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AB-TRUST.TXT
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*** AB-TRUST.TXT
*******************************
*** C A U T I O N ***
*******************************
Do Not Use These Documents Without Consulting
An Estate Planning Attorney.
The purpose of this software product is to assist you in the
preparation of sample estate planning documents. You must have these
documents reviewed and approved by an Estate Planning Attorney to
ensure that the documents meet your particular needs, as well as to
ensure that the documents conform to requirements of state and federal
laws.
JIAN and the authors of the software do not represent or guarantee
that these documents are appropriate for your needs, satisfy any
provision of state or federal law or will have any particular state or
federal tax effect.
>>>>> A Note To LivingTrustBuilder Users Who Are <<<<<
>>>>> Residents Of Non-Community Property States <<<<<
The LivingTrustBuilder trust agreements and abstracts for married
persons contain several references to "community property." For
couples residing in community property states, these provisions are
essential. For those residing in non-community property states, the
provisions are harmless. In effect, the trust is administered in non-
community property states as though these references were not there.
It may be to your advantage to retain the references to community
property in your trust documents. For example, if you move to a
community property state, the presence of these references may
minimize or eliminate the need to revise your living trust documents
to conform to the requirements of the community property state.
In any case, we caution you against deleting the references to
community property from the text of the documents without first
consulting an estate planning attorney in your state.
----------------------------------------------------------------------
REMEMBER
to change the complete insertion code (***Q1***, ***Q2***, etc.)
and not just the "Q1" or "Q2".
This document references the following codes:
Q1, Q2, Q3, Q4, Q5, Q6, Q7, Q9, Q10, Q21, Q22, Q23, Q26
**********************************************************************
A-B (Married) Living Trust Agreement
This establishes your TRUST (the entity which will hold title to
assets) and provides for the management and distribution of these
assets during your life and after your death.
This Document Must Be Reviewed By An Estate Planning Attorney
Before You Sign It.
**********************************************************************
TRUST AGREEMENT
THIS TRUST AGREEMENT made this ________ day of _______________, 19___,
between ***Q1*** and ***Q2***, Husband and Wife, of the County of
***Q4***, State of ***Q5***, herein designated as Co-Trustors, and
***Q1*** and ***Q2***, herein designated as Co-Trustees. The term
"Trustee" shall include Co-Trustees.
IT IS AGREED BETWEEN THE PARTIES HERETO AS FOLLOWS:
ARTICLE I
TRUST PROPERTY
A. Original Trust Estate. The Co-Trustors hereby transfer to the
Trustee, without consideration from the Trustee, the sum of one
hundred dollars ($100.00), receipt of which is hereby acknowledged,
upon the conditions herein provided.
B. Name of Trust. The name of this trust is ***Q3***.
C. Nature of Property. On documents of title, the letters "SPH",
"SPW" or "CP", should they be present, shall connote the following:
"SPH" shall connote separate property or quasi-community property in
the name of the husband; "SPW" shall connote separate property or
quasi-community property in the name of the wife; and "CP" shall
connote community property. Such connotations are rebuttable if the
facts would indicate that ownership is other than as so designated.
Should an asset not be designated "SPH", "SPW" or "CP", the separate,
community or quasi-community character shall be as reflected in the
books and records of the Co-Trustors and the Trustee. Joint tenancy
property transferred into the trust, however, shall be converted to
community property upon transfer into the trust.
D. Additions to Trust Estate. Additional property may be added to
the trust estate at any time by the Co-Trustors or either of them, or
by any person or persons, by inter vivos or testamentary transfer.
Such additions and title to any property so added may be, but need not
be, evidenced by amendment to this agreement or by schedule, deed,
assignment, or other writings transferring property to the Trustee.
All such original and additional property is referred to herein
collectively as the trust estate and shall be held, managed and
distributed as herein provided.
ARTICLE II
CO-TRUSTORS' RIGHTS DURING JOINT LIFETIMES
A. Amendment. While both Co-Trustors are living and competent, this
trust may be altered or amended by written instrument signed by both
Co-Trustors and filed with the Trustee.
B. Revocation. While both Co-Trustors are living, either Co-Trustor
may revoke this trust in whole or in part and restore to Co-Trustors
their respective rights of testamentary disposition by written
instrument filed with the other Co-Trustor and the Trustee. By way of
construction, Co-Trustors intend that the character of all property
transferred to the trust which has an original source as community
property shall remain community property and shall receive a basis
adjustment under Section 1023 of the Internal Revenue Code of 1986, as
amended. Any joint tenancy property owned by the Co-Trustors which
was originally acquired out of community property assets and
transferred to this trust shall be construed as community property as
defined herein. Separate property and quasi-community property shall
retain their original character as separate or quasi-community
property. Either Co-Trustor may withdraw his or her separate or
quasi-community property without the consent or concurrence of the
other Co-Trustor.
C. Conservatorship or Guardianship. In the event that either Co-
Trustor shall be legally declared a Conservatee or a Ward of the
court, and the income from the trust shall be insufficient to provide
for the proper health, support and maintenance of such Co-Trustor, the
Conservator or Guardian of such Co-Trustor shall have the right, with
the approval of the appropriate court, to invade the trust for the
benefit of such Co-Trustor to the extent that such Co-Trustor could
have invaded the trust had such Co-Trustor not been, at that time,
subject to a Conservatorship or Guardianship. The powers of the
Co-Trustors to revoke or amend this trust are personal to them and
shall not be exercisable in their behalf by any Conservator or
Guardian or other person, except that revocation or amendment may be
authorized, after notice to the Trustee, by the court that appointed
the Conservator or Guardian.
D. Investment of Trust Estate. While both are living and competent,
the Co-Trustors may, at any time or times, direct the Trustee in
writing to invest the trust estate in specific securities, properties
or investments, to retain as part of the trust estate any securities,
properties or investments for such length of time as such directions
may provide, or to sell, encumber, lease, manage, control or dispose
of any property of the trust estate. The Trustee shall not be liable
for any loss sustained or incurred by reason of compliance by such
Trustee with any such written directions of the Co-Trustors.
E. Character of Property. Regardless of the location of such
property, any personal property transferred to this trust shall remain
personal property, and any real property transferred to this trust
shall remain real property.
ARTICLE III
IRREVOCABLE PROVISIONS
Upon the death of the first Co-Trustor to die, hereinafter called the
"Deceased Spouse", the then surviving Co-Trustor, hereinafter called
the "Surviving Spouse", shall have the power to amend, revoke and/or
terminate TRUST A (the marital deduction trust) only, and TRUST B (the
exemption equivalent trust), hereinafter established, may not be
amended, revoked or terminated. On revocation of TRUST A, all of its
assets shall be delivered to the Surviving Spouse. Revocation and
amendment shall be made by written instrument filed with the Trustee.
ARTICLE IV
DISPOSITIVE PROVISIONS DURING JOINT LIFETIMES
A. Payment of Expenses. The Trustee shall pay or reserve sufficient
funds to pay all expenses incident to the establishment, management
and administration of the trust estate, including the compensation of
the Trustee, all or any part of which may, in the discretion of the
Trustee, be charged either to income or principal of the trust estate.
The remaining income shall be and is hereinafter referred to as "net
income".
B. Distribution of Income and Principal of Community Estate. During
the joint lifetimes of the Co-Trustors, the Trustee shall pay to the
Co-Trustors, or shall apply for the Co-Trustors' benefit, the net
income of the community estate in quarter-annual or more frequent
intervals. If the Trustee considers the net income insufficient, the
Trustee shall pay to the Co-Trustors or apply for the benefit of the
Co-Trustors as much of the principal of the community estate as is
necessary, in the Trustee's discretion, for the Co-Trustors' proper
health, education, support, maintenance, comfort and welfare, in
accordance with their accustomed manner of living at the date of this
instrument. The Co-Trustors shall have the same duty to use community
income and principal received under this instrument for the benefit of
Co-Trustors as they have with respect to any other community property.
C. Distribution of Income and Principal of Separate and Quasi-
Community Estate. During the joint lifetimes of the Co-Trustors, the
Trustee shall pay to or apply for the benefit of the Co-Trustor whose
separate or quasi-community property was transferred to the trust the
net income of that Co-Trustor's separate or quasi-community estate in
quarter-annual or more frequent intervals. Similarly, if the Trustee
considers the net income of the separate or quasi-community property
insufficient, it shall pay to or apply for the benefit of the Co-
Trustor whose separate or quasi-community property was transferred to
the trust as much of the principal of that Co-Trustor's separate or
quasi-community estate as is necessary, in the Trustee's discretion,
for the proper health, education, support, maintenance, comfort and
welfare of that Co-Trustor in accordance with his or her accustomed
manner of living at the date of this instrument. Unless otherwise
agreed by the Co-Trustors, quasi-community property shall, for these
purposes, be treated as the separate property of the spouse whose
labors gave rise to such property.
D. Liberal Exercise of Power of Invasion. The Trustee shall exercise
in a liberal manner the power to invade principal contained in
Subparagraphs B and C of this ARTICLE IV.
ARTICLE V
DISPOSITIVE PROVISIONS AFTER DEATH OF DECEASED SPOUSE
A. Division at Death of Deceased Spouse. Upon the death of the
Deceased Spouse, the Trustee shall divide the trust estate, including
any additions made to the trust by reason of the Deceased Spouse's
death, such as from the Deceased Spouse's Will or life insurance
policies on the Deceased Spouse's life, into two (2) separate trusts,
designated as TRUST A and TRUST B. The date of allocation may be no
later than six (6) months from the date of death of the Deceased
Spouse.
1. TRUST B Assets. There shall be placed in TRUST B that amount
of the Deceased Spouse's interest in the community, quasi-community
and separate property included in the trust estate which, after taking
into account all allowable deductions and all allowable credits, other
than the unified credit against federal estate tax, equals the
exemption equivalent of the unified credit against federal estate tax,
as defined in Section 2010 of the Internal Revenue Code of 1986, as
amended, which is in effect at the date of death of the Deceased
Spouse. If the Deceased Spouse's said interest in the trust estate is
less than such exemption equivalent amount, then the Deceased Spouse's
entire said interest shall be placed in TRUST B. The assets placed in
TRUST B shall not be subject to an election to be treated as qualified
terminable interest property and no person shall have any power to
make such an election.
2. TRUST A Assets. There shall be placed in TRUST A the
balance, if any, of the Deceased Spouse's interest in community,
quasi-community and separate property included in the trust estate;
the Surviving Spouse's interest in the Co-Trustors' community and
quasi-community estate; and the Surviving Spouse's separate estate, if
any, included in or added to the trust estate in any manner, including
any undistributed or accrued income on such interest.
3. Distribution of Assets into Trusts. The Trustee shall
designate, in its sole discretion, the assets which shall constitute
each trust. The Trustee shall satisfy the amounts determined to be
distributed to each trust in cash or in kind, or partly in cash and
partly in kind, and the assets allocated in kind shall be determined
to satisfy the amounts on the basis of their value at the date or
dates of distribution to the respective trusts. The power of the
Trustee to make distributions in kind shall include the power to make
non-pro rata distributions in kind without regard to the income tax
basis of assets so distributed. However, no allocation of assets
shall be made to TRUST A which do not qualify for the marital
deduction.
4. Vested Interest. Regardless of the date of allocation of
assets into TRUST A and TRUST B by the Trustee, the interest of the
Surviving Spouse in each trust shall be vested immediately upon the
death of the Deceased Spouse and the Surviving Spouse shall be
immediately entitled to such income from the trusts as is hereinafter
set forth and may appoint his or her TRUST A share as provided in
ARTICLE V B.
5. Payment of Debts of Deceased Spouse. On the death of the
Deceased Spouse, the Trustee may, in the Trustee's discretion, pay,
out of the trust, debts of the Deceased Spouse; the estate and
inheritance taxes, including interest and penalties, arising because
of the Deceased Spouse's death; the last illness and funeral expenses
of the Deceased Spouse; attorneys' fees and other costs incurred in
administering the Deceased Spouse's estate. The Trustee may pay any
such taxes directly or, alternatively, in the sole discretion of the
Trustee, distribute such sums to the Executor as shall be necessary to
pay all or any portion of such taxes. Should the Trustee elect to
make any payments of expenses or debts of the Deceased Spouse, the
Trustee may not pay the separate or community debts or expenses of the
Deceased Spouse from the separate property of the Surviving Spouse.
B. TRUST A.
1. Distribution of Income and Principal. During the life of the
Surviving Spouse, the Trustee shall pay to or apply for the benefit of
such Surviving Spouse the entire net income of the trust in quarter-
annual or more frequent intervals. Additionally, the Trustee may
distribute such portion of the principal of TRUST A, up to and
including the whole thereof, as the Trustee deems to be in the best
interest of the Surviving Spouse.
2. Appointment Exercisable During Life. During the life of the
Surviving Spouse, such Surviving Spouse may, by a written instrument
filed with the Trustee and signed by the Surviving Spouse, direct the
Trustee to distribute any amount of income and/or principal of TRUST
A, up to and including the whole thereof, to himself or herself, or to
his or her estate, his or her creditors, or the creditors of his or
her estate, or to any other individual designated by such Surviving
Spouse.
3. Appointment Exercisable at Death. Upon the death of the
Surviving Spouse, the Trustee shall distribute the principal of TRUST
A and any accrued or undistributed net income thereon to such person
or persons, including the estate, the creditors, or the creditors of
the estate of the Surviving Spouse, outright or in trust, or upon such
conditions and estates, and with such powers, in such manner and at
such time or times, as appointed and directed by the last unrevoked
written instrument executed by the Surviving Spouse and on file with
the Trustee at the date of death of the Surviving Spouse or, if no
such written instrument exists, as appointed and directed by such
Surviving Spouse's Last Will, with such Will specifically referring to
this power of appointment. Unless within ninety (90) days after the
death of the Surviving Spouse the Trustee has actual notice of the
existence of such a written instrument or Will, it shall be deemed for
all purposes hereunder that such power of appointment was not
exercised (but the provisions of this paragraph shall not affect any
right which an appointee or beneficiary in default of appointment may
have against any distributee).
4. Distribution of TRUST A in Lieu of Appointment. To the
extent that the Surviving Spouse does not exercise this power of
appointment, the principal of TRUST A and any accrued or undistributed
net income thereon, after payment of any estate or inheritance taxes,
debts and expenses, shall be added to and commingled with TRUST B and
shall be held, administered and distributed, in whole or in part, as
if it had been an original part of TRUST B.
5. Payment of Expenses of Surviving Spouse's Estate. After the
death of the Surviving Spouse, the Trustee may, in the sole discretion
of the Trustee, pay the estate and inheritance taxes and any debts and
expenses of the Surviving Spouse from TRUST A.
C. TRUST B.
1. Distribution of Income. On the death of the Deceased Spouse,
the Trustee shall pay to or apply for the benefit of the Surviving
Spouse the net income of TRUST B in quarter-annual or more frequent
intervals.
2. Invasion of Principal.
(a) In the event of any illness affecting the Surviving Spouse,
or if such Surviving Spouse should be in need of funds for support in
the standard of living to which he or she is accustomed at the date of
the death of the Deceased Spouse, and if the income of this trust
shall be deemed insufficient by the Trustee to provide for such
reasonable health, support and maintenance as set forth herein, the
Trustee may, as often as it deems necessary, pay to or apply for the
use and benefit of such Surviving Spouse such part of the principal of
TRUST B, up to and including the whole thereof, as is necessary for
such reasonable health, support and maintenance.
(b) Additionally, the Trustee may pay to the Surviving Spouse
such part of the principal of TRUST B as such Surviving Spouse shall
request in writing from time to time; provided, however, that the
amount distributed to such Surviving Spouse during a calendar year
shall not exceed the greater of Five Thousand Dollars ($5,000.00) or
Five Percent (5%) of the value of the trust, and such right of
withdrawal shall not be cumulative, but shall lapse at the end of each
calendar year not so exercised.
ARTICLE VI
DISPOSITIVE PROVISIONS AFTER DEATH OF SURVIVING SPOUSE
A. Payment of Expenses. Upon the death of the Surviving Spouse, the
Trustee shall pay or reserve sufficient funds to pay all expenses of
management and administration of the trust estate, including the
compensation of the Trustee and the attorney, all or any part of which
shall be charged, in the Trustee's discretion, to income and/or
principal of the trust estate. The remaining income shall be and is
hereinafter referred to as "net income".
B. Distribution of Gifts. The Trustee shall distribute gifts of
trust property, subject to the provisions of ARTICLE VI E.
hereinbelow, to beneficiaries as follows: ***Q26*** If any
beneficiary named in this ARTICLE VI B. is not then living, the gift
to such deceased beneficiary shall lapse and shall become a portion of
the remainder of the trust estate.
C. Distribution of Remainder of Trust Estate. Upon the death of the
Surviving Spouse, the Trustee shall, after paying or reserving for all
amounts payable, as provided in ARTICLE VI A. and B., divide the
remainder of the trust estate, including the assets of TRUST B and any
and all property added to TRUST B from TRUST A pursuant to ARTICLE V
B. 4. hereinabove, into shares set forth as follows and shall hold,
administer and distribute each share according to the provisions of
ARTICLE VI E. hereinbelow: ***Q22***
D. Distribution of Deceased Beneficiary's Share. In the event a
beneficiary named in Paragraph C. of this ARTICLE VI is not then
living, the share of such deceased beneficiary shall ***Q23***
E. Distributions of Income and Principal.
1. The Trustee may pay to or apply for the benefit of each
beneficiary for whom a trust is then held who has not yet attained the
age of twenty-one (21) years as much of the net income of said trust
as the Trustee shall determine to be in the best interest of and
tending to promote the welfare of such beneficiary, after taking into
consideration, to the extent the Trustee deems advisable, any other
income or resources of such beneficiary. Any income not distributed
shall be accumulated and added to and become part of the principal of
said trust. After a beneficiary for whom a trust is then held attains
the age of twenty-one (21) years, the Trustee shall pay to or apply
for the benefit of such beneficiary the net income of said trust in
convenient intervals not less frequently than quarter-annually.
2. If the Trustee deems the net income available hereunder not
sufficient to provide for the reasonable health, support, maintenance
and education of any beneficiary for whom a trust is then held, taking
into consideration any other income and financial resources of such
beneficiary, so far as known to the Trustee, it may, as often as it
deems necessary, pay to or apply for the use and benefit of such
beneficiary such part of the principal of the respective trust of such
beneficiary, up to and including the whole thereof, as is necessary
for the reasonable health, support, maintenance and education of such
beneficiary.
3. The Trustee, in its discretion, may make net income or
principal payments to a minor or a beneficiary under disability by
making such payments to the guardian or conservator of his or her
person, to a custodian under a Uniform Transfers to Minors Act or
similar statute applicable in the State of ***Q5***, or to any
suitable person with whom he or she resides, or the Trustee may apply
such payments directly for the beneficiary's benefit. The Trustee may
make net income or principal payments directly to a minor child if, in
the Trustee's discretion, such child is of sufficient maturity to
manage such distribution.
4. Upon the death of a beneficiary for whom a trust is then held
prior to final distribution to such beneficiary, if said decedent is
survived by issue, that portion of such trust (including both
principal and any accrued or undistributed income) which is not exempt
from the generation-skipping transfer tax imposed by Chapter 13 of the
Internal Revenue Code of 1986 (or any successor provisions) shall be
distributed to such one or more persons or entities, including the
decedent's estate, and on such terms and conditions, either outright
or in trust, as the decedent shall have appointed by the last dated
instrument delivered to the Trustee, including a Will (whether or not
admitted to probate), specifically referring to and exercising this
power of appointment. Any of such portion of the trust as is not
appointed, together with that portion of the trust that is exempt from
the generation-skipping transfer tax, shall be distributed according
to the terms of ARTICLE VI D. hereinabove as though said beneficiary
had predeceased the Surviving Spouse.
5. There need be no physical segregation or division of the
various trust shares except as segregation or division may be required
by the termination of any of the trusts, but the Trustee shall keep
separate accounts for the different undivided interests.
6. Subject to a possible retention of some or all of the assets
of the trust estate by the Trustee pursuant to ARTICLE VIII S.,
whenever any beneficiary for whom a trust is then held shall have
attained the age of ***Q21*** years, the Trustee shall distribute to
such beneficiary, free of trust, the entire principal and accumulated
income, if any, of his or her separate trust.
7. In the event that there shall be no surviving named
beneficiaries, including issue as set forth herein, the trust shall
terminate and the proceeds shall be distributed one-half (1/2) to the
then surviving heirs at law of each Co-Trustor, as determined by the
laws of intestate succession then existing in the State of ***Q5***;
excluding, however, any provision for distribution to heirs of a
predeceased spouse.
8. The term "issue", unless otherwise designated herein, shall
include adopted "issue" of descendants and lineal descendants, both
natural and legally adopted indefinitely. Such term shall
specifically exclude individuals adopted out of the family of
Co-Trustors or out of the family of a descendant of Co-Trustors. The
word "living" shall include unborn persons in the period of gestation.
ARTICLE VII
ADDITIONAL DISPOSITIVE PROVISIONS
A. Discretionary Termination. If the value of the trust estate or of
any segregated share held as a separate trust is determined by the
Trustee to be valued at $20,000.00 or less, then such trust may, in
the discretion of the Trustee, be terminated and the remainder of such
trust shall be distributed to the person then entitled to the income
therefrom.
B. Rule Against Perpetuities. Unless sooner terminated in the manner
hereinbefore provided, each trust shall cease and terminate one day
prior to twenty-one (21) years from the death of the Surviving Spouse
or the death of the survivor of the named beneficiaries who are living
at the date of death of the Deceased Spouse, whichever death shall
last occur. Upon such termination, the entire trust estate, including
principal and any accrued or undistributed net income thereon, shall
be distributed to the persons for whom said trust estate is then held,
in proportion to the trusts then held for such persons.
C. Spendthrift Provision. No beneficiary of this trust, other than a
Co-Trustor, shall have any right to alienate, encumber or hypothecate
his interest in the trust to claims of his creditors, or to render
such interest liable to attachment, execution, or other process of
law. The income of this trust shall not be pledged, assigned,
transferred, sold or accelerated, anticipated or encumbered in any
manner whatsoever by any beneficiary, nor shall any income of the
trust be in any manner subject or liable in the hands of the Trustee
for the debts, contracts or encroachments of any beneficiary or be
subject to any assignments or any other voluntary or involuntary
alienation or disposition whatsoever. If the creditor of any
beneficiary, other than a Co-Trustor, who is entitled to any
distributions from a trust established under this instrument shall
attempt by any means to subject to the satisfaction of his claim such
beneficiary's interest in distribution, then, notwithstanding any
other provision herein, until the release of the writ of attachment or
garnishment or other process, the distribution set aside for such
beneficiary shall be disposed of as follows:
1. Distribution to Beneficiary. The Trustee shall pay to or
apply for the benefit of such beneficiary such sums as the Trustee
shall determine to be necessary for the reasonable health, education
(including study at institutions of higher learning) and support of
the beneficiary according to his or her accustomed mode of life.
2. Disposition of Excess. The portion of the distribution that
the Trustee shall determine to be in excess of the amount necessary
for such health, education (including study at institutions of higher
learning) and support shall, in the Trustee's discretion, either be
added to and become principal of the trust share of such beneficiary
or be paid to or applied for the benefit of the other beneficiaries
then entitled to receive payments from any trust established under
this instrument, in proportion to their respective interests in the
trust estate; or, if there be no other beneficiaries, the excess
income may be paid to or applied for the benefit of the person or
persons presumptively entitled to the next eventual interest, in
proportion to their respective interests.
D. Simultaneous Death.
1. Co-Trustors. In the event that the Co-Trustors shall die
simultaneously, or if there is insufficient evidence to establish that
Co-Trustors died other than simultaneously, it is deemed that the
spouse owning the greater share of the separate property in this trust
or passing into this trust due to the death of the Co-Trustors, as
defined for federal estate tax purposes, shall have predeceased the
other Co-Trustor, notwithstanding any provision of law to the
contrary, and the provisions of this trust shall be construed on such
assumption. Should there be no separate property either in the trust
or passing into trust after the Co-Trustors' deaths, all property
shall pass as though the Wife shall have survived.
2. Surviving Spouse and Beneficiaries. If any beneficiary of
the trust other than a Co-Trustor shall die simultaneously with the
Surviving Spouse, or if there is insufficient evidence to establish
that such beneficiary and the Surviving Spouse died other than
simultaneously, it is hereby deemed that the Surviving Spouse shall
have survived the beneficiary.
ARTICLE VIII
TRUSTEE'S POWERS
In addition to all other powers and discretions granted to or vested
in the Trustee by law or by this instrument, the Trustee shall have
full power to do everything it deems to be in the best interests of
the beneficiaries of the trust, including, but not limited to, the
following powers and discretions:
A. Power to Retain Trust Property and Comply with Existing
Agreements. To continue to hold any property received in trust,
including undivided interests in real property, and to operate any
property or any business received in trust as long as the Trustee, in
the Trustee's discretion, may deem advisable, notwithstanding the fact
that any or all of the investments retained are of a character or size
which, but for this express authority, would not be considered proper
for the Trustee. In the event either Co-Trustor shall be a party to a
Buy-Sell Agreement, Cross-Purchase Agreement, Stock Redemption
Agreement, Option or any agreement providing for the disposition of
such Co-Trustor's interest in property, whether such agreement has
been executed by Co-Trustor individually or as Co-Trustee of this
Trust Agreement, and which property is owned by the trust, then upon
the death of such Co-Trustor, the then acting Trustee of this trust is
hereby directed to transfer as much of Co-Trustor's interest in such
property then held in the trust as is necessary to carry out the
provisions of any such agreement and to execute all documents and take
all further actions necessary or appropriate to carry out the terms of
such agreement.
B. Power to Manage Trust Property. To manage, control, sell, convey,
exchange, partition, divide, subdivide, improve and repair; to grant
options and to sell upon deferred payments; to lease for terms within
or extending beyond the duration of the trust, for any purpose,
including exploration for and removal of oil, gas and other minerals;
to enter into oil, gas and mineral leases, assignments, farmouts,
farmins and joint ventures; to purchase and sell gas, oil and mineral
royalties, to create restrictions, easements, and other servitudes; to
compromise, arbitrate, or otherwise adjust claims in favor of or
against the trust; to institute, compromise and defend actions and
proceedings; to construct, alter or demolish any buildings; and to
carry such insurance as the Trustee may deem advisable.
C. Power to Invest. To invest and reinvest the principal and to
purchase or acquire therewith every kind of property, real or
personal, and every kind of investment, specifically including, but
not by way of limitation, commodities of every nature, corporate
obligations of every kind, precious metals such as gold or silver, and
stocks, preferred or common, and to buy stocks, bonds, commodities and
similar investments on margin or other leveraged accounts and to short
sell such accounts, and to buy, sell and write stock and other
security options, and to enter into commercial partnership as a
partner, limited or general, and to operate any business as a sole
proprietor. To open, operate and maintain a securities brokerage
account wherein any securities may be bought and/or sold on margin,
and to hypothecate, borrow upon, purchase and/or sell existing
securities in such account as the Trustee may deem appropriate or
useful.
D. Power to Retain Trust Property without Diversification. To
retain, without liability for loss or depreciation resulting from such
retention, original property, real or personal, at any time received
by the Trustee, for such time as the Trustee shall deem best, even
though such property may not be of the character prescribed by law or
by the terms of this trust for the investment of trust funds, and
although it may represent a large percentage of the total trust or
estate property, and without being required to observe the principle
of diversification of trust investments.
E. Power to Retain Unproductive Property. To retain uninvested all
or any part of the trust estate from such time, and from time to time,
as the Trustee may deem advisable; provided that unproductive property
shall not be held as an asset of TRUST A for more than a reasonable
time during the life of the Surviving Spouse without his or her
consent.
F. Power to Borrow. To borrow money for any trust purpose upon such
terms and conditions as the Trustee may deem proper, and to obligate
the trust estate by mortgage, deed of trust, pledge, or otherwise,
using such procedure to consummate the transaction as the Trustee may
deem advisable and to pledge the assets of the trust estate to secure
the guarantee by the Co-Trustors of the debts of third parties.
G. Power to Manage Securities. To have, respecting securities, all
the rights, powers and privileges of an owner, including the power to
pay assessments and other sums deemed by the Trustee necessary for the
protection of the trust estate; to participate in voting trusts,
pooling agreements, foreclosures, recapitalizations, reorganizations,
consolidations, mergers, and liquidations, and in connection therewith
to deposit securities with and transfer title to any protective or
other committee under such terms as the Trustee may deem advisable; to
exercise or sell stock subscription or conversion rights, to accept
and retain as an investment any securities or other property received
through the exercise of the foregoing powers.
H. Power to Partition, Allot and Distribute. Upon any division or
distribution of the trust estate, to partition, allot and distribute
the trust estate in undivided interests or in kind, or partly in money
and partly in kind, at valuations determined by the Trustee, and to
sell such property as the Trustee may deem necessary to make division
or distribution. The power of the Trustee to make distributions in
kind shall include the power to make non-pro rata distributions in
kind without regard to the income tax basis of assets so distributed.
I. Power to Determine Principal and Income. Except as otherwise
specifically provided in this Trust Agreement, the determination of
all matters relating to principal and income and receipts and expenses
shall be governed by the provisions of the Uniform Principal and
Income Act or similar statute applicable in the State of ***Q5*** from
time to time existing. Any such matter not provided for either in
this instrument or in the Uniform Principal and Income Act or similar
statute applicable in the State of ***Q5*** shall be determined by the
Trustee in the Trustee's discretion. The Trustee's powers shall be
subject, at any time that a beneficiary shall be a Trustee hereunder,
to the Trustee's duty to treat income and remainder beneficiaries
equitably.
J. Power to Distribute Income. To make payments, if any, of the net
income of the trust in quarterly or more frequent intervals as may be
convenient to the Trustee. Upon the death of the income beneficiary
of the trust during its continuance, any accumulated income which
would have been paid to such beneficiary had he or she survived shall
not be payable to his or her estate but shall be paid to his or her
successors or successor in interest in the trust as hereinabove
provided.
K. Power to Employ Counsel. To employ counsel and corporate or other
agents in the discharge of their duties and to pay them a reasonable
compensation out of either income or principal, in the Trustee's
discretion, and to rely upon the advice of counsel and to suffer no
liability resulting from any action taken or withheld pursuant to such
advice.
L. Power to Pay Taxes and Expenses Relative to Trust Property. To
pay from time to time all taxes, assessments, including corporate
assessments, and other charges levied or accruing against or on
account of the trust property, and to pay all expenses of the trust,
including reasonable compensation to the Trustee. To deduct all said
taxes, assessments, charges and expenses from the income or principal
of the trust as the Trustee may deem proper, giving consideration to
whether it was income or principal or an allocation between them which
gave rise to such taxes, charges and expenses.
M. Power to Hold Trust Property in the Name of a Nominee. To take
title to any property in its name as Trustee hereunder or in its own
name or in the name of a nominee without disclosing the trust, or, in
the case of securities, to take and keep the same unregistered and to
retain them in such manner that title may pass by delivery; or, in the
case of real estate, to keep deeds unrecorded; or to deposit cash in a
checking or savings account without indication of any fiduciary
capacity.
N. Power to Distribute to or for the Benefit of Minor or Disabled
Beneficiary. In any case in which a trust share is distributable to a
beneficiary who has not reached majority in the state of his or her
residence, or in any case where mandatory or discretionary payments of
income or principal are to be made to such a minor or other
beneficiary under legal disability, the Trustee may, in its
discretion, distribute income or principal directly to the
beneficiary, to the guardian or parent of the beneficiary, to a bank
account in trust, to a custodianship for the beneficiary or to a
person with whom the beneficiary resides. The receipt of the
beneficiary, guardian, parent or person shall discharge the Trustee
from its responsibility for the proper expenditure of income or
principal.
O. Power to Pay Taxes. To pay out of the trust shares or income
interests giving rise to such taxes, all state, federal and local
property taxes, income taxes and all other taxes relating to the trust
estate.
P. Power to Lend. To lend money to any person, including the probate
estate of either Co-Trustor, provided that any such loan shall be
adequately secured and shall bear a reasonable rate of interest.
Q. Power to Insure. To carry insurance of such kinds and in such
amounts as the Trustee deems advisable, at the expense of the trust,
to protect the trust estate and the Trustee personally against hazard.
R. Power to Commence or Defend Litigation and to Compromise. To
commence or defend, at the expense of the trust, such litigation with
respect to the trust or any property of the trust estate as the
Trustee may deem advisable, and to compromise or otherwise adjust
claims or litigation against or in favor of the trust.
S. Power to Withhold Payment Pursuant to Conflicting Claims. To
withhold from distribution, in the Trustee's discretion, at the time
for distribution of any property in this trust, without the payment of
interest, all or any part of the property, so long as the Trustee
shall determine, in the Trustee's discretion, that such property may
be subject to conflicting claims, to tax deficiencies, or to
liabilities, contingent or otherwise, properly incurred in the
administration of the trust estate. The Trustee is under no
obligation to make such retentions and shall be under no liability
whatever for the exercise or the failure to exercise such discretion.
The interests of the beneficiaries hereunder shall be vested
regardless of whether or not such assets are so retained, and all
income required to be distributed shall be payable to such
beneficiaries in convenient intervals not less frequently than
quarter-annually. Anything else herein to the contrary
notwithstanding, the Surviving spouse may cause the disposition of the
share in TRUST A through the exercise of his or her power of
appointment under ARTICLE V B. 2. or 3. of this Trust Agreement.
T. Power to Adjust for Tax Consequences. To take any action and to
make any election, in the Trustee's discretion, in order to minimize
the tax liabilities of this trust and its beneficiaries or to extend
the time for payment of any tax liabilities. The Trustee shall
allocate the benefits from such action or election among the various
beneficiaries. The Trustee shall make adjustments in the rights of
any beneficiaries, or between the income and principal accounts, to
compensate for the consequences of any tax election, investment, or
administrative decision that the Trustee believes has had the effect
of directly or indirectly preferring one beneficiary or group of
beneficiaries over others.
U. Power to Subject Trust Property to Probate. It is the Co-
Trustors' intention to avoid probate through the use of this Trust
Agreement. If, however, the Trustee of this trust and the Executor of
the estate of either Co-Trustor shall mutually determine that it shall
be in the best interests of the beneficiaries of the trust, and the
beneficial interests of the beneficiaries shall not thereby be
altered, the Trustee may subject any asset to probate to accomplish a
result unavailable without probate. This power shall be strictly
construed and shall only be used to secure any tax or other benefit
otherwise unavailable to the trust.
V. Power to Delegate. To perform or to delegate to any trustee or
non-trustee any non-discretionary power, including the power to
singularly or jointly open, close or transfer any type of bank account
and savings and loan association account, sign checks, drafts,
withdrawal slips or other documents, give instructions for the receipt
or delivery of securities or other property, give instructions for the
payment or the receipt of money and, singularly or with others, have
access to any safe deposit box or other place containing property of
this trust.
ARTICLE IX
LIMITATION OF POWERS
A. Management of Principal and Income. No powers, enumerated herein
or accorded to Trustee generally by law, shall be construed to enable
any person appointed as Trustee or otherwise, or any other person, to
purchase, exchange or otherwise deal with or dispose of the principal
or income of this trust for less than an adequate consideration in
money or money's worth or to enable any person appointed as Trustee or
otherwise to borrow the principal or income of this trust directly or
indirectly without adequate interest or security. This limitation
shall not apply to a Co-Trustor acting as Co-Trustee or sole Trustee,
nor shall it apply to a Co-Trustor who is the Surviving Spouse and
serving as Trustee of TRUST A after the death of the Deceased Spouse.
B. Fiduciary Capacity of Trustee. Any Trustee or Co-Trustee of an
irrevocable trust hereunder shall act at all times in his or her
fiduciary capacity and shall treat the income and remainder
beneficiaries equitably, and no Trustee shall have any power which
would cause includibility of such irrevocable trust share in his or
her estate for federal estate tax purposes. Should any condition
arise, including a change in the law, which would prevent any such
Trustee or Co-Trustee of such irrevocable trust from acting as Trustee
hereunder without causing includibility of such trust share in his or
her estate for federal estate tax purposes merely by reason of such
trusteeship, such Trustee or Co-Trustee shall resign, and the next
successor Trustee, as designated herein, who shall not be subject to
such includibility shall be appointed in his or her stead.
C. Invasion of Principal by Trustee. No Trustee or Co-Trustee who is
also a beneficiary of an irrevocable trust share hereunder shall have
the power to invade the trust principal for his or her benefit prior
to the termination of the trust, except pursuant to the ascertainable
standards set forth in this Trust Agreement.
D. Trustee's Power over Community Property. The Trustee shall have
no more extensive power over any community property transferred to the
trust than either of the Co-Trustors would have had according to the
laws of the State of ***Q5*** had this trust not been created, and
this instrument shall be so interpreted to achieve this intention.
This limitation shall terminate upon the death of either Co-Trustor.
ARTICLE X
RECORDS AND ACCOUNTING
The Trustee shall keep and maintain adequate books and records
reflecting all income and principal transactions, which books and
records shall be open at all reasonable times to the inspection of the
Co-Trustors and to their duly authorized representatives. The Trustee
shall furnish at least annual statements for all transactions to the
then income beneficiaries of the trust or to the natural or legal
guardians of such beneficiaries.
ARTICLE XI
COMPENSATION OF TRUSTEE
The Trustee shall receive as compensation for its services, unless
waived, such amount of commissions as are customarily being charged by
commercial trust companies for services as a trustee of an inter vivos
trust in the State of ***Q5***.
ARTICLE XII
TRUSTEES AND SUCCESSORS
A. Co-Trustors as Trustees and Successors. Upon the death,
resignation or incapacity of either ***Q1*** or ***Q2*** as Trustee,
the successor Trustee shall be the survivor of them. Upon the death,
resignation or incapacity of both ***Q1*** and ***Q2***, the successor
Trustee shall be ***Q9***. Upon the death, resignation or incapacity
of ***Q9***, the successor Trustee shall be ***Q10***.
B. Powers and Responsibility of Successor Trustee. Upon the
appointment of any successor Trustee, such Trustee shall not be
required to conduct an audit or account of the fiduciary conduct of
any previous Trustee and shall incur no liability whatsoever by its
failure to examine the prior trust record. Every successor Trustee
shall have all the powers given the originally named Trustee. No
successor Trustee shall be personally liable for any act or omission
of any predecessor.
C. Guardianship or Conservatorship of Trustee. The establishment
of a Guardianship or Conservatorship of the Trustee, whether it is of
the Estate or the Person, shall cause the trusteeship of such
individual to terminate and to pass to the successor Trustee.
Additionally, should two physicians, neither of whom is a beneficiary
hereunder, related to either Co-Trustor or to the Trustee within the
second degree, nor related to any beneficiary of this trust or
beneficiary under the Will of either Co-Trustor within the second
degree, certify that the Trustee is incompetent to act as Trustee,
such trusteeship shall terminate and pass to the successor Trustee
upon notification of such certification to the Co-Trustors, or the
surviving Co-Trustor, the Trustee, and each then income beneficiary.
Should any Co-Trustor, Trustee or income beneficiary object to such
certification, such objecting party may seek a legal determination of
incompetence in any court of competent jurisdiction.
D. Resignation of Trustee. Any Trustee or Co-Trustee of this Trust
Agreement may resign as Trustee after written notice of such
resignation is delivered to the Co-Trustors, or the surviving
Co-Trustor, or, if both Co-Trustors are deceased, to all of the
beneficiaries then receiving income interests, and upon the acceptance
of the successor Trustee to act. The resignation of a Trustee can be
effected by the attorney-in-fact for a Trustee exercising such power
pursuant to a valid power of attorney. An accounting of the assets,
income and expenses shall be delivered by the resigned Trustee to the
successor Trustee as soon thereafter as is reasonably practical.
E. Removal of Trustee. The Co-Trustors shall have full power and
authority and, after the death of either Co-Trustor, the surviving
Co-Trustor shall have full power and authority, at any time or times,
to remove the Trustee hereunder and to appoint a successor Trustee,
including any corporation or banking institution, and shall do so by
delivering to the Trustee to be removed a written notice of such
removal, a written appointment of the successor Trustee, and a written
acceptance by the successor Trustee. Upon delivery of such
instruments to the Trustee, said Trustee shall, after deducting all
charges and amounts due it as Trustee, and upon receipt of such proper
indemnity as it may require, transfer and deliver the trust estate to
the successor Trustee. Thereafter, said removed Trustee shall have no
further powers, discretions, rights, obligations or duties with
reference to the trust, and all such powers, discretions, rights,
obligations or duties given the Trustee by this instrument shall inure
to and be binding upon said successor Trustee. After the death of
either Co-Trustor, the surviving Co-Trustor shall have full power and
authority to alter the succession of trustees, as provided herein, by
written Designation of Successor Trustee(s) filed with the then acting
Trustee.
F. Delegation of Power to Co-Trustee(s) and Other Agents. Any acting
Co-Trustee may, from time to time, delegate to one or more of the
remaining acting Co-Trustees any powers, duties or discretions. Every
such delegation shall be in writing, delivered to the delegate or
delegates and shall remain in effect for the period of time specified
in such written delegation or until earlier revocation in writing is
delivered to such delegate or delegates. The certification of any
Trustee as to the name and authority of any Trustee acting by reason
of delegation or otherwise shall be sufficient evidence and shall
indemnify any person relying upon such certification. Additionally, a
Co-Trustor acting as a Trustee may, by the execution of a Power of
Attorney, delegate to a third party the power and authority to act for
such Co-Trustor in his or her capacity as a Trustee in any way in
which said Trustee could act if personally present and able to act,
subject to the provisions and any limitations set forth in such
executed Power of Attorney.
G. Required Consent of Co-Trustees. Subject to the provisions of
ARTICLE XII F., whenever there are more than two (2) acting
Co-Trustees, a majority of such Co-Trustees, whether individual or
corporate, shall have the power to make any decision, undertake any
action or execute any documents affecting the trusts created herein,
and the dissenting Co-Trustee or Co-Trustees shall thereupon be
released from all liability resulting from the decision of the
majority. If there are two (2) acting Co-Trustees, they must act
unanimously. If an individual Co-Trustee and a corporate Co-Trustee
are acting, the decision of the individual Co-Trustee shall be
binding.
H. Vacancy in Trusteeship. In the event that all of the named
Trustees and successors shall die, resign, or be incapacitated, and in
the event that the right to appoint or designate a successor Trustee
is not exercised by the Co-Trustors or by the surviving Co-Trustor, as
provided in ARTICLE XII E. hereinabove, then, and in that event, the
successor Trustee shall be chosen by a majority in interest of the
then living beneficiaries, with a parent or guardian voting for each
minor beneficiary.
I. Foreign Assets. In the event that the trust shall own real
property (hereinafter referred to as "Foreign Assets") in some state
other than ***Q5*** and the Trustee hereunder shall be a corporate or
individual Trustee not authorized to do business in that state, such
corporate or individual Trustee shall select an individual ancillary
Trustee located anywhere within the United States of America,
providing such individual Trustee shall be legally able to act in such
state, or a corporate ancillary Trustee located within the state of
situs of such real property, and such ancillary Trustee shall be
vested with, and only with, title to and management of each Foreign
Asset, and such ancillary Trustee shall have the same rights and
powers over the real property within such state as the regularly
appointed Trustee under this trust would have had it been able to act
as Trustee within that state. The ancillary Trustee shall pay over to
the Trustee hereunder, at least annually, the net income attributable
to such Foreign Assets. The Trustee selecting such ancillary Trustee
shall be held harmless for any wrongdoing on the part of the ancillary
Trustee which it shall select. No individual ancillary Trustee may be
selected who would, merely through selection as such ancillary
Trustee, be subject to estate or inheritance tax on any trust assets
upon his or her death.
ARTICLE XIII
BOND
No Trustee or successor Trustee named herein shall be required to
furnish any bond or bonds for the performance of Trustee's duties
hereunder.
ARTICLE XIV
BANK ACCOUNTS
While both Co-Trustors are living and competent, except when a
corporate Trustee is acting hereunder, either Co-Trustor may add money
to or withdraw money from any savings or checking account owned by the
trust in any financial institution without the approval of the Trustee
or other Co-Trustor, provided, however, that the ownership of the
funds received or deposited, whether community or non-community of
either party, shall remain the same and the Co-Trustor removing or
adding such funds shall gain no additional ownership interest therein
than was present prior to the withdrawal from or addition to the trust
account.
ARTICLE XV
GOVERNING LAW
The validity of this trust with respect to real property shall be
governed by the state of its situs. The validity of this trust with
respect to personal property, and the construction, interpretation and
administration of this trust with respect to all property, shall be
governed by the laws of the State of ***Q5*** in force from time to
time.
ARTICLE XVI
MERGER
The trust created hereby shall not terminate or be held to have
terminated upon any theory of merger based on the fact that the same
persons are, by the terms of this instrument, made sole beneficiaries
and Trustee of said trust; and said beneficiaries are expressly given
the right and privilege to participate in the property and business
and the profits, dividends, earnings and increase thereof without
regard to the relation as Trustee which such beneficiaries may bear to
said trust.
ARTICLE XVII
NO-CONTEST CLAUSE
In the event that any beneficiary under this trust shall, singly or in
conjunction with any other person or persons, contest in any court the
validity of this trust or of a deceased Co-Trustor's Last Will or
shall seek to obtain an adjudication in any proceeding in any court
that this trust or any of its provisions, or that such Will or any of
its provisions, is void, or seek otherwise to void, nullify, or set
aside this trust or any of its provisions, then the right of that
person to take any interest given to him by this trust shall be
determined as it would have been determined had the person predeceased
the execution of this Trust Agreement. The Trustee is authorized to
defend, at the expense of the trust estate, any contest or other
attack of any nature on this trust or any of its provisions.
ARTICLE XVIII
VALIDITY OF TRUST AGREEMENT
A. Conflict with Jurisdictional Law. This trust shall be construed
in such a manner as to uphold its validity in the event that any
provision would otherwise appear to conflict with the law of the
jurisdiction governing such trust provision in question.
B. Distribution Required by Court. In the event that any court of
competent jurisdiction shall make a final determination that some
individual or institution other than a named beneficiary hereunder is,
in fact, to be a recipient of a portion or all of this trust estate,
the Trustee shall distribute to such court-determined beneficiary such
share as such court shall order, and the Trustee and attorney for the
trust shall be absolved from any liability whatever for carrying out
such order, and all beneficiaries herein shall be bound by such court
order. Should any such court make such a determination after any
assets are distributed hereunder, the individual or individuals
receiving such assets shall return them to the Trustee for
redistribution in accordance with the court order.
C. Violation of Law. If the trust created hereunder shall violate
any applicable rule against perpetuities, accumulations or any similar
rule or law, the Trustee is hereby directed to terminate such trust on
the date limited by such rule or law and, thereupon, the property held
in such trust shall be distributed to the persons then entitled to
share in the income therefrom, in the proportions in which they are
entitled to share the income, notwithstanding any provision of this
trust to the contrary.
D. Exercise of Power of Appointment in Violation of Law. No power of
appointment granted hereunder shall be so exercised as to violate any
such applicable rule or law, and attempted exercise of any such power
which violates such rule or law shall be void, notwithstanding any
provision of this trust to the contrary.
E. Headings. The headings, titles and subtitles used herein are for
the convenience of reference only and do not form a part hereof and in
no way modify, interpret or construe the meanings of the provisions
contained herein and shall not affect the construction hereof.
IN WITNESS WHEREOF, ***Q1*** and ***Q2***, Co-Trustors, and ***Q1***
and ***Q2***, as evidence of their acceptance of the responsibilities
of Co-Trustees hereunder, have each signed this Trust Agreement.
CO-TRUSTORS:
______________________________
***Q1***
______________________________
***Q2***
CO-TRUSTEES:
______________________________
***Q1***
______________________________
***Q2***
STATE OF ***Q7*** )
: ss.
COUNTY OF ***Q6*** )
On the ______ day of _______________, 19___, before me, the
undersigned, a Notary Public in and for said County and State,
personally appeared ***Q1*** and ***Q2***, known to me (or proved to
me on the basis of satisfactory evidence) to be the persons whose
names are subscribed to the within instrument, and acknowledged to me
that they executed the same.
WITNESS my hand and official seal.
______________________________
Notary Public
