WILLS OR TRUSTS? THE CASE FOR LIVING TRUSTS 

How To Eliminate The Hassles Of: 

PROBATE 
LAWYERS 
DELAYS 
LEGAL SYSTEM 

INTRODUCTION TO LIVING TRUSTS 

Simply put, living trusts are an expedient way to transfer property at your death. A living trust is a
legal document that controls the transfer of property in the trust when you die. 

Generally, living trusts are established during an individual's lifetime and can be modified or changed
while that person is still alive. Circumstances do change and the option to make alterations in the
trust is important. 

For this reason, a living trust is set up on a "revocable" basis. Revocable means you can modify or
change the trust's provisions. Your other option would be to create an irrevocable trust. Once put in
place, you are unable to change the terms of the trust regardless of the circumstances. 

As you will see, living trusts speed up the process by which your property moves to your designated
beneficiaries after you die. Today, and into the foreseeable future, this is vitally important as the
United States is experiencing an unprecedented wealth transfer. 

It is estimated, according to "Fortune" magazine, that some $6.8 trillion worth of assets will soon
pass from parents to children, grandchildren, friends, charities and others. The questions remains:
how will this wealth be transferred? Will it be the traditional methods of wills and probate or the new
revolution of estate planning that has incorporated living trusts? Many legal experts believe that living
trusts are the future of wealth transfers. 

The concept of living trusts has created controversy simply because the legal profession seems
evenly split on the issue. Estate planners seem to favor living trusts but there are enough opposed to
the concept to avoid a clear majority decision. 

Living trusts are also called "inter vivos" trusts, a Latin term preferred by attorneys. The Internal
Revenue Service calls them "grantor" trusts. All mean the same thing. 

The Internal Revenue Service, however, recognizes the living trust as a valid estate planning tool and
exhibits no prejudice against it. There are specific provisions in the tax laws that deal with living or
grantor trusts. 

The revocable provision means that while you live, you still effectively own all of the property that
has been transferred into the trust. You can sell it, spend it, give it away; in short, do anything you
wish since the property is still yours. The trust itself is merely a document in your lifetime that truly
doesn't begin to function until you die. Then, the trust operates to transfer your property privately,
outside of the reach of probate, to the specific individuals or organizations to whom you wish to
leave your worldly possessions. 

What is probate? Why do people try to avoid it? 

Technically speaking, probate is the process by which one proves the validity of a will in court. If
there is no one contesting the will, this should not take long. If there are complications, probate can
take years. For those of you familiar with the works of Charles Dickens, recall "Bleak House" and
the never-ending probate case of Jarndyce vs. Jarndyce. 

Probate has come to mean not just proving the validity of the will but the entire administrative
sequence involving the passing of an owner's title to property after the owner's death. The
deceased's property is inventoried and creditors are identified and paid after the payment is made to
the estate's attorney, executor and tax entities. 

The term "probate" also identifies the court which has jurisdiction over the estate probate and
administration. Probate court also has jurisdiction over the guardianship of minors and mentally
incompetent adults. All wills go through probate. 

The average length of the probate process is twelve to eighteen months. Any estate transactions in
that time must be approved by the probate court. 

This can create havoc for beneficiaries. Since a living trust replaces a will and doesn't need validation
from the probate court, considerable time and hassle can be saved. 

This, then, is the purpose behind living trusts. The trust is simple to establish and, when carried out,
makes it easy to transfer property. The trust is a matter of explicit instructions as to who gets what
property after the owner dies. Like a will, the trust should cover all expected and unexpected events
that might occur. The details tell the designated trustee how to use the money and property in the
trust. 

A living trust is a capable substitute for a will and a document that more and more people,
disillusioned with the probate system, are turning to in their estate planning. 

TERMS YOU SHOULD KNOW 

Before proceeding further, it might be helpful to define a few terms for you. These terms will occur
often during this text and in the actual living trust process, so it's important to familiarize yourself with
their definitions. 

A/B TRUST: Common term for a "marital life estate trust", generally used by couples whose estates
are valued at more than $600,000. 

ACCUMULATION TRUST: A trust that does not pay out all of its income until certain
circumstances occur. 

ADMINISTRATION: Court supervised distribution of the probate estate of the deceased. The
person who manages this distribution is called the EXECUTOR if there is a will or an
ADMINISTRATOR if there is not. 

BENEFICIARY: The person or organization legally entitled to receive gifts made under the
provisions of a legal document such as a will or trust. 

CODICIL: An amendment to a will. It is a separate legal document, properly witnessed and
executed. 

CORPUS: Property owned by the trust, commonly referred to as "corpus of the trust". 

DEATH TAXES: Amounts levied on the property of the deceased called estate taxes (federal) and
inheritance (state) taxes. 

DURABLE POWER OF ATTORNEY: A general power of attorney that will continue to be valid
after its maker becomes incapacitated or incompetent. 

DURABLE HEALTH CARE POWER OF ATTORNEY: A special power of attorney in which the
maker gives another person authority to make health care decisions when the maker is unable to do
so, due to injury or sickness. 

ESTATE: In general, all of the property you own when you die. 

ESTATE PLANNING: The legal maneuvering by which one dies with the smallest taxable and
probate estate possible, with the ability of passing on your property to your beneficiaries with the
least amount of hassle and expense. 

INTESTATE: To die without a will or other valid estate transfer device. Estate will go through
probate and be passed to heirs who are specified in the applicable state's laws. 

IRREVOCABLE TRUST: A trust that cannot be changed, once established, except by court action
in a proceeding referred to as REFORMATION. 

JOINT TENANCY: A form of property ownership by two or more people where the death of one
owner causes the transfer of that individual's share to go directly to the remaining owner(s). A will
has no power to change the joint tenant's right of survivorship. This is another common tool used to
avoid probate, all though there may be gift tax consequences. 

LIVING TRUST: Trust established while the maker is alive and which becomes immediately
effective. It remains under the control of the maker until death. It allows property to pass to
beneficiaries free of probate. 

LIVING WILL: A document that provides instructions to physicians, health care providers, family
and courts as to what life prolonging procedures are desired if a person should become terminally ill
or be in a persistent vegetative state and unable to communicate. 

PERSONAL PROPERTY: All property other than land, buildings attached to the land, and certain
oil, gas and mineral interests. 

PER STIRPES: A legal term meaning that if a person dies, the inheritance will pass to heirs in equal
shares. It means "by right of representation". 

POUR OVER WILL: A will that transfers the decedent's assets that are subject to the will to a trust
that was already in effect prior to the decedent's death. 

POWER OF ATTORNEY: A legal document whereby, a person authorize someone else to act for
them. 

PROBATE: Court proceeding in which the authenticity of a will is established, an executor or
administrator is appointed, debts and taxes are paid, heirs are identified, and property in the
probated estate is distributed according to the dictates of the will. 

QUALIFIED TERMINABLE INTEREST PROPERTY TRUST: Also referred to as a "QTip"
trust, it allows a surviving spouse to postpone, until his or her own death, payment of estate taxes
that were assessed upon the death of the first spouse. The surviving spouse is still entitled to all of the
income from the property. 

REVOCABLE TRUST: A trust that can be changed by the trust maker at any time. Living trusts are
revocable trusts. 

SETTLOR: Another name for a maker of the trust, also called "trustor", "grantor" or "creator". 

TENANCY IN COMMON: A form of joint ownership of property. Each owner is able to sell or
give a way his or her share of property, as well as pass it along separately at death. There is no right
of survivorship. 

TESTACY: Dying with a valid will in place. All property controlled by the will passes through
probate. 

TESTAMENTARY TRUST: A trust created by a valid will. 

TRUST: A legal arrangement under which one person or institution controls property given by
another person for the benefit of a third party. 

TRUSTEE: The person who, or institution which, manages the trust and its property under specific
instruction. 

WILL: A legal document that is used to pass property to heirs following a person's death. A will only
becomes effective at the death of its maker. 

TRANSFERS 

The purpose of the living trust, as mentioned, is to be able to transfer property to a designated
beneficiary(ies) without the usual hassles associated with wills and probates. 

However, your living trust can't transfer property it doesn't own. 

Therefore, the first step in making the trust effective is to transfer ownership, or title, of a property to
the trust's name. It's safer to transfer the title to the trust's name rather than to the name of the trustee
since it is more likely the trust name will continue even if you change trustees. 

For the purposes of transferring title into a trust's name, there are two classifications of property: that
which has an ownership document and that which doesn't. 

Property without ownership documents include the following: 

_ household possessions and furnishings; 

_ clothing and furs 

_ jewelry 

_ tools and most equipment 

_ antiques 

_ art work 

_ electronic and computer equipment 

_ cash 

_ precious metals 

_ bearer bonds 

These items are transferred to a trust simply by listing them on a trust schedule. That's it! Pretty
simple, right? 

Property that has ownership documents requires a reregistration of ownership into the trust's name.
Once the trust document has been established, signed and notarized, this process should begin. The
document of the title must clearly show that the trust is the legal owner of the property or the trustee
will not be able to legally transfer any of that property. 

The type of property owned by the trust which requires this reregistration of ownership includes the
following: 

_ real estate 

_ bank accounts 

_ stocks and stock accounts 

_ money market accounts 

_ mutual funds 

_ most bonds, including U.S. Government Securities 

_ safety deposit boxes 

_ corporations, partnerships and limited partnerships 

_ cars, boats, motor homes and airplanes 

If you set up a trust and fail to reregister ownership of a specific property, it will remain outside the
trust after you die. If you do not have a will, property will pass through intestacy and your state's
succession law. The chances of leaving it to the person you wanted it to go to are reduced, and you
will not avoid probate of the property which is the purpose of a living will! Do not fail to reregister
property that has a title. You prepare a new title document for each piece of property, transferring
ownership into your trust's name. With real estate, for example, you must prepare and sign a deed
listing the trust as the new owner. Then have the deed must be notarized and properly recorded. For
bank accounts, ask your bank for the proper form. You can usually accomplish this in one trip. 

TRUSTEES 

When you establish a living trust, you must name a trustee. In fact, you should name both an initial
trustee and a successor trustee in the event the initial trustee becomes incapacitated and cannot
serve. 

The trustee is the individual who or institution which actually manages the trust assets that you
transfer in, according to the specific instructions you've given. The appointment is important, as this
person or entity will have the responsibility of honoring your wishes your after death. 

The initial trustee is, most often, YOU! That's why it's called a living trust. Since it's revocable, you
can change assets in the trust as circumstances dictate. While you're alive, the trust can conform to
your specific wishes. 

It is important to understand this: a living trust does not take the control of your property from you-
until you die. You handle it while you're alive. It's merely tucked away in a convenient legal vehicle
that takes over immediately after you die and passes the property along to the people you designate
without publicity and without the potential lengthy delay and costs of probate. 

If you've set up a marital living trust, usually both spouses are cotrustees. When one spouse dies, the
other spouse continues as the initial trustee. 

It is possible to name someone else other than you and/or your spouse to be the initial trustee. It is
uncommon and unnecessarily complicates your trust arrangements as you must keep separate
records of the trust. You should work with your attorney to select a capable trustee if you wish. 

Because something could happen to the initial trustee, it's vital to name a successor trustee. This is
the individual who will be distributing your assets according to your wishes after you die, or if you
become unable to manage the trust due to injury or illness. For property not held in the living trust,
creation of a durable power of attorney and a health care durable power of attorney can designate
someone else to carry on with the nontrust assets. 

If your trust is a marital one, the successor trustee would not take over until after the second spouse
dies. 

The successor trustee could also die or become incapacitated, so it's imperative that you name an
alternative trustee, too, to take over as successor in that circumstance. 

What does the successor trustee do? If your instructions are explicit as to how you want property
transferred at your death, then the job is somewhat easier. However are still things you must do: 

_ Obtain copies of the death certificate of the initial trustee 

_ Present death certificate, copy of the living trust and proof of successor trustee's identity to the
various financial institutions or organizations that have the property/assets 

_ Prepare documents of title transfer from the trust to the beneficiary(ies) 

as appropriate. 

_ Supervise distribution of trust assets where no title is involved. 

_ If necessary, the successor trustee may manage a child's trust if the beneficiary is a child who has
not reached the age at which the initial trustee designated the property to be transferred. The
successor manages the property for that individual until he or she reaches the specific age outlined in
the original living trust. This may be the only task the successor trustee is actually paid to do. If
required, the successor trustee might also file federal and/or state death tax returns. 

It is important to name a successor trustee, preferably one whom you feel will diligently carry out
your wishes. It may even be someone who is also a beneficiary of the trust assets. If there is any
question about whom you should name, consult with an attorney for suggestions. 

WILLS 

A will is a written document detailing instructions as to how you want your assets divided up after
your death. You might also include information as to a child's guardianship, how (or if) you are to be
buried and the appointment of an executor of your will. 

The two main types of wills are: 

_ attested 

_ holographic 

The attested will is the most common. It is usually prepared by a lawyer in typewritten form and
signed in front of several witnesses who have no benefit in the will whatsoever. 

The holographic will is made without a lawyer, written on plain paper in your own handwriting, dated
and signed. If your wishes are clear, this should be as effective as the attested will. It will more likely
be disputed than an attested will and be subject to the interpretation of the courts, where anything
could happen. Attested wills are safer for carrying out your final instructions. 

Most people think they should have a will. Many people do, however, do not have a will because
estate planning is generally not a high priority to many people nationwide. There are many fine estate
planners around the country who work with individuals, but the average person doesn't put much
thought, time or effort into addressing this important financial task of preparing for asset distribution
after death. 

Attorneys will be glad to help you do an attested will and may not charge much to do so. They'll get
paid later- when the will goes through probate court. The payors will be your beneficiaries, who will
see assets drain as a result of legal fees and court costs. 

Probate can be lengthy, especially if the will and estate is a complex one. Not only does a will
diminish the value of the property, it may also slow down the time it takes to actually transfer it to the
designated beneficiary. 

A will does let you choose your heirs, but the advantages stops there. You will not avoid probate,
estate taxes (if any), death income taxes, privacy of transfers or incapacitation. These are the primary
reasons one should set up a living trust INSTEAD of a will. 

There is a will that is important when establishing a living trust. It's called the pourover will. This
document puts any assets you failed to place in your living trust during your lifetime into the trust
after your death. In effect, it "pours over" assets from the will to the trust. This document may also
name the guardian for minor or incapacitated children. 

The pourover will is a "failsafe" device to ensure that any property left out of the trust will be placed
there. It is also a backup to the living trust in case it's invalidated for any reason. The pourover will
can substantiate the trust simply by reaffirming its terms. It would be difficult for one or more heirs to
challenge successfully both a living trust and a pourover will if their conditions and instructions are
similar. 

ESTATES 

What is an estate? Exactly what are we trying to protect with a living trust? 

An estate is essentially all the property you own (your assets) minus anything that you owe
(liabilities). This calculation, assets minus liabilities, will yield a net worth for you. This is the value of
your estate at the time it is calculated. 

The size of your estate is important. More important is the value of your taxable estate. This will
equal, roughly, the value of your estate less property left to your surviving spouse or to charity. 

The other estate calculation of note is the probate estate. This is the portion of your estate that must
go through probate before it can be distributed. Leaving your assets via a will puts them through
probate. 

The difference between the taxable estate and the probate estate should be considerable if you plan
your estate properly. For example, let's say your estate calculation is $400,000. By transferring the
title of your house, valued at $250,000 and your Chrysler stocks, valued at $75,000, to a living
trust, you have reduced your PROBATE estate by $325,000 to $75,000. Your goal should be to
try and reduce the probate estate to zero if possible. 

Living trusts will save probate costs. They do not avoid death income taxes. There are other things
you can do, planning wise, to reduce your taxable estate, but a living trust is not one of those. You
can and should, however, reduce or even eliminate your probate costs. 

Proper estate planning, in general, can accomplish all of the following: 

_ select your heirs 

_ choose amount and time of distribution of inheritance to heirs 

_ avoid probate 

_ eliminate or reduce federal estate taxes 

_ eliminate death income taxes 

_ maintain control over your assets 

_ maintain both privacy and flexibility 

_ leave directions and the power to act if you are incapacitated 

_ leave funeral instructions 

_ leave organ transplant instructions 

_ make the administration of your estate as simple and quick to execute as possible. 

These are important goals. A living trust is one example of addressing these goals in your estate
planning. It is by no means the only thing you should do, but it is a document that can help you and
your heirs immensely. 

OTHER TYPES OF TRUSTS 

By now, you should understand the meaning and main purpose of a living trust. There are, however,
other types of trusts that should be mentioned that assist in estate planning goals. 

Living trusts are only truly functional when the creator of the trust passes away. It avoids probate
costs. Other types of trusts help you to avoid taxes. 

MARITAL ESTATE LIFE TRUST: Commonly referred to as the AB Trust, this trust is set up for
couples whose combined estate is in excess of $600,000. $600,000 is the amount of your estate
which is exempt from federal estate taxes. The marital life estate trust lets BOTH spouses take full
advantage of the $600,000 estate tax exemption. 

When a spouse dies, property is left for the use of the surviving spouse during the balance of his or
her lifetime. However, the survivor never becomes the legal owner of the property. If legal
ownership is never bestowed, then the property is not included in the survivor's estate and thus
avoids being counted for tax purposes. 

The trust is complex and has important ramifications for the surviving spouse which should be
understood before putting this type of trust into effect. 

QTIP TRUST: Short for Qualified Terminal Interest Property, it is a type of marital life estate trust
that is intended to postpone payment of estate taxes when the first spouse dies. It only postpones
them until the death of the second spouse and the taxes could be higher then since the amounts
would be calculated on the then current estate, but it saves the survivor a substantial amount of
money while alive. 

GENERATIONSKIPPING TRUST: You may have heard of this type of trust where the bulk of
assets are left to the grandchildren, but the income derived from them is utilized by the trustor's own
children. In essence, the estate "skips" the children, going directly to the grandchildren, but the use of
the income is still there for the direct heirs; the use of the property is not. 

Current laws impose a tax on all generationskipping transfers in excess of $1,000,000. If an estate is
worth more than that, the children may want to get this excess property directly since they will have
no access other than to income from the property that was transferred to the grandchildren. 

It all depends on the size and type of estate. 

These are examples of other trusts. This isn't meant to say you should attempt to set up every
conceivable type of trust. The key is what your estate and heirs "picture" looks like-this will govern
the estate planning devices you will utilize. 

TAKING INVENTORY 

To value your estate from both a net worth and living trust planning standpoint, you must inventory
your assets and calculate your liabilities first. 

Assets: This is the first calculation. You should list each item and describe it, indicating whether you
own the property outright or the percentage of your ownership if not. Then list the actual value of the
portion you own. 

Begin with your liquid assets: 

_ cash 

_ savings 

_ checking accounts 

_ money market accounts 

_ CDs 

_ precious metals 

Next, list other personal property: 

_ stocks 

_ mutual funds 

_ bonds 

_ other securities 

_ automobiles 

_ jewelry 

_ furs 

_ art works 

_ antiques 

_ tools 

_ collectibles 

_ life insurance 

Then, list your real estate holdings including your own home(s), condominiums, mobile homes, land,
etc. 

Finally, list any business personal property including partnership interests, copyrights, patents,
trademarks, stock options, etc. 

Add these up and you will have the total amount of your assets. 

Then, list your liabilities by name and the amount you owe, including: 

_ personal loans (credit cards, bank) 

_ mortgage loan(s) 

_ taxes due, current or past 

_ life insurance loans 

_ other personal debts 

Add all of these numbers up to arrive at your total liabilities. Subtract your liabilities from your assets
to arrive at your net worth. 

This allows you to place a value on your estate. You can see how close your estate is to $600,000.
You can inventory property that has to be itemized for the living trust anyway. You can separate
property by titled ownership and nontitled property. 

SUMMARY 

Knowing where you are in valuing your estate is an excellent start to your estate planning program.
The use of a living trust is a clear example of using estate planning to help you (and your heirs) save
money and to avoid the hassles of court and lawyers. 

Living Trust Basic Form 

This form creates a revocable living trust. A living trust is a testamentary device, used instead of a
will. Popularized by the infamous "How to Avoid Probate" books, Living Trusts are a type of estate
planning which have become quite popular for many reasons. Although touted as a substitute for
traditional wills, a living trust also requires a pour over will. A pour over will bequeaths any assets
which have not been conveyed to the living trust, into the trust estate. Virtually all living trusts are
"revocable" which means that the terms can be changed during the lifetime of the settlor. Irrevocable
trusts create extensive tax consequences and are not suitable for regular estate planning. The trusts
provided is revocable. 

REVOCABLE TRUST 

, referred to herein as Settlor, and , referred to herein as Trustee, (the singular term "Trustee" shall
refer to multiple Trustees if multiple Trustees are appointed) in consideration of the covenants and
undertakings herein agree: 

ARTICLE I 
CONVEYANCE OF PROPERTY TO THE TRUSTEE
Settlor herewith assigns and conveys to the Trustee, the property described in Exhibit "1" hereto. All
of said property, together with any income, accessions and additions herein, shall be held by the
Trustee in trust for the purposes set forth in this revocable living trust. 

ARTICLE II
REVOCATION
Settlor hereby reserves the right to revoke this trust at any time, by written instrument. Revocation
shall be effective upon mailing or delivery to the Trustee of a notice of revocation. Trustee may resign
upon 30 days prior written notice to the Settlor. For purposes of this agreement, notices shall be
delivered as follows: 

TO SETTLOR
[Write in your (the Settlor's) name and address below] 

_______________________________________________ 

_______________________________________________ 

_______________________________________________ 

TO TRUSTEE
[Write in the Trustee's name and address below] 

_______________________________________________ 

_______________________________________________ 

_______________________________________________ 

ARTICLE III
SUCCESSORS TO THE TRUSTEE
ADDITIONAL TRUSTEES
The Settlor during his lifetime may from time to time add additional Trustees by notice to the then
existing Trustees. In the event there are multiple Trustees, the majority shall in any matter in which the
Trustees disagree control. In the event that the Trustees are evenly divided in the actions to be taken,
the Trustee with the longest tenure of service shall cast an additional vote to determine the matter. 

In the event that any Trustee resigns or is unwilling or incapable of acting, during the Settlor's lifetime,
the Settlor shall name additional or replacement Trustees. After the Settlor's death, shall name the
replacements for any Trustees who resign or are unwilling 

or incapable of acting. If                   is unwilling or incapable
of acting,                                             shall name the

same. In the event that _____________ shall be unwilling or incapable of acting, the Court having
jurisdiction over states and trusts, located in County, State of shall name the successor Trustees. 

ARTICLE IV
WITHDRAWALS BY SETTLOR
The Settlor may from time to time withdraw any portion of the corpus of the trust (whether capital or
interest) by written notice to the Trustee. The Trustee shall be acquitted of all further responsibility
for any assets so delivered upon receipt by the Settlor. 

ARTICLE V
POWERS OF THE TRUSTEE
The Trustee shall have the power to do all acts, institute all proceedings and exercise all rights,
powers and privileges that an absolute owner of the trust property would have, subject always to the
discharge of Trustee's fiduciary responsibilities. 

I further direct that the Trustee shall act without bond. Further, this Trust shall be administered
without the necessity for an administration thereof to be through the court system. No entity dealing
with the Trustee shall be required to investigate or to confirm the Trustee's authority to enter into any
transaction or to administer the application of the proceeds of any transaction. 

ARTICLE VI
COMPENSATION OF TRUSTEE If the Trustee is an individual, then the Trustee shall serve
without compensation, but with reimbursement for reasonable and ordinary expenses. Nevertheless,
the Trustee if an attorney shall be entitled to compensation for legal services rendered to the trust, or
if an accountant, for accounting services rendered to the trust. 

If the Trustee is a corporation or banking entity, it shall be entitled to customary, reasonable and
ordinary charges and expenses incurred in rendering services to the estate. 

ARTICLE VI
DISPOSITION OF TRUST PROCEEDS
After paying the necessary expenses incurred in the management and investment of the trust estate,
including compensation as provided for herein, the Trustee shall accumulate the same during the
lifetime of the Settlor. After Settlor's death the Trustee shall distribute the net income of the Trust in
the following manner: 

Please see exhibit 2
Should any beneficiary named above die, the Trustee shall distribute the net income to the lineal
descendants of the beneficiary. If any beneficiary dies and is not survived by lineal descendants, the
distributions from the Trust shall be adjusted to pro-rata increase all other shares. 

ARTICLES VII
INVASION OF PRINCIPAL
After Settlor's death, the Trustee may apply so much of the principal of the trust for the use of the
beneficiaries at such time or times as in Trustee's discretion Trustee may deem advisable for their
health, education, support or maintenance. Any amounts so applied to the use of any beneficiary
shall be charged against, or deducted from, the principal of any share then or thereafter set apart for
said beneficiary. 

ARTICLE VIII
NON-ASSIGNABILITY OF THE TRUST PROCEEDS The interest of the beneficiaries of this
trust shall not be assignable, and beneficiaries shall not have the right to pledge, assign, convey, or
otherwise transfer, lien or encumber any portion of the income or principal of the trust. All payments
provided for by the beneficiaries herein shall be made directly to them or their guardians as is
provided herein. 

ARTICLE VIII
DISTRIBUTIONS TO MINOR OR INCOMPETENT BENEFICIARIES The Trustee in his
discretion may make payments of income or principal to any minor or incompetent beneficiary by
paying the same to the minor or incompetent's guardian, or to the person having control over the
minor or incompetent, or by direct expenditure for the benefit of the minor or incompetent.
However, the Trustee may also pay an allowance in such amount as he may see fit from time to time
to the minor or incompetent. Further, in the discretion of the Trustee the distributions for a minor or
incompetent beneficiary may be accumulated and shall thereupon be paid to the minor or
incompetent upon their disability being removed. Any payment under this Section shall operate as a
full discharge of the Trustee as to such payment. 

ARTICLE VIII
ACCOUNTINGS
The Trustee shall, after the death of the Settlor provide a semiannual accounting to all competent,
adult beneficiaries detailing the transactions, if any, of the trust. The same shall not be required to be
audited, although the Trustee may, in his sole discretion, may cause an audit to be performed from
time to time. 

ARTICLE IX
LIQUIDATION OF TRUST
If at any time the total of the principal and income of the trust is less than $500,000.00, the Trustee,
may in his absolute discretion, close out the trust by paying the proportionate shares of each
beneficiary to them. The Trustee shall at that time deliver a final accounting to each beneficiary. Upon
payment, the Trustee shall be discharged from all further duties. 

SECTION X
PERPETUITIES SAVINGS CLAUSE
Notwithstanding anything to the contrary herein contained, the trust created by this agreement shall
cease and terminate as is provided in Sections IX, 21 years after the death of the last survivor of
trustors and all issue of trustors living at the date of this agreement. 

SECTION XI
DISTRIBUTION OF DIVISION IN KIND
On any distribution from the trust, whether it be an ordinary distribution or one of principal, or a final
distribution, the Trustee may apportion and allocate the assets of the trust estate in cash and partly in
kind, in Trustee's discretion. The valuation, whether based on an appraisal, or not, made by the
Trustee shall be binding on the beneficiaries. 

SECTION XII
LITIGATION OR COMPROMISE OF CLAIMS
The Trustee may compromise, or abandon, at Trustee's option any claim or claim against the trust,
or subject the same to arbitration. Or, the Trustee, in his absolute discretion, may litigate any claim in
favor of or against the estate. 

SECTION XIII
NOTICE OF EVENTS
Until the Trustee receives notice of any death, birth, marriage, or other event on which the right to
receive distributions is based, the Trustee shall incur no liability for any disbursements or distributions
made in good faith. This clause shall not prevent the Trustee from seeking restitution of any payments
made in error in his discretion. 

SECTION XIV
DEFINITIONS - GOVERNING LAW
The words "child", "children", "descendants" and "issue" shall include children legally adopted and the
lawful descendants of such adoptees. This trust shall be governed by the laws of
_________________ [Put State here.] 

SECTION XV
SEVERABILITY
If any provision herein is found by a court of competent jurisdiction to be invalid, the remainder shall
govern. Dated: ____________________________________
__________________________________________ 

{Put the Notary Public's name here]
STATE OF ___________________
COUNTY OF _________________
[Notary Public's name here], being duly sworn states that they executed this instrument for the
purposes stated herein. __________________________________________ 

Notary Public
My Commission Expires: ____________________