Section 3.38 Form of Joint Revocable Inter Vivos Trust

• Library: Estate Planning 2013 Forms

A married couple may not want to undertake any substantial federal estate tax planning because the size of their estate is not likely to exceed the value of assets sheltered from estate tax by the unified credit. I.R.C. § 2010. But the husband and wife may nevertheless want to avoid probate. For the reasons discussed in §1.27 of Chapter 1 of the deskbook, jointly owning property with the “next generation” is frequently an unsatisfactory approach. In this circumstance, counsel may wish to consider a “joint” trust for both the husband and the wife. The following form illustrates this approach. Counsel drafting a revocable trust for married clients with taxable estates should instead review Chapter 4 of the deskbook, which discusses marital deduction wills and trusts in great detail.

Revocable Trust Agreement

of

John Doe and Jane Doe

This agreement is made and entered into this _____ day of ________________, 20___, by and between

John Doe and Jane Doe

of [City], [County] County, Missouri, as Settlors, and

John Doe and Jane Doe

of [City], [County] County, Missouri, as the Trustee.

In consideration of the mutual covenants and promises set forth in this Agreement, Settlors and the Trustee agree as follows:

Article I

Transfer in Trust

Settlors hereby transfer and deliver to the Trustee, in trust, the property listed and described on the attached Schedule A, and the Trustee hereby acknowledges receipt, in trust, of the property listed and described. The Trustee accepts the Trust created by this Agreement, and, subject to the rights and powers reserved to and retained by Settlors, and to the survivor of them, agrees to hold, administer, and distribute the trust estate upon the terms set forth in this Agreement.

Article II

Revocable Trust Terms

During the joint lifetimes of Settlors and, subject to the provisions of Article III, during the lifetime of the survivor of them, the trust shall be known and designated as the John Doe and Jane Doe Revocable Trust, and the trust estate shall be held and distributed upon the following terms:

Section 1

As long as either of Settlors is competent, and during any period when either of Settlors is competent, the Trustee shall distribute the net income and principal of the trust estate as follows:

a. If both Settlors are then competent, to Settlors or to others as Settlors, or either of them, may from time to time direct. The Trustee shall promptly comply with each direction of Settlors, or either of them, but Settlors or the one giving the direction shall, if requested by the Trustee, confirm a verbal direction given the Trustee in a writing signed by Settlors, or by Settlor giving the direction, as the case may be.

b. If only one Settlor is then competent, to the competent Settlor or others as the competent Settlor may from time to time direct. The Trustee shall promptly comply with each direction of the competent Settlor, but that Settlor shall, if requested by the Trustee, confirm a verbal direction given the Trustee in a writing signed by that Settlor.

c. In the absence of direction by a competent Settlor, the Trustee shall have full power and authority from time to time to distribute such amounts of the net income and principal of the trust estate to or for the benefit of Settlors, or either of them, as the Trustee shall, in the absolute discretion of the Trustee, deem necessary or advisable for the health, support, and maintenance of Settlors, or either of them.

Section 2

If neither of Settlors is competent, and during any period when neither of Settlors is competent, the Trustee shall distribute the net income and principal of the trust estate as follows:

a. To or for the benefit of Settlors, either of them to the exclusion of the other, or to or for the benefit of the survivor of them, in such amounts as are necessary to provide for the health, support, and maintenance of Settlors or Settlor, as the case may be.

b. Subject to the provisions of Subsection 2.a, which at all times shall have priority, for the general welfare of Settlors, either of them to the exclusion of the other, or for the general welfare of the survivor of them, in such amounts as the Trustee shall from time to time, in the absolute discretion of the Trustee, deem necessary or advisable. In illustration, but not limitation, of the intended breadth of the discretion granted to and conferred on the Trustee by the term “general welfare,” the Trustee is expressly authorized and empowered:

1. To pay all costs and expenses to enable Settlors, or either of them, to continue to reside in their usual residence, whether or not that residence is an asset of the trust estate, and to receive complete medical care, if needed, at that residence.

2. To participate in planning designed to minimize income and transfer taxes payable by either of Settlors or by the estate of either of Settlors, and to take such actions in furtherance of the planning as the Trustee shall deem advisable and in the best interest of Settlors or of a Settlor’s estate, or of both. Such planning may include, but is not limited to, gifts from the principal of the trust estate, outright or in trust, to or for the benefit of Settlors’ descendants from time to time living, any one or more of them to the exclusion of the others, to continue, expand, or initiate a program of gifting by Settlors, or either of them, to utilize, in whole or in part, the federal gift tax exclusions under §§ 2503(b) and 2503(e) of the Code.

3. To make distributions to either Settlor’s attorney in fact under a durable power of attorney, either for the purposes set forth in this Subsection 2.b or for the purposes set forth in the power of attorney.

Any distribution of principal in accordance with this Subsection shall be deemed a withdrawal of the principal and a revocation of this Agreement with respect to, and to the extent of, the principal distributed. The foregoing powers to gift may be exercised in favor of a person then serving as a Trustee, and any provisions of § 456.8‑814.2, RSMo, to the contrary shall not apply.

c. A written direction by Settlors or Settlor, as the case may be, in accordance with Subsection 1.a regarding distributions to or for the benefit of a person other than Settlors or Settlor, as the case may be, including a written direction that is contrary to an express provision of this Agreement, shall remain in full force and effect, unless

1. the direction, by its terms, is to be of no force or effect during any period when either or both of Settlors is incompetent; or

2. the Trustee shall, from time to time, in the absolute discretion of the Trustee, determine that termination of the distribution, in whole or in part, is necessary to comply with the provisions of Subsection 2.a, which at all times shall have priority, whereupon the direction shall be of no further force or effect, in whole or in part, as the Trustee determines.

Except as expressly provided in this Subsection, the provisions of § 456.8‑808.1, RSMo, shall not apply to this Agreement.

Section 3

Any net income of the trust estate not distributed in accordance with the prior provisions of this Article shall be accumulated and periodically added to principal.

Article III

Payments and Dispositions at Death

of First of Settlors to Die

 

UPON THE DEATH OF THE FIRST OF SETTLORS TO DIE, SUCH SETTLOR BEING SUBSEQUENTLY REFERRED TO IN THIS ARTICLE AS THE “DECEASED SETTLOR,” THE FOLLOWING PROVISIONS SHALL APPLY:

 

 

SECTION 1

 

THE TRUSTEE SHALL HAVE FULL POWER AND AUTHORITY TO PAY, TO THE EXTENT THAT THEY ARE TIMELY PRESENTED TO THE TRUSTEE, THE EXPENSES OF DECEASED SETTLOR’S LAST ILLNESS, FUNERAL, AND BURIAL; DEBTS OF DECEASED SETTLOR; EXPENSES OF ADMINISTRATION; ANY OTHER LAWFUL CLAIMS OR CHARGES AGAINST THE ESTATE OF DECEASED SETTLOR; AND TRANSFER TAXES IMPOSED BY REASON OF DECEASED SETTLOR’S DEATH, BUT ONLY UPON THE TERMS AND SUBJECT TO THE LIMITATIONS SET FORTH IN SECTIONS 1 AND 2 OF ARTICLE IV, WITH THOSE PROVISIONS TO BE APPLIED AS THOUGH THIS DECEASED SETTLOR IS THE “DECEASED SETTLOR” REFERENCED IN THOSE SECTIONS.

Section 2

All of the nonbusiness tangible personal property of Deceased Settlor, [including/excluding] motor vehicles and watercraft, shall be disposed of as follows:

a. Deceased Settlor shall have, and hereby reserves, a general power of appointment by which Deceased Settlor may dispose of any part or all of such property by a list, and the Trustee shall distribute the items described on the list to the person or persons designated, subject, however, to the following provisions:

1. To be effective as, and conclusively presumed to be, a “list” and an effective exercise of the general power of appointment reserved to Deceased Settlor, the document must be dated and signed by Deceased Settlor and must be located within 30 days following the date of Deceased Settlor’s death. Any document that does not satisfy the foregoing requirements shall be conclusively presumed not to be a list.

2. If Deceased Settlor prepares more than one list and there is a conflict as to the disposition of any item of such property, the disposition of that item in the list bearing the latest date shall control.

3. Unless the list otherwise provides, a direction to distribute any item or items to a person who does not survive Deceased Settlor shall be of no force or effect.

4. The Trustee shall be fully exonerated from any liability for distributions of items of property made in accordance with a list.

b. All such property not disposed of in accordance with Subsection 2.a shall be disposed of as subsequently provided in this Article.

Section 3

All of the income and principal of the John Doe and Jane Doe Revocable Trust not disposed of under the prior provisions of this Article shall continue in trust for the benefit of the surviving Settlor, upon the terms set forth in Article II.

Article IV

Payments and Dispositions at Death

of Last of Settlors to Die

Upon the death of the last of...