IRREVOCABLE
LIVING TRUST
ANNUITY
This
agreement is made and entered into on __________________ (Date), by and between
___________________________________________ (referred
to as the Donor), and _______________________ and
______________________________ (referred to
as the Trustees).
The
Donor, in consideration of the agreements and undertakings made by the Trustees
and other valuable consideration, does hereby assign, transfer, and set over
unto the Trustees and their successors the property listed in Schedule A which
is attached and incorporated by reference.
The Trustees are hereby authorized to and agree that they will receive
and hold such property and all investments and reinvestments and income from
the property for the following uses and trusts:
ARTICLE I
This
trust has been created by the Donor for the primary benefit of the Donor and
the Donors issue. It shall be held and administered by the Trustees for the
following uses and purposes:
(A)
During each year for a period specified in Article II commencing on the
establishment of this trust, an aggregate amount equal to __________ percent of
the initial net fair market value of the assets of the trust shall be paid and
distributed to the Donor.
(B)
Any such distributions pursuant to Paragraph (A) of this Article shall be paid
from the net income of the respective trust for the current tax year, or, to
the extent that the net income is insufficient, from the principal of the trust,
using to the extent available, first net short term capital gains from the
current tax year, then net long term capital gains from the current tax year,
and thereafter the balance of the principal of the trust.
(C)
In the case of a taxable year which is a period of less than twelve (12) months
(other than the taxable year in which the annuity interest created in this
Article terminates pursuant to Article II below), the amount distributed under
Paragraph (A) of this Article shall be the amount which must be distributed at
least yearly multiplied by a fraction, the numerator of which is the number of
days in the taxable year of the trust and the denominator of which is 365 (366
if February 29 is a day included in the numerator). In the case of a taxable year
of a trust in which the annuity interest created in this Article terminates
pursuant to Article II below, the amount required to be distributed under
Paragraph (A) of this Article shall be the amount which must be distributed at
least yearly multiplied by a fraction, the numerator of which is the number of
days in the period beginning on the first day of the taxable year and ending on
the date on which the termination occurs, and the denominator of which is 365
(366 if February 29 is a day included in the numerator).
(D)
In the event the net fair market value of the trust assets is incorrectly
determined by the Trustees, the Trustees shall pay to the Donor (in the case of
an undervaluation) or be repaid by the Donor (in the case of an overvaluation)
an amount equal to the difference between the amount which the Trustees should
have paid the recipient if the correct value were used and the amount which the
Trustees actually paid the recipient. Such payments or repayments shall be made
within a reasonable period after the final determination of the value. The
Trustees may in their absolute discretion require that distributions to the
Donor be made subject to written acknowledgment and acceptance of these
conditions.
(E)
It is the express intent of the Donor that the interest of the Donor created
under this Article shall qualify as a qualified interest as described in
Section 2702(b) of the Internal Revenue Code of 1986, as amended (referred to
as the Code), and that any gift from the Donor to any trust created under this
agreement shall qualify to the maximum extent possible for the deduction from
the value of the gift as provided in Section 2702(a)(2)(B) of the Code. This
agreement and all powers, trusts, directions, authorizations, instructions, and
obligations granted to or imposed on the Trustees by this Agreement and by law
shall be construed in such a way that the trusts created under this Article
shall so qualify. To the same end and purpose, the Trustees are expressly
authorized and empowered, by an instrument in writing, to amend this instrument
in whatever manner the Trustees in their absolute and uncontrolled discretion
shall deem necessary or desirable to qualify the interest retained by the Donor
created under this Article as described in Section 2702(b) of the Code;
provided, however, that this instrument may not be amended in such a way that
the trusts created under this Article shall not so qualify.
(F)
No commutation may be made of the distributions to the Donor provided for under
this Article. Such distribution shall not terminate except as provided in
Article II.
ARTICLE II
(A)
In the event of the Donors death prior to the expiration of twenty (20) years
from the date this trust is established, all of the assets of the trust shall
be paid to the Estate of the Donor.
(B)
Twenty (20) years after the date this trust is established, this trust shall
terminate and the assets of the trust, including any accrued and undistributed
income from it, but specifically excluding any amount otherwise required to be
distributed pursuant to Article I, shall be divided into as many equal shares
as there shall be children of the Donors then surviving and deceased children
of the Donor leaving issue then surviving. One such share shall be paid and
distributed to each of the Donors then surviving children and one such share
shall be paid and distributed, per stirpes, to the then surviving issue of each
then deceased child of the Donor; provided, however, that if any grandchild or
more remote issue of the Donor shall not then have attained the age of
twenty-one (21) years, the share or partial share which would otherwise be paid
and distributed to the grandchild or more remote issue of the Donor shall
instead be designated with the name of that person and shall continue to be
held as a separate and distinct trust and trust fund pursuant to the terms of
Paragraph (C) of this Article.
(C)
Any property designated under Paragraph (B) of this Article with the name of a
grandchild or more remote issue of the Donor (each such grandchild or more
remote issue of the Donor being referred to in this Paragraph (C) as the
Beneficiary) shall be held as a separate and distinct trust and trust fund
(which respective trust shall be identified by the name of the Beneficiary) for
the following uses and purposes:
(1) Until the Beneficiary with whose name a
trust is designated shall attain the age of twenty-one (21) years, the Trustees
may, from time to time, in the Trustees absolute discretion, pay or distribute
such part or all of the net income of the trust as may be deemed appropriate to
any one or more then living of the group consisting of the Beneficiary with
whose name the trust is designated and the issue of the Beneficiary, in such
amounts and proportions as the Trustees shall determine.
(2) When any Beneficiary with whose name
such a trust is designated shall have attained the age of twenty-one (21)
years, the entire remaining principal of the trust designated with the name of
the Beneficiary shall be paid and distributed to the Beneficiary; provided,
however, that the Trustees may, in the Trustees absolute discretion, postpone
the date on which the right to the mentioned distribution vests for a period
not exceeding two (2) years.
(3) If any Beneficiary in whose name such a
trust is designated shall die prior to the termination of the trust, the entire
principal of the trust designated with the name of the Beneficiary shall be
paid and distributed to the appointee or appointees, including the
Beneficiary's estate, in such amounts and proportions, for such estates and
interests, and free of trust or on such terms, trusts, conditions, and
limitations as the Beneficiary may designate in the Beneficiary's last will and
testament by making specific reference to and exercise of this power given to
the Beneficiary. If the Beneficiary shall die intestate or shall fail in part
or entirely to exercise this power, the entire principal of the trust
designated with the name of the Beneficiary, or the part thereof not disposed
of by the Beneficiary, shall be paid and distributed as follows:
(a) If the Beneficiary leaves issue then
surviving, to the Beneficiary's then surviving issue, per stirpes; provided,
however, that if any such issue shall not then have attained the age of
twenty-one (21) years, the share or partial share of the issue shall be
designated with the name of the issue and shall continue to be held as a
separate and distinct trust and trust fund pursuant to the terms of this
Paragraph (C).
(b) If the Beneficiary leaves no issue
then surviving, the property shall be divided into equal shares, and one such
share shall be paid and distributed to each then surviving brother or sister of
the Beneficiary and one such share, per stirpes, to the then surviving issue of
any then deceased brother or sister of the Beneficiary; or if there shall not
then be any such surviving brother or sister or issue thereof, then to the then
surviving issue, per stirpes, of the Beneficiary's nearest ascendant who is a
descendant of the Donor and of whom there are issue then surviving; or if there
shall not then be any such surviving issue, then to the then surviving issue of
the Donor, per stirpes; provided, however, that if any such person shall not
then have attained the age of twenty-five (25) years, the share or partial
share which would otherwise be paid and distributed to the person shall be
added to the trust fund created under this Paragraph (C) designated with the
name of the person, or if such a trust fund is not then in existence, such
share or partial share shall be held as a separate and distinct trust and trust
fund designated with the name of the person for the same uses and purposes
specified in this Paragraph (C).
(D)
Net income not paid or distributed from any trust created by this Article may
be added to any subsequent income payment from the trust. Until distributed,
accrued and accumulated income shall be regarded for all purposes under this
trust agreement as principal of the respective trusts created by this Article.
First consideration for any distribution of income or principal from any such
trust shall be given to the person with whose name the trust is designated.
(E)
The Trustees may, from time to time, in the Trustees absolute discretion, pay
or distribute to any Beneficiary then eligible to receive income from any trust
created by this Article such part of the principal of the trust from which the
Beneficiary is eligible to receive income as the Trustees may deem appropriate.
No such payment or distribution shall constitute an advance against any amount
receivable by any person from any trust created by this Article unless the
Trustees shall otherwise provide in writing at the time of making the payment,
and then only to the extent so provided.
(F)
Any of the trusts created under this Article may be terminated, in whole or in
part, at any time after the termination of the trusts created under Article I,
if such action is deemed advisable and for the best interests of the trust or
trusts, or the Beneficiaries thereof, in the sole discretion of the Trustees
whose judgment shall be conclusive and free from question by anyone or in any
court. In the event of such
termination, the principal of each trust so terminated, together with the
accrued, accumulated, and undistributed income from it, shall be paid over and
distributed to that person with whose name the trust is designated. In giving the Trustees such discretion to
terminate any such trust, the Donor recognizes that the interests of present
and future Beneficiaries may be terminated on the exercise of such discretion.
(G)
If at any time after the termination of the trusts created by Article I there
shall be no Beneficiary eligible to receive the income or principal of any
trust created by this Article, the entire principal of the trust created by
this Article shall be paid and distributed to the persons then living who would
have been the heirs of the Donor if the Donor had died at that time.
(H)
All interests, both in income and in principal, in all trusts created by this
Article are intended for the personal protection and welfare of the Beneficiaries
thereof; no such interest shall be transferable, voluntarily or involuntarily,
by a Beneficiary nor subject to the claims of creditors or of a spouse or
former spouse of a Beneficiary. In the event that the Trustees shall have
notice or believe that the rights or interests of any Beneficiary in or to any
part of the income or principal of any trust created by this Article have been
or may be diverted from the purpose of providing for the personal protection
and welfare of the Beneficiary, whether by voluntary act or legal process, the
Trustees shall not pay such income or principal to the Beneficiary, but may
utilize so much of it as the Trustees, in the Trustees sole discretion, deem
appropriate for the care, support, maintenance, education, or other necessities
of the Beneficiary, such utilization, if any, to be made as the Trustees deem
appropriate under the circumstances.
(I)
Any person may irrevocably disclaim and renounce any part or all of any gift
made to the person by this Article. Any
such disclaimer and renunciation shall be effected in the manner required by
applicable law. If any person disclaims
and renounces all interest in all or any part of any gift made to the person by
this Article, all of that gift or all of that part shall be disposed of as if
the person had not survived the Donor.
If any person disclaims and renounces less than all interest in all or
any part of any gift made to the person by this Article, all of the gift or all
of the part shall be held in trust otherwise as provided above.
ARTICLE III
Neither
the Donor nor any other person or organization may, at any time, give,
transfer, or bequeath to this trust or to any separate trust fund created under
this agreement, either by inter vivos transfer or testamentary disposition,
additional money or property of any kind to this trust.
ARTICLE IV
Subject
to the provisions and limitations expressly set forth in this instrument, the
Trustees shall have the powers granted, and only such powers. While it is the Donors intention that the
Trustees have broad and effective powers to carry out the provisions of this
instrument, no power conferred on any Trustee by this Article shall be
exercised in such a manner as, in the aggregate, to deprive the Donor or any
trust created by this instrument of any otherwise available tax exemption,
deduction, or credit. The powers
granted below shall not be exhausted by any use of them, but each shall be
continuing; and each shall continue and be exercised without the license or
authorization of any court or other legal authority. The determination of the Trustees with respect to whether to
exercise or not to exercise any power shall be final. These powers are the powers:
(1) To change the situs of the trust and of
any property which is part of the trust to any place in the United States of
America.
(2) Not to file an inventory of the
property which is part of the trust nor annual accounts of administration with
and not to have any of the property examined by any court where the filing or
examination is not required by applicable law.
(3) To retain for any period of time any
property which may be received or acquired.
(4) To collect, receive, and receipt for
rents, profits, or other income from any property which may be held.
(5) To expend money or other property in
order to collect, sell, manage, conserve, or administer any property which may
be held, or in order to improve, repair, equip, develop, furnish, maintain,
alter, extend, or add to any such property.
(6) To sell at public or private sale
(including, specifically, the power to initiate or participate in any public
offering or underwriting), partition, exchange for like or unlike property,
lease for any period of time even though it may be longer than the duration of
the trust, modify, renew, or extend any lease, grant options on, release,
demolish, abandon, dedicate, and otherwise dispose of any property which may be
held, on such terms and conditions, including credit, and for such consideration,
even though it may be less than the value at which the property was received or
acquired, or for such other benefit, even though it may be intangible, as may
be deemed appropriate.
(7) To transfer title to, grant rights in,
and convey in fee simple or otherwise any property which may be held, free of
all trusts.
(8) To invest and reinvest in any and all
kinds of securities, domestic or foreign, including common and preferred
stocks, bonds, debentures, notes, commodity contracts, mortgages and options on
property; in investment trusts and in common trust funds; in any real property;
in any personal or mixed property; in any business, mining or farming
operation, or other venture; or in any other interest or investment medium,
even though the investment would not be of a character authorized by applicable
law but for this provision.
(9) Not to diversify the property which may
be held, whether the property was originally received or subsequently acquired
by exchange, investment, or otherwise.
(10) To retain cash for reasonable periods
of time in amounts sufficient to meet anticipated needs, including payments of
expenses and to Beneficiaries.
(11) With respect to property subject to
depreciation or depletion, to withhold an amount from trust income in the
discretion of the Trustees to provide for a reasonable allowance for depreciation
or depletion on the property under generally accepted accounting principles.
(12) To do all things necessary, customary,
or desirable to conduct the affairs of an unincorporated business, mining or
farming operation, real estate operation, or other venture.
(13) To do all things necessary, customary,
or desirable to conduct the affairs of any corporation; to act as officer,
director, attorney, or employee of any corporation; and to place stock in the
name of a Trustee or any Beneficiary of the trust in order to qualify him or
her as a director of the corporation.
(14) Alone or with others to organize,
reorganize, merge, consolidate, recapitalize, dissolve, liquidate, or otherwise
create or change the form of any corporation, partnership, joint venture, or
other entity.
(15) To exercise all voting, sale,
purchase, exchange, or other rights or options with respect to any security or
other property which may be held.
(16) To refuse, reject, or not to exercise
any offer to purchase, option to purchase, voting or other right or option with
respect to any security or other property which may be held.
(17) To participate in any plan or
proceeding for protecting or enforcing any right, obligation, or interest
arising from any property which may be held; to serve as a member of a security
holder protective committee; and to deposit securities in accordance with any
plan agreed on.
(18) To expend money or other property,
whether by bidding in at foreclosure, by making a contribution to capital, or
by paying an assessment or otherwise, in order to protect any property which
may be held.
(19) To pay, contest, compromise, abandon,
release, adjust, submit to arbitration, sue on, defend and otherwise deal with
and settle any claim in favor of or against the trust or the Trustees.
(20) To receive, acquire, and retain
policies of fire, motor vehicle, business interruption, title, liability,
fidelity, indemnity, or other casualty insurance, either in stock or in mutual
companies, in any amount, against any risk in which the trust has an insurable
interest.
(21) To borrow money or other property for
such periods of time, on such terms and conditions, and for such purposes as
may be deemed appropriate; to mortgage, pledge, or otherwise encumber any
property which may be held as security for any such loan; and to renew, extend,
or refund any existing loan either as maker or endorser.
(22) With respect to any obligation held,
whether secured or unsecured, to reduce the interest rate on it, to continue it
on and after maturity with or without renewal or extension and without regard
to the then value of any security, to foreclose on the security thereof, or to
acquire the security without foreclosure.
(23) To keep books of account and to make
reports on such reasonable basis and with such detail as may be deemed
appropriate.
(24) To execute any instrument, under seal
or otherwise.
(25) To bind absolutely, by any action
taken or not taken, all Beneficiaries, born or unborn, ascertained or
unascertained, of the trust as against any other party; and no party dealing
with the Trustees shall have any duty to follow any property transferred by the
party to the Trustees.
(26) To sell any property to, to exchange
any property with, to purchase any property from, or otherwise to deal with any
Beneficiary of the trust or with any trust or estate of which either the Donor,
the Donors spouse, or any issue of the Donor is or was a donor or beneficiary, whether
created by this instrument or not, even though some or all of the Trustees are
also fiduciaries of the other trust or estate; and when dealing with any
fiduciaries, the Trustees shall have no duty to follow any property transferred
by them.
(27) To act notwithstanding the self
interest of any of the Trustees, including the powers to lease, mortgage, or
sell any property to or lease or purchase any property from any Trustee, to
determine the amount of and to receive their compensation for services as
Trustees or in any other capacity; in the case of a corporate trustee, to
borrow from, deposit money, or otherwise deal with its own banking department,
to invest in its own stock or the stock of my of its affiliates, or to invest
in its own common trust fund, and to be interested in any investment,
corporation, unincorporated business, farming or mining operation, real estate
operation, or other venture in which the trust is interested.
(28) To obtain the advice of accountants,
attorneys at law, brokers, investment counsel, realtors, appraisers, and other
experts, and to compensate the experts by salary, commission, fee, or
otherwise, and to act pursuant to the advice of the experts without independent
investigation.
1 (29) To delegate to one or more Trustees or
to agents: the authority to execute contracts, checks, documents of title, and
other instruments, to keep books of account, to prepare reports and tax
returns, to hold possession and record ownership of securities, bank accounts,
and other property, or to perform any other ministerial function; the authority
to perform the following discretionary functions: the management of any
investment, unincorporated business, farming or mining operation, real estate
operation, or other venture (whether by employing agents, giving proxies,
entering into voting trusts or otherwise) and the selection of the time to
acquire or to dispose of any property which may be held; any power, including
this power, possessed by the Trustees which is necessary, customary or
desirable so that the delegate may perform any function delegated pursuant to
this paragraph; and to compensate the agents by salary, commission, fee, or
otherwise; provided, however, that any power specifically reserved by the terms
of this instrument to the Trustees may be delegated or redelegated only to
another Trustee.
(30) To enter into any pooling or
unitization agreement.
(31) To advance money on behalf of the
trust for which advances, with any interest, the Trustees shall have a lien on
the assets of the trust as against any Beneficiary.
(32) To permit any Beneficiary to have the
use, possession, and enjoyment of any property then distributable pending
actual distribution of the property.
(33) To loan money or other property, with
or without formal evidence of indebtedness, with or without collateral
security, for such periods of time and on such terms and conditions as may be
deemed appropriate to any Beneficiary of any trust created by Article II of
this instrument, to any business controlled by any such Beneficiary, or to any
estate or trust of which any such Beneficiary is a beneficiary, out of any
trust created by Article II of this instrument from which the Beneficiary is
eligible to receive income; to make any such loan a lien on any property
payable or distributable to the Beneficiary; and to guarantee any loans of any
such Beneficiary, business, estate, or trust.
(34) To receive, acquire, and retain any of
the property of several trusts created by Article II of this instrument
undivided until division shall become necessary in order to make any payment or
distribution, to hold, manage, invest, reinvest, and account for the several
shares or parts of shares by appropriate entries in books of account, and to
allocate to each such share or partial share its proportionate part of all
receipts and expenses.
(35) To receive, acquire, and retain
policies and proceeds of policies of life insurance and of immediate and
deferred annuities, either in stock or in mutual companies, in any amount, on
the life of any Beneficiary of any trust created by Article II of this
instrument, or on the life of any person in whom the Beneficiary or any such
trust has an insurable interest; to pay the premiums thereof out of either the income
or principal or both of any such trust which is the beneficiary of the policy
or out of which the beneficiary of the policy is eligible to receive income;
and to exercise all rights, privileges, and options available under the policy.
ARTICLE V
The
construction, validity, and effect of this agreement and the rights and duties
of the Beneficiaries and the Trustees under it shall at all times be governed
exclusively by the laws of ____________________ (State).
ARTICLE VI
This
agreement may be executed in any number of counterparts, any one of which shall
constitute the agreement between the parties.
ARTICLE VII
(A)
____________________ and _____________________ are hereby appointed initial
Trustees under this agreement. Any of the Trustees, or any successor Trustee,
shall have the power, exercisable by the execution of a written instrument so
specifying, to nominate and appoint the Trustees immediate successor as
Trustee. The nomination may be changed
by the nominating Trustee at any time while the Trustee is acting as
Trustee. Any such nominated successor
Trustee shall become a Trustee whenever the nominating Trustee shall cease to
serve as Trustee. In the event any
Trustee shall cease to serve as Trustee and (I) has not effectively nominated
the Trustees immediate successor as Trustee, or (2) if the so-nominated
successor Trustee shall, for any reason, not become a Trustee, then the
remaining Trustee or Trustees then serving shall nominate and appoint a
successor Trustee.
(B)
Any individual or corporation at any time serving as Trustee under this
agreement may resign as Trustee of any trust or trusts created under this
agreement by delivering a written instrument to that effect signed by or on
behalf of the Trustee to the Donor if the Donor is then living otherwise to the
other Trustees then serving. Any such
resignation shall be effective as of the date of completion of delivery of the
instrument to such person or persons or as of such later date as shall be
specified in the instrument.
(C)
No bond or other security shall ever be required to be given or be filed by any
Trustee under this agreement for the faithful execution of the Trustees
duty. If, notwithstanding the foregoing
provision, a bond shall nevertheless be required, no sureties shall be
required.
(D)
No Trustee shall be liable except for willful malfeasance or bad faith.
(E)
The vote of a majority of the Trustees entitled to act on any matter shall be
sufficient to govern any action.
In
witness whereof, __________________________________________, as Donor, and
__________________________________ and ________________________________, as
Trustees, have executed this agreement on the day and year first
above-mentioned.
________________________________ ______________________
Signature
of Donor Date
________________________________ ______________________
Signature
of Trustee Date
________________________________ ______________________
Signature
of Trustee Date
________________________________ ______________________
Signature Date
