The following free trust agreement is a thorough trust written for a married man with one child. This agreement and contract is being provided for information and research purposes only, however it is a valid legal contract and agreement. Always consult an Attorney or Lawyer.
This document should be used in conjunction with a Last Will and Testament, Living Will, Durable Power of Attorney and Health Care Power of Attorney. All these documents can be found in the Trusts and Estate Section of this website. This Agreement can apply in most states including California, New York, Florida, Nevada and others. Help improve this agreement by leaving a comment.
THIS TRUST AGREEMENT (this “Agreement”) is made and entered into as of the effective date of __________________, by and between __________________, (the “Trustor”), now residing in the County of __________________, State of __________________, and __________________ (the “Trustee”).
A. The Trustor has caused or will cause the Trustee to be named as owner of the assets listed on “Schedule of Assets” attached hereto, which Schedule of Assets is made a part hereof as though fully set out herein verbatim.
B. The Trustor may in the future cause the transfer of ownership of other property to the Trustee and the Trustor may, by Last Will and Testament, add other property to the trust property hereunder.
C. The Trustee agrees to hold the original trust property listed on “Schedule of Assets” attached hereto and all additions thereto which may be made from time to tome from whatever source such additions may come, in trust, which rust shall hereafter be known and referred to as the “__________________” (the “Trust”), to be held, administered and distributed as set forth in this Agreement.
D. The Trustee intends, by establishing this Trust to provide a receptacle during the lifetime of the Trustor in which to deposit assets for management by Trustee and provide a receptacle for estate planning in the event of the death of Trustor.
I. CREATION / INTENTION OF TRUST / IDENTIFICATION OF PARTIES.
1.1 Trust Property. Concurrently with the execution of this Trust, Trustor has conveyed and delivered to Trustee the property described in a Schedule of Trust Assets, and Trustee hereby acknowledges receipt of that property and agrees to hold and dispose of that property and all additions thereto and income wherefrom IN TRUST upon the terms and conditions hereinafter set forth. Additional property from time to time may be transferred to Trustee with Trustee's consent by Trustor or by any other person, estate or trust. Any such additional property shall become a part of the Trust estate and shall be held, managed, invested and disposed of on the same terms and conditions as hereinafter provided.
1.2 Identification of the Beneficiaries. The Trust is created for the benefit of the Trustor during his lifetime, and after his death, for the Trustor’s Spouse, __________________ (“Trustor’s Spouse”) and Trustor’s child __________________ (“Trustor’s Child”). (Trustor’s Spouse and Trustor’s Child are hereinafter referred to as “Beneficiary(ies)”).
1.3 Trust Name. This Trust shall, for convenience, be known as the THE __________________ FAMILY TRUST, and it shall be sufficient that it be referred to as such in any deed, assignment, bequest or devise.
1.4 Place of Constructive Notice of Trust. The parties to this Trust designate the County Recorder of Maricopa County, Arizona, as the location where title companies and others may check to ascertain if this Trust has been modified in any material respect. A signed Abstract of certain terms of this Trust shall be filed or recorded with that public office as notice of the existence of this Trust, its Trustor, Trustee, beneficiaries, Trustee powers and other relevant provisions. All parties dealing with this Trust may rely on the Abstract, Amended Abstract and other documents filed or recorded with that public office in ascertaining the status of this Trust and may assume, if there are no recordings to the contrary, that no material modifications have been made to the Trust since the last recording.
1.5 Interpretation. Inasmuch as the continued welfare of Trustor is of primary and paramount concern, Trustee is directed to liberally construe all provisions of this Trust in favor of the Trustor, and if there is any doubt or conflict of interest, the rights and interests of the Trustor shall be dealt with by Trustee as primary and paramount to the rights and interests of all other beneficiaries.
1.6 Incorporation of Last Will and Testament. This trust incorporates by reference the Last Will and Testament of Trustor, which provides if a Revocable Living Trust, of which he/she is a Trustor, is in existence at the time of Trustor's death, all the residue of Trustor's estate and property, wherever situated, including lapsed legacies and devises, but expressly excluding any property over which Trustor may have a power of appointment, is devised to the then Trustee under that trust agreement. It is intended by the Trustor of this trust that this is the trust into which the Last Will and Testament pours over as provided for in that Will.
1.7 No Distributions to or Control by Former Spouse of Trustor. Notwithstanding any other provision of this Trust, and regardless of whether a former spouse, spouse of a former spouse, or other relative of a former spouse may be appointed the Guardian, Conservator, or as any other legal representative of any beneficiary of this Trust, Trustor directs that:
1.7(a) In no event shall any distribution of income or principal from this Trust be made to any former spouse of Trustor, or to any spouse of any former spouse of Trustor, or to any other relative of any former spouse of Trustor (other than a beneficiary of this Trust), even though Trustee makes such distribution intending that it be used by such person for the care, maintenance, support or education of a beneficiary of the Trust and even though such former spouse of Trustor, spouse of any former spouse of Trustor, or other relative of any former spouse of Trustor may have been appointed by a court of law as the Guardian, Conservator or other legal representative of a minor or incompetent beneficiary.
1.7(b) In no event shall any former spouse of Trustor, any spouse of any former spouse of Trustor, or any other relative of any former spouse of Trustor (except a beneficiary of the Trust) have or exercise any power or right to remove a Trustee or Successor Trustee, appoint a new Trustee or Successor Trustee, limit the powers of the Trustee, remove the Protector, limit the powers of the Protector, or designate a new Protector.
1.7(c) In no event shall any former spouse of Trustor, any spouse of a former spouse, or any other relative of a former spouse (except a beneficiary of this Trust) have or exercise any right or authority to demand the payment to a beneficiary of any amount of principal or income from this Trust, nor demand any accounting of income or principal on behalf of any beneficiary.
1.7(d) Trustor believes that the Trust will be best administered and the Trust estate best preserved if this provision is expressly complied with. Therefore, this provision shall prevail and be controlling over any other provision of the Trust that may express or imply any rights, control, benefits or other connections between this Trust and any former spouse of Trustor, spouse of any former spouse of Trustor, or other relative of any former spouse or Trustor (except a beneficiary of this Trust).
1.8. Minimum Limitation on Separate Trusts’ Size. Irrespective of the other provisions of this Trust, if at any time after the death of Trustor the Trust estate or any Separate Trust created hereunder be of the aggregate principal fair market value of fifty thousand dollars ($50,000) or less, such Trust may be terminated in the sole discretion of Trustee and distributed to the beneficiaries in accordance with the provisions of the Trust or Separate Trust in proportion to their interest; or, if such interests are indefinite, then to the beneficiaries of that Trust in such equitable proportions as Trustee shall determine.
II. OPERATION OF TRUST DURING LIFETIME OF TRUSTOR
2.1 Distribution of Income. During the lifetime of the Trustor, the Trustee shall distribute monthly all of the income of this Trust to the Trustor.
2.2 Distribution of Principal. The Trustee shall distribute the principal of this trust at such time and in such manner as the Trustor directs.
3.3 Distribution for Benefit of Trustor. The principal of the Trust may, in the discretion of the Trustee, be applied to or for the benefit of the Trustor and, in addition may be applied for the preservation of Trustor’s property during Trustor’s lifetime.
III. OPERATION OF TRUST FOLLOWING THE DEATH OF TRUSTOR
3.1 Distribution of Tangible Personal Property. In the event the trust estate includes personal effects at the death of the Trustor, the Trustee shall distribute the Trustor’s property interests in such personal effects as specifically provided in such Trustor’s Will. In regard to such disposition, the Trustee shall have the same powers and discretions as are accorded to the Trustor’s Personal Representative. With respect to any instrument which purports to be the Trustor’s Will, the Trustee may assume that such instrument is valid if the Trustee acts without having first received written notice specifying a defect which would render the instrument invalid. All costs of storing, protecting, packing, shipping and insuring such items for distribution shall be borne as administration costs of the Trustor’s estate and shall not be charged to the beneficiaries receiving such items.
3.2 Specific Distributions. At the time of execution of this trust, there are no payments of specific distributions.
3.3 Division of Trust. Upon the death of the surviving Trustor, and after providing for the disposition set forth in Section 3.1 and 3.2, if any, the Trustee(s) shall divide the remaining Trust estate into separate Trust shares so as to provide a fifty percent (50%) share for __________________ in the __________________ TRUST, per stirpes, and a fifty percent (50%) share for __________________ in the __________________ TRUST, per stirpes. The shares created for the Beneficiaries shall be held, administered and disturbed pursuant to the remaining provisions of this Article III. Trustee shall obtain a separate tax identification number for each Trust share and, except as provided elsewhere in this Trust instrument, treat each Trust share as a separate tax entity in accordance with proper accounting rules and procedures.
3.4 Distribution of Income. Prior to the Beneficiary(ies) obtaining the age of eighteen (18) or not yet having graduated form high school all income shall be added to the principal of the Trust(s). Upon obtaining the age of eighteen (18) and having graduated from high school, the net income from each share so provided for a Beneficiary(ies) shall, in the sole and absolute discretion of the Trustee, be paid in convenient installments to or for the benefit of such Beneficiary(ies) as shall appear advisable from time to time for his or her health and education, including room and board. Upon the Beneficiary(ies) attaining the following: (a) a four-year degree from an accredited college or university; or (b) twenty-five (25) years of age, the net income from each share so provided for a Beneficiary(ies) shall be paid in convenient installments, not less frequently than quarterly, to or for the benefit of such Beneficiary(ies).
3.5 Discretionary Distribution of Principal. The Trustee, in its sole discretion, may from time to time apply so much of the principal as appears necessary or advisable to the Trustee for the health, education and welfare of a Beneficiary(ies) form whom the separate trust share was established as their respective needs may appear.
3.6 Withdrawal of Principal.
3.6(a) Provided that the trust estate has been divided into trusts shares as provided in Section 3.3 above, a Beneficiary(ies) may withdraw from the principal of his or her share at any time or times not to exceed in the aggregate: (i) one-third (1/3) of the value of the trust share on the date upon which the first request is made after said Beneficiary(ies) graduates from an accredited four (4) year institution, or attains twenty-five (25) years of age; (ii) one-third (1/3) of the value of the trust share on the date upon which the first request is made after said Beneficiary(ies) attains thirty (30) years of age; and (iii) the balance after said Beneficiary(ies) attains thirty-five (35) years of age. Payments shall be made without question upon written request. The right of withdrawal shall be a privilege which may be exercised only voluntarily and shall not include an involuntary exercise.
3.6(b) If any Beneficiary(ies) for whom a separate trust share was created dies before receiving his or her other share in full, then upon his or her death, his or her remaining share shall be paid over to his or her estate.
3.7. Authority to Pay Death and Tax Expenses of Beneficiary. Upon the death of a beneficiary provided for in paragraph 1.2, Trustee shall pay from the share of such beneficiaries Trust his or her expenses of last illness, funeral and burial together with any inheritance, estate or other death taxes that may by reason of such death be due upon or in connection with the share of such beneficiary.
3.8 Special Power of Appointment to Beneficiary. Each beneficiary shall have a Special Power to Appoint by Will the whole or any part of the principal of the Trust established on his account to or among that child's living descendants, in such amounts or proportions and in such lawful interests and estates, whether absolute or in trust, as the beneficiary may direct.
3.8(a) No child shall have any power to appoint any part of the principal either directly or indirectly in such a way as to benefit himself or herself, his or her estate, his or her creditors or the creditors of his or her estate. Further, he or she shall have no power to appoint any policies of insurance or the proceeds of any policies of insurance on his or her life which such Trust may own.
3.8(b) Any Power conferred on any beneficiary shall be exercisable by such beneficiary by a specific reference to the Power in the Will of such beneficiary. At any time after 90 days following the death of a beneficiary, Trustee, in the absence of actual notice of the existence of a Will exercising this Special Power of Appointment (which notice is, in the opinion of Trustee, worthy of belief), shall be entitled to treat this Special Power of Appointment as not exercised; provided, however, that this provision shall not affect any right which an appointee (should there be an appointee, regardless of the lack of knowledge of such fact on the part of Trustee), or a beneficiary in default of appointment may have against any distributee with respect to property distributed to such distributee. Any such Power shall be releasable in whole or in part by such beneficiary. In addition to other methods of release recognized by law, such Power may be released by written instrument delivered to Trustee expressly declaring the intention of that child to release his Power in whole or in designated part.
3.8(c) This Special Power of Appointment shall not be exercised while the Trustor is still living. A Will exercising this Special Power of Appointment is effective on death of Trustor.
3.9. Disaster Provision. In the event that all of the Beneficiary(ies) should not survive the Trustor and all of the Beneficiary(ies) shall have no issue surviving Trustor or should not survive to the time of complete distribution of the Trust, the Trustees shall distribute the balance of the principal and accrued or undistributed income as follows: to the persons who would have received the personal property of __________________ under the intestate succession laws of the State of Arizona then in force, and in the proportions described therein, as if __________________ had died intestate on the date stipulated for distribution, unmarried and domiciled in the State of Arizona.
3.10 Disclaimer by Beneficiary. Any beneficiary may disclaim, in whole or in part, any property that is to become or has become the vested interest of such child, before such property is distributed to the child. Such disclaimer shall be in writing under any method recognized at law. The property subject to the disclaimer shall then be held or distributed as follows: Should __________________ disclaim any property, 100% of the disclaimed property will be distributed to __________________ TRUST and should __________________ disclaim any property, then 100% of that property shall be held in trust to the issue of __________________ in trust, pursuant to the terms of this trust. Should __________________ not have issue then the property shall be distributed to the persons who would have received the personal property of __________________ under the intestate succession laws of the State of Arizona then in force, and in the proportions described therein, as if __________________ had died intestate on the date stipulated for distribution, unmarried and domiciled in the State of Arizona. A written signed copy of the disclaimer shall be mailed or delivered to the Trustee.
3.11 Treatment of Lifetime Trust on Death of Trustor. On the death of Trustor, this Trustor Lifetime Trust shall continue until all property is distributed to the other sub-Trusts established by this Trust. Transfers from this Trustor Lifetime Trust shall be made as soon as practicable and convenient after the death of Trustor and after all accounting, legal and administrative taxes and decisions have been completed. From the time of the death of Trustor until termination when all assets have been distributed, this Trustor Lifetime Trust shall operate as an irrevocable trust.
3.12 Payment of Death Expenses of Trustor. On the death of Trustor (and before distribution to any sub-Trust), Trustee shall pay the expenses of the last illness, funeral and burial of the deceased Trustor, together with any inheritance, estate or other death taxes that may, by reason of his death, be due upon or in connection with the entire Trust estate or any portion thereof and any taxes that may be due on any property outside the Trust estate, unless Trustee shall determine, in Trustee's discretion, that other provisions have been made for the payment of such expenses and taxes. All such expenses and taxes which may be paid by Trustee shall be charged against and paid from the Trust share which is included in the Trustor's taxable estate.
IV POWER TO AMEND OR REVOKE AND ADDITIONS TO TRUST
4.1 Power in Trustor During Lifetime of Trustor. In addition to any powers reserved to the Trustor elsewhere in this Trust, Trustor reserves the right at any time or times to amend or revoke this Trust Agreement and the Trusts hereunder, in whole or in part, by an instrument in writing, signed by Trustor and delivered in Trustor's lifetime to Trustee.
4.2 Power in Trustor by Last Will and Testament. Trustor reserves the right to amend or revoke this Trust Agreement and the Trusts hereunder, in whole or in part, by a Will, which specifically refers to this Trust Agreement and specifically directs what amendments are to be made or states that the Trust Agreement is revoked. If this Trust Agreement is revoked in its entirety by a Will of Trustor, Trustee shall deliver to Trustor's estate, or as his Will may direct, all the Trust property.
4.3 Correlation of Trustor’s Last Will and This Trust. Trustor's Will may provide for additions to the Trust estate hereunder and should be examined when making of any amendment to or revocation of this Trust Agreement.
4.4 Rights Personal to the Trustor. The right of the Trustor to amend or revoke this instrument, and the trust created hereunder, is personal to the Trustor, and shall not be exercised by a Guardian, Conservator, personal representative or any other person or entity.
4.5 Additions to Trust. Any trust established hereunder, or any share thereof, may be increased by additions of property from any person, by a person’s Last Will, and by naming the Trustee as the beneficiary of life insurance policies. The property, upon acceptance by the Trustee, shall become a part of the appropriate trust estate or share thereof.
4.6 Transfers to Trust. By the designation of his or her assets on the attached SCHEDULE OF ASSETS, to this Trust, the Trustor intends to and does hereby transfer, seal and assign said assts to the Trustees of the Trust.
V. TRUSTEES POWERS AND DUTIES
5.1 Trustee powers. In the investment, administration and distribution of the Trust estate and the several shares thereof, the Trustee (subject only to the duty to apply the proceeds and avails of the Trust estate to the purposes herein specified) may perform every act in the management of the Trust property which individuals may perform in the management of like property owned by them free of trust. Trustee may exercise every power with respect to each item of property in the Trust estate, real or personal, which individual owners of like property may exercise, including, by way of illustration but not by way of limitation, the following powers:
5.2 Tax Returns. Trustee shall have the power to file estate, gift and income tax returns on behalf of a deceased person having any interest in this Trust.
5.3 To Acquire Stock Rights. To acquire stock and securities of Trustee by the exercise of rights issued in connection with the stock of Trustee comprising a portion of the Trust estate; to vote in person or by general or limited proxy with respect to any shares of stock or securities held by Trustee; to consent, directly or through a committee or other agent to the reorganization, consolidation, merger, dissolution or liquidation of any corporation in which the Trust estate may have any interest; to consent to the sale, lease, pledge or mortgage of any property by or to any such corporation; and to make any payments and take any steps which Trustee deems necessary or proper to enable Trustee to obtain the benefit of such transaction.
5.4 To Add Net Income to Principal. To add to principal that portion of the net income of this Trust in excess of net income distributed to beneficiaries and reinvest such amounts at the end of the taxable year of this Trust.
5.5 To Appoint Ancillary Trustee. To appoint an individual or another corporation as Trustee, if the Trustee is unable to act with respect to real and tangible personal property not located in the state of the Trust's situs. The appointed Trustee (1) shall have all the powers of the appointing Trustee, to be exercised, however, only with the approval of the appointing Trustee, (2) shall not, unless required by law, make periodic judicial accounting, but shall furnish the appointing Trustee with semi statements, and (3) may delegate any or all Trust powers. The appointing Trustee is to require any Trustee so appointed to remit to the appointing Trustee the income and net proceeds of any sale of any property. The appointing Trustee may remove any Trustee appointed pursuant to this paragraph at any time and to appoint another, including the appointing Trustee.
5.6 To Apportion Principal and Income. To determine what is principal and what is income and to allocate receipts and expenses between them as Trustee shall in good faith determine to be in accordance with the law; provided, however, that notwithstanding any such laws, all dividends payable in shares of a corporation other than the declaring corporation and all capital gains distributions of any Trust investment shall be apportioned to the principal.
5.7 To Borrow. To borrow money for any purpose connected with the protection, preservation or improvement of the Trust estate whenever in Trustee's judgment this action is deemed advisable, and as security for same to mortgage or pledge any real estate or personal property forming a part of the Trust estate upon such terms and conditions as Trustee deems advisable. Money may be borrowed from the banking department of a corporate Trustee.
5.8 To Buy on Margin. To buy, sell and hypothecate securities on margin; to buy, sell and write put and call options.
5.9 To Commence or Defend Litigation. To commence or defend such litigation with respect to the Trust or any property of the Trust as Trustee deems advisable, at the expense of the Trust; and to compromise, abandon, or otherwise adjust any claims or litigation against or in favor of the Trust.
5.10 To Deal Between. To sell or purchase assets from any trust or estate in which the beneficiary of the Trust established by Trustor may be interested, including sales by the Trust hereby established to any other of the Trusts hereby established; to deal in every way and without limitation or restriction with the Personal Representative, Trustee or other representative of any trust or estate in which any beneficiary hereunder has any existing or future interest, even though Trustee is acting in such other capacity, without liability for loss or depreciation resulting from such transactions; and to purchase from, sell to, or otherwise deal with any corporation, partnership or association with which any Trust may be affiliated, or in which any Trust may in any other way be interested, as freely as Trustee might or could deal with an independent third party without any greater responsibility, all rules or provisions of law to the contrary being hereby expressly waived.
5.11 To Delegate Powers. To delegate powers, discretionary or otherwise, for any purpose to one or more nominees or proxies with or without power of substitution; and to make assignments to and deposits with committees, Trustees, agents, depositories and other representatives.
5.12 To Designate Signator on Bank Accounts. To have the power to designate, as signator or joint signator on any Trust bank account, any person Trustee desires to designate. This person shall act as agent for Trustee and may sign on the bank account, deposit funds in the bank account or otherwise deal with the bank account.
5.13 To Determine Value. To determine the market value of any investment of the Trust estate for any purpose on the basis of such quotations or information as Trustee may deem pertinent and reliable without any limitation whatsoever.
5.14 To Develop. To develop, improve, lease, partition, abandon, subdivide, dedicate as parks, streets and alleys, and grant easements and rights-of-way with respect to any real property or improvements thereon; and to improve, construct, repair, alter, reconstruct, or demolish any such improvements.
5.15 To Dissolve Corporations. To enter into an agreement to dissolve a corporation in which stock is owned by the Trust, when, in Trustee's opinion, such action is in the best interest of the Trust estate.
5.16 To Employ Agents. To employ agents, experts and advisors, even if they are employed by Trustee or any beneficiary of the Trust estate; and to make reasonable and proper payments to such agents, experts or advisors for services rendered.
5.17 To Establish Reserves. To set aside from rents, profits or other income received, reserves for taxes, assessments, insurance premiums, mortgage payments, debt payments, repairs, improvements, depreciation, obsolescence and general maintenance of buildings and other property, and for the equalization of payments to or for beneficiaries entitled to receive income, as Trustee deems advisable.
5.18 To Exploit Oil, Gas and Other Mineral Interests. To drill, mine and otherwise operate for the development of oil, gas and other mineral interests; to enter into contracts relating to the installation and operation of absorption and pressure plants; to enter into unitization or pooling agreements for any purpose including primary or secondary recovery; to place and maintain pipelines and telephone and telegraph lines; to execute oil, gas and mineral leases, division and transfer orders, grants and other instruments; and to perform such other acts as Trustee deems appropriate, using such methods as are commonly employed by owners of such interests in the community in which the interests are located.
5.19 To Guarantee Debts. To sign guarantees of loans and co-endorse any type of loan document and thus obligate the Trust estate for and on behalf of any individual, partnership, corporation, Trust, or other type of participating interest with which the Trust is involved in some type of business relationship; and to guarantee an indebtedness, co-endorse an indebtedness for and on behalf of one of the named beneficiaries of the Trust as Trustee deems advisable. This power supplements the power of Trustee to borrow.
5.20 To Have Rights. To have all the rights, powers and privileges of an owner, including the power to give proxies, pay assessments, abandon stock; to expend any sums deemed by Trustee to be necessary for the protection of the Trust estate; to participate in voting trusts, pooling agreements, foreclosures, reorganizations, consolidations, mergers and liquidations; and to participate in and deposit securities with any creditors, bondholders, stockholders or other protective committees.
5.21 To Hold Partnership Interests. To act as a general or limited partner in a general or limited partnership.
5.22 To Hold Property. To hold, without liability for loss or depreciation resulting from such retention, any original property, real or personal, received by Trustee from Trustor, including stock and securities of Trustee, for such time as Trustee shall deem advisable. Even though such property may not be of the character prescribed by law or by the terms of this Trust Agreement for investment by the Trust and represents a large percentage or all of the Trust estate, such original property may be held as a permanent investment.
5.23 To Invest. To invest the Trust estate, both principal and income, in any property or undivided interests therein, wherever located, without being limited by any statute or rule of law concerning investments of Trustees; to hold on deposit or to deposit any funds in banks, including Trustee bank, in any form of account whether or not interest
5.24 To Make Distribution. To make any distribution or division of the Trust estate in cash or in kind, or both; to allot different kinds or disproportionate shares of property or undivided interests in property among the beneficiaries; and to continue to exercise any powers and discretions herein given for a reasonable period after the termination of the Trust, but only for so long as no rule of law relating to perpetuities would be violated.
5.25 To Make Loans. To make loans to any person, including any beneficiary, at a reasonable interest rate and with adequate security.
5.26 To Operate Business. To operate and manage, at the sole risk of the Trust estate and not at the risk of Trustee, any business received in trust, as long as Trustee deems advisable; to incorporate any unincorporated business received hereunder; and to accept beneficial employment with or from any business in which the Trust estate may be interested, whether by way of stock ownership or otherwise, even though the interests of the Trust estate in the business shall constitute a majority interest therein or the complete ownership thereof, and to receive appropriate compensation from such business for such employment.
5.27 To Pay Costs. To pay all costs, charges and expenses of the Trust estate and pay or compromise all taxes pertaining to the administration of the Trust estate which may be assessed against it or against Trustee on account of the Trust estate or the income thereof, together with a reasonable compensation to Trustee for Trustee's services hereunder, including services in the matter of whole or partial distribution of the Trust estate.
5.28 To Purchase Insurance. To insure the Trust estate against such risks and for such amounts and upon such terms as Trustee deems necessary; to purchase policies of insurance on the life of any beneficiary of this Trust, or on the life of any other person in whom this Trust may have an insurable interest; to continue in effect or to terminate any life insurance policy which may be owned or held by this Trust; to pay (from income or principal) any premiums or other charges; and to exercise any and all rights or incidents of ownership in connection therewith.
5.29 To Purchase Special Properties. To purchase or otherwise acquire, and to retain, whether originally a part of the Trust estate or subsequently acquired, any and all stocks, bonds, notes or other securities, including interests in investment trusts and common trust funds or any variety of real or personal property, as Trustee may deem advisable, whether or not such investments be of the character permissible for investments by fiduciaries, or be unsecured, unproductive, under productive, over productive, or of a wasting nature. Investments need not be +diversified and shall be made or retained with a view to a possible increase in value. Trustee may at any time render liquid the Trust estate, in whole or in part, and hold cash or readily marketable securities with little or no yield for such period as Trustee may deem advisable.
5.30 To Receive Additional Assets. To receive additions to any Trusts established under this Trust Agreement from any source, and to administer such additions according to the terms of this Trust Agreement.
5.31 To Sell and Lease. To sell, lease, pledge, mortgage, transfer, exchange, convert or otherwise dispose of, or grant options with respect to, any and all property at any time forming a part of the Trust estate, in such manner, at such time or times, for such purposes and for such prices and upon such terms, credits and conditions as Trustee deems advisable. Any lease may be made for such period of time and upon such terms and conditions as Trustee may deem proper and may extend beyond the period fixed by statute for leases made by fiduciaries and beyond the duration of the Trust without the approval of any court.
5.32 To Settle. To complete, extend, modify or renew any loan, note, bond, mortgage, contract or any other obligation under which the Trust estate may be a party or obligated or which may be a lien or charge against any property of the Trust estate, even though the Trust estate may not be liable thereon, in such manner as Trustee deems advisable; to pay, compromise, compound, adjust, submit to arbitration, sell or release any claim or demand of the Trust estate against others or of others against the Trust estate as Trustee deems advisable, and to make any payments in connection therewith which Trustee deems advisable.
5.33 To Transfer Situs. To transfer the situs of the Trust estate to some other location.
VI. ADDITIONAL POWERS OF TRUSTEE
6.1 Discretionary Power to Purchase Property From Estate of Trustor. Trustee is authorized to purchase securities and other property, real or personal, belonging to the estate of Trustor, and to retain such purchased property as an investment of the Trust.
6.2 Discretionary Power to Make Loans to Estate of Trustor. Trustee is authorized to make loans from the Trust estate to the Trustor's executors, administrators or personal representatives, provided such loans are made with adequate security and at a reasonable interest rate.
6.3 “S” Corporation Stock. Upon the death of a Trustor whose "S" Corporation stock is included in the Trust estate, Trustee shall have the power to immediately distribute, in Trustee's sole discretion, all "S" Corporation stock directly to the current Trust beneficiaries, if this is necessary to avoid tax problems for the parties.
If for any reason, either through a deliberate or an inadvertent action by any party, this Trust becomes a shareholder of an "S" corporation, then immediately on that event, the Trustee shall pay all income attributable to the beneficiaries of this Trust under "S" corporation regulations, directly to the beneficiary until such time as the "S" corporation terminates its "S" corporation status and becomes a regular "C" corporation in good standing.
6.3(a) During the period when this Trust is a shareholder of "S" corporation stock, Trustee shall take all actions to meet the requirements mandated for a Trust to qualify as an "S" corporation shareholder. Trustee shall meet regularly with the then serving certified public accountant and attorney for the corporation to make certain Trustee has taken all necessary steps to ensure the Trust qualifies and thereby avoid an inadvertent termination of the "S" corporation status.
6.3(b) If qualification for "S" corporation stock ownership requires the addition of any terms or removal of any terms of the Trust, the Trustee shall upon notice of this requirement exercise his Trustee rights and duties under the Trust to add or remove provisions in order to ensure that the Trust has the requisite terms to qualify for "S" corporation stock ownership.
6.4. Authority. No person dealing with Trustee shall be obliged to inquire as to Trustee's powers or to see to the application of any money or property delivered to Trustee. Trustee shall not be required to obtain authority or approval of any court in the exercise of any power conferred hereunder. Trustee shall not be required to make any current reports or accounting to any court nor to furnish a bond for the proper performance of Trustee's duties hereunder. Trustee may execute and deliver any and all instruments in writing which Trustee deems advisable to carry out any of the foregoing powers. No party to any such instrument in writing signed by Trustee shall be obliged to inquire into its validity, or be bound to see to the application by Trustee of any money or other property paid or delivered to Trustee pursuant to the terms of any such instrument.
6.5 Additional Powers Given By Law. The powers enumerated in this Part Four shall be construed as being in addition to any other authority given or conferred upon Trustee by law.
6.6 Continuation of Powers. After termination of any Trust created herein until the same is finally distributed, Trustee shall have the authority to exercise all powers and authority including any discretionary powers.
6.7 Distribution of Beneficiary’s Trust. If any beneficiary of this Trust has created a Trust for the management of his property, or if any minor or incompetent beneficiary has had a Trust created for his protection, care, support or general welfare, then Trustee may, in his discretion, make the designated distributions under this Trust to that beneficiary by transferring to the Trustee of that beneficiary's Trust the share of that beneficiary, instead of distributing the share to the beneficiary directly. Should a beneficiary ask in writing that a share be distributed to a Trust by disclaimer, Special Power of Appointment, or otherwise, then such request shall be controlling on Trustee.
6.8 Merger of Trusts. If at any time Trustee is holding any Trust under this Trust Agreement for the primary benefit of any person or persons for whose primary benefit Trustee is holding any other Trust, upon substantially the same terms, created by Trustor or any member of Trustor's family under this or any other Trust Agreement, Trustee may, in Trustee's discretion, consolidate, commingle and hold them as a single Trust. Trustee shall allot to each Separate Trust an undivided interest in the mingled funds that shall always be equal to that Separate Trust's proportionate contribution (as adjusted from time to time by payments, accumulations of income or additions to principal) to the mingled funds.
6.9 Power to Transfer Assets to Another Trust. For purposes of facilitating administration, reducing the cost of managing this Trust, greater protection of the assets or for other reasons which Trustee, in his opinion, feels are in the best interest of the beneficiaries, the Trustee may, in his absolute discretion, transfer all or some of the property of the Trust or sub-Trust to another valid Trust which provides substantially the same benefits for the same beneficiaries, rather than distributing directly to a beneficiary.
6.10 Authority to Make Ta Elections and Allocations. Trustee is authorized to make tax elections and allocations under any statute or rule of law as the Trustee deems prudent to minimize or eliminate taxes with respect to the estate of the Trustor and any other beneficiary under this Trust Agreement (following the death of the Trustor) and no adjustments shall be made with respect to the interests of the beneficiaries to compensate for the effect of the Trustee's tax elections and allocations.
6.11 Treasury Bonds to Pay Estate Tax. During the lifetime of Trustor, Trustee is authorized to purchase and retain, for the Trust estate, United States of America Treasury Bonds which may be redeemed at par in payment of the Federal Estate Tax which may be imposed upon 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 pledge of the bonds so purchased, by pledge of any other Trust property, or by any other security arrangement which Trustee determines advisable. The discretion granted in this paragraph should be freely exercised when information is received that Trustor is seriously ill, or that there may be a substantial and progressive deterioration in Trustor's state of health. In determining the amount of bonds to purchase, consideration should be given to Trustor's view that it is better to overestimate the amount of such bonds that may ultimately be required than to purchase an inadequate amount of bonds.
If, upon the death of Trustor, the Trust estate contains any such treasury bonds, Trustee shall submit for redemption so many of such bonds as may be required to pay in full the federal estate tax imposed by reason of Trustor's death, including additional assessments, penalties and interest, without regard to the apparent adequacy of the assets comprising Trustor's probate estate.
6.12 Pour-Back. Trustee shall have the express power at any time to pour back assets to the probate estate of Trustor if necessary or advantageous.
6.13 Continuation of Gift Programs. Trustee shall have the power and duty to continue gifting programs which Trustor may have begun, or to initiate gifting programs to issue of Trustor should Trustees, in their sole discretion, deem these gifts advantageous to the family of Trustor. All gifts shall be pre-approved by the attorney and accountant for the Trust to insure that all tax laws are complied with.
VII. GENERAL PROVISIONS
7.1 Income Payment Dates. Income payments which Trustee is required to make hereunder to a beneficiary of the Trust shall be made in convenient installments not less frequently than quarterly.
7.2 Spendthrift Provision. The interest of a beneficiary in the income or principal of the Trust hereunder shall be free from the control or interference of any creditor of the beneficiary or of the spouse of the beneficiary and shall not be subject to attachment, execution or other process of law or susceptible to anticipation, alienation or assignment, whether voluntarily or involuntarily encumbered, except in those cases where Trustee, in Trustee's sole discretion, approves the credit extended and the assignment of the beneficiary's interest hereunder as collateral therefore. In exercising such discretion, Trustee shall ascertain whether or not it would be in the best interest of the beneficiary that credit be accepted and collateral given. This provision includes obligations to pay alimony or support by any beneficiary or spouse of a married beneficiary. Nothing contained in this paragraph shall be construed as restricting in any way the exercise of any powers or discretions granted hereunder.
7.3 Cost of Living Increases. Should the retail cost of living index change, as evidenced by the Consumer Price Index (CPI), as published by the Bureau of Labor Statistics of the United States Department of Labor, then any amounts set forth in this Trust as fixed amounts shall be increased or decreased, on an annual basis, by Trustee in the same proportion as the changes in the CPI for the twelve month period following the first month of payment or last CPI adjustment, whichever is applicable. This paragraph shall not apply to any sum which sets limitations in amounts for tax purposes or over which the Trustee has discretionary power.
If at the time required for the determination of the cost of living adjustment, the CPI is no longer published or issued, Trustee may use such other index as is then generally recognized and accepted for similar determinations of purchasing power fluctuations.
7.4 Interpretation. Trustee shall have full power to construe any provision in this Trust where Trustor’s intent is uncertain or ambiguous. However, should there be any serious question in the interpretation of any provision of this Trust, then an interpretation given in writing by, __________________, the attorney who drew this Trust, shall be binding. If that attorney is no longer practicing law, then written interpretation shall be obtained by Trustee from three disinterested attorneys specializing in estate planning in the county where this Trust is administered, and the interpretation rendered by a majority of them shall be binding upon the parties having an interest in this Trust.
7.5 Arbitration of Disputes. Any dispute arising in connection with this Trust, including disputes between Trustee and any beneficiary or among Co-trustees shall be settled by the negotiation, mediation and arbitration provisions of the American Arbitration Association. Any decision rendered either in accordance with the rules of the American Arbitration Association shall be binding upon the parties as if the decision had been rendered by a court having proper jurisdiction.
7.5(a) In any dispute arising out of this Trust, the losing party shall pay to the prevailing party reasonable costs and expenses incurred in connection with any suit or arbitration as determined by the court or arbitrator, including attorneys' fees, court costs and the value of time lost by the prevailing party or any agent or employee of the prevailing party in participating in any litigation or arbitration in connection herewith. This provision shall be binding upon Trustee and any beneficiary who seeks to enforce rights or privileges under this Trust.
7.5(b) This provision shall not be interpreted to allow an assessment of attorneys' fees against a disinterested Trustee who acted in good faith. It shall, however, be interpreted to permit the assessment of attorneys' fees against the share of any Trustee who is also a beneficiary, or the share of any beneficiary. The purpose of this clause is to discourage persons with frivolous disputes by putting them on notice that the losing party shall bear these expenses.
7.6 Governing Law. Each Trust hereunder is a(n) Arizona Trust and its validity is to be determined, interpreted and construed according to Arizona law. The administration of the Trust and investments shall be governed by the law of the situs where the Trust may be administered.
7.7 Certified Copies of this Trust. To the same effect as if it were the original, anyone may rely upon a copy certified by a notary public to be a true copy of this Trust Agreement or an Abstract of this Trust Agreement (and of the writings, if any, endorsed thereon or attached thereto). Anyone may rely upon any statement of fact certified by anyone who appears from the original document or a certified copy thereof to be a Trustee hereunder.
7.8 Notices of Event. Until Trustee shall receive written notice of any birth, marriage, death or other event, or the existence of any document upon which the right to payments from the Trust estate may depend, Trustee shall incur no liability for disbursements made in good faith to persons whose interests may have been affected by that event.
7.9 Rule Against Perpetuities. Notwithstanding other provisions of this Trust, no Trust created hereby shall continue for more than 21 years after the death of the last survivor of the Trustor and beneficiaries and such descendants of Trustor and beneficiaries as are in being at the date this Trust becomes irrevocable. If at the expiration of this period any property is still held in Trust hereunder, such property shall immediately be distributed to those persons as are then entitled to receive income there from, in the same proportion which the income such persons are receiving shall bear to the entire income of the Trust.
7.10 Creation of New Trusts. Trustee shall have the power to create a new Trust for any beneficiary with terms and conditions which carry out the intent and purposes of this Trust and which protect the well-being of that beneficiary. This provision shall be liberally construed, and the exercise of this power shall be left to the absolute discretion of Trustee. The attorney advising Trustee shall be responsible for reviewing the new Trust Agreement into which distributions from this Trust shall pour-over or for drafting the new Trust Agreement with the necessary provisions.
This clause recognizes that the uncertainties of the future for each beneficiary cannot be predicted in advance and therefore, wide flexibility must be given to the Trustee to meet a myriad of future situations.
7.11 Establishment of Incapacity. In establishing the incapacity of a Trustor or beneficiary of this Trust Agreement, affidavits of three independent licensed Doctors of Medicine shall be sufficient to establish such incapacity or inability to act or ability to continue to act hereunder, and Trustee, any Successor Trustee and third parties shall be protected in relying upon such statements without any further act or notice.
7.12 Generation-Skipping Taxes and Exemptions. If a Trust created by this Trust Agreement would be partially exempt from generation-skipping tax by reason of a generation-skipping tax exemption allocated to it, then before the allocation, the Trustee, in his discretion, may divide the Trust into two separate, identical Trusts of equal or unequal value, to enable the Trustee or Personal Representative making the allocation to allocate the generation-skipping tax exemption solely to one Trust which will be entirely exempt from the generation-skipping tax. In addition, if a Trust created by this Trust Agreement is entirely exempt from generation-skipping tax and adding property to the Trust would partially subject it to generation-skipping tax, the addition shall not be made and the property instead shall be held as a Separate Trust identical to the exempt Trust.
7.12(a) In both cases, the two Trusts shall have identical terms and conditions, but the Trustee shall not make discretionary distributions from the income or principal of the exempt Trust to any non-skip beneficiaries so long as any readily marketable assets remain in the non-exempt Trust. If the Trustee considers that any distribution from a Trust created by this Trust Agreement, other than pursuant to a power to withdraw or appoint, is a taxable distribution subject to a generation-skipping tax payable by the distributee, the Trustee shall augment the distribution by an amount which the Trustee estimates to be sufficient to pay the tax and shall charge the same against the Trust to which the tax relates. If the Trustee considers that any termination of an interest in the Trust estate is a taxable termination subject to a generation-skipping tax, the Trustee shall pay the tax from the Trust estate to which the tax relates, without adjustment of the relative interests of the beneficiaries.
7.12(b) If any Trust set up within this Trust is subject to a generation-skipping tax, then that portion of the Trust that would be subject to generation-skipping taxes will vest in the lifetime beneficiary at age 65 or at his sooner death, so as not to subject any of the assets of this Trust to a generation-skipping tax.
7.13 Determination of Best Interests. The best interest of a beneficiary shall be liberally construed by Trustee and shall contemplate not only distributions necessary for the support of such beneficiary (if such distributions shall be in the best interests of such beneficiary as determined by Trustee), but also distributions for the beneficiary's comfort and convenience. As illustrations and not in limitation to the purposes for which distributions may be made under such standard (which is not intended to be an ascertainable or inflexible standard), Trustee may make distributions to permit the beneficiary to travel for education or pleasure, to permit the beneficiary to purchase or furnish a personal residence, or to permit the beneficiary to purchase, initiate or invest in a business which Trustee personally deems to be sound or promising, even though such business might be the type of investment in which, because of its risk, Trustee would not or could not invest the Trust estate.
In making any such discretionary distribution, Trustee shall consider both the general financial resources and requirements of such beneficiary and the ability of the beneficiary to deal with and manage the money or property involved and shall exercise the discretionary powers herein conferred primarily in the best interest of the beneficiary.
8.1 Beneficiary. Unless otherwise expressly identified herein, wherever reference is made herein to a beneficiary, such reference shall be deemed to mean a person to whom the Trustee of a Separate Trust is then directed or authorized to distribute net income or principal or both from the Trust estate of such Trust, and wherever the facts and context require such construction, the term beneficiary shall be deemed to mean the plural form thereof.
8.2 By Right of Representation. The term by right of representation denotes that method of dividing an estate by which an equal share is given to all those persons of a class who are related in the same degree to the decedent. For instance, where the deceased has a son with one son (who is a grandson to the deceased) and a daughter with three daughters (who are the granddaughters to the deceased) and the will provides that the deceased's descendants shall share by right of representation and both children predecease the decedent, then each grandchild shall receive an equal one share of the estate.
8.3 Child, Children and Issue. References in this Trust to child or children mean lawful blood descendants in the first degree of the parent designated, and references to issue mean lawful blood descendants in the first, second or any other degree of the ancestor designated, provided always, however, that:
8.3.a Adopted Children. References to adopted child and such adopted child's lawful blood descendants shall be considered in this Trust Agreement as lawful blood descendants of the adopting parent or parents and of anyone who is by blood or adoption an ancestor of the adopting parent or of either of the adopting parents, and shall not be considered descendants of the adopted child's natural parents, except where a child is adopted by a spouse of one of his natural parents, such child shall be considered a descendant of such natural parent as well as a descendant of the adopting parent.
8.3.b Child in Gestation. A child in gestation who is later born alive shall be regarded in this Trust Agreement as a child in being during the period of gestation in determining whether any person has died without leaving surviving issue, and in determining, on the termination of any Trust hereunder, whether such child is entitled to share in the disposition of the then remaining principal and undistributed income of such Trust, but for other purposes, such child's rights shall accrue from the date of birth.
8.4 Community Property. All property acquired by either Husband or Wife during the marriage, except that which is acquired by gift or devise, is the community property of the Husband and Wife. In non-community property states, community property is intended to mean property where the Husband and Wife jointly acquired it with joint funds or joint credit or in a way that if it were acquired in a community property state it would be deemed community property.
8.5 Descendants. Except where distribution is directed to the descendants per stirpes of a person, the term descendants includes descendants of every degree, whenever born, whether or not a parent or more remote ancestor of such descendant is living. Where distribution is directed to any person's descendants per stirpes who are living at a designated point of time, the stirpes shall begin with the children of such person, whether or not any child of that person is then living.
8.6 Education. The term education shall include all forms of education, including but not limited to public or private schools, primary or secondary, college, advanced college or post-college, professional, commercial, technical, business, language or artistic studies.
8.7 Trustor. In this Trust, the term Trustor shall refer to the person(s) designated above as the Trustor. Trustor Wife. Should the term Trustor Wife be used in this Trust or in any amendments hereto, the term Trustor Wife shall refer to Trustor’s present wife; or if Trustor is not married at the time of execution of this trust, Trustor Wife shall refer to the woman Trustor shall marry after the effective date of this Trust.
8.8 Gross Estate and Taxable Estate. The terms gross estate and taxable estate refer to the amounts described by these terms in the Internal Revenue Code.
8.9 Heirs. The term heirs means those persons other than creditors who would receive the personal property of the person designated under the laws of the state named in the place designated in the heading of this Trust, as if said person had died intestate, unmarried and domiciled in that state on the date stipulated for distribution.
8.10 Per Capita. The term per capita denotes that method of dividing an estate by which an equal share is given to each of a number of persons, all of whom stand in equal degree to the decedent. The term literally means by the head. For instance, where the deceased has a son with one son (who is a grandson to the deceased) and a daughter with three daughters (who are granddaughters to the deceased) and the will provides that the deceased's children shall share per capita and both children predecease the decedent, then the grandchildren receive nothing and the estate passes under the residuary clauses of the Trust or will.
8.11 Per Stirpes. The term per stirpes denotes that method of dividing an estate where a class or group of distributees take the share to which a deceased would have been entitled, taking thus by their right of representing such ancestor, and not as so many individuals. The term literally means by the branch. For instance, where the deceased has a son with one son (who is a grandson to the deceased) and a daughter with three daughters (who are granddaughters to the deceased) and the will provides that the deceased's children shall share equally per stirpes and both children predecease the decedent, then the grandson shall receive one of the estate (the share his father would have received) and the three granddaughters shall share the other one(one-sixth each) which their mother would have received.
8.12 Person. The term person includes an individual, a corporation, an organization or other legal entity.
8.13 Personal Representative. Personal Representative includes executor, administrator, successor personal representative, special administrator and persons who perform substantially the same functions under the law governing their status.
8.14 Reference to Gender. References hereunder to the masculine gender shall be deemed to include the feminine and neuter genders, unless otherwise stated or unless the circumstances eliminate such inclusion.
8.15 Disclaimer. Any person who is a beneficiary or who otherwise has an interest in any Separate Trust may at any time renounce the whole, or from time to time, any part of an interest in such Trust, either as to income or principal or both, by an instrument in writing delivered to Trustee, and thereafter such Trust or the part of such Trust which shall have been renounced shall be administered and distributed as if such person had died on the date of delivery of the written instrument, and as if such person had not exercised any testamentary power of appointment granted to that person; provided, however, that such renunciation shall not, unless it specifically so provides, affect the right of such person to receive subsequent distributions of principal or income from the Trust estate of any Separate Trust upon the death of any other person, upon the renunciation by any other person of any interest in any Separate Trust or pursuant to the exercise of any power of appointment by any other person.
8.16 Separate Property. All property, real and personal, of each spouse, owned by such spouse before marriage, and that acquired afterward by gift or devise, and also the increase, rents, issues and profits thereof, and where the Trustors have agreed (in writing in any form) that the property be separate, is the separate property of such spouse.
8.17 Surviving Spouse. Where the term Surviving Spouse is used in this Trust, the term shall refer to a surviving Trustor Wife.
8.18 Trust Estate. The term Trust estate shall include all property received initially by Trustee with respect to any Separate Trust, all additions thereto received by Trustee from any other source, all investments and reinvestments of such property or such additions thereto, and all accrued and undistributed income of such Trust.
8.19 Trustee. References in this Trust to Trustee shall be deemed to include not only the original Trustee or Co-Trustee but also any additional or Successor Trustee or Co-Trustee.
8.20 Will. The term Will includes Last Will and Testament and any Codicils thereto.
IX. TRUSTEE’S RIGHTS AND DUTIES
9.1 TRUSTEE’S RIGHTS. Trustee shall be entitled:
9.1.a To Act Without Bond. To act at any time and in any jurisdiction without bond or other security to ensure the faithful performance of Trustee's fiduciary duties. If a bond is required by law, no surety on such a bond is required. The bond will not be required so long as the Trustee is listed in this document, however should a Trustee be assigned pursuant to the terms of this document other than a listed Trustee, then, that Trustee will have to submit a bond.
9.1.b To Rely on Documents. To rely on any document or other paper if believed by Trustee to be genuine and to be signed and delivered by or on behalf of the proper person, firm or corporation, without incurring liability for any action or inaction based thereon.
9.1.c To Use Best Judgment. To use Trustee's best judgment in exercising the powers, discretions and rights conferred by this Trust or in performing the duties imposed upon Trustee by law.
9.1.d To Reimburse. To reimburse Trustee from the Trust estate for all reasonable expenses incurred in the administration thereof.
9.1.e To Be Indemnified. To not be required to comply with any instructions of the Trust or defend any action, which in Trustee's judgment may subject Trustee to liability or expense, unless indemnified in a manner and amount satisfactory to Trustee.
9.1.f To Petition Court for Accounting. To petition at any time any appropriate court to have Trust accounting judicially settled.
9.1.g To Keep Property in Certain Place. To keep any of the Trust property at any place or places within the United States or abroad or with a depository or custodian at such place or places.
9.2 Jurisdiction of Probate Court. Except for disputes to be settled by arbitration under provisions of this Trust or interpreted under provisions of this Trust, the Trustee or any beneficiaries or interested parties may seek the assistance of the probate court to have Trust provisions clarified and judicially settled.
9.3 Adequate Records. Trustee shall be the custodian of the property constituting the Trust estate and shall be responsible for the maintenance of adequate records evidencing the Trust income and expenses, and for the preparation and filing of all required accounting, reports and tax returns. The records pertaining to any Trust herein created shall be open at all reasonable times to inspection by any beneficiary of any Trust, or by the representatives of any beneficiary. Any beneficiary shall have the right to demand an annual accounting of the administration of the Trust.
9.4 Separate and Combined. Trustee may combine for investment purposes all or any part of the funds held in all or any of the Trust estates, or may hold the funds of all such Trust estate in a combined Trust fund. Trustee shall be responsible for the maintenance of records showing the receipts and disbursements, the funds held for the benefit of each Separate Trust estate, and showing the allocable portion of any such combined Trust fund belonging to each such Separate Trust.
9.5 Compensation to Trustee. The compensation of the Trustee shall be a reasonable amount as is customary for Trustees of corporate fiduciaries in the county and state where the Trust is administered.
9.6 Keep Informed. The Trustee shall use its best efforts to keep informed of called bonds, subscription rights, reorganizations and other matters of similar nature which may affect the securities on deposit, and upon receipt of any notice in connection therewith, Trustee shall forward same to beneficiaries. Proxies, circulars, financial statements and similar material are not to be forwarded unless, in the judgment of Trustee, the matter is of unusual importance and should be brought to the attention of beneficiaries.
X. RENDITION OF ACCOUNTS
10.1 During Lifetime of Trustor. During the lifetime of Trustor, Trustee shall render an accounting of income and principal to Trustor whenever requested to do so by Trustor or any income beneficiary. The written approval of this account by Trustor shall, as to all matters and transactions covered by the account, be binding upon all who are then or who may thereafter become entitled to the income or principal. Failure to disapprove an account within 10 days of the mailing of the account shall be deemed an approval.
10.2 Mandatory Distribution of Income. After the death of Trustor, with respect to each Separate Trust under which the income is required to be distributed, Trustee shall render an annual accounting of income and principal to the person(s) to whom the income of the Trust is required to be distributed, or to the guardian(s) of such person(s). The written approval of such person(s) or guardian(s) shall as to all matters and transactions covered by that account, be binding upon all who then are or who may thereafter become entitled to the income or principal, provided, however, that nothing contained in this paragraph shall be deemed to give such person(s) or guardian(s), acting in conjunction with Trustee, the power to amend or revoke such Trust.
10.3 Discretionary Distribution of Income. After the death of Trustor, with respect to any Separate Trust under which the income may be distributed or accumulated in the discretion of the Disinterested Co-Trustee, Trustee shall render an annual accounting of income and principal to the oldest person to whom such income could be distributed, or to the guardian of such person(s). The written approval of such person(s) or guardian(s) shall as to all matters and transactions covered by that account be binding upon all who are then or who may thereafter become entitled to the income or principal, provided, however, that nothing contained in this paragraph shall be deemed to give such person(s) or guardian(s), acting in conjunction with Trustee, the power to amend or revoke such Trust.
10.4 Distributions. All distributions of income or principal shall be made to the respective beneficiaries in person or may at their direction be deposited in any bank to the credit of such beneficiary in any account carried in the beneficiary's name or jointly with another or others. Distributions to a minor or an incompetent beneficiary may nevertheless be made by Trustee for the benefit of such beneficiary in such of the following ways as in Trustee's opinion will be most desirable:
10.4.a Directly to such beneficiary;
10.4.b To such beneficiary's legal representative;
10.4.c To some near relative or friend of such beneficiary; or
10.4.d By Trustee making such payments directly for the benefit of such beneficiary.
XI. RESIGNATION AND REMOVAL OF TRUSTEE AND APPOINTMENT OF SUCCESSOR TRUSTEE
11.1 Resignation of Trustee. Trustee may resign by giving thirty (30) days written notice to Trustor during Trustor’s lifetime, or after Trustor’s death, to each of the adult income beneficiaries.
11.2 Removal of Trustee. Trustee may be removed at any time by a majority of the adult income beneficiaries who are members of the Trustor’s bloodline and the legally appointed guardians of the other beneficiaries who are members of the Trustor’s bloodline who are then currently entitled to benefits under this Trust, by written notice to Trustee. Until the accounts of Trustee are settled and Trustee discharged, Trustee shall continue to have all the powers and discretions granted to Trustee hereunder or conferred by law, except as limited by provisions of this Trust Agreement.
11.3 Appointment of Successor Trustee. Except as may be otherwise provided in Part One, in case of resignation or removal of Trustee, a majority of the adult income beneficiaries who are members of the Trustor’s bloodline and the legally appointed guardians of the other beneficiaries who are members of the Trustor’s bloodline, and who are then currently entitled to benefits under this Trust, may, by instrument signed and acknowledged, appoint a Successor Trustee; provided, however, said Trustee shall be a corporate fiduciary having at least $150 million under trust management. If a Successor Trustee is not appointed within 30 days after the giving of notice of resignation or removal, Trustee may apply to a court of competent jurisdiction for the appointment of a successor. Trustee shall be entitled to reimbursement from the Trust estate for all expenses incurred in connection with the settlement of Trustee's accounts and the transfer and delivery of the Trust estate to Successor Trustee. If Trustee is removed, Trustee shall be entitled to full compensation as if the Trust had terminated while Trustee was still acting. If Trustee resigns, Trustee shall be entitled to retain the compensations theretofore taken and to take any compensations then accrued but unpaid.
If the Trustee is missing for more than 30 days as attested to by three credible persons, a Successor Trustee shall be appointed as described above.
11.4 Successor to Business of Corporate Trustee. Any successor to the business of a Corporate Trustee, whether by reorganization or otherwise, shall succeed as Trustee with the like powers as though originally named as Trustee.
11.5 Powers of Successor Trustee. Successor Trustee, upon executing an acknowledgment of acceptance as Trustee and upon the settlement of the accounts and discharge of the prior Trustee, shall be vested, without further act on the part of anyone, with all the estate, title, rights, powers, duties, obligations, privileges, immunities and discretions granted to the predecessor Trustee. The prior Trustee shall, however, execute and deliver such assignments or other instruments as shall be deemed advisable.
11.6 Incapacity of Trustee. If Trustee becomes unable to discharge his duties as Trustee of this Trust by reason of accident, physical or mental illness, progressive or intermittent physical or mental deterioration or other similar cause, as certified by three independent licensed physicians affirming that each has examined Trustee and that each has concluded, based upon such examination, that Trustee is unable to discharge his duties as Trustee, then, in that event, Trustee shall thereupon cease to be Trustee in the same manner as if he had resigned on the date that the third certificate from the independent physician is signed. The Affidavit of Succession signed by Successor Trustee shall be recorded with the County Recorder as provided in Part One of this Trust. Successor Trustee shall deliver a true copy of that Affidavit of Succession, with the physician's certificates attached, to the Trustee and all adult beneficiaries forthwith after recordation of the original. The independent physicians shall be selected one by the spouse or oldest child of Trustee, and the other two by the president of the Medical Association in the county where Trustee resides. Should the spouse or child not be available, then one independent physician shall be selected by one of the income beneficiaries. If none of these persons is available, then all shall be selected by the other Trustees and the president of the Medical Association of the county in which Trustee resides. The standard that shall be used in determining incapacity for purposes of succession is the same as that defined for the appointment of a conservator under the present laws of the state in which Trustee resides.
11.7 Notice of Incapacity. To give proof of the incapacity of the incompetent Trustee in order for the Successor Trustee to act on behalf of the Trust, the Successor Trustee must mail, by certified mail, return receipt requested, or by direct delivery, a copy of the Affidavit of Succession to the incompetent Trustee. The purpose of this provision is to permit the Successor Trustee to act on behalf of the incompetent Trustee without the necessity of the Successor Trustee filing court proceedings.
11.8 Acts of Prior Trustees. An additional or Successor Trustee shall not be liable for any action taken by Trustee prior to the time such additional or Successor Trustee becomes a Trustee.
11.9 Restrictions on Liability of Successor Trustee. No Successor Trustee shall be liable for the acts or defaults of any previous Trustee, or for any loss or expense from anything done or neglected to be done by any predecessor Trustee, but such Successor Trustee shall be liable only for his own willful wrongdoing or gross negligence with respect to property received by him as Trustee. Any Successor Trustee who shall be then acting as Trustee pursuant to a notice of vacancy shall not be guilty of any wrongdoing merely because he is acting as Successor Trustee if it shall later be discovered that another has been designated as Successor Trustee pursuant to any provisions herein.
11.10 Criminal Charges, Convictions, or Bankruptcy of Trustee. Should any individual Trustee be convicted of a felony or file bankruptcy, said Trustee shall be deemed immediately terminated as Trustee as of that date. Should a Trustee be subjected to a charge of committing a felony or to the filing of an involuntary bankruptcy, then all his powers as a Trustee shall be suspended until the determination of the proceedings.
XII. CO-TRUSTEES EFFECT UPON OPERATION
12.1 Operation of Trust. If there is more than one Trustee, the following provisions shall be controlling and take precedence over any other provisions relating to Trustee:
12.1.a Definition. The use of the term Trustee or Co-Trustee shall be used interchangeably throughout this Trust Agreement and shall mean, for all purposes, the duly authorized Trustees under this Trust.
12.1.b Corporate Trustees Unable to Act. If any corporate Trustee at any time resigns, is unable or refuses to act, another corporation, authorized under the laws of the United States or of any state to administer trusts, may be appointed as Trustee by an instrument signed by all the beneficiaries and delivered to it.
12.1.c Power of Attorney. Any Co-Trustee may give another Co-Trustee of this Trust a general or limited power of attorney to act for him as Trustee under this Trust. The use of such a Power of Attorney shall not relieve either Trustee of his liability for breach of any fiduciary duties.
12.1.d Desire for Concurring Decision. It is Trustor’s desire that all Trustees concur on all decisions made with regard to the Trust. If the Co-Trustees fail to concur or either has discomfort with any decision, they shall involve a Third Co-Trustee. With the advice and counsel of a Third Co-Trustee or other experts that they may bring in as mediators, Trustor desires that the Trustees reach a concurrence on final decisions.
12.2 Acts of Co-Trustee. If there are two or more Co-Trustee one Co-Trustee shall not be responsible for the acts or omissions of another Co-Trustee or for allowing another Co-Trustee to have custody or control of the funds, securities or property. Each Trustee shall be responsible for his own bad-faith acts or omissions.
12.3 Conflicts of Interest. Trustees shall disclose to the other Trustees any conflict of interest they may have with respect to any matter. The other Trustees shall seek legal counsel and if the Trustees after seeking legal counsel decide there is a conflict of interest, then the Trustee with the conflict shall not vote on that matter. Whenever a Trustee disqualifies himself or is disqualified by the other Trustees for a vote, a written memorandum of this decision to disqualify and the reasons for it shall be written and placed in the files of the Trust.
12.4 One Trustee Authority to Sign Insurance Applications and Tax Documents. If any insurance is purchased by the Trustees of this Trust, any one of them may sign life, property and casualty or other insurance applications and paperwork necessary to purchase and process the policies. The reason for this special authority to any one of the Trustees is that sometimes speed is necessary in obtaining insurance coverage and damages may be caused to the Trust by the unnecessary delays of finding a Trustee. Any Trustee may sign tax applications, returns and other tax and governmental forms and paperwork that may be required from time to time.
XIII. INSURANCE PROVISIONS
13.1 Insurance with Regard to Trust. Insurance policies may be the subject property of this Trust and the Trust may be designated as beneficiary and/or owner of certain policies of insurance on the life of Trustor or any beneficiary, listed in Schedule A or another schedule of assets for the Trust attached hereto. Such policies and the proceeds wherefrom, together with any other property which is added to this Trust, and the investments and reinvestments thereof, shall be managed, controlled and disposed of for the uses and purposes and upon the terms and conditions as provided herein.
13.2 Rights of Trustee to deal with Insurance Policies. Trustee shall have full power and authority to have and possess the rights of an owner with respect to any life insurance policy held in the trust estate, including, without limiting the generality of the foregoing, the right to receive or apply dividends or distribute shares of surplus, disability benefits, surrender values or proceeds of matured endowments; to obtain and receive from the issuing insurance company such advances or loans on account of any such policy as may be available; to sell, assign or pledge the policy; to surrender the policy; and to exercise any option or privilege granted in the policy, including, the right to select, in Trustee's discretion, settlement options with respect to any life insurance policy payable to the Trustee of the Trust created hereunder.
13.3 Duties of Trustee with Respect to Insurance. Trustee shall use Trustee's best efforts to collect the proceeds of any policies of insurance which are made payable to Trustee hereunder when any of such policies shall, to the knowledge of Trustee, have matured, but shall not be required to take legal proceedings until indemnified to Trustee's satisfaction against all expenses and liabilities to which Trustee might be subjected. Any release given by Trustee to any insurance company shall fully and completely discharge the insurance company for any payment so made and shall be binding upon every beneficiary under this Trust Agreement.
13.4 Designation of Trust as Beneficiary of Disability and Salary Continuation Policies. It is contemplated that from time to time this Trust may be designated as the beneficiary of disability or salary continuation policies which provide for income to the named insured while the named insured is incapacitated or disabled as defined in the policies. The reason for designating the Trust as the beneficiary of these policies is to allow a receptacle for the administration of these funds, should the disabled beneficiary be unable to manage the funds because of incapacity or disability.
13.5 Notice to Insurance Company. No insurance company shall be required to inquire into or take notice of any of the provisions of this Trust Agreement or to see to the application or disposition of the proceeds of such policies.
XIV. EXECUTION AND CERTIFICATION
14.1 Effective Date. This Trust Agreement has been executed by the parties intending that it be effective on the effective date set forth on the caption page. The parties recognize that they effectuated a meeting of the minds among themselves on that effective date and intended that this Trust Agreement take effect on that date even though, because of the exigencies of the modern world, the mechanics of drafting, the convenience of the parties, and the economy of travel, it may have been necessary to actually sign the document at a later time.
14.2 Effective Place of Execution. The parties intend that the place of execution be that county and state that is set forth in the caption of this Trust Agreement. The effective place of execution is the place that the parties intend this Trust Agreement to have been executed, incorporating all laws, for purposes of conflicts of laws, which apply to that effective place of execution. The parties recognize that, due to the exigencies of the modern world, the mechanics of drafting, the convenience of the parties, and the economy of travel, this Trust Agreement may be executed by one or all the parties at some other geographic location and possibly at multiple places. However, in spite of this, they intend that it be deemed executed at the effective place of execution.
14.3 Interlineations and Initials. The parties recognize that because of the exigencies of the modern world, the mechanics of drafting, the convenience of the parties, and the economy of costs, they may have in their own handwriting made minor changes in this Trust Agreement. These minor changes have been initialed by all the parties, if any changes have been made, before and after the change on all originals to prevent any extension or alteration of that change by any of the parties or others. Unless otherwise indicated by the placement of a date beside the change, these changes were intended by the parties to have occurred as of the effective date of this Trust Agreement. Any interlineated changes made by the parties after the effective date of this Trust Agreement shall be initialed by all parties, dated and have the date itself initialed before and after by all parties to this Trust Agreement.
14.4 Execution. All parties named in the caption as parties shall sign below and at least one of the parties shall initial all pages of all original copies of this Trust Agreement. Furthermore, all documents such as schedules, exhibits and like documents which are expressly incorporated herein shall be initialed by the parties and either exchanged or attached to the originals which are given to any party named on the caption page of this Trust Agreement. It is the intent of the parties that all pages be initialed on all originals that are exchanged in order that no substituted pages or misunderstanding shall ever become possible to create problems in satisfying the intended objectives of this Trust Agreement.
14.5 Acknowledgment. The Notary Publics who have acknowledged the signatures of the various parties as designated in the acknowledgments hereof certify that this Trust Agreement was acknowledged by the signing party before the notary on the date of the notarization. If the Trust Agreement was subscribed by any of the parties in a representative capacity, then the notary ascertained that the signing party signed for the principal named and in the capacity in which that party indicated he signed.
IN WITNESS WHEREOF, the parties execute this Trust intending that it be effective on the Effective Date and at the Effective Place of Execution.
This Trust, consisting of 30 pages, including this page and the following page(s), was signed in the presence of us who, at the request and in the presence of Trustor and in the presence of each other, have signed the same as witnesses thereto. WE ALSO AFFIRM THAT WE ARE NOT RELATED TO THE TRUSTOR BY BLOOD, MARRIAGE OR ADOPTION AND THAT WE ARE AWARE OF NO INHERITANCE RIGHTS, GIFTS, OR DISTRIBUTIONS THAT WE SHALL RECEIVE FROM TRUSTOR’S WILL OR FROM ANY OTHER SOURCE FROM THE TRUSTOR AND ARE NOT PERSONS INVOLVED WITH THE MEDICAL CARE OF THE TRUSTOR.
Witness Name (Printed) Witness Address
Witness Name (Printed) Witness Address
IN WITNESS WHEREOF, I have signed this document this date __________________.
ACKNOWLEDGMENT OF TRUSTOR
STATE OF: __________________
COUNTY OF: __________________
On this _______ day of _________________, ________, before me, the undersigned Notary Public appeared __________________ to me known to be the individual in and whom executed the foregoing instruments, and acknowledged that they executed the same as their free act and deed.
Printed Name: _________________
My Commission Expires: ______________________
Commission # __________________
ACKNOWLEDGMENT OF TRUSTEE
STATE OF: __________________
COUNTY OF: __________________
On this _______ day of _________________, ________, this instrument was acknowledged before me by __________________, who acknowledged themselves/himself to be the acting Trustee of The __________________ Family Trust, dated __________________, and that he, being authorized to so do, executed the within instrument for the purposes therein contained by signing for that Trust as such Trustee.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Printed Name: _________________
My Commission Expires: ______________________
Commission # __________________
ACKNOWLEDGMENT OF WITNESSES
STATE OF: __________________
COUNTY OF: __________________
On this _______ day of _________________, ________, this instrument was acknowledged before me, a Notary Public, personally appeared the above witnesses known to me or satisfactorily proven to be the person whose names are subscribed to this instrument and acknowledged that they executed the same for the purposes contained therein.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Printed Name: _________________
My Commission Expires: ______________________
Commission # __________________