the protection of the Trust and for all expenses, losses, and liabilities sustained in its administration.

L. To prosecute or defend any action for the protection of the Trust, the Trustee in the performance of the Trustee's duties, or both, and to pay, contest, or settle any claim by or against the Trust or the Trustee in the performance of its duties.

M. To employ persons, even if they are associated with the Trustee, to advise or assist the Trustee in the performance of its duties.

N. To distribute Trust assets in kind or in cash, without regard to the income-tax basis of any asset so distributed.

O. To allocate receipts and disbursements to principal or income, in accordance with applicable local law and practice, except that in the absence of any specific local law, the Trustee shall follow the rules and principles of the Revised Uniform Principal and Income Act, as adopted and most recently revised (at the time of such allocation) by the National Conference of Commissioners on Uniform State Laws.

P. To execute and deliver any instruments necessary or useful in the exercise of any of these powers.

VI. Definitions and Miscellaneous.

A. The Grantor is the unmarried of at the time this Trust is executed, and has children,

B. All tax-related terms mean the same things in this Trust instrument as they mean in the Internal Revenue Code of 1986, as amended (the Code), and any regulations under the Code.

C. This Trust shall be governed by and construed according to the law of .

D. Whenever the context of this Trust requires, the masculine gender includes the feminine or neuter, and vice versa, and the singular number includes the plural, and vice versa.

(Acknowledgments)

(Attachment of schedule)