Section 4.5 Will Form—Including Power of Appointment Trust

• Library: Estate Planning 2013 Forms

Will Containing Pecuniary Marital Deduction Formula; Qualifying Trust A for the Benefit of the Spouse—Power of Appointment Trust; Nonqualifying Trust B for the Benefit of the Spouse and Descendants—Credit Shelter Trust

Will of

John Doe

I, John Doe, of Kansas City, Missouri, declare this to be my Will and revoke all other Wills.

Article I

Disposition of Tangible Personal Property

I give all my tangible personal property to my spouse, Jane Doe, if my spouse survives me. If my spouse does not survive me, I give those items of tangible personal property that are described in the most recent list signed by me and dated after the date of this Will to my survivors named in the list. To the extent that the list does not dispose of all of my tangible personal property (or if the list is not found within thirty days after my death), I give the property to my children who survive me, and my Personal Representative shall divide the property among my children as equally as is practical, having regard for each child’s preferences. But if my Personal Representative determines that distributing any of the property to my children is undesirable or impractical, my Personal Representative shall sell it and add the proceeds to the rest of my estate.

Article II

Distribution of Rest of Property

I give all the rest of my property to the Trustees hereinafter named, in trust, upon the following terms and conditions:

A. Division of Trust Property

The Trustees shall divide the property (together with any other property to which the Trustees may be entitled by reason of my death and less any taxes, debts, expenses, or other obligations payable by the Trustees as a result of my death) into two shares determined as follows:

1. Trust A

The first share (to be created only if my spouse, Jane Doe, survives me), called “Trust A,” shall be in an amount equal to all property to be divided into shares, reduced by the lesser of:

· the maximum amount that will avoid any federal estate tax being due in my estate; or

· the maximum amount that will avoid any state death tax being due in my estate.

In determining this amount, any property of Trust A disclaimed by my spouse shall be disregarded and shall become a part of Trust B. Final federal estate tax values shall be used in determining the amount of Trust A. Assets shall be allocated to Trust A using the basis of such assets as determined for federal income tax purposes, provided that Trust A shall be satisfied with property fairly representative of appreciation or depreciation in value of all property available for allocation to Trust A, this appreciation or depreciation to be determined from the federal income tax value of the assets. There shall be allocated to each trust its proportionate share of all income from the date of my death, including income collected by the Personal Representative of my estate and transferred to the Trustee. Trust A shall not be reduced by any death taxes.

2. Trust B

The second share, called “Trust B,” shall consist of that property that is not included in Trust A and shall consist of all of the property if my spouse does not survive me.

B. Distribution of Trust A

The Trustees shall distribute Trust A as follows:

1. During Life of Spouse

While my spouse is living, the Trustees:

a. Income Distributions to Spouse

Shall pay to my spouse any net income of the trust that my spouse may from time to time request, without limitation as to the amounts of or the reasons for the withdrawals of income. The Trustees shall accumulate the net income of the trust not requested by my spouse and add it to the principal of the trust at such times as the Trustees shall determine.

b. Principal Distributions to Spouse

Shall pay to my spouse from the principal of Trust A property or sums of money that my spouse from time to time requests in writing, without limitation as to the amounts of or the reasons for the withdrawals.

2. Distribution Upon Death of Spouse

Upon the death of my spouse:

a. Spouse’s Power to Appoint Trust Assets

The Trustees shall distribute the principal and undistributed net income of Trust A to, or in trust for, those persons or corporations or the estate of my spouse in those amounts or proportions designated by specific reference to this power in my spouse’s last Will.

b. Distribution of Rest of Trust Assets

If this power of appointment is not effectively or fully exercised by my spouse, that part or all of the principal and undistributed net income of Trust A not so appointed by my spouse shall be added to and disposed of as a part of Trust B under all the terms that pertain to it, provided, however, that the Trustees, when the amounts needed are certified by the Personal Representative of my spouse’s estate (or when the amounts are determined by the Trustees) shall be authorized in their discretion to pay to the Personal Representative (or to pay directly) amounts needed to pay all debts and costs of administration of my spouse’s estate, all cash bequests contained in my spouse’s Will, and all taxes (including any interest and penalties) imposed by reason of my spouse’s death, whether or not the taxes are payable by my spouse’s estate or by any recipient of the property. All payments made by the Trustees in accordance with this paragraph shall be made without any right of reimbursement from the Personal Representative of my spouse’s estate or from the recipient of the property, and the Trustees’ decision as to the propriety and amount of any payment shall be final and binding on all beneficiaries. The Trustees may defer the termination of Trust A until such time as the debts, costs of administration of my spouse’s estate, and taxes are determined.

3. Marital Deduction Protective Provision for Trust A

The property in Trust A shall be available for the marital deduction allowed by the federal tax law applicable to my estate. Therefore, in that event, anything herein to the contrary notwithstanding, with respect to Trust A:

· During the lifetime of my spouse, the Trustee shall not, without the consent of my spouse, retain beyond a reasonable time any property that is unproductive or invest in unproductive property.

· No power or discretion granted to the Trustee by any other provision of this Will shall be exercised or exercisable by the Trustee, except to the extent and in the manner consistent with the allowance of the marital deduction, and any question pertaining to Trust A shall be resolved accordingly.

C. Distribution of Trust B

The Trustees shall distribute Trust B as follows:

1. During Life of Spouse

While my spouse is living, the Trustees shall pay to my spouse as the preferred beneficiary part or all of the net income of the trust as the Trustees shall deem advisable to provide for my spouse’s support and medical care. The Trustees shall pay to any one or more or all of my descendants from time to time part or all of the net income of the trust not paid to my spouse as the Trustees shall determine is advisable to provide for their support, medical care, and education (including college and professional education). These payments shall not be deemed advancements. The Trustees shall have the right to exclude any or all of the beneficiaries at any time and to make unequal distributions among them. Any net income not so distributed by the Trustees shall be accumulated and added to the principal of the trust at times that the Trustees shall determine. In exercising the foregoing discretion, the Trustees may consider:

· the standard of living to which my spouse and family are accustomed;

· tax factors to the end that my family unit as a whole shall be subjected to the least income and estate taxation;

· all other sources of funds available to each of the beneficiaries that the Trustees shall know about;

· my wish that my descendants receive an adequate education; and

· any physical or mental disability of any beneficiary for whom special provisions should be made,

but these considerations are to be taken simply as guidelines by the Trustees in the exercise of the foregoing discretion. The Trustees shall be under no obligation to determine whether any person should be considered for a distribution hereunder or to verify any information on which any determination by the Trustees shall be made.

2. Distribution of Rest of Trust Upon Death of Spouse

Upon the death of my spouse, or upon my death if my spouse does not survive me, the Trustees shall divide the principal of the trust, together with any undistributed net income, into a sufficient number of equal shares to create one share for each child of mine who is then living and one share for each child of mine who is then deceased but has one or more descendants then living. Each share shall be disposed of by the Trustees as follows:

a. Separate Trusts for Living Children

Each share created for a child of mine who is then living shall constitute a separate trust. The Trustees shall pay all the net income of the trust at least quarter annually to the child for whom the share was created as long as the child lives. At any time after attaining twenty-five years of age, the child shall be entitled to withdraw up to the whole of the principal of the trust (thereby terminating the trust). Withdrawal may be effected by a letter signed by the child and delivered to the Trustees directing the Trustees to deliver a specified part of the trust property free of the trust. Upon the death of the child, the Trustees shall distribute the principal and undistributed net income of the trust to, or in trust for, those people or corporations or the estate of my child in those amounts or proportions designated by specific reference to this power in the child’s last Will. If this power of appointment is not effectively or fully exercised by the child, that part or all of the principal and undistributed net income of the trust not so appointed by the child shall be distributed to the child’s descendants then living, per stirpes...