Living Trusts

General Explanation - Joint Revocable Living Trust
Funding Estate Tax Shelter (Family) Trust At First Death

For married clients with potential estate tax liability.

This is a general explanation of a joint trust. A joint trust is one (1) trust document used by married couples with separate trust shares for both husband and wife. The trust is a contract between you (as Grantors) and your Trustees (generally you and your spouse) specifying how you wish your assets managed during lifetime and at death.

The basic elements of your trust are these:

1. The trust is a will substitute. All assets placed in your trust will pass through the trust at your death, avoiding the court-supervised probate process.

2. The trust is a disability planning tool -- it eliminates the need for conservatorship proceedings if you become incompetent. Your Co-Trustee or Successor Trustee (often your spouse or an adult child or other family member) named in your trust will take over the management of the Trust and manage the trust assets for the benefit of you and your spouse (and, if authorized in the trust document, your children) during disability or incompetency.

3. The trust is also designed to eliminate (or reduce) estate taxes at the deaths of the husband and wife. Each spouse has a federal estate tax credit equivalent exemption presently worth $1.5M1. We structure the trust so the husband and wife can each shelter their trust assets from federal death taxes up to their full exemption.

4. The trust may also include provisions to permit assets to remain in trust upon the death of both husband and wife to preserve assets for the benefit of children, grandchildren, and other beneficiaries for their lifetimes and the lifetimes of their offspring (issue). These are known as generation skipping provisions, and the trust is called a “dynasty trust”.

The following is a brief discussion, article by article, of the various provisions in a typical trust document beginning with the introductory paragraph.

INTRODUCTORY PARAGRAPH-DECLARATION OF TRUST
This paragraph declares that you and your spouse are setting up a joint trust which will be dated the day you execute the documents. You are the Grantors of the Trust -- the persons setting up and placing the assets in the trust. You are also the initial Trustees of the trust -- the persons managing the assets placed in the trust. You and your spouse serve as Co-Trustees; however, either of you may act alone. This means that either of you can deal with brokerage accounts, bank accounts, real property, Certificates of Deposit, or savings bonds that have been titled in your names as Trustees. At the time you sign your trust documents, we will give you an Attorney Certification Letter to give to your bank, broker, or other financial institution/advisor, which will explain in detail how to title new accounts or change the name on existing accounts to the names of the trustees. For example, the typical trust account will be titled: John J. Doe and/or Mary Jane Doe, Trustees U/T/D 2 January 2004. U/T/D means “under trust dated”.

ARTICLE I. REVOCABILITY
Article I, Paragraphs A through C, identifies the family members and states the purposes of the Trust. These paragraphs set forth your intent to manage your assets through the trust during your lifetime and during periods of disability to provide for your health, support, and maintenance, and possibly those needs of your children and/or grandchildren. Each Grantor reserves the right to revoke the trust, even if the other objects. Both Grantors must, however, agree to changes or amendments to the trust. The trust is NOT a substitute for a marital settlement agreement in the event of a divorce.

Article I, Paragraphs D, Incapacity- provides special provisions for the situation where one of you may become incompetent (incapacitated) and attempt to revoke the Trust. If you have been declared incapacitated or incompetent by a court (or by two doctors), or if you sign a document stating you are unable to make appropriate decisions regarding the Trust, then your Co-Trustee or your Successor Trustee, may disregard any instructions by you to revoke the Trust. In that way, the trust assets are protected from your own misjudgment should your health or mental acumen fail.

Article I, Paragraph E & F, Determination of your incapacity and recovery- outlines how to determine incapacity. You can admit incapacity yourself or two health care professionals can certify that you are incapacitated. Contingencies are also included in Paragraph F should you recover your capacity, where you and one physician can determine that you have recovered your capacity to act.

Article I, Paragraph G, Power of Appointment- is a special provision which states that even though you may have been declared incapacitated or incompetent and no longer have the right to revoke the Trust, you still reserve to yourself the absolute right to dispose of the assets that are in your share of the Trust by using your Last Will and Testament. This right is called a “Power of Appointment” and means that either of you may state in will that you appoint (give) all the property you own in the Trust to named beneficiaries or other persons (who can be different from those named in the trust). In this way, you have retained the absolute right to control the disposition of your assets as long as you live.

Article I, Paragraph H, only Grantors can amend- specifically reserves the power to control this Trust and to modify and amend it yourself. No one can petition a Court to take over your rights under this document. The only other person with a right to amend or revoke the Trust for you would be your agent (usually a spouse) under a Power of Attorney with authority to make changes to the Trust. The Durable Power of Attorney that we normally include with your trust document gives your agent (attorney-in-fact) that power.

REMINDER: One thing you should remember about a revocable living trust: It is confidential and no one has access to this trust or its contents but you and your trustees and under certain circumstances, a beneficiary. It is not to be recorded at any court when you die.

ARTICLE II. TRUST PROPERTY.
Article II Paragraph A- List of Assets- deals with assets placed in the Trust or assigned to the Trust. To keep track of those assets, we've provided at the end of your trust four (4) different schedules -- Schedule A, Schedule B, Schedule C and Schedule D. Schedule A is property transferred to the trust or re-titled into the names of the Trustees – husband and wife (assets listed on Schedule A are owned by husband and wife 50/50). Each share of the Trust is considered separate property and ensures that each of you can keep your property separate for estate tax purposes. However, as long as you are both living and managing the assets in the trust, you will be managing the Trust as if you owned the property in the Trust jointly even through you each own an undivided one-half of the trust.

On the other hand, any assets listed on Schedule B are assets that will be deemed to belong only to the husband. Likewise, any assets listed on Schedule C would be deemed to belong only to the wife.

It would be somewhat rare to use Schedules B or C, but occasionally you might have an interest in an asset (like a partnership interest with other people) where your share must be kept in your name alone. In other words, you would list on Schedules B and C specific assets that you want to keep in your separate share of the Trust. Unless you specify an asset on Schedule B or C, everything titled in the name of the trustees not listed on Schedules B and C is deemed to be on Schedule A and owned 50/50. Schedule D is to list who is to receive your untitled tangible personal items.

Article II, Paragraph B, Separate Trusts- states that you are actually setting up two separate trusts within the one document. In other words, you have the husband's trust and the wife's trust, which are managed jointly.

Article II, Paragraph C, Additional Assets- indicates that you may add additional assets by will to the trust by deed, by an assignment, or by a gift to the Trustees, and upon your death. If assets are inadvertently left outside the trust, they would come in by your “pour over” will. Unless otherwise specified, any assets transferred to the Trust during your lifetime are considered 50/50 property (unless you assign the asset to Schedule B or C). Assets transferred in as a result of your death (i.e., insurance or payable on death accounts) or by your Last Will and Testament, will be allocated to your trust share and considered your separate property.

Article II, Paragraph D, Life Insurance- deals with any life insurance that you may have on your life and payable to the Trustees. We normally recommend that after the Trust is signed, you each change your beneficiary designations on your life insurance to designate the “Trustee(s)” of the Trust as the beneficiary thus, when you die, the insurance proceeds come directly into the Trust. This way, the proceeds can be managed by the Trustee(s). You will need to ask your insurance/benefits representative or your insurance company for a change of beneficiary form. We can show you how to fill out the form(s) to change the beneficiary designation at your signing appointment.

Article II, Paragraph E, Tangible Personal Property- deals with your untitled personal property -- that is, your tangible personal property such as household goods, tools, furniture, jewelry, firearms, pets; sporting equipment, and other personalty (things that you own but which you do not have a “title”). This provision does not apply to automobiles, airplanes, or boats and other items that have a title. This paragraph states that as long as you are living and keep your untitled tangible personal property in your personal possession, the Trustee has no responsibility to look after it. The purpose of assigning your tangible personal property to the Trust (by the “Assignment of Untitled Tangible Personal Property to Trustees” at the end of your trust document) is to show that if you die, this property will be considered part of your trust. You may use Schedule D to designate who gets what.

Article II, Paragraph F, Receipt- is a general acknowledgment by the Trustee(s) that the Trustee agrees to hold and manage the assets under the provisions of the Trust.

ARTICLE III. MANAGEMENT OF ASSETS.
Article III, Paragraph A, Management During Joint Lifetime- states how your assets are to be handled. All the income is payable to each spouse and is considered the couple’s for income tax purposes. Although this paragraph states income will be paid out to each of you quarterly, this means only any income earned on any account (i.e., savings accounts, CDs, or bonds, etc.) will be deemed to be your income (and not trust income) and taxed to you during that year. The Trustee does not have to actually pay out the income earned on the assets but you do have to pay taxes on the income.

Article III, Paragraph B, Management During Disability- states that if either of you become disabled, the Co-Trustee or your successor Trustee will manage the Trust for you both or either of the two of you. Income and principal of the Trust may also be used for the benefit of certain beneficiaries, if necessary.

Article III, Paragraph C, Distribution at First Death- states what happens when one of you die. The Trustee is to pay the legitimate bills and burial (or cremation) expenses and also take care of any other final responsibilities of the decedent Grantor's estate.
Subparagraphs 1 and 2, (Executor)- provides that the Trustee has the discretion to deal with the personal representative of the deceased Grantor's estate and to purchase assets out of such estate (remember, assets inadvertently left out of the trust will pass by Will to the trust from the deceased Grantor's estate) or make other arrangements, including lending money to the estate to satisfy the obligations of the estate. The Trustee should do whatever is prudent under the circumstances. The Trustee will not be responsible for any losses to the estate or the Trust unless it is by gross negligence or willful misconduct. Bills should not, however, be paid from IRA distributions coming into the trust. IRA proceeds are for named beneficiaries not creditors.

Article III, Distribution of amounts over your death tax exemption subparagraphs 2 - directs the Trustee to determine the size of the decedent's total estate, including the decedent Grantor's share of the Trust. If the estate exceeds the decedent's estate tax exempt amount the excess amount is to be paid over from the decedent Grantor's share to the survivor's trust share. What is left, the remainder, will be allocated to a new trust called the “Family Trust”. The Family Trust is then an irrevocable by-pass trust made up of the maximum amount of the decedent's trust share that can pass tax-free in his/her trust share, using the decedent Grantor's estate tax exemption. The Family Trust shelters the death tax exemption and these funds by-pass the Survivor's Trust at survivor’s death.

The surviving spouse usually serves as Trustee of the Family Trust (which obtains its own IRS ID number) and continues as Trustee of the Survivor's Trust. The Survivor’s Trust is a continuation of the original trust and continues to be revocable and amendable by the surviving Grantor.

Article III, Management of the Family Trust subparagraph 4- directs how the Family Trust is managed by the Trustee for the surviving Grantor. It provides that the Trustee pays all of the income of the Family Trust to the surviving Grantor, and, if necessary, principal for the health, support, education, and maintenance of the surviving spouse. Additionally, the surviving Grantor may withdraw $5,000 or 5% of the principal (whichever is greater) for any purpose at the end of each year. The key to the Family Trust is that property in the Family Trust is not considered the property of, or “owned” by, the surviving Grantor. The Family Trust is considered the decedent Grantor's trust property and, therefore, will not later be taxed to the survivor at the survivor's death. The Family Trust is not normally subject to claims of creditors or to the claims of a second spouse should the surviving Grantor remarry.

Subparagraph 5 (d), Distribution to Beneficiaries- provides that if the surviving Grantor has sufficient income and he/she does not need the income from the Family Trust, the Trustee may pay it out to any beneficiary named in the Trust (or their issue) for such beneficiary's health, support, maintenance or education. Such payments are totally within the Trustee's discretion. Before the Trustee pays out any income, however, he should consider other income and support available to the surviving Grantor and that beneficiary from other sources. It also states that the Trustee may pay out more income to one beneficiary than to the others, depending on need.

Subparagraph 5 (e), Use of Family Trust for Surviving Grantor- provides that the Trustee can then withdraw principal from the Family Trust for the health, support, and maintenance of the surviving Grantor. To protect the integrity of the Trust, the surviving Grantor must obtain the consent of the Successor Trustee (or the other Co-Trustee) if the surviving Grantor is serving as Trustee or a Co-Trustee of the Family Trust. Generally the successor Trustee would be one of the children of Grantors or other family members.

Paragraph D, Incapacitated survivor- addresses an institutionalized spouse. This is a special provision incorporated into the Trust to deal with the situation that if, at the time one of the Grantors die, the survivor is in or heading for a nursing home. If at that time of the death of the first Grantor, the survivor is in a nursing home and all assets that would go to the Family Trust are paid over to the Executor of the decedent’s estate to set up a special needs “income only” trust under the decedent’s will. These assets should not be considered an available resource for the survivor in qualifying for benefits under Medicaid or other public assistance available to the survivor. In other words, the Trustee can use the principal from the testamentary special needs trust in the will to supplement the nursing home bills but not to disqualify the spouse from assistance. The government is making it very hard to preserve assets when one spouse is in a nursing home. This clause should give the Trustees a mechanism so that these assets can be preserved for the institutionalized spouse and the rest of the family. Clients may expect the State to challenge this provision if Medicaid eligibility becomes an issue.

ARTICLE IV. DISPOSITION UPON DEATH OF SURVIVING GRANTOR.
Article IV Survivor’s death- provides for the disposition of property in the Trust after both Grantors have died.

Article IV, Paragraphs A & B: Distribution of survivor’s share- provides that upon the death of the surviving Grantor, or the simultaneous death of both Grantors and the funding of the survivor's trust and the Family Trust, the First Successor Trustee or remaining Co-Trustee will pay the survivor's bills from the survivor's trust share. The Trustee then pays the residue to the Family Trust and divides the remaining assets of the Trust into separate shares for your beneficiaries named in Article IX in the percentages set forth under that Article. If one of the beneficiaries has died, the children of that beneficiary would take their share.* If there are no children, then the other beneficiaries would take the share. If there are no other beneficiaries, then unless you provide otherwise the Trust will be divided up one-half (1/2) to the husband's heirs and one-half (1/2) to the wife's heirs under the Anti-Lapse Clause contained in Paragraph B (or sometimes Paragraph C). The assets would be split between your two families. However, if you have named other individual or charitable beneficiaries under this clause, then the assets would be divided among those named, if there was no one who would otherwise take.

*NOTE: If you have requested the inclusion of “dynasty trust” provisions then the beneficiaries named in Article IX or their surviving issue will become beneficiaries of separate exemption trust. Each trust will be held for their lifetime benefit. Normally, they will receive all of the income from their separate “Exemption Trust” and will have the right to withdraw the greater of $5,000 or 5% of their trust principal annual if they so request. They can use the principal for their health, education, maintenance and support. Each beneficiary of an Exemption Trust may direct by will how their trust will be distributed between their children or siblings or sibling’s children at their death, otherwise, the trust continues as a separate exemption trust for their issue, if any, otherwise for your issue. Issue means descendants.

Article IV, Paragraph C Rule Against Perpetuities- states that the English Rule against perpetuity does not apply and that the trust is designed to prevent it from ever ending if you so direct. Virginia law requires that real estate must be removed from the trust within ninety (90) years from death of the grantors.

ARTICLE V. MANAGEMENT OF TRUST ASSETS.
Article V Administrative Provisions- sets forth how the trust assets will be managed during the life of the trust.

Article V, Minors Clause- provides that if you do have a grandchild or other younger beneficiary who takes under the Trust, that child will get his share at a specified age, usually twenty-five (25). You can modify this for longer periods, (for example 1/3 at 25, ½ at 30, all the rest at 35) for life, or for special needs beneficiaries.

Article V, Disabled Beneficiary- provides that if a beneficiary under the trust is disabled, the Trustee shall manage his or her share for them as long as they are disabled.
Article V, Institutionalized Beneficiary- further provides that if any beneficiary under the Trust is at any time institutionalized, then the Trustee is not to pay the funds to the institution -- or pay them in any way that would disqualify them from benefits that they might otherwise be entitled to.

Article V, Spendthrift Beneficiary- deals with the creditors of a beneficiary and prohibits the beneficiary from alienating, pledging or otherwise encumbering their share of the Trust before they actually receive it. In other words, the Trustee may disregard any claim by a creditor of a beneficiary for any part of this trust for as long as necessary. The limitation on this is $1 million per beneficiary.

Article V, Trustees Authority- states that the Trustee can deal with the public and any corporation or bank without having to prove that they have authority to do what they are doing.

Article V, Distribution of Assets- states that the Trustee can distribute trust assets in kind (i.e. stock certificates or other personal property) without liquidating them into cash.

Article V, Investment Advisor- states that Grantors, or either of them, reserve the right to appoint an investment advisor. You can require your Trustee to consult with the investment advisor before the Trustee sells or buys assets, if you want this specific requirement in your trust, please advise your attorney.

ARTICLE VI. TRUSTEE'S POWERS.
Article VI, Paragraph A- sets forth the Trustee's general powers under the Trust, as well as under the law. Also incorporated into the Trust is the Virginia Code, Section 64.1-57, which enumerates a multitude of specific powers that a trustee may use in carrying out the Trustee's responsibilities. A copy of that Code section will be included with the Trust document when you sign it. In addition, we have included specific powers to deal with specific situations. For example, subparagraph 1, under Paragraph A, relaxes the “prudent person rule” for investing which says that the Trustee has the power to invest in anything you have invested in, even though a bank might not be authorized to invest in that kind of property. The Trustee is given the flexibility on how to allocate income and principal of the Trust. The power to separate and manage each share of a beneficiary is authorized or the Trustee can deal with all the shares under one fund.

Article VI, Survivor to occupy home- provides that if an interest in your home is in the Family Trust, the survivor can continue to occupy and use it as his/her own residence without rent for the survivor's life. In addition, the survivor can instruct the Trustee to sell the residence and direct where the proceeds are to be reinvested. If the home is sold, half the proceeds would go into the Family Trust.

Article VI, Burial Plan- provides that the Trustee can also purchase a burial trust for you, which is then exempt from Medicaid rules.

Article VI, Trust Advisors- states the Trustee has the power to employ legal and/or professionals to assist the trust or act on behalf of the Trustee, if necessary, and to pay for such employment out of the principal or income of the trust assets.

Article VI, Consolidate Trust- provides that the Trustee can combine similar trusts, if necessary.

Article VI, Dealing with Power of Attorney- provides that any attorney-in-fact appointed by a Grantor in a Power of Attorney has the right to withdraw any or all of the trust estate for any purpose outlined in the Power of Attorney or for any purpose described in the Trust. The Trustee has no responsibility to see what the attorney-in-fact is doing with the money.

Article VI, Amending Trust after death- provides that if the Trustee, other than one of you, finds that the Trust is improperly drafted and it needs to be fixed, the Trustee can amend the administrative provisions to avoid taxes.

Article VI, Gifts to Beneficiaries- states that the Trustee may make certain tax-free gifts out of the Trust, in coordination with your attorney-in-fact appointed under a Power of attorney. Under our gift tax laws, one can give a gift to any individual each year of any amount up to $11,000 without tax consequences.

Article VI, Loans to Beneficiary, provides that if a child of either of you owes you or the Trust money upon the death of the last one of you to die, the Trustee shall take the amount owed and deduct it from his/her share of the trust assets.

Article VI, Small Trusts- provides that if the trust corpus gets too small (say that its total value is now $25,000), and it is not feasible economically to keep it running because of the costs involved, then the Trustee can distribute the assets to the beneficiary(ies) entitled to receive the assets. If, at some point, all that remains in the trust is land and the beneficiaries are all adults, the Trustee may go ahead and deed the land to the beneficiary(ies) and close the trust.

ARTICLE VII. TRUSTEES.
Article VII, Successor Trustees- generally sets forth what happens when a Trustee becomes incompetent, incapacitated, resigns or dies. With respect to the Grantors, acting as Trustees, if one of you dies or resigns, the remaining takes over. In the event of the death, resignation, incapacity or disability of the survivor, then the First Successor Trustee or Co-Trustees named in Article X, would take over. If the First Successor Trustee is not available to take over, then the Second Successor Trustee takes over, and so on. We may have included a provision that if the Grantor husband died or became disabled or incapacitated, the named First Successor Trustee came in to serve as Co-Trustee with the Grantor wife, then at the time the Grantor wife died or became disabled or incapacitated, the First Successor serves alone. We may have also written in this provision that a named Successor Trustee(s) are really two (2) Co-Trustees, who may serve together or independently. This clause can be drafted to meet your requirements as to who will manage the trust assets, either during your disability or incapacity, or after your deaths.

In addition, a Trustee is not required to give any surety on his/her bond (if required) or have a bond, and a Trustee is not required to make any reports to any courts. However, a Trustee (other than either of you serving as Trustee) must keep records on what they do with the assets. If a Trustee becomes disabled, all they need is one doctor to say they are
unable to run the Trust and either the next named Trustee serves, or if there are none named or appointed by the last serving Trustee, a majority of the income beneficiaries (not under a legal disability) may appoint one.

Article VII, Paragraph D- Commission of Trustee, provides for the payment of a fee or commission for the Trustee. A Trustee is entitled to be reimbursed for its costs and is also entitled to a reasonable fee. However, if a Trustee is related by blood or marriage to a Grantor and is a beneficiary under the Trust, the Trustee's entitlement to a fee will be limited -- usually to one-half of one percent (.5%) of the principal of the trust assets per year. If you have named a corporate Trustee as successor, then a clause will be included to entitle a corporate trustee to receive compensation in accordance with their published fees in effect at the time they are serving as Trustee.

Article VII, Paragraph E- (or sometimes Paragraph F), Removal of Trustee clause, which is included sometimes, states that a majority of the beneficiaries can remove a Trustee. For example, if a Trustee were to sit on the job and not do anything, then a majority of the beneficiaries entitled o income may remove the Trustee and put in another trustee.

Article VII, Paragraph F- Sole Signature clause, states that at any time a Trustee is acting as a Co-Trustee, the single signature of one Trustee is enough to direct the management of the trust. If one of you died and the survivor named a Co-Trustee to serve with him/her, the survivor would not have to get the Co-Trustee's permission to sign things; likewise, the Co-Trustee would not have to obtain your permission either. We can change that provision to your preference. We can also include a provision that says that in the event there are multiple Co-Trustees, the majority have to act or they have to consult with the other before acting alone, or that they must act together. We can also include a clause that states that in the event a dispute arises between Co-Trustees, the next Successor Trustee is appointed for the sole purpose of resolving any such dispute. These clauses are tailored to your individual needs and wants.

Article VII, Exercise of Discretion by Successor Trustee- the Virginia Code now permits a Grantor or Grantors to leave a notarized letter or memo with the Trustee instructing the Trustee on how they wish the Trustee to carry out the Trustee’s discretionary authority under the trust. For example, the Trustee is provided authority under Trustee’s powers to purchase a burial contract or provide a trust to take care of a Grantor’s final arrangements. The Grantor may want to leave a memo for the Trustee instructing the Trustee on their desires with respect to their burial, funeral in the event the Trustee elects to purchase such a contract. The memo must be notarized.

NOTE: Sometimes included in Article VII is a “Reimbursement of Guardian Expenses” clause, which provides that should a guardian of a minor beneficiary incur personal expense in the support and maintenance of such beneficiary, the Trustee is authorized to disburse funds from that minor's trust funds to reimburse the guardian for reasonable expenses incurred in keeping the minor beneficiary.

ARTICLE VIII. MISCELLANEOUS PROVISIONS.
Article VIII- deals with miscellaneous provisions and definitions. We define “issue” as any descendant of you and “per stirpes” as distribution by the generations as opposed to “per capita” which is by the number of people surviving. Under this trust, a child's children would take only that child's share. In addition, this is a Virginia trust and the laws of Virginia should govern the provisions contained in the trust.

Situs- you can change the place of the trust or the “situs” of the trust as you see fit. The Trustee may change it for you if you move to another state.
Simultaneous Death- provides for what happens if both of you should die together and you cannot tell who died first (this determination has to be made in order to know whose estate will be the one to manage the trust). If the husband does not survive the wife by 120 hours, we generally presume that the husband dies first. There is no specific formula to determine this; usually it's just that the husband has more assets than the wife does. There may be some occasions when we would want the husband to survive the wife and in that case we will make this provision opposite.

Disclaimers- the Trustee or each of you has the right to disclaim (refuse) any property under this trust coming into the trust or from the decedent’s share or elsewhere.

Plan Benefit Clause- the Internal Revenue Service issued in April of 2002 final regulations on the final distribution of IRA benefits to a beneficiary. If the IRA owner has made a IRA or similar plan payable to the trust or to the trustee, these provisions instruct the Trustee on how to withdraw IRA distributions for the benefit of a beneficiary of the Trust. To obtain the benefit of the age of the specific beneficiary for payment purposes, the Trustee must split the trust into separate accounts for each named beneficiary to receive distributions from the IRA.

Section 529- Federal income tax code permits each state to establish an education trust program under Section 529 of the Internal Revenue Code. These education trusts can be opened by any individual for any member of their family or other beneficiary for the purpose of funding the qualified education expenses of the individual. This provision tells the Trustee the authority the Trustee has to open such an account. 529 accounts are generally outside of the Grantor’s estate for Federal estate tax purposes and, when properly distributed under the current law, are exempt from income taxes for the student beneficiary. The Trustee, nevertheless, retains full control over these accounts and may change the beneficiary or simply close the account and return the funds to the trust.

ARTICLE IX. FINAL DISTRIBUTION.
Article IX Beneficiaries- lists your beneficiaries and what percentage or shares of the trust assets you want them to take at your deaths. This could be in equal or specific percentages, or it could be specific property and a percentage. It could also be specific stocks, a certain cash amount, etc, whatever is your wish.

ARTICLE X. ESSENTIAL INFORMATION.
Article X Grantors & Trustees- sets forth the Grantor's names and addresses and the names and addresses of your Successor Trustee(s).

EXHIBIT:

ASSIGNMENT OF UNTITLED TANGIBLE PERSONAL PROPERTY TO TRUSTEES.
After the signature and notary pages, we have an Assignment of Personal Property whereby you put your tangible personal property (household furniture, tools, sporting equipment, etc., anything that does not have a title) in the trust by assigning the property to your Trustees. Your car, truck, or boat has a title so it would not apply. In some instances (if the car or boat has a significant value), you might transfer the title to the trust, but usually, it just includes your personal property and jewelry, etc. If you desire specific items of personal property to be given to specific beneficiaries or persons after you have assigned the property to the Trustees, then you will need to make a list of who is to get what and place it with your trust document for the Trustee to follow upon your deaths. However, if you fail to leave a list (or Memorandum) then the Trustee will follow the directions in your Last Will and Testament for the distribution of your tangible personal property.

SCHEDULE A. – is a list of your assets that you are putting in the Trust and that you consider each owning one-half. Schedule A also lists real property, stocks, bonds, and other securities identified, the contents of safe deposit boxes. There is also a space to list at what bank you may have a safe deposit box and the box number, your checking, savings, and brokerage accounts. You should fill in all this information in your copies of the trust agreements. In addition, you should make a copy after all the assets have been transferred and listed on the Schedules and send it to me so that we may have it in our files.

SCHEDULE B. -- is a list of any assets that would be considered to be solely in the Husband's share of the Trust. As discussed, this might be an interest in a partnership or the family farm.

SCHEDULE C. -- is a list of any assets that would be considered to be solely in the Wife's share of the Trust.

SCHEDULE D. – is a list of gifts of tangible personal property, personal effects, etc. to children or others

The Foregoing Information is not intended as a substitute for legal counsel. While taking every precaution to make this information accurate, we assume no responsibility for errors or omissions or for damages resulting from the use of the information in this handout.