INTER VIVOS CHARITABLE REMAINDER UNITRUST AGREEMENT

Transcription

1 This is a specimen document only. Its legal and tax consequences must be reviewed and approved by qualified legal and tax counsel before it is utilized for any purpose. This document has been furnished by The Milner Agency, Inc. INTER VIVOS CHARITABLE REMAINDER UNITRUST AGREEMENT (SINGLE PERSON IS INCOME BENEFICIARY) (CHARITY IS REMAINDER BENEFICIARY) On this day of [MONTH], [YEAR], I, [NAME OF DONOR], hereinafter known as Donor, desiring to establish a charitable remainder unitrust, within the meaning of section 664(d)(2) of the Internal Revenue Code as amended from time to time, hereinafter referred to as the Code, hereby create the [FAMILY NAME] Charitable Remainder Unitrust, hereinafter known as the Trust, and designate [NAME OF TRUSTEE] as the initial Trustee, hereinafter known as the Trustee. 1. Initial Funding of Trust. The Donor transfers to the Trustee the property described in Schedule A, and the Trustee accepts such property and agrees to hold, manage and distribute such property of the Trust, as well as any property added later, under the terms set forth in this Trust instrument. 2. Payment of Unitrust Amount. In each taxable year of the Trust, the Trustee shall pay to [NAME OF INCOME BENEFICIARY], hereinafter referred to as the Recipient or Income Beneficiary, during the Recipient's life a unitrust amount equal to [at least five] percent (#%) of the net fair market value of the assets of the Trust valued as of the first day of each taxable year of the Trust, also known as the valuation date. The unitrust amount shall be paid in equal quarterly (or monthly or annual) amounts from income and, to the extent that income is not sufficient, from principal. The Trustee shall have the exclusive right to determine the net fair market value of all trust assets, and such determination made in good faith shall be binding on all interested persons. In determining the net fair market value of trust assets, the Trustee shall take into account all of the Trust's assets and liabilities as of the date of such determination without regard to whether a particular item is considered in determining Trust income or principal. Any income of the Trust for a taxable year in excess of the unitrust amount shall be added to principal. If for any year the net fair market value of the Trust assets is incorrectly determined, then within a reasonable period after the value is finally determined for Federal tax purposes, the Trustee shall pay to the Recipient (in the case of an undervaluation) or receive from the Recipient (in the case of an overvaluation) an amount equal to the difference between the unitrust amount properly payable and the unitrust amount actually paid.

2 3. Proration of the Unitrust Amount. In determining the unitrust amount, the Trustee shall prorate the same on a daily basis for a short taxable year and for the taxable year of the Recipient's death. 4. Distribution to Charity. Upon the death of the Recipient, the Trustee shall distribute all of the then principal and income of the Trust (other than any amount due Recipient or Recipient's estate under the provisions above) to the following organizations described in sections 170(c), 2055(a), and 2522(a) of the Code, hereinafter referred to as the Charitable Organization, in the percentages indicated: A. [PERCENTAGE] percent (#%) to [NAME OF CHARITABLE ORGANIZATION], of [LOCATION OF CHARITABLE ORGANIZATION] free of trust, to be used as follows: [DESCRIPTION OF SPECIFIC REQUIRED CHARITABLE USES, IF ANY]; B. [PERCENTAGE] percent (#%) to [NAME OF CHARITABLE ORGANIZATION], of [LOCATION OF CHARITABLE ORGANIZATION] free of trust, to be used as follows: [DESCRIPTION OF SPECIFIC REQUIRED CHARITABLE USES, IF ANY]; C. [PERCENTAGE] percent (#%) to [NAME OF CHARITABLE ORGANIZATION], of [LOCATION OF CHARITABLE ORGANIZATION] free of trust, to be used as follows: [DESCRIPTION OF SPECIFIC REQUIRED CHARITABLE USES, IF ANY]; The foregoing charitable remainder beneficiary designations may be amended or revoked by a written instrument delivered at any time from the Donor to the Trustee. Such written instrument shall be valid only for those organizations that are described in sections 170(c), 2055(a), and 2522(a) of the Code. If more than one such written instrument is delivered to the Trustee, the written instrument bearing the latest date shall be valid and all prior such written instruments shall be revoked or amended accordingly. If the latest written instrument containing charitable remainder beneficiary designations for this Trust is the Donor's last will and testament, such written instrument must be filed for probate and presented to the Trustee prior to six (6) months after the death of the last surviving Income Beneficiary. If at the time when the principal or income of the Trust is to be distributed to the charitable remainder beneficiary no Charitable Organization designated herein or by written instrument is an organization described in sections 170(c), 2055(a), and 2522(a) of the Code or if one hundred percent (100%)of the Trust assets has not been allocated to one or more charitable remainder beneficiaries, then the Trustee shall distribute such principal or income to one or more organizations described in sections 170(c), 2055(a), and 2522(a) as the Trustee shall select in its sole discretion. 5. Additional Contributions. If any additional contributions are made to the Trust after the initial contribution, the unitrust amount for the year in which the additional contribution

3 is made shall be [the same percentage as in paragraph 2] percent of the sum of (a) the net fair market value of the Trust assets as of the first day of the taxable year (excluding the assets so added and any income from, or appreciation on, such assets) and (b) that proportion of the value of the assets so added that was excluded under (a) that the number of days in the period that begins with the date of contribution and ends with the earlier of the last day of the taxable year or the Recipient's death bears to the number of days in the period that begins on the first day of such taxable year and ends with the earlier of the last day in such taxable year or the Recipient's death. In the case where there is no valuation date after the time of contribution, the assets so added shall be valued at the time of contribution. 6. Prohibited Transactions. The income of the Trust for each taxable year shall be distributed at such time and in such manner as not to subject the Trust to tax under section 4942 of the Code. Except for the payment of the unitrust amount to the Recipient, the Trustee, or any Special Trustee appointed hereunder, shall not engage in any act of self-dealing, as defined in section 4941(d), and shall not make any taxable expenditures, as defined in section 4945(d). The Trustee, or any Special Trustee appointed hereunder, shall not make any investments that jeopardize the charitable purpose of the Trust, within the meaning of section 4944, or retain any excess business holdings, within the meaning of section Powers of Trustee. In performing its duties under this Trust, the Trustee shall have all the authority, powers and discretions conferred upon the Trustee by the laws of the state of [NAME OF STATE]. 8. Successor, Ancillary and Independent Trustees. The Donor, or the Income Beneficiary if the Donor is not an Income Beneficiary, shall have the right to dismiss the Trustee by giving the Trustee at least thirty (30) days notice of its dismissal and to appoint a successor Trustee. An Independent Special Trustee, Ancillary Trustee, or Administrative Agent may be dismissed by the Donor, or the Income Beneficiary if the Donor is not an Income Beneficiary, at any time without prior notice. If the Donor fails to appoint a successor Trustee and the Trustee resigns or is dismissed, unable or unwilling to carry out the duties of Trustee, [Name of Successor Trustee] is hereby appointed to act as successor Trustee. If [Name of Successor Trustee] resigns or is dismissed, unable or unwilling to act as Trustee, then [Name of Power Holder] shall have the power to appoint another successor Trustee. A Trustee may resign by tendering its resignation in a written instrument to the Donor and the Trust Administrator or, if no Administrator has been appointed, to the Successor Trustee or Power Holder named above at least thirty (30) days prior to the effective date of the resignation. If for any reason the Trustee (or Independent Special Trustee) is unwilling or unable to act with regard to specific property, such as but not limited to, real property in another jurisdiction, the Trustee (or Independent Special Trustee) shall appoint, by written

4 instrument specifying the purpose and scope of duties thereof, an Ancillary Trustee or Administrative Agent to administer such specific property. Any Ancillary Trustee or Administrative Agent so appointed shall act solely within the scope of its duties specified in the written instrument of appointment, render to the Trustee (or Independent Special Trustee) full accountings regarding the specific property on at least a quarterly basis, and remit to the Trustee any amounts received from the sale or rental of such specific property. An Ancillary Trustee or Administrative Agent may resign at any time by delivering a written resignation to the Trustee (or Independent Special Trustee) to whom the Ancillary Trustee or Administrative Agent is required to give accounting. When the Trustee holds assets that do not have a readily ascertainable fair market value, such as, but not limited to, real estate, closely-held stock, patents, or other intangible property, the Trustee shall appoint an Independent Special Trustee to take title to, value, invest, sell, exchange, dispose of, or otherwise administer such property. The Donor shall not serve as an Independent Special Trustee, nor shall any person serve as an Independent Special Trustee who is related to or subservient to the wishes of the Donor within the meaning of Code sections 672(c) and 674(c). The initial Independent Special Trustee of this Trust shall be: [NAME OF INDEPENDENT SPECIAL TRUSTEE] at [ADDRESS OF INDEPENDENT SPECIAL TRUSTEE]. (Omit this paragraph if none is needed initially.) Fees payable to any Independent Special Trustee shall be taken from income first, then principal to the extent that income is insufficient, and such fees shall in no way reduce the unitrust amount payable to any Income Beneficiary hereunder. While such Independent Special Trustee is serving, no other Trustee shall have any power, duty, right, or obligation with respect to such property. In no event shall the activities of any Independent Special Trustee appointed hereunder be permitted to jeopardize the status of this Trust as a charitable remainder unitrust under Code section 664 and the Treasury Regulations and Rulings pertaining thereto. The Independent Special Trustee shall render to the Trustee full accountings regarding the specific property on at least a quarterly basis, and remit to the Trustee any amounts received from the sale or rental of the property under its authority. An Independent Special Trustee may resign at any time by delivering a written resignation to the Trustee. 9. Taxable Year. The taxable year of the Trust for the first year of its existence shall be from the date of execution through December 31 st of that year. In subsequent years the taxable year of the Trust shall be the calendar year. 10. Governing Law. The operation of the Trust shall be governed by the laws of the State of [NAME OF STATE]. However, the Trustee is prohibited from exercising any power or discretion granted under said laws that would be inconsistent with the qualification of the Trust under section 664(d)(2) of the Code and the corresponding regulations. All references to Code sections and regulations herein shall refer to the Internal Revenue Code of 1986, as amended, and shall include the sections and regulations in effect at the

5 time this Trust is executed and any changes or amendments to such sections and regulations, as well as any successor sections and regulations. 11. Limited Power of Amendment. The Trust is irrevocable. However, the Trustee shall have the power, acting alone, to amend the Trust in any manner required for the sole purpose of ensuring that the Trust qualifies and continues to qualify as a charitable remainder unitrust within the meaning of section 664(d)(2) of the Code, and the Donor shall have the power to amend, revoke, or add charitable remainder beneficiaries as provided by paragraph 4, herein. 12. Investment of Trust Assets. Nothing in this Trust instrument shall be construed to restrict the Trustee from investing the Trust assets in a manner that could result in the annual realization of a reasonable amount of income or gain from the sale or disposition of Trust assets. 13. Death Taxes at Donor's Death. If any gift, estate, generation-skipping, inheritance, or other death taxes are assessed against any property held by this Trust by reason of the Donor's death or the death of a Recipient, the surviving Recipient or Recipients agree to pay such taxes from sources other than Trust assets, otherwise their income interests in the Trust shall terminate. 14. Claims of Creditors. No creditor nor spouse of any Trust beneficiary shall have claim on the assets of the Trust, nor can a Trust beneficiary voluntarily or involuntarily alienate or encumber Trust assets, except that such beneficiary may assign his or her income interests to the qualified charitable organizations designated herein or by written instrument from the Donor properly delivered to the Trustee. IN WITNESS WHEREOF [DONOR] and [TRUSTEE] by its duly authorized officer have signed this agreement the day and year first above written. Donor Trustee By

6 STATE OF ) ) ss. COUNTY OF ) On this day of,, before me personally appeared, Donor, to me known to be the person described herein and who executed the foregoing instrument, and acknowledged that executed the same as free act and deed. In Testimony Whereof, I have hereunto set my hand and affixed my official seal the day and year first above written. My Commission Expires: NOTARY PUBLIC [SEAL] STATE OF ) ) ss. COUNTY OF ) On this day of,, before me appeared, Trustee, to me personally known, who, being by me duly sworn did say that he/she is the of, a corporation of the State of, and that the seal affixed to the foregoing instrument is the corporate seal of said corporation and that said instrument was signed and sealed on behalf of said corporation by authority of its Board of Directors, and said acknowledged said instrument to be the free act and deed of said corporation. In Testimony Whereof, I have hereunto set my hand and affixed my official seal the day and year first above written. My Commission Expires: NOTARY PUBLIC [SEAL] Schedule A

7 The following assets of [DONOR], donor, are transferred, assigned, conveyed and set over to [TRUSTEE], as Trustee, subject to the terms and provisions of the foregoing Trust Agreement: [Here list assets or cash.] Receipt of the above assets is hereby acknowledged this day of,. By: Trustee

8 Important Note: This material is for educational purposes only. In all cases, the approval of a client's legal and tax advisers must be secured regarding the implementation or modification of any planning technique as well as the applicability and consequences of new cases, rulings, or legislation upon existing or impending plans. Any editing of the document herein that involves any legal or tax issue or consequence must only be done by qualified legal or tax counsel. Anyone using this document for any purpose is responsible for presenting the material only in suitable situations.