I, [grantor’s name], on [date], sign this trust agreement ...
I, [grantor’s name], on [date], sign this trust agreement (Agreement) with [trustee’s name], who, with any successor trustee, will be called Trustee in this Agreement and referred to in singular neuter pronouns. Trustee shall hold all property delivered to it, in trust, as follows:
I. Introduction
1.1 Name of trust. This trust may be referred to as the [grantor’s name] Irrevocable Trust (the Trust).
1.2 Fiscal year. The first fiscal year of the Trust begins with the date of this Agreement and shall end on [date]. Subsequent fiscal years of the Trust shall commence on May 1 of each year and terminate on the last day of April.
1.3 Declarations. I am a disabled person as defined by Michigan Department of Health and Human Services (DHHS) Bridges Eligibility Manual Item 260, and as of the date this Agreement is created my age is [number].
1.4 Additions to Trust property. I or any other person may, individually or jointly, transfer additional property to Trustee, either by lifetime or testamentary transfer. Trustee agrees to hold, administer, and distribute all property received as Trustee in accordance with this Agreement.
1.5 Irrevocable trust. This Agreement is expressly made irrevocable, and it shall not at any time or by any persons be capable of revocation, alteration, amendment, or modification in whole or in part in any manner. Trustee, however, 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 “solely for the benefit of” trust within the meaning of the provisions of 42 USC 1396p(c)(2)(B) and the Michigan Department of Health and Human Services Bridges Eligibility Manual in effect at this date or as later amended.
1.6 Intent of grantor. It is my intention that this Agreement shall be a trust “solely for the benefit of” me, a disabled person under age 65, as provided for by DHHS Bridges Eligibility Manual Item 405. This Agreement has been drafted in accordance with and is intended to comply with the provisions of 42 USC 1396p(c)(2)(B) and the DHHS Bridges Eligibility Manual in effect at this date. All provisions of this Agreement shall be interpreted to carry out my intent. Accordingly, this Agreement is legally binding, and none of the net income and principal (the Resources) subject to this Agreement shall be used for anyone other than me during my lifetime, except for the payment of Trustee fees. Should any provision or part of this Agreement be determined to be contrary to the requirements of the statutory and regulatory provisions cited above, that provision or part shall be void and inoperative, and the remainder of this Agreement shall be effective as though that provision or part had not been included.
II. Trust During My Lifetime
2.1 During my lifetime. Trustee shall hold, administer, and distribute the Trust assets and income in one undivided trust solely for my benefit during my lifetime as provided in this Agreement.
2.2 Distribution of resources. During each fiscal year of the Trust, Trustee shall from time to time during the fiscal year pay or distribute to me, or for my sole benefit, during my lifetime whatever part of the net income and principal (the Resources) of the Trust that Trustee determines is necessary to distribute the resources on an actuarially sound basis. However, during the first fiscal year of the Trust, the distribution shall be made to me after [date], but before [date]. In determining an actuarially sound basis for distribution, Trustee shall use the life expectancy table attached to this Agreement as exhibit A, to determine the appropriate minimum portion of the Resources to be distributed in any fiscal year. During my lifetime, no Resources of the Trust may be used for anyone other than me, except for Trustee fees. Notwithstanding anything in this Agreement to the contrary, Trustee shall distribute the Resources of the Trust at a rate that is calculated to use up all of the Resources during my lifetime. The Resources of the Trust shall be valued on the first day of [month] of each fiscal year of the Trust, except that in the first fiscal year the Resources of the Trust shall be valued as of the date of their contribution to the Trust.
2.3 Spendthrift provision and termination of Trustee’s discretionary powers. No interest in the principal or income of this Trust shall be anticipated, assigned, or encumbered or be subject to any creditor’s claim or to legal process before its actual receipt by me.
III. Distribution of Trust After My Death
3.1 Claims and taxes. After my death, to the extent the assets of my estate (other than tangible personal property and any property that in Trustee’s judgment does not have a readily realizable market value) are insufficient, Trustee shall pay all estate, inheritance, and other taxes payable as a result of my death, including interest and penalties but excluding taxes imposed on any generation-skipping transfer of assets that are not part of my estate or of a trust I created; and Trustee may pay (a) expenses of my last illness and death, (b) claims against my estate, (c) expenses of administering my estate, (d) any allowance by court order, statute, or rule for those dependent on me, and (e) all or any part of gifts provided by my will. Trustee may make payments directly to the personal representative of my estate. Written statements by the personal representative of my estate of the amounts to be paid shall be sufficient evidence for Trustee’s protection. Trustee has no obligation to see to the application of the payments. Trustee shall not use proceeds of insurance on my life to pay expenses or claims against my estate.
3.2 Distribution of trust. At my death the balance of this Trust shall be held, administered, and distributed as provided in this section.
a. Special testamentary power of appointment. I reserve a special testamentary power of appointment to appoint in any manner (outright or otherwise) to any of my Children, or their Descendants, whatever amounts, specific assets, or all of this Trust estate, including undistributed net income, that I determine. This power shall not be exercised by me for the purpose of discharging my legal obligations. This special power shall be exercised only by specific reference in my will. To the extent that the Trust estate is not disposed of by my exercise of my special testamentary power of appointment, the balance remaining at my death shall be administered and distributed as provided below.
b. Distribution to family. Trustee shall divide the remaining Trust property, including additions from any sources, into separate trusts, equal in value, one for each living Child and one for the then living Descendants, collectively, of each deceased Child. Trustee shall distribute each trust set aside for each living Child and each trust for the Descendants of a deceased Child to the beneficiary free from trust.
IV. Trustee
4.1 Successor trustee. If [initial trustee] is, or becomes, unavailable to serve as Trustee, [first successor trustee] shall serve as Successor Trustee. If [first successor trustee] is, or becomes, unavailable to serve, a Successor Trustee shall be appointed by the court in [county], Michigan, that has jurisdiction over trusts and trust matters.
4.2 Resignation by Trustee. Trustee may resign at any time by giving written notice, specifying the effective date of resignation, to the settlor and to the then residuary beneficiaries.
4.3 Action by one trustee. When more than one person is serving as Trustee, any one of them, acting alone, may exercise any power or authority of Trustee.
4.4 Miscellaneous trustee provisions. The following apply to every trust created under this Agreement:
a. Trustee’s fees. Trustee shall be entitled to reasonable compensation for services and to reimbursement for reasonable expenses.
b. Qualifying as Trustee. A Successor Trustee shall qualify on signing an acceptance of this Trust and mailing or delivering the acceptance to the settlor and to one or more of the then residuary beneficiaries of this Agreement.
c. Title and powers. Any Successor Trustee shall have all the title, powers, and discretion of the Trustee succeeded, without the necessity of any conveyance or transfer.
d. Investments. Trustee shall be exempt from the Michigan Prudent Investor Rule, MCL 700.1501 et seq. Trustee shall not be held liable for any decisions relating to the investment of Trust assets, provided the decisions were made in good faith.
e. Prior Trustee’s acts and accounts. No Successor Trustee shall be personally liable for any act or omission of any predecessor Trustee. Any Successor Trustee may accept, without examination or review, the accounts rendered and the property delivered by or for a predecessor Trustee without incurring any liability for doing so.
f. Corporate successor. Any corporate successor to the trust business of any corporate Trustee acting under this Agreement shall become Trustee in place of its predecessor without the necessity of any conveyance or transfer.
g. Disclaimer. Trustee may disclaim any power granted to it if the disclaimer will not adversely affect any beneficiary materially. Trustee shall deliver a written disclaimer under this provision to one or more of the beneficiaries then entitled to Trust income. The disclaimer shall be effective on the date first received by a beneficiary.
h. Proceeds application. No person paying money or delivering any property to Trustee need see to its application.
i. Notice. Unless otherwise specifically provided in this Agreement, Trustee may rely on any notice, certificate, affidavit, letter, telegram, or other document it believes to be genuine or on any evidence it deems to be sufficient in making any Trust payment or distribution. Trustee shall incur no liability for any payment or distribution made in good faith without actual knowledge of a changed condition affecting any person’s interest in the Trust.
V. Trust Administration
5.1 Powers of Trustee. Every Trustee may exercise any of the following powers, and any others granted by law, without court order, except any power that would disqualify the Trust as a “solely for the benefit of trust” in compliance with the provisions of 42 USC 1396p(c)(2)(B) and the Michigan Department of Health and Human Services Bridges Eligibility Manual.
a. Investment and management of property.
i. retain any Trust property
ii. invest in any property, without limit
iii. sell or exchange any Trust property, real or personal, for cash or on credit, at public or private sales, for any purposes; exchange any Trust property for other property; grant options to purchase or acquire any property; and determine the prices and terms of sales, exchanges, and options
iv. vote in person or by proxy all securities and keep any property in bearer form or in the name of a trustee or a nominee, with or without disclosure of any fiduciary relationship
v. borrow money for any purpose from Trustee or from others and mortgage or pledge any Trust property
vi. execute contracts, conveyances, and other instruments, including instruments containing covenants and warranties binding on and creating a charge against the Trust property and containing provisions excluding personal liability
vii. receive, own, pay premiums on, and borrow on any insurance policy that is held by the Trust
viii. exercise, as absolute owner, all of the options, benefits, rights, and privileges under any insurance policies held by the Trust
b. Tax matters.
• make, revise, or revoke any available allocation, consent, or election affecting any tax
Trustee’s decision shall bind all beneficiaries.
c. General powers of administration.
i. employ agents, with or without discretionary powers, and pay their reasonable compensation and expenses
ii. except as authorized to use discretion, allocate between income and principal all receipts and disbursements in accordance with sound trust accounting principles
iii. allot different kinds, disproportionate portions, or undivided interests in property among beneficiaries and determine the value of any allotted property, without compensating adjustment even if the basis for federal income tax purposes of property allotted to any beneficiary is not fairly representative of all property available for distribution
iv. make any distribution or division of Trust property in cash or in kind or both (In any distribution by right of representation, the stirpes [common ancestor] shall be the oldest generation with at least one then survivor.)
v. transfer the assets of any trust to another jurisdiction and appoint, compensate, and remove a Successor Trustee (individual or corporate) for Trust assets in another jurisdiction, with any trust powers set out in this Agreement that Trustee delegates to the Successor Trustee
d. Limitation on powers.
i. When more than one person is serving as Trustee and at least one of them is not beneficially interested in the exercise or nonexercise of a power or election, the beneficially interested Trustee shall not participate in the exercise or nonexercise of the power or election.
ii. A beneficially interested Trustee may not exercise any power in favor of itself or its estate without the written consent of at least one adult beneficiary of this Agreement.
5.2 Beneficiary under disability. If a beneficiary, other than me, who is to receive a distribution under paragraph 3.2.b is under the age of 25; legally disabled; or, in Trustee’s opinion, incapable of managing a Trust distribution, Trustee either may expend directly any income or principal that it is authorized to use for the beneficiary or may pay it over to or for use of the beneficiary or to the beneficiary’s conservator, if any, or any adult with whom the beneficiary is residing, without responsibility for its expenditure. If Trustee is directed to distribute any portion of Trust principal to that beneficiary, the Trust principal shall vest in interest in the beneficiary indefeasibly; but Trustee, in its discretion, may distribute the portion to a custodian under a Uniform Transfer to Minors Act or similar act or hold the portion as a separate trust for the period of time Trustee deems advisable but not (a) after the time the beneficiary reaches the age of 21 years, (b) after the removal of the legal disability, or (c) after the time Trustee deems the beneficiary is capable of managing a final Trust distribution, whichever is latest. If Trustee holds the portion as a separate trust, Trustee may pay to or use for the beneficiary so much of the income and principal as Trustee determines to be required for the reasonable support, comfort, and education of the beneficiary and the beneficiary’s spouse and Descendants.
5.3 Spendthrift clause. No interest under this Agreement may be transferred or assigned by any beneficiary or be subject during the beneficiary’s life to claims by or for the beneficiary’s creditors, spouse, or spouse’s creditors.
5.4 Miscellaneous administration provisions. The following apply to every trust created under this Agreement:
a. Trust registration. This Agreement and any trust created by it shall be exempt from registration under Article 7 of the Michigan Estates and Protected Individuals Code. However, if any controversy arises relating to the Agreement or a trust and recourse to any court is required, the Agreement shall be registered and the proceedings held in [county], Michigan, in the court that has jurisdiction over trusts and trust matters.
b. Certificate. The Trustee may record or file with any clerk, register of deeds, transfer agent, or similar agency or office or with any person dealing with the Trustee a certificate, signed and acknowledged by the Trustee, that contains a synopsis of certain provisions of this Agreement. Any person dealing with the Trustee may rely on the certificate as a full statement of the provisions of this Agreement that are pertinent to the particular transaction. Machine copies of the executed certificate shall have the same effect and authority as the executed certificate. The certificate of Trustee that it is acting according to the terms of the Agreement shall fully protect all persons dealing with Trustee.
VI. General Provisions
6.1 Rule against perpetuities. Notwithstanding any provision to the contrary, any trust under this Agreement shall terminate not later than 21 years after the death of the last surviving beneficiary living on the date of this Agreement or a longer period (e.g., 90 years from the date of this Agreement) if permitted by law. At the end of that period, Trustee shall distribute each remaining portion of the Trust property to the beneficiary or beneficiaries, at that time, of the current Trust income and, if there is more than one beneficiary, in the proportions in which they are beneficiaries.
6.2 Law, definitions, captions, and severability. The following apply to every trust created under this Agreement.
a. Governing law. This Agreement and the Trust shall be construed and regulated and their validity and effect shall be determined by the law of Michigan.
b. Definitions. Whenever necessary in this Agreement and where the context permits, (i) the singular term and the related pronoun shall include the plural; the masculine and the feminine; and, as to Trustee, the neuter; and (ii) descendant and issue shall include adopted children.
c. Captions. Captions in this Agreement are used for convenience and shall not limit, broaden, or qualify the text.
d. Provisions severable. The provisions of this Agreement are severable. If any provision is held invalid by final judgment of a court, all other provisions shall remain valid.
Executed in multiple original counterparts, delivered, and the Trust accepted, as of the date first written above.
|Dated: ______________________ | |/s/______________________ |
| | |[Typed name] |
| | |Settlor |
|Dated: ______________________ | |/s/______________________ |
| | |[Typed name of Trustee] |
| | |Trustee |
|Witness | | |
|Dated: ______________________ | |/s/______________________ |
| | |[Typed name] |
| | |[Address, telephone] |
|Witness | | |
|Dated: ______________________ | |/s/______________________ |
| | |[Typed name] |
| | |[Address, telephone] |
|STATE OF MICHIGAN |) |
| | |
|________ COUNTY |) |
| | |
Acknowledged before me in [county] County, Michigan, on [date] by [name of person acknowledged].
|/s/__________________________________ |
|[Notary public’s name, as it appears on application for commission] |
|Notary public, State of Michigan, County of [county]. |
|My commission expires [date]. |
|[If acting in county other than county of commission: Acting in the County of [county].] |
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