IRREVOCABLE
LIVING TRUST
RETAINED
INCOME
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 good and 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, in
trust, to hold, manage, and dispose of for the uses and purposes set forth
below. In consideration of the
transfer, the trustees agree to accept the property, and any additional money
or property as may be transferred, assigned, or bequeathed to the trustees by
the donor or any other person or organization, and to take, hold, manage, and
dispose of such property, and all investments and reinvestments and income from
the property, on the following uses and trusts.
ARTICLE I
(A)
All of the net income from the trust shall be paid to the donor annually or at
more frequent intervals until the first to occur of the donors death or 20
years.
(B)
The donor shall have, in all events, the power to require, by written notice,
the trustees to convert any unproductive property to productive property within
a reasonable period of time.
(C)
On the death of the donor prior to 20 years, the entire principal of the trust
shall be paid and distributed to the estate of the donor.
(D)
On 20 years, if the donor is surviving, all of the principal of the trust shall
be divided by the trustees into as many equal proportions as there shall be
children of the donor then surviving, and deceased children of the donor
leaving issue then surviving each of which shares shall be held and
administered as follows:
(1) One such share shall be paid and
distributed to each of the then surviving children of the donor and one such
share, per stirpes, to the then surviving issue of each then deceased child of
the donor; provided, however, that if any such child of the donor shall not
then have attained the age of 21 years, the share or partial share which would
otherwise be paid and distributed to the child or grandchild of the donor (but
not the share or partial share of any issue of any deceased grandchild of the
donor, which share shall be paid and distributed to the issue free of trust) shall
be designated with the name of the child or grandchild and shall continue to be
held as a separate and distinct trust and trust fund for the following uses and
purposes:
(a) With respect to each such trust, the
trustees may, from time to time in their sole and absolute discretion, pay or
distribute to any one or more then living of the group consisting of the child
or grandchild with whose name the trust is designated, the spouses and issue of
the child or grandchild, and the parent of the grandchild such part of the net
income of the trust as they may deem appropriate.
(b) When any child or grandchild of the
donor with whose name such a trust is designated shall have attained the age of
21 years, the entire remaining corpus of the trust designated with the name of
the child or grandchild, together with any and all accrued, accumulated, and
undistributed income shall be paid and distributed to the child or grandchild,
as the case may be.
(c) If any child of the donor with whose
name such a trust is designated shall die prior to the termination of the trust
leaving issue then surviving, the entire corpus of the trust shall be divided
into as many equal shares as there shall be children of the child of the donor
then surviving and deceased children of the child of the donor leaving issue
then surviving. One such share shall be
paid and distributed to each of the then surviving children of the child of the
donor (being grandchildren of the donor) and one such share, per stirpes, to
the then surviving issue of each then deceased child of the child of the donor;
provided, however, that if any child of the child of the donor shall not then
have attained the age of 21 years, the share which would otherwise be paid and
distributed to the grandchild of the donor shall be designated with the name of
the grandchild and shall continue to be held as a separate and distinct trust
and trust fund for the same uses and purposes as provided above for a trust for
a grandchild of the donor whose parent predeceased the donor and the spouse of
the donor.
(d) If any grandchild of the donor with
whose name such a trust is designated shall die prior to the termination of the
trust leaving issue then surviving, the entire corpus of the trust designated
with the name of the grandchild shall be paid and distributed to the estate of
the grandchild.
(e) If any child of the donor with whose
name such a trust is designated shall die prior to the termination of the trust
leaving no issue then surviving, the entire corpus of the trust shall be
divided into equal shares, and one such share shall be paid and distributed to
each then surviving brother or sister of the child, and one such share, per
stirpes, to the then surviving issue of each then deceased brother or sister of
the child or grandchild; provided, however, that if a trust created by this
article designated with the name of any such person should then be in
existence, the share or partial share which otherwise would be paid and
distributed to that person shall instead be added to and become a part of the
corpus of the trust.
(2) Net income not required to be paid or
distributed from any trust created by this article may be added to any
subsequent income payment from the trust.
Until distributed, accumulated income shall be regarded for all purposes
under this trust as corpus of the respective trusts created by this Article.
(3) If, prior to the time that any trust fund
shall be set up for and designated with the name of any person under the
foregoing provisions, or any addition shall be made to any such fund, or any
other fund or share of any other fund shall become payable to him or her or to
a trust for his or her benefit under the provisions of this agreement, the
person shall have arrived at the age when a mandatory partial or total
distribution to him or her is required under the terms of this agreement, then
the persons fund or share of any other fund forthwith shall be partially or
totally paid and distributed to that person in the same proportions as required
by the mandatory provisions.
(E)
If at any time there shall be no issue of the donor then surviving, the entire
corpus of all trusts created by this Article, including any and all accrued,
accumulated, and undistributed income, shall be paid and distributed to the
persons then living who would have been the next of kin of the donor, if the
donor had died at the time or times of such payment and distribution, under the
then existing laws of __________________ (State)
relating to the distribution of intestate personal property, in the proportions
prescribed by such laws; provided, however, that for purposes of this
paragraph, the parents of the donor shall be deemed to have predeceased the
donor.
(F)
With respect to any trust or trust fund created under this Article I, the
trustees may pay to or apply for the benefit of any beneficiary currently
eligible to receive the income or any part of it arising from any such trust
fund such amounts out of the principal of the trust fund as the trustees in
their absolute discretion, shall deem requisite or expedient by reason of
accident, illness, general need, insufficiency of income, or other economic,
political, or tax emergency or adversity for the care, maintenance, comfort,
support, education, travel, and other benefits or necessities of the
beneficiary or any legal dependent of the beneficiary. The receipt of any trust beneficiary for, or
other evidence of application for the benefit of the beneficiary of, any
payment of income or corpus shall fully discharge the trustees from any
liability in connection with same.
(G)
The provisions made for the beneficiaries of any trust created in this Article
I, whether in respect of income or principal, are intended for the personal
protection and welfare of the beneficiaries, and their rights or interests
thereunder shall not be assignable or subject to anticipation, hypothecation,
or seizure by legal process. When and
if the trustees shall have notice or shall believe that the rights or interests
of any beneficiary in and to any part of the income of any trust fund from
which the beneficiary is eligible to receive income have been or may be
diverted, whether by voluntary act or legal process, the trustees may in their
sole discretion, instead of paying or distributing the income to the
beneficiary, expend the same for the support, maintenance, education, comfort,
welfare, and necessities of the beneficiary.
Whenever the trustees shall be satisfied in their own judgment that the
payments to the beneficiary of the income may be made without danger of its
being so diverted, the trustees may resume the outright payment and
distribution of income directly to the beneficiary. If payment is withheld from the income otherwise payable to any
beneficiary, it may, unless otherwise disbursed as provided above, be added to
any subsequent payment to the beneficiary, or be made a part of the principal
of his or her trust fund. The power conferred
on the trustees to withhold payment of income to any beneficiary shall not be
exhausted by the use thereof, but shall be continuing. In the event that payments of income to any
beneficiary shall have been resumed, the trustees may thereafter discontinue
the payments if they shall have reason to believe such action necessary. The judgment of the trustees in reference to
the matters referred to in this paragraph shall be conclusive and free from
question by any one or in any court.
Nothing contained in this agreement shall be construed to extend the
ultimate term of the trusts.
(H)
The whole or any part of the income or principal payable under this agreement
to any beneficiary who is a minor, or who, in the opinion of the trustees, is
incapacitated through illness, age, or other cause, may in lieu of being paid
directly to the beneficiary, be paid to or applied by the trustees for the
benefit of such party or parties, at such time or times, and in such manner as
the trustees deem advisable, including, but not limited to, the making of
direct payments of the beneficiary's expenses, or by the making of payments to
the beneficiary's guardian, or to the person with whom the beneficiary may be
making his or her home, or to any other person or party deemed appropriate by
the trustees. In each case, the receipt
of any person or party to whom payment is made or entrusted shall be a complete
discharge of the trustees concerning the payment.
(I)
Any of the trusts created under Article I may be terminated, in whole or in
part at any time, if such action is deemed advisable and for the best interests
of the trust or trusts, or the beneficiaries thereof, whether by reason of
economic, tax, or political emergency or for any other reason whatsoever
(including the determination that the corpus of the trust is so small as to
make the efficient management of it impractical) 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 of
the trust, shall be paid over and distributed to that person with whose name
the trust is designated.
ARTICLE II
The
donor or 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 acceptable to the trustees. In that event such additional property shall
become a part of the trust or trust fund to which it is given and shall be
divided, allocated, administered, and distributed as if it had originally been
a part thereof.
ARTICLE III
(A)
All questions relating to the ascertainment of income and principal and the
allocation of receipts and disbursements between income and principal shall be
resolved by the trustees in accordance with the terms of the Uniform Principal
and Income Act from time to time in effect in _________________ (State), or if the Act should be abolished,
then in accordance with the terms of the Act as it was last in effect in
___________________ (State);
provided, however, that the trustees may withhold from amounts otherwise
payable as income under the Act a reasonable allowance for depreciation or
depletion on property subject to depreciation or depletion, and may set up a
reserve for depreciation or depletion, all under generally accepted accounting
principles.
(B)
In making any division or apportionment under the provisions of Article I for
the purpose of creating any fund or share of any fund, or for any other purpose
of whatsoever nature, the trustees shall have the power to make such division
or apportionment in money or in kind, or partly in money and partly in kind,
including securities, real property and undivided interests in real or personal
property, making the necessary equalizations, if any, in cash, the values to be
determined by the trustees, whose judgment as to such values shall be binding
and conclusive on all parties in interest.
ARTICLE IV
Except
as provided in Article I, it is the intention of the donor that this instrument
shall constitute an irrevocable gift in trust of all property at any time held
under it, any and all rights, title, and reversionary interest in the property,
of any kind or description, which the donor now has or may subsequently
acquire, either by operation of law or otherwise (other than those rights and
interests which are specifically reserved to the donor) are hereby renounced
and relinquished forever. Any future
gift of property to this trust, whether by the donor or any other person, shall
likewise be irrevocable. Any right,
title, or reversionary interest in the property, of any kind or description,
which the donor may have or subsequently acquire, by operation of law or
otherwise, shall, by the making of the gift to this trust, be likewise
renounced and relinquished forever. In
the event at any time of the failure of any present or future gift under this
agreement, the property comprising the gift shall then be paid to and among the
persons then living who, if the donor had died then, would have been the next
of kin of the donor (other than the parents of the donor) under the then
existing laws of __________________ (State)
relating to the distribution of intestate personal property, in the proportions
described by the laws of distribution.
ARTICLE V
Subject
only to the provisions and limitations expressly set forth in this agreement,
the trustees and any successor trustees, shall have in general the power to do
and perform any and all acts and things in relation to this trust in the same
manner and to the same extent as an individual might or could do with respect
to his or her own property. No
enumeration of specific powers in this agreement shall be construed as a
limitation on the foregoing general powers.
The powers, or any of them, conferred on the trustees shall not be
exhausted by any use thereof, but each shall be continuing. The trustees are especially authorized and
empowered in their sole discretion:
(A)
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 or any other country.
(B)
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 such property examined
by any court where the filing or examination is not required by applicable law.
(C)
To retain for any period of time any property which may be received or acquired
even though its retention by reason of its character or otherwise would not be
appropriate apart from this provision.
(D)
To collect, receive, and receipt for rents, profits, or other income from any
property which may be held.
(E)
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.
(F)
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 estate or 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 appraised in the estate or was
received or acquired, or for such other benefit, even though it may be
intangible, as may be deemed appropriate.
(G)
To transfer title to, grant rights in, and convey in fee simple or otherwise
any property which may be held, free of all trust.
(H)
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 money market funds, commercial
paper, repurchase agreements, United States Treasury obligations, certificates
of deposit, savings accounts, checking accounts, and any other cash investment
medium; 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.
(I)
Not to diversify the property which may be held, whether the property was
originally received or subsequently acquired by exchange, investment, or otherwise.
(J)
To retain cash for reasonable periods of time in amounts sufficient to meet
anticipated needs, including payments of expenses and to beneficiaries.
(K)
With respect to property subject to depreciation or depletion, to withhold an
amount from trust income in the discretion of the Independent Trustee to
provide for a reasonable allowance for depreciation or depletion on the
property under generally accepted accounting principles.
(L) 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.
(M)
To do all things necessary, customary, or desirable to conduct the affairs of
any corporation; to act as an officer, director, attorney, or employee of any
corporation; and to place stock in the name of an individual personal
representative or trustee or any beneficiary of the estate or of the trust in
order to qualify the person as a director of the corporation.
(N)
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.
(O)
To exercise all voting, sale, purchase, exchange, or other rights or options
with respect to any security or other property which may be held.
(P)
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.
(Q)
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 securities-holder protective committee; and to deposit
securities in accordance with any plan agreed on.
(R)
To expend money or other property, whether by bidding in at foreclosure, by
making a contribution to capital, by paying an assessment, or otherwise, in
order to protect any property which may be held.
1
(S)
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 estate or the trust or the personal representative or trustees.
(T)
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 estate or the trust has an insurable interest.
(U)
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 loan; and to renew, extend, or refund any existing loan either as maker or
endorser.
(V)
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 or to acquire the security without foreclosure.
(W)
To keep books of account and to make reports on such reasonable basis and with
such detail as may be deemed appropriate.
(X)
To execute any instrument, under seal or otherwise.
(Y)
To bind absolutely, by any action taken or not taken, all beneficiaries, born
or unborn, ascertained or unascertained, of my estate or of the trust as
against any other party; and no party dealing with the personal representative
or trustees shall have any duty to follow any property transferred by the party
to the personal representative or trustees.
(Z)
To sell any property to, to exchange any property with, to purchase any
property from, or otherwise to deal with any beneficiary of the estate or of
the trust or with any trust or estate of which either I, my spouse or any
ancestor or issue of mine is or was a donor or beneficiary, whether created by
this will or not, even though some or all of the personal representatives or
trustees are also fiduciaries of such other trust or estate; and when dealing
with any fiduciaries, my personal representative or trustees shall have no duty
to follow any property transferred by them.
(AA)
To act notwithstanding the self-interest of any of the personal representatives
or trustees, including the powers to lease, mortgage, or sell any property to
or lease or purchase any property from any personal representative or trustee,
to determine the amount of and to receive their compensation for services as
personal representative or trustees or in any other capacity, in the case of a
corporate personal representative or trustee, to borrow from, deposit money, or
otherwise deal with its own banking department, to invest in its own stock or
the stock of any 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
estate or the trust is interested.
(BB)
To obtain the advice of accountants, attorneys at law, brokers, investment
counsel, realtors, appraisers, and other experts, and to compensate such
experts by salary, commission, fee, or otherwise, and to act pursuant to the
advice of such experts without independent investigation.
(CC)
To delegate to one or more personal representatives or trustees or to agents or
nominees: 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 whether or not such agency agreements,
proxies, voting trust agreements, or other arrangements may extend beyond the
term of the trusts provided in this agreement) 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 personal representative or trustees which is
necessary, customary, or desirable so that the delegate may perform any
function delegated pursuant to this paragraph; and to compensate such agents by
salary, commission, fee, or otherwise; provided, however, that any power
specifically reserved by the terms of this will to the Independent Trustee may
be delegated or redelegated only to another such Independent Trustee.
(DD)
To enter into binding agreements not to exercise any power which may be possessed
on such terms and conditions and for such reasons as may be deemed appropriate.
(EE)
To enter into any pooling or unitization agreement.
(FF)
To advance money on behalf of the trust or of the estate, for which advances,
with any interest, the personal representative or trustees shall have a lien on
the assets of the trust or estate as against any beneficiary.
(GG)
To permit any beneficiary to have the use, possession, and enjoyment of any
property then distributable pending actual distribution of it.
(HH)
To retain for any period of time cash or other unproductive property.
(II)
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 the donors estate
or of any trust created by this instrument, or on the life of any person in
whom the beneficiary, the donors estate, or any trust created by this
instrument has an insurable interest; to pay the premiums on any insurance out
of the donors estate or out of either the income or principal or both of any
trust created by this agreement 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.
(JJ)
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
the donors estate or of any trust created by 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 the donors estate or out of any trust
created by this instrument from which the beneficiary is eligible to receive
income, as the case may be; 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.
(KK)
To receive, acquire, and retain any of the property of several trusts created
by 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.
ARTICLE VI
This
trust shall at all times be governed by the laws of __________________ (State).
ARTICLE VII
(A)
No bond or surety or security of any kind shall be required of any trustee at
any time appointed or acting under this agreement. No trustee shall be liable
for any cause or in any event for the trustees own willful malfeasance or bad
faith.
(B)
All discretionary powers and duties vested in any corporate trustee under this
agreement may be exercised on its behalf from time to time as occasion shall
arise by its governing board, or by an appropriate committee, or by any of its
principal officers or trust officers. Any corporate trustee shall be entitled
to compensation at the prevailing rate for the administration of trusts of this
nature.
In
witness whereof, ____________________, as donor, and _____________________ and
___________________, as trustees, have executed this agreement on the day and
year above written.
_______________________________
______________________
Signature
Date
_______________________________ ______________________
Signature
Date
