LIVING
TRUST
CHARITABLE
REMAINDER ANNUITY
I hereby transfer
to ____________________________________________ (hereinafter called the
Trustee) as Trustee, the property set forth on Schedule A attached hereto and
made a part hereof, to be held IN TRUST, for the purposes and in accordance
with the provisions which follow:
ARTICLE I
Disposition of
Trust Fund
SECTION 1: Annuity
amount
During the
lifetime of ___________________________________________________ (hereinafter
referred to as the recipient), my Trustee shall invest and reinvest such
property and pay to the recipient in each taxable year of this trust an annuity
in an amount (hereinafter referred to as the annuity amount) equal to _____________
percent (______%) (not less than 5 %) of
the initial net fair market value of the assets passing into this trust as
finally determined for federal gift tax purposes. The annuity amount shall be paid in _____________ equal
installments from trust income and, to the extent income is not sufficient,
from principal. Trust income for a
taxable year in excess of the annuity amount shall be added to principal. In determining the annuity amount, my
Trustee shall prorate this amount on a daily basis for any short taxable year
of this trust including the taxable year of the recipient's death.
SECTION 2:
Incorrect payments
If the net fair
market value of the trust assets is incorrectly determined, my Trustee shall,
within a reasonable time after the value is finally determined for federal tax
purposes, either pay to the recipient or his estate (in the case of an
underpayment) or receive from the recipient or his estate (in the case of an
overpayment) an amount equal to the difference between the annuity amount
properly payable and the annuity amount actually paid.
SECTION 3:
Charitable Disposition
Upon the
recipient's death, my Trustee shall distribute all property then belonging to
the income and principal of this trust, other than any amount due the recipient,
to _________________________________________ (Charity)
to be used by it for its general purposes; provided that, if at the time of
distribution, that organization is not described in Sections 170(b)(1)(A),
170(c), 2055(a) and 2522(a) of the Internal Revenue Code, then all such
property shall be distributed to one or more organizations,
as
shall then be so described, whose purposes and activities are similar to those
of __________________________________________ (Charity),
in such shares as my Trustee, in its sole discretion, shall determine.
SECTION 4:
Foundation Restrictions
Except for the
payment of the annuity amount to the recipient, my Trustee is prohibited from
engaging in any act of self-dealing as defined in Section 4941(d) of the
Internal Revenue Code, from retaining any excess business holdings as defined
in Section 4943(c) of the Internal Revenue Code which would subject the trust
to tax under Section 4943 of the Internal Revenue Code, from making any
investments which would subject this trust to tax under Section 4944 of the
Internal Revenue Code and from making any taxable expenditures as defined in
Section 4945(d) of the Internal Revenue Code.
My Trustee shall make distributions at such time and in such manner as
not to subject this trust to tax under Section 4942 of the Internal Revenue
Code. Nothing in this trust shall be
construed to restrict my Trustee from investing the trust assets in a manner
which could result in the annual realization of a reasonable amount of income
or gain from the sale or disposition of trust assets.
SECTION 5: Savings
Clause
I intend to create
a charitable remainder annuity trust within the meaning of Section 664(d)(1) of
the Internal Revenue Code and Revenue Procedure 89-21, and to this end I direct
that (1) the provisions of this agreement shall be interpreted in accordance
with this intent, (2) my Trustee shall not have and may not exercise any power
or responsibility granted by this agreement (whether expressly stated or
incorporated by reference) or by law to the extent such power or responsibility
would cause this trust to fail to qualify for the federal estate or gift tax
charitable deductions, and (3) my Trustee shall have the exclusive power to
amend the terms of this trust in writing to meet any governing instrument
requirements subsequently imposed by law or the interpretation of such law,
without instituting judicial proceedings or seeking court approval of same;
provided that formal notice of the exercise of this power and a copy of any
such written amendment is provided each beneficiary of this trust, and provided
further that the beneficial interests of all such beneficiaries are not
otherwise changed.
ARTICLE II
Irrevocability
I declare that the
trust hereby created is irrevocable, and that this agreement may not be
altered, amended or modified.
ARTICLE III
Fiduciary Powers
I grant my Trustee
(including any successor Trustee) the authority and power to exercise, in its
sole discretion and without court order, in respect of any property forming
part of any trust created under this agreement or otherwise in its possession
hereunder, all powers conferred by law upon trustees, or expressed in this
agreement, and I intend that the powers so granted be construed in the broadest
possible manner. In addition, my Trustee shall also have the power, authority
and discretion hereinafter set forth:
(1) Facility of Payments: To apply for the benefit of, or to the use
of, any person, any property (whether principal or income) vesting in or
payable to such person, without seeing to the application of the payments so
made and for which the receipt of the payee shall be full acquittance to my
Trustee.
(2) Non-Pro Rata Distribution: To make distributions under this agreement
(without the consent of any beneficiary) in cash or in specific property, real
or personal, or in undivided interests therein, or partly in cash and partly in
such property, and to do so without regard to the income tax basis of specific
property allocated to any beneficiary (including any trust) and without making
pro rata divisions of specific assets.
(3) Court Accounting and Bond Excused: My Trustee shall not be required to qualify,
to make or file any inventory, appraisal, account or report to any court or to
give bond (unless in each instance it is otherwise required to do so
notwithstanding this provision), but shall be required to furnish at least
annually to each current beneficiary a statement giving a summary of receipts
and disbursements during each accounting period and assets on hand at the end
of the accounting period. Such
accountings are deemed correct and are accepted if no notice to the contrary is
received within 90 days.
(4) Provisions Regarding Holding and Management
of Real Property:
(a)
To deal with matters involving the actual or threatened contamination of
trust property (including interests in sole proprietorships, partnerships or
corporations and any assets owned by such business entities) by hazardous
substances, or involving compliance with environmental laws. In particular, my Trustee is empowered:
(i)
To inspect any such property periodically, as it deems necessary, to
determine compliance with any environmental law affecting such property, with
all expenses of such inspection and monitoring to be paid from the income or
principal of the trust;
(ii)
To respond (or take any other action necessary to prevent, abate or
clean up) as it shall deem necessary, prior to or after the initiation of
enforcement action by any governmental body, to any actual or threatened
violation of any environmental law affecting any of such property, the cost of
which shall be payable from trust assets;
(iii)
To refuse to accept property as a trust asset if it determines that such
property is contaminated by any hazardous substance or that such property is
being used or has been used for any activities directly or indirectly involving
hazardous substances which could result in liability to the trust or otherwise
impair the value of trust assets;
(iv)
To settle or compromise at any time any claim against this trust related
to any such matter asserted by any governmental body or private party;
(v)
To disclaim any power which it determines may cause it to incur personal
liability as a result of such matters, whether such power is set forth in this
document, incorporated by reference herein, or granted or implied by any
statute or rule of law;
(vi)
To decline to serve as Trustee or, having undertaken to serve, resign at
any time it believes there is or may be a conflict between it in its fiduciary
capacity and in its individual capacity because of potential claims or
liabilities which might be asserted against this trust because of the type or
condition of trust assets.
(5) Income and Principal Apportionment: The Trustee shall have discretion to
determine whether items should be charged or credited to income or principal,
or be apportioned between income and principal, including the power to provide
or not to provide a reasonable reserve against depreciation, depletion or
obsolescence. The Trustee shall
exercise its discretion in such manner as it may reasonably deem equitable and
just under all the circumstances and regardless of whether such items are
charged or credited to or apportioned between income and principal as provided
in of the Uniform Principle and Income Act as adopted in this state.
ARTICLE IV
Resignation
My Trustee or any
successor Trustee may resign at any time as Trustee of any trust being held
under this agreement in a writing signed, acknowledged and delivered to all
adult income beneficiaries of such trust, such resignation to be effective upon
a successor Trustee being appointed to act in its place. A majority of the beneficiaries entitled to
receive such notice shall have the power to sign an acknowledged writing to be
delivered to the then acting Trustee appointing a successor Trustee. In no event shall I be appointed or have the
power to appoint a successor Trustee under this agreement.
Any successor
corporate Trustee domiciled outside the State in which the Trust is presently
sited and duly appointed hereunder, shall be authorized to remove any personal
property constituting the principal of such trust to the domicile of the
successor corporate Trustee; provided that the laws of the State in which the
Trust was first created shall continue to govern the rights of beneficiaries in
such property and the manner in which such trust is construed and administered.
Any successor
Trustee is authorized and directed to accept from any prior Trustee the assets
delivered by such predecessor on the basis of the predecessor's accounting for
such assets without requiring an audit or other independent accounting of the
transactions, acts or omissions of such prior Trustee, and any successor
Trustee shall not have any duty, responsibility, obligation or liability
whatsoever for the acts or omissions of such prior Trustee.
ARTICLE V
Situs
This agreement
shall be construed and the trusts created by this agreement shall be regulated
and governed in accordance with the laws of the State of ________________.
ACCEPTANCE CLAUSE
In Witness
Whereof, I do hereby sign and seal this instrument, and my Trustee in executing
same hereby acknowledges receipt of property set forth on Schedule A and
accepts the trust created hereunder and covenants to faithfully discharge all
duties of its office as Trustee, this ________ day of _________ (Month) ____ (Year).
______________________________________
(SEAL)
Grantor
______________________________________
(SEAL)
Trustee
