VIEWS: 94 PAGES: 10 CATEGORY: Trust Agreement POSTED ON: 1/17/2013
Gifts in trust to minors are quite common, both as a means of building up a child's estate and as a way to minimize federal gift, income, and estate taxes payable by the trustor or the estate of trustor. A carefully drafted minor's trust can provide competent management of the property on the minor's behalf, while avoiding any problem of the minor's disability to act with respect to that property. Such a trust can effect substantial tax savings for the trustor-donor while regulating distribution of the trust income and principal in keeping with the needs of the minor.
Trust Agreement for Minor Qualifying for Annual Gift-Tax Exclusion with Beneficiary having Option to Continue Trust Past Age 21 This Trust Agreement is made this (date), between (Name of Grantor), of (street address, city, state, zip code), hereinafter called the Grantor, and (Name of Trustee One), of (street address, city, state, zip code), (Name of Trustee Two), of (street address, city, state, zip code), and (Name of Trustee Three), of (street address, city, state, zip code), said Trustee One, Trustee Two and Trustee Three referred to herein as the Trustees. The Grantor, in consideration of the Agreements and undertakings set forth below made and assumed by the Trustees, and other valuable consideration, does now assign, convey, and set over to the Trustees and their successors the property listed and described in Schedule A, which is attached and incorporated by this reference. The Trustees are authorized to and agree that they will receive and hold that property and such additional property as may be transferred, assigned, or bequeathed to the Trustees from time to time by any person or organization, to become a part of the principal of the Trust created by this Agreement, and all investments and reinvestments of the same and income for the following uses and trusts: I. Beneficiary. This Trust has been created by the Grantor for the benefit of the son of Grantor (Name of Son), hereinafter called the Beneficiary. II. Disposition of Principal and Income. A. In each calendar year before the Beneficiary shall attain the age of 21 years, the Trustees shall pay over and distribute to the Beneficiary, or apply for his benefit, all or such part of the principal and income of the Trust as the Trustees, in their sole and absolute discretion, shall deem appropriate. Any net income of the Trust Fund not so distributed to the Beneficiary may, in the Trustees' discretion, be accumulated as Trust Income and added to any subsequent income payment or be added to and regarded as part of the principal of the Trust Fund. B. When the Beneficiary shall attain the age of 21 years, the Trustees shall pay over and distribute to him the entire Trust Fund, including any and all accrued, accumulated, and undistributed income. C. Notwithstanding the provisions of Paragraph B of this Section II, the term of the Trust shall continue until the Beneficiary shall reach the age of (age) years if the Beneficiary, on reaching the age of 21 years, shall so elect by written instrument delivered to the Trustees. If the Beneficiary shall so elect, the Beneficiary subsequently may elect to continue the Trust for successive (number of year)-year periods, each such election to be made by written instrument delivered to the Trustees on or before the day the Trust would otherwise terminate. If the Beneficiary shall make any such election(s) to extend the term of this Trust, then during the extended term the Trustees shall continue to pay to him or apply for the Beneficiary's benefit income and principal as set forth in Paragraph A. D. If the Beneficiary shall die during the original or extended term of this Trust, the entire Trust Fund, including all accrued, accumulated, and undistributed income, shall be distributed to such appointee or appointees, including the Beneficiary's Estate, in such amounts and proportions, for such estates and interests, and on such terms, trusts, conditions, and limitations as the Beneficiary may designate in his last will and testament by specific reference to the power given to him. If the Beneficiary shall die intestate or shall fail in part or entirely to exercise this power, the entire Trust Fund, including all accrued, accumulated, and undistributed income, or the part not effectively disposed of by the Beneficiary, as the case may be, shall be paid and distributed to the Beneficiary's then living issue, per stirpes; or if no such issue shall then be living, the entire Trust Fund shall be divided into equal shares, and one such share shall be paid and distributed to each then living brother or sister of the Beneficiary, and one such share, per stirpes, to the then-living issue of each then deceased brother or sister of the Beneficiary; or if there shall not then be any such surviving brother or sister or issue, to the estate of the Beneficiary. III. Additions to Trust. The Grantor or any other person may at his option from time to time, or by last will and testament, add to the Trust Fund by paying, transferring, and delivering to the Trustees such further and additional funds, assets, securities, or other property as he shall determine, unless the Trustees in their discretion deem the transfer adverse to the interests of the Beneficiary for tax or other reasons. Such funds, assets, securities, and property shall then become and be subject to all the terms and provisions of this Agreement with the same force and effect as if this Trust Agreement were executed by the person making the addition to the Trust Fund on the date the addition is made. IV. Powers of Trustees. A. Subject only to the provisions and limitations set forth in this Section IV and elsewhere in this instrument and especially Section V, the Trustees, in extension and not in limitation of the powers given them by law or other provisions of this instrument, shall have the following powers with respect to the Trust created by this Agreement and its property, in each case to be exercised from time to time in their discretion and without the order or license of any court: 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 or any other country. 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 such 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, even though its retention by reason of its character or otherwise would not be appropriate apart from this provision. 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 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. 7. To transfer title to, grant rights in, and convey in fee simple or otherwise any property which may be held, free of all Trust. 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 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 such 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 Independent Trustee to provide for a reasonable allowance for depreciation or depletion on such 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 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 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. 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 securities-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, 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 estate or the Trust or the personal representative or 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 estate or 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 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 my estate or of the Trust as against any
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