TRUST AGREEMENT
OF
[NAME OF SETTLOR]
By this Trust Agreement dated ______, 20__, I, [NAME OF SETTLOR](a.k.a. [SETTLOR AKA NAME]), a resident of Minnesota (“Settlor”) establish a trust and [NAME OF SETTLOR]and [NAME OF SPOUSE] (“Trustee” or “Trustees”) hereby agree(s) to act as Trustee(s) of such trust.
RECITALS
Transfer of Assets. I intend to transfer certain property to the Trustee, the receipt of which shall be acknowledged by the Trustee.
Governing Provisions. All property transferred to the Trustee in the future shall be administered and distributed as provided in this instrument.
Identification of Trust. The trust created by this instrument shall be referred to as the “[NAME OF SETTLOR] Trust under Agreement dated ______, 20__” or by such other name as the Trustee shall designate from time to time.
ARTICLE 1
RESERVATION OF RIGHTS
I reserve the following rights, to be exercised (except as otherwise specified) without the consent or participation of any other person.
1.1 Reserved Powers. [Unless I am incapacitated,] I may exercise the following rights:
1.1.1 Amendment and Revocation. To amend, in whole or in part, or to revoke this trust by a writing delivered to the Trustees, provided that the making of a written list disposing of tangible personal property shall be a valid and effective amendment as to the items of tangible personal property on such list only, even though not delivered to the Trustees.
1.1.2 Approval of Accounts. To approve accounts from the Trustee (or the Personal Representative of any deceased Trustee). My approval of these accounts by writings delivered to a Trustee other than myself shall cover all transactions disclosed in these accounts and shall be binding and conclusive as to all persons.
1.1.3 Investment of Trust Assets. To direct the Trustee as to the retention, acquisition, or disposition of any trust assets. Any assets retained or acquired pursuant to such directions shall be retained as a part of the trust estate unless I subsequently direct otherwise. The Trustee shall not be liable to anyone for any loss resulting from any action taken or not taken in accordance with any such direction of mine.
1.1.4 Powers Personal to Settlor. [The rights set forth in this Paragraph1.1 are personal to me and may not be exercised by my attorney-in-fact, conservator, or other legal representative.][The rights set forth in this Paragraph1.1 are not personal to me and may be exercised by my attorney-in-fact, conservator, or other legal representative without approval by any court.][The rights set forth in this Paragraph1.1 are not personal to me and may be exercised by my attorney-in-fact, conservator, or other legal representative, but only with prior court approval.]
1.2 Addition of Assets. I may add any other property by transferring such property to the Trustee, and to add any other property by my will. The Trustee shall administer and distribute any such property as if it had been a part of the original trust estate.
1.3 Designation of Trust as Beneficiary. I may make payable to the Trustee death benefits from insurance on my life, annuities, retirement plans, or other sources. If I do so, I reserve all incidents of ownership, and I shall have the duties of safekeeping all documents, of giving any necessary notices, of obtaining proper beneficiary designations, of paying premiums, contributions, assessments or other charges and of maintaining any litigation.
ARTICLE 2
TRUST ADMINISTRATIONDURING MY LIFETIME
The Trustee shall hold and distribute the principal and income of the trust estate during my lifetime as follows:
2.1 Distributions. [Unless I am incapacitated] The Trustee shall pay to me such portions of income and principal as I direct and make such other payments or distributions as I may direct.
2.2 Distributions During Incapacity. If I am incapacitated:
2.2.1 Distributions for Support. The Trustee shall pay (a)to me or for my benefit such portions of income and principal as the Trustee deems advisable; or (b)to or for the benefit of my spouse [and any minor children whom I have an obligation to support] such portions of income and principal as the Trustee deems necessary for any such beneficiary’s health, education, support, or maintenance; and
2.2.2 Gifts. The Trustee may make such gifts to or in trust for my spouse, my descendants [and the spouses of my descendants] (including the Trustee or the descendants of the Trustee) [or any charity][as the Independent Trustee deems advisable or consistent with my past practices or instructions][as the Trustee deems advisable or consistent with my past practices or instructions; provided, however, that no transfer to any beneficiary may exceed the federal annual gift tax exclusion amount in the year of such gift].
ARTICLE 3
TRUST ADMINISTRATIONUPON MY DEATH
Upon my death, the Trustee shall make distributions from the trust assets, including all property that becomes distributable to the Trustee at my death, as follows:
3.1 Authorized Payments. The Trustee, if requested by the Personal Representative of my estate shall, or in the Trustee’s discretion may, directly or through the Personal Representative of my estate, pay the following items:
3.1.1 General Expenses. The expenses of my last illness and funeral, allowed claims against my estate, and expenses of administering my estate, including my non-probate assets; provided that no such claims and expenses shall be paid from the proceeds of any insurance, retirement plan or other asset which, but for this Paragraph, would be exempt from liability for such claims and expenses; and
3.1.2 Estate Taxes. Any estate taxes imposed upon my estate except to the extent paid from other sources, provided that the estate taxes paid by the Trustee shall be allocated and paid in accordance with the directions set forth in the General Governing Provisions.
3.2 Priority of Payments. All payments under the preceding provisions of this Article shall be made prior to the final allocation of assets under Article 4 of this instrument.
3.3 Special Distributions. The Trustee shall make the following special distributions:
3.3.1 Tangible Personal Property. I may make one or more written lists directing the disposition of my personal effects (including jewelry, wearing apparel, watches, etc.), household property (including furniture, pictures, books, etc.), automobiles, objects of art, and other tangible personal property owned by me at the time of my death, together with any insurance on such property, excluding, however, money and coin collections and tangible personal property used exclusively in carrying on or conducting a business, trade or profession, and the Trustee shall distribute the property (and such insurance, if any) described in such list or lists as directed. To be given effect, a list must be signed by me or in my handwriting and it must describe an item or items of tangible personal property and the intended recipient with reasonable certainty. In the case of any inconsistent dispositions, the most recent disposition shall control. If no such list is found within 60days after my death, any dispositions made by such a list shall abate to the extent that the Trustee has distributed or disposed of such property. The Trustee shall distribute all such tangible personal property not effectively disposed of by any such list to my spouse if [he][she] survives me, or if [he][she] does not survive me, [in equal shares to my descendants who survive me][as part of the residue of the trust estate]. [The expense of packing, shipping, insuring, and delivering tangible personal property to an individual under this Paragraph shall be paid by the Trustee as an administration expense.]
3.3.2 Provision for Spouse. The Trustee shall distribute to my spouse, if my spouse survives me, all interests in property, both real and personal, including buildings, fixtures, and improvements to the property, used by me or my spouse [as a primary residence][for residential purposes, whether primary, secondary, seasonal, or recreational], whether evidenced by deed, stock or other securities, lease, license, permit or otherwise, together with and including all insurance policies relating thereto. This gift shall include all real property contiguous to or used in connection with such property, other than tangible personal property disposed of pursuant to a list under the preceding Paragraphof this instrument.
3.4 Specific Gifts. The Trustee shall distribute to each person named below who survives me the sum set forth opposite the name of such person [or, if such person does not survive me, to such person’s descendants who survive me, per stirpes]. [If any such person does not survive me, the gift to such person shall lapse.]
3.4.1 [NAME AND RELATIONSHIP][AMOUNT]
3.4.2 [NAME AND RELATIONSHIP][AMOUNT]
3.4.3 [NAME AND RELATIONSHIP][AMOUNT]
[Choice #1, Paragraph 3.5]
3.5 Provision for Charity. The Trustee shall distribute to each organization named below the sum set forth opposite the name of such organization, to be used for its general tax-exempt purposes but without other restriction as to use. [If such organization is not in existence at my death and the time of distribution, or if such organization is not an organization described in section 2055 of the Internal Revenue Code at my death and at the time of distribution, the gift to such organization shall lapse.][If such organization is not in existence at my death and the time of distribution, or if such organization is not an organization described in section 2055 of the Internal Revenue Code at my death and at the time of distribution, the gift to such organization shall lapse and the sum that such organization would have been entitled to receive if it were then in existence and an organization described in section 2055 of the Internal Revenue Code shall be distributed to the remaining organizations designated in this paragraph that are then in existence and are then described in section 2055 of the Internal Revenue Code in the proportions that the distributions to such remaining organizations bear to each other.]
3.5.1 [NAME AND LOCATION][AMOUNT]
3.5.2 [NAME AND LOCATION][AMOUNT]
3.5.3 [NAME AND LOCATION][AMOUNT]
[The assets to be distributed under this Paragraph shall be selected by the Trustee, but, to the extent possible, such distributions shall be satisfied with assets constituting Income in Respect of Decedent (IRD) in my estate.]
[Choice #2, Paragraph 3.5]
3.5 Provision for Non-Charitable Entities. The Trustee shall distribute to each organization named below the sum set forth opposite the name of such organization, to be used for its general purposes but without other restriction as to use. [If such organization is not in existence at my death and the time of distribution, the gift to such organization shall lapse.][If such organization is not in existence at my death and the time of distribution, the gift to such organization shall lapse and the sum that such organization would have been entitled to receive if it were then in existence shall be distributed to the remaining organizations designated in this Paragraph that are then in existence in the proportions that the distributions to such remaining organizations bear to each other.]
3.5.1 [NAME AND LOCATION][AMOUNT]
3.5.2 [NAME AND LOCATION][AMOUNT]
3.5.3 [NAME AND LOCATION][AMOUNT]
ARTICLE 4
ALLOCATION OF REMAININGTRUST ASSETS
The trust assets, including all property that becomes distributable to the Trustee by reason of my death, not effectively distributed under the preceding provisions of this instrument, shall be allocated and distributed as follows:
4.1 Provision If Spouse Survives. If my spouse survives me, the remaining trust assets shall be distributed to my spouse, outright and free of trust; provided that any interest that my spouse disclaims shall be allocated instead to the Disclaimer Trust.
[Choice #1, Paragraph 4.2 – Separate Trusts to an Age]
4.2 Provision If Spouse Does Not Survive. If my spouse does not survive me, the remaining trust assets shall be allocated to my descendants who survive me, per stirpes. Each share so allocated to a descendant of mine who has attained the age of [AGE] shall be distributed outright to such beneficiary. Each share so allocated to a descendant of mine who has not attained the age of [AGE] shall be held by the Trustee as a separate trust named for such beneficiary.
[Choice #2, Paragraph 4.2 – Single Trust Followed by Separate Trusts to an Age]
4.2 Provision If Spouse Does Not Survive. If my spouse does not survive me, the remaining trust assets shall be allocated as follows:
4.2.1 Single Trust for Children. If any child of mine who survives me is under the age of [AGE], the remaining trust assets shall be allocated to the Single Trust for Children.
4.2.2 Provision for Descendants. If no child of mine who survives me is under the age of [AGE], the remaining trust assets shall be allocated to my descendants who survive me, per stirpes. Each share so allocated to a descendant of mine who has attained the age of [AGE] shall be distributed outright to such beneficiary. Each share so allocated to a descendant of mine who has not attained the age of [AGE] shall be held by the Trustee as a separate trust named for such beneficiary.
[Choice #1, Paragraph 4.3]
4.3 Contingent Provision. If my spouse does not survive me and no descendant of mine survives me, or if at any other time there are trust assets for which no beneficiary is specified under this instrument, such trust assets shall be distributed as follows: [______].
[Choice #2, Paragraph 4.3]
4.3 Heirs-at-Law. If my spouse does not survive me and no descendant of mine survives me, or if at any other time there are trust assets for which no beneficiary is specified under this instrument, such trust assets shall be distributed one-half to my then living heirs-at-law and one-half to my spouse’s then living heirs-at-law, determined under the Minnesota statutes of intestate succession in force at the execution of this instrument as if each of us had died unmarried and without descendants [and as if our parents were then deceased].
[Choice #3, Paragraph 4.3]
4.3 Descendants of Parents. If my spouse does not survive me and no descendant of mine survives me, or if at any other time there are trust assets for which no beneficiary is specified under this instrument, such trust assets shall be distributed one-half to the then living descendants of my [mother][father], per stirpes and one-half to the then living descendants of my spouse’s [mother][father], per stirpes.
[Choice #4, Paragraph 4.3]
4.3 Provision for Others. If my spouse does not survive me and no descendant of mine survives me, or if at any other time there are trust assets for which no beneficiary is specified under this instrument, such trust assets shall be distributed in equal shares to the following individuals who are then living, and the share for any such individual who is not then living shall lapse, thereby ratably increasing the other shares: [NAMES OF INDIVIDUALS].
[Choice #5, Paragraph 4.3]
4.3 Provision for Charity. If my spouse does not survive me and no descendant of mine survives me, or if at any other time there are trust assets for which no beneficiary is specified under this instrument, such trust assets shall be distributed to [NAME OF ORGANIZATION] for its general [tax-exempt] purposes but without other restriction.
ARTICLE 5
TRUSTS
The separate trusts created under this instrument upon and after my death shall be administered and distributed as provided in this Article:
5.1 The Disclaimer Trust. The Disclaimer Trust shall be administered and distributed as follows:
[Choice #1, Paragraph 5.1.1]
5.1.1 Income. The Trustee shall distribute the income to my spouse, in annual or more frequent installments.
[Choice #2, Paragraph 5.1.1]
5.1.1 Income for Health, Education, Support, or Maintenance. The Trustee shall distribute to my spouse such portions of the income (including all or none) as the Trustee deems advisable to provide for my spouse’s health, education, support, or maintenance.
5.1.2 Principal for Health, Education, Support, or Maintenance. The Trustee shall distribute to my spouse such portions of the principal (including all or none) as the Trustee deems advisable to provide for my spouse’s health, education, support, or maintenance.
[Optional Paragraph 5.1.3]
5.1.3 Additional Principal. The Independent Trustee[, if there is an Independent Trustee then serving,] also may distribute to my spouse such portions of the principal (including all or none) as such Independent Trustee deems advisable for any purpose.
[Optional Paragraph 5.1.4]
5.1.4 Distributions to Descendants for Health, Education, Support, or Maintenance. The Trustee also may distribute to my [children][descendants] such portions of the income or principal (including all or none) as such Trustee deems advisable for the health, education, support, or maintenance of such beneficiaries.
[Optional Paragraph 5.1.5]
5.1.5 Distributions to Descendants. The Independent Trustee[, if there is an Independent Trustee then serving,] also may distribute to my [children][descendants] such portions of the income or principal (including all or none) as such Trustee deems advisable for any purpose.
[Optional Paragraph 5.1.6]
5.1.6 Distributions If Other Sources of Support Are Insufficient. Principal distributions may be made by the Trustee only after the Trustee determines that other funds known to the Trustee to be readily available to a beneficiary are insufficient to meet such beneficiary’s needs.
[Optional Paragraph 5.1.7]
5.1.7 Priority of Spouse. The trust shall be administered for the primary benefit of my spouse, and the Trustee may distribute principal to or for the benefit of my spouse without regard for the interests of the remainder beneficiaries of the trust.
5.1.8 Distribution at Death. Upon my spouse’s death, the Trustee shall allocate and distribute the remaining assets of the Disclaimer Trust, including any accrued income, in the manner provided under Article4 if I had survived my spouse and died immediately after my spouse’s death.
5.2 The Single Trust for Children. The Single Trust for Children shall be administered and distributed as follows:
5.2.1 Distributions for Health, Education, Support, or Maintenance. Until my youngest child attains the age of [AGE], the Trustee shall distribute to any of my living children and any descendant of a deceased child of mine such portions of the income or principal as the Trustee deems advisable for the health, education, support, or maintenance of such beneficiary. Subject to these distribution standards, the Trustee may determine that no distribution shall be made to one or more of the beneficiaries.
[Choice #1, Paragraph 5.2.2 – No Chargeback]
5.2.2 Division of Trust. On the date when no living child of mine is under age [AGE], the Trustee shall allocate the remaining assets to my then living descendants, per stirpes. In making such division, the Trustee shall not take into account any discretionary distributions previously made under this Article. Each share so allocated to a child or other descendant of mine who has attained the age of [AGE] shall be distributed outright to such beneficiary. Each share so allocated to a child or other descendant who has not attained the age of [AGE] shall be held as a separate trust for such beneficiary, to be administered and distributed as provided in this instrument.