Irrevocable Trust Agreement with Husband and Wife
as Beneficiaries, Power of Appointment, Marital Trust and Residual Trust
This Trust Agreement is made on (date), between (Name of Trustor), of (street
address, city, county, state, zip code), hereinafter referred to as Trustor, and (Name of
Trustee), a corporation organized and existing under the laws of the state of
______________, with its principal office located at (street address, city, state, zip
code), referred to herein as Trustee.
Whereas, Trustor desires to establish a Trust with the property described in the
attached Exhibit A and other property which may be added from time to time, all of
which is hereafter called the Trust Fund; and
Whereas, Trustee accepts such Trust and agrees to administer it in accordance
with the terms and conditions of this Agreement;
Now, therefore, Trustor hereby gives Trustee the property described in Exhibit
A, in Trust, for the following purposes:
A. During Trustor’s Lifetime. During Trustor’s lifetime, Trustee may, from
time to time and subject to Subsection F of this Section I, distribute to Trustor,
and Trustor’s Wife all, some, or none of the net income and/or principal in such
amounts and proportions (whether equally or unequally, and even to the
exclusion of one or more beneficiaries) as Trustee, in its sole discretion, deems
appropriate after taking account of all other sources of funds available to them.
Trustee shall accumulate any net income not so distributed and add it to
principal, to be disposed of as a part of it. No such distribution shall be deemed
to be an advancement.
B. On Trustor’s Death. On Trustor’s death, Trustee shall distribute the Trust
Fund to such person or persons, other than Trustor, Trustor’s creditors, Trustor’s
estate, and the creditors of Trustor’s estate, in such manner and amounts, and
on such terms, whether in Trust or otherwise, as Trustor effectively appoints by
specific reference hereto in his Will. However, Trustor may, from time to time,
release this special power of appointment, in whole or in part, by a written
instrument delivered to Trustee during his lifetime. On Trustor’s death, if Trustor’s
Wife survives him, Trustee shall set aside, as the Marital Trust, so much of the
Trust Fund, to the extent not effectively appointed, that is includable in Trustor’s
gross estate for federal estate tax purposes. The remainder of the Trust Fund not
set aside as the Marital Trust, or all of the Trust Fund if Trustor’s Wife
predeceases Trustor, or if none of the Trust Fund is includable in Trustor’s gross
estate for federal estate tax purposes, shall be set aside as the Residuary Trust.
C. Marital Trust.
1. During Lifetime of Trustor’s Wife.
Commencing with Trustor’s date of death, Trustee shall distribute
the net income of the Marital Trust to Trustor’s Wife at least
annually for life and as much principal as she requests in writing at
any time or times. In addition, Trustee may, from time to time,
distribute so much, or all, of the principal to Trustor’s Wife, as
Trustee deems appropriate to provide for her benefit. Trustee may,
but need not, take into account other sources of funds available to
2. On the Death of Trustor’s Wife. On the death of Trustor’s
Wife, Trustee shall distribute the principal, free from this
Trust, to such person or persons, including the estate of
Trustor’s Wife, in such manner and amounts, and on such
terms, whether in Trust or otherwise, as the Wife of Trustor
effectively appoints by specific reference hereto in the last written
instrument which she executes and delivers to Trustee during her
lifetime or, failing any such instrument, in her Will. On the death of
the Wife of Trustor, Trustee shall distribute the balance of the
principal, to the extent not effectively appointed, to the Trustee of
the Residuary Trust, to be added to its principal and disposed of as
though it had been a part of it immediately before the death of the
Wife of Trust.
D. Residuary Trust.
1. During Lifetime of Trustor’s Wife. Commencing with Trustor’s
date of death, Trustee shall distribute the net income of the Residuary
Trust to Trustor’s Wife at least annually for life. In addition, Trustee may,
from time to time, distribute so much, or all, of the principal to Trustor’s
Wife and Trustor’s issue, as Trustee deems appropriate to provide for their
health, maintenance, education, and/or support, provided that no such
distribution or application of principal shall be made out of the Residuary
Trust for the benefit of Trustor’s Wife at any time when such distribution
could be made from the Marital Trust. Trustee may, but need not, take into
account other sources of funds available to them. No such distribution
shall be deemed to be an advancement.
2. On the Death of the Survivor of Trustor and Trustor’s Wife. On
the death of Trustor’s Wife, if she survives Trustor, Trustee shall distribute
the principal, free from this Trust, to such of Trustor’s issue, in such
manner and amounts, and on such terms, whether in Trust or otherwise,
as Trustor’s Wife effectively appoints by specific reference hereto in the
last written instrument which she executes and delivers to Trustee
during her lifetime or, failing any such instrument, in her Will. On the death
of the survivor of Trustor and Trustor’s Wife, Trustee shall divide the
principal then held in Trust hereunder, to the extent not effectively
appointed, into shares for Trustor’s then living issue, per stirpes.
3. Shares Held for Children. Trustee shall hold each living child’s
share in further trust and distribute the net income to the child for life.
In addition, Trustee may, from time to time, distribute so much, or all, of
the principal of a child’s share to the child, as Trustee deems appropriate
to provide for the child’s health, maintenance, education, and/or support.
Trustee may, but need not, take into account other sources of funds
available to the child. On the death of the child, Trustee shall distribute so
much of the child’s share as is then held hereunder, free from this Trust, to
such person or persons, including the child’s estate, in such manner and
amounts, and on such terms, whether in Trust or otherwise, as effectively
appointed by specific reference hereto in the last written instrument which
the child executes and delivers to Trustee during his or her lifetime or,
failing any such instrument, in his or her Will. If there be no such will or
written instrument, then on the death of the child, Trustee shall distribute
the balance of the share, to the extent not effectively appointed, free from
Trust, to the child’s then living issue, per stirpes, but if no such issue is
then living, then to Trustor’s then living issue, per stirpes. However, any
principal distributable to an issue of Trustor for whose benefit a share of
the Residuary Trust is then held in Trust under the provisions of this
Agreement shall instead be distributed to the Trustee of such share, to be
added to its principal and disposed of as a part of it.
4. Shares for Remote Issue. Trustee shall distribute each share set
aside (at the time previously provided for dividing the Residuary Trust into
shares) for an issue of Trustor more remote than a child of Trustor to such
issue, free from Trust.
E. Failure of Beneficiaries. If, at any time, Trustee holds any portion of the
principal of any Trust not disposed of effectively under the previous provisions,
then, at such time, Trustee shall distribute such principal, free from Trust, to such
then living person or persons as are then determined to be Trustor’s distributees
by the application of the intestacy laws of the State of (name of state) governing
the distribution of intestate personal property then in effect, as though Trustor
had died at that particular time, intestate, a resident of (name of state), and
owning such property then so distributable.
F. Trustor’s Veto Power. Trustee shall exercise its discretionary power to
distribute income and/or principal to any beneficiary other than Trustor pursuant
to Subsection A of this Section I only with the written consent of Trustor, so
long as he is willing and able to act. If, at any time, Trustor fails to express in
writing to Trustee consent or disapproval as to the exercise of any discretionary
power within fifteen (15) calendar days after Trustee has sent a written request
for such consent to Trustor’s last known address by certified mail (or by any other
means for which the sender shall have evidence of receipt by the addressee),
Trustee may act in the matter as it deems appropriate.
1. In exercising the veto power conferred on him by this Subsection,
Trustor shall not be required to act in a fiduciary capacity and shall have
no duty to inquire into or see to the performance by Trustee of its duties
under this Agreement.
2. Trustor shall receive no compensation and shall not be reimbursed
for expenses incurred for services performed under this Subsection.
II. Minority or Other Capacity.
If any property is otherwise required to be distributed to a beneficiary who has
not attained age twenty-five (25) or is, in Trustee’s opinion, unable to manage funds due
to illness or infirmity, Trustee may:
A. Distribute such property to such beneficiary himself or herself; or
B. Apply such property for the benefit of such beneficiary; or
C. Hold the property not so distributed or applied in Trust hereunder for the
benefit of such beneficiary, and distribute or apply the net income and principal
thereof to such beneficiary as Trustee deems appropriate to provide for their
health, maintenance, education.
Trustee shall distribute the property in such Trust to the beneficiary upon his or
her attaining age twenty-five (25) or upon the termination of his or her incapacity (as the
case may be). If the beneficiary dies prior to such distribution, Trustee shall distribute
the property to the beneficiary’s estate.
Notwithstanding the foregoing, income (including income attributable to property
held pursuant to this Section) which is required to be distributed to a beneficiary in order
to qualify a Trust hereunder for the marital deduction under Section 2056 of the Code,
or for any other tax deduction, exemption, or credit, shall be distributed to such
beneficiary or any guardian of such beneficiary’s property if requested in writing by such
beneficiary or guardian.
III. Merger with Similar Trusts.
If, at any time, a Trust is set aside for any person or persons under the terms of
this Agreement which is substantially the same as any other Trust established for that
person or persons by Trustor or Trustor’s Wife, Trustee may, in its sole discretion,
merge the Trust created hereunder with the other Trust for such person or persons, and
the two Trusts shall thereafter be held, administered, and distributed as one.
IV. Alternative Methods of Distribution.
Trustee may take any reasonable steps to disburse funds to or for a beneficiary,
including: (i) distribution, either by hand or mail, to the beneficiary or the guardian of the
person or property (whether the guardian is formally appointed or a natural guardian),
(ii) distribution to a custodian for the beneficiary under the Uniform Transfers to Minors
Act (or similar statute) of any state, (iii) deposit to the account of the beneficiary in any
federally insured depository, (iv) direct application for the benefit of the beneficiary, or
(v) distribution to a new or existing Trust for the beneficiary.
V. Spendthrift Provision.
No beneficiary (including Trustor) may alienate or in any other manner, whether
voluntary or involuntary, assign, transfer, pledge, or mortgage his or her interest in any
Trust hereunder, and no one (including a spouse or former spouse) may attach or
otherwise reach any interest of any beneficiary hereunder to satisfy a claim against that
beneficiary, whether the claim is legal or equitable in origin. The provisions of this
Section shall not limit or otherwise affect any power of appointment conferred upon a
beneficiary or the right of a beneficiary to disclaim or release any interest created
hereunder. This Section constitutes a restriction on the transfer of Trustor’s beneficial
interest in the Trust Fund that is enforceable under applicable non-bankruptcy laws
within the meaning of Section 541(c)(2) of the Bankruptcy Code (11 USC § 541(c)(2)) or
any other similar or successor statute.
VI. Payment of Death Taxes, Debts, and Expenses of Administration.
A. Death of a Beneficiary (including Trustor). On the death of the
beneficiary of any Trust created hereunder (including Trustor), if the principal of
such Trust is included in the estate of the beneficiary for transfer tax purposes,
Trustee shall, unless otherwise directed by the beneficiary’s Will, distribute from
such Trust to the Personal Representative of the beneficiary’s estate an amount
equal to the sum of all additional transfer taxes and costs of administration
payable by such Personal Representative as a result of the inclusion of the Trust
in the beneficiary’s estate. Certification of such Personal Representative as to the
amount of such additional taxes and costs will be determinative for all purposes.
Trustee shall make such distributions directly to the appropriate payee if so
directed by such Personal Representative.
B. Generation-Skipping Transfer Tax. Trustee shall pay any tax imposed
under Chapter 13 of the Code as a result of a “taxable termination” attributable to
any Trust created hereunder from the principal of such Trust, charging such
payments ratably against the property in respect of which such termination
VII. Trustee’s Powers
In addition to those powers granted by law, Trustee is specifically authorized and
empowered, in its sole discretion, but subject to the provisions of Section 8:
A. To sell at public or private sale, exchange for like or unlike property,
convey, lease for terms longer or shorter than the Trust, and otherwise dispose
of any or all property held hereunder, for such price and upon such terms and
credits as it deems proper.
B. To invest in any kind of property, real, personal, or mixed, regardless of
the laws governing investments by fiduciaries, without any duty to diversify
C. Unless otherwise directed by the investment adviser named in Section 8
hereof, to execute securities transactions without necessity of providing written
confirmation thereof to such adviser at the time of settlement, and to execute
securities transactions through any brokerage service, whether discount or full
service, at its normal rates of compensation, without diminution of compensation
otherwise payable to Trustee.
D. To vote directly or by proxy at any election or stockholders’ meeting any
shares of stock.
E. To participate in any plan or proceeding, including any voting trust plan
for liquidating, protecting, or enforcing any interest in any property, or for
reorganizing, consolidating, merging, or adjusting the finances of any corporation
issuing any such interest; to accept in lieu thereof any new or substituted stocks,
bonds, notes, or securities, whether of the same or a different kind or class, or
with different priorities, rights, or privileges; to pay any assessment or any
expense incident thereto; and to do any other act or thing tha