SECTION 2503(C) MINOR'S TRUST

Transcription

1 SECTION 2503(C) MINOR'S TRUST FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION. Specimen documents are made available for educational purposes only. This specimen form may be given to a client s attorney for consideration as a sample document, when requested. This specimen form shall not be given to a client. This document should not be used as drafted. It has not been adapted to the specific circumstances or objectives of any individual client, nor has it been prepared to meet the legal requirements of any particular state. Clients should be advised to seek legal counsel when entering into any transaction and in the preparation of all legal documents. All formalities required under applicable local law should be observed. ***** TRUST AGREEMENT This trust agreement is made this (day) of (month), (year) by and between (name of Settlor) of (address of Settlor), hereinafter called "Settlor," and (name of Trustee), of (address of Trustee), hereinafter called "Trustee." The Settlor by this instrument transfers to the Trustee the property listed in Exhibit A, attached to and made a part of this agreement. That property and all investments and reinvestments of that property as well as all additions to it are in this agreement collectively referred to as the "trust estate" and shall be held upon the following trusts: The Trustee shall immediately divide the trust estate into equal shares to create one share for each of, and, each of whom is in this agreement referred to as a "beneficiary." Each share shall be held as a separate trust and disposed of as follows: ARTICLE I A. The Trustee shall pay to or for the benefit of a beneficiary so much or all of the income and principal of his or her share as the Trustee deems necessary or advisable from time to time Sample Document - Page 1 of 7

2 for his or her health, education, maintenance or support in reasonable comfort. Any income not so paid shall be added to principal, except that after the beneficiary has reached the age of 21 years, the Trustee shall pay to or for the benefit of the beneficiary all the annual income from his or her share in convenient installments, at least quarterly. B. When a beneficiary reaches the age of 21 years, the beneficiary may withdraw any part or all of his or her share. The Trustee shall notify the beneficiary in writing of his or her right of withdrawal. The beneficiary may exercise his or her right of withdrawal only by written request delivered to the Trustee no later than 30 days after the later to occur of the Trustee's mailing or delivery of the notice and the beneficiary's attaining the age of 21 years. C. After a beneficiary has reached the age of 25 years, the beneficiary may withdraw any part or all of his or her share at any time or times by written request delivered to the Trustee. D. If a beneficiary dies before receiving his or her share in full, then upon the death of the beneficiary his or her share shall be held in trust under the terms of this agreement or distributed to or in trust for such appointee or appointees (including the estate of the beneficiary), with such powers and in such manner and proportions as the beneficiary may appoint by his or her will, making specific reference to this power of appointment. The Trustee may rely upon an instrument admitted to probate in any jurisdiction as the will of the beneficiary or may assume that the beneficiary has died intestate if the Trustee has no notice of a will within 3 months after the death of the beneficiary. E. Upon the death of a beneficiary any part of his or her share not effectively appointed shall be distributed by right of representation to his or her then living descendants, or if none, then in equal shares to such of the other beneficiaries of the trust as shall then be living, except that the then living descendants of a deceased beneficiary shall take by representation the share which the beneficiary would have received if living, subject in each case to postponement of possession as provided below, and except further that each portion otherwise distributable to a beneficiary for whom a share of the trust estate is then held under this agreement shall be added to that share. Any part of the share not effectively disposed of by the above provisions shall be distributed to Settlor's heirs-at-law, the heirs-at-law and the proportions which they shall respectively take to be determined according to the present laws of descent of the State of (name) as if the Settlor had died unmarried at that time. F. Each share of the trust estate which is distributable to a descendant who has not reached the age of 21 years shall immediately vest equitably in that descendant but the Trustee shall establish with the share a custodianship for such descendant under a Uniform Gifts or Transfers to Minors Act. ARTICLE II Sample Document - Page 2 of 7

3 The following provisions shall apply to the trust estate and to each trust created under this agreement: A. If income or discretionary amounts of principal become payable to a minor or to a person under legal disability or to a person not adjudicated disabled, but who, by reason of illness, profligate habits, or mental or physical disability, is in the opinion of the Trustee unable to manage his or her affairs properly, then that income or principal shall be paid or expended only in such of the following ways as the Trustee deems best: (a) to the beneficiary directly; (b) to the legally appointed guardian of the beneficiary; (c) to a custodian for the beneficiary under a Uniform Gifts or Transfers to Minors Act; (d) by the Trustee directly for the benefit of the beneficiary; (e) to an adult relative or friend in reimbursement for amounts properly advanced for the benefit of the beneficiary. B. The interests of beneficiaries in principal or income shall not be subject to the claims of any creditor, any spouse for alimony or support, or others, or to legal process, and may not be voluntarily or involuntarily alienated or encumbered. This provision shall not limit the exercise of any power of appointment. C. For convenience of administration or investment, the Trustee may hold the several trusts as a common fund, dividing the income proportionately among them, assign undivided interests to the several trusts, and make joint investments of the funds belonging to them. The Trustee may consolidate any separate trust with any other trust with similar provisions for the same beneficiary or beneficiaries. D. The Trustee may retain any property originally constituting the trust or subsequently added thereto, although not of a type or quality considered proper for trust investments, and shall have no duty to diversify trust investments. The Trustee shall have power to invest and reinvest the trust property in bonds, stocks, notes, bank deposits, options, futures contracts, limited partnership interests, shares of registered investment companies, or other property, real or personal, domestic or foreign, suitable for the investment of trust funds; to register property in the name of a nominee without restriction; to vote in person or by general or limited proxy, or refrain from voting, any corporate securities for any purpose; to lease (for any period of time though commencing in the future or extending beyond the term of the trust), sell, exchange, mortgage or pledge any or all of the trust property, and to sell put and covered call options, as the Trustee deems proper; to borrow from any lender, including a trustee hereunder individually; to employ agents, attorneys, and proxies; to compromise, contest, prosecute or abandon claims; to distribute income and principal in cash or in kind, or partly in each; to allocate or distribute undivided interests or different assets or disproportionate interests in assets (and no Sample Document - Page 3 of 7

4 adjustment shall be made to compensate for a disproportionate allocation of unrealized gain for federal income tax purposes); and to value the trust property and to sell any part or all of such property in order to make allocation or distribution, and no action taken by the Trustee pursuant to this power shall be subject to question by any person. The Trustee is authorized to establish out of income and credit to principal reasonable reserves for depletion, but reserves for depreciation shall not be established except to the extent that the trustee determines that readily marketable assets in the principal of the trust will be insufficient for any renovation, major repair, improvement or replacement of trust property which the Trustee deems advisable. The Trustee shall not lend trust property to the Settlor or Settlor's wife, directly or indirectly, without adequate interest and adequate security, nor shall the Trustee pay premiums on policies of insurance on the life of the Settlor or the Settlor's wife from the income or principal of the trust estate. E. The Trustee shall render an account of receipts and disbursements and a statement of assets at least annually to each adult beneficiary then entitled to receive or have the benefit of the income from the trust. The Trustee shall be reimbursed for all reasonable expenses incurred in the management and protection of the trust, and any corporate Trustee shall receive compensation for its services in accordance with its schedule of fees in effect from time to time. The Trustee's regular compensation, if any, shall be charged half against income and half against principal, except that the Trustee shall have full discretion at any time or times to charge a larger portion or all against income. F. The Trustee may at discretion terminate and distribute any trust which is created under this agreement if the Trustee determines that the costs of continuance of such trust will substantially impair accomplishment of the purposes of the trust. The Trustee shall terminate and immediately distribute any trust created by exercise of a power of appointment hereunder and still held 21 years after the death of the last to die of the Settlor and the beneficiaries in being at the date of this agreement. Distribution under this section shall be made to the persons then entitled to receive or have the benefit of the income from the trust in the proportions in which they are then entitled to such income, or if their interests are indefinite, then in equal shares. G. Any Trustee may resign at any time by written notice to each and every trust beneficiary then entitled to receive or have the benefit of the income from the trust. In case of the death, resignation, refusal or inability to act of the originally named Trustee, (name) of (address), shall be successor Trustee, and if such successor fails to become Trustee or ceases to act, the beneficiary or a majority in interest of the beneficiaries then entitled to receive or have the Sample Document - Page 4 of 7

5 benefit of the income from the trust shall appoint a successor Trustee, except that in no event shall the Settlor or a trust beneficiary become a successor Trustee. Every successor Trustee shall have all the powers given to the originally named Trustee. No successor Trustee shall be personally liable for any act or omission of any predecessor. With the approval of the beneficiary or a majority in interest of the beneficiaries then entitled to receive or have the benefit of the income from the trust, a successor Trustee may accept the account rendered and the property received as a full and complete discharge to the predecessor Trustee without incurring any liability for so doing. No Trustee shall be required to give bond or surety or account for the administration of any trust to any court. H. The benefits of this agreement are in addition to and not in substitution for any legal obligation of any person to a beneficiary, and the Trustee may not use trust property to satisfy legal obligations of the Trustee. I. The parent or guardian of a beneficiary under disability shall receive notice and have authority to act for the beneficiary under this agreement, except in no event shall the Settlor so act. ARTICLE III The laws of the State of (name) shall govern the interpretation of this agreement and the dispositions made under it. ARTICLE IV A. The Settlor or any other person may transfer or bequeath additional property to the Trustee to be held under this agreement and may designate the trust to which the property shall be added, subject to the consent of the Trustee, which shall not be unreasonably withheld. ARTICLE V This agreement is irrevocable shall not be subject to alteration, amendment or revocation by any person. Sample Document - Page 5 of 7

6 IN WITNESS WHEREOF, (name of Settlor), as Settlor, and (name of Trustee), as Trustee, have signed this agreement on the day and year first above written. SETTLOR (typed name of Settlor) TRUSTEE (typed name of Trustee) ***** Sample Document - Page 6 of 7

7 This information is provided by American General Life Insurance Company (AGL) and The United States Life Insurance Company in the City of New York (US Life), members of American International Group, Inc. (AIG). All companies mentioned, their employees, financial professionals, and other representatives, are not authorized to give legal, tax, or accounting, advice, including the drafting or execution of any legal document. Applicable laws and regulations are complex and subject to change. Any tax statements in this material are not intended to suggest the avoidance of U.S. federal, state or local tax penalties. AGL and US Life shall not be liable for any loss or damage caused by the use of, or reliance on, the tax, accounting, legal, investment or financial items contained in this material. FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION All rights reserved. Sample Document - Page 7 of 7