Sample Revocable Living Trust to Discuss With Your Lawyer

SAMPLE REVOCABLE LIVING TRUST

Caution: This sample revocable living trust is purposely outdated and intended as an educational tool. Under no circumstances should anyone "copy and paste" this sample document and attempt to circumvent competent professional assistance in the preparation of your family revocable living trust.

Note: Revocable living trusts (sometimes referred to as "loving trusts") are one of the most improperly used estate planning documents. They are often no more than standard "boiler-plate" sole to consumers in little need of them, based on exploitation of fears of the purported evils of probate. This is not to mean that revocable living trusts are not valuable estate and financial planning tools. They can be. But to obtain benefits you should understand why and how you can benefit from such a trust, and how to properly use it. Proper use includes tailoring a complex legal document to meet your personal needs. This sample can help you identify personal planning opportunities to discuss with your lawyer and help you evaluate the scope and comprehensiveness of a living will which you may have had prepared. Remember, the laws differ significantly from state to state, be sure to obtain the advise of a local attorney specializing in estate planning.

Note: Why use a revocable living trust? The use of such a trust is indicated where: (1) the grantor wishes someone else to accept management responsibility; (2) the grantor wishes to assure continuity of management and income flow of a business of other assets in the event of death or disability; (3) the grantor wishes to secure investment advice; (4) the grantor wishes to protect against his or her own legal incompetency or physical incapacity or the incompetency of incapacity (physical, mental or legal) of beneficiaries; (5) the grantor desires privacy in the handling and administration of his or her assets during lifetime and at death; (6) the grantor wishes to minimize estate administration costs and delay at death; (7) the client wishes to avoid ancillary administration of assets situated in other states by placing title in the trustee (but don't assume that a revocable trust is the correct answer - a limited liability company is better in some circumstances); (8) the client would like to reduce the potential for an election against, or a contest of, the will (but this result depends on state law and what assets and lifetime transfers may be reached by an electing spouse) and (9) the client would like to select the state law under which the provisions of the dispositive document will be governed.

Note: As with all trusts, to be effective as an estate and financial planning tool, your revocable living trust should be funded. Make sure you arrange to have title transferred to the trustees as the legal title holders of the property for the benefit of the trust beneficiaries. You do not lose control over the assets since the trust is revocable (you can change, modify or revoke it at any time) and is not treated as a separate taxable entity until the death of the Grantor. No gift tax is generated by establishing or funding a revocable trust since the gift is not completed until the trust becomes irrevocable (at client's death). Since the grantor has not irrevocably disposed of any assets, the entire trust corpus will be included in the grantor's estate for federal estate tax purposes.

PREPARED BY:

_______________________
*LAWYER NAME, Esq.

*CLIENT NAME *Revocable Living Trust

Note: Many taxpayers use their Social Security Number for their revocable living trust instead of obtaining a Tax Identification Number by filing a Form SS-4 for the trust with the IRS. See The Complete Book of Trusts (2d ed.) published by John Wiley & Sons, Inc. for more details. While a taxpayer identification number ("TIN") is not required until the Grantor's death when the trust becomes irrevocable, by obtaining same during the Grantor's life, this may be one less step that must be taken at the death of the Grantor.

Trust EIN: __________________________

I. DECLARATION OF TRUST.

Note: For revocable living trusts, the Grantor is the person who wishes to set up the trust. The Grantor could be named as a co-trustee together with a family member (e.g., child) or trusted friend or institution if this approach were deemed more appropriate to better facilitate management of assets.

Note: In Community Property states, both spouses could be Grantors. Community property concepts have NOT been addressed in this sample trust document.

THIS TRUST AGREEMENT dated as of *MONTH *DAY, *YEAR, between, *CLIENT NAME, who resides at *CLIENT-ADDRESS ( the "Grantor") and *AGENT1-NAME, who resides at *AGENT-1ADDRESS and *AGENT2-NAME, who resides at *AGENT-2ADDRESS, and any successor Trustee appointed as provided in this Trust Agreement (the "Trustee").

RECITALS

WHEREAS, the Grantor desires to create a trust, and transfer the assets listed below to the trust, on the terms which are detailed below, and the Trustee has consented to accept and perform said trust in accordance with such terms;

NOW, THEREFORE, in consideration of the mutual covenants and promises of the parties hereto, and other good and valuable consideration, receipt and adequacy of which is hereby acknowledged, this Trust shall be effective as of the date and the terms following:

Note: If this is an amendment of a prior trust a paragraph should be added listing all prior trusts and stating that this amends and supersedes them.

Note: The provisions below address the transfer of property into the trust. Advise your client to arrange to transfer assets into the trust (e.g., retitling a deed to the name of the trust). Generally, the trust is intended to hold all assets of the Grantor. However, not all assets make in to the trust (e.g., some assets may not be assigned). Therefore, Grantor's will could include a "pour over" provision, providing that all assets under the will (i.e., that did not make it into the trust) are to be transferred (poured over) to the Grantor's living trust. Thus assets will be transferred into the trust during Grantor's life and after Grantor's death. Don't assume that a "pour-over will" is always appropriate. It may not be. Discuss the pros and cons with your estate planner. For example, if you are really concerned about a will challenge, using a pour-over will only serves to highlight the existence of your living trust.

II. TRUST ASSETS.

Note: Simply stating that assets are transferred, and even listing assets on the schedule attached at the end of the trust is not enough. Proper steps should be taken to legally transfer title. For example, for real estate, sign a deed.

A. Transfer of Property To Trust.

The Grantor assigns and transfers to the Trustee, and the Trustee, by the execution of this Trust, acknowledges receipt from the Grantor of the property described in Schedule "A". This property, together with any Addition, shall constitute the Trust Estate. The term Trust Estate shall also include any other property which the Grantor, the legal representatives of the Grantor's estate pursuant to the provisions of the Grantor's last will and testament, or any other persons transfer to the Trustee, as well as the proceeds from the sale or investment of such property, and the securities or other assets in which such proceeds may be invested and reinvested.

B. Additional Assets Contributed to Trust.

The Grantor, or any other person, may assign or transfer after the date of this Trust Agreement, to the Trustee, securities, policies of life insurance or interests therein (whether or not premiums are paid directly by Grantor or otherwise to the insurance company) or other property, whether real or personal, tangible or intangible, reasonably acceptable to the Trustee as an Addition to the Trust Estate. All Additions shall be added to the Trust Estate.

C. Additions To The Trust Estate Following Death of Grantor.

Following the death of the Grantor, the Trustee may collect and add to the Trust Estate the following property, if such assets are reasonably acceptable to the Trustee: (i) Amounts payable under insurance policies on the life of the Grantor held in this Trust; (ii) Amounts payable under insurance on the life of the Grantor in which the Trustee has been designated beneficiary which are not held in this Trust; (iii) Amounts payable under the Grantor's employee benefit plans in which the Trustee has been designated as beneficiary; (iv) Property payable to the Trustee by the legal representatives of the Grantor's estate pursuant to the provisions of the Grantor's last will and testament; (v) Property payable to a trust formed under Grantor's last will for the benefit of a person who is a beneficiary of a similar Trust formed hereunder, and for which the Executor of Grantor's last will has the authority to combine by transfer with a Trust formed hereunder; and (vi) Property payable by any other persons, whether pursuant to the provisions of such person's last will or otherwise, to the Trustee.

D. Trustee Dealing with Additions.

The Trustee shall accept and hold any Addition, if such property is reasonably acceptable to the Trustee, as part of the Trust Estate subject to the terms and provisions of this Trust Agreement. The Trustee shall then deal with, manage, operate, invest, reinvest, and dispose of these Additions as part of the Trust Estate, as provided in this Trust Agreement. The Trustee shall not be under any duty to accept any Addition not reasonably acceptable in the Trustee's reasonable discretion. The Trustee shall not be under any obligation to record any assignment, transfer, or other written evidence of any Addition.

III. GRANTOR'S POWERS AND RIGHTS UNDER THE TRUST.

Note: The following paragraph is key to obtaining the results most people intend to obtain from a living trust -- that you can change, amend or revoke it any time. This right, however, is also why a typical revocable living trust does not constitute a completed gift for gift tax purposes (i.e., the assets transferred will be taxed in your taxable estate when you die, even if they are excluded from your probate estate). Contrary to popular belief, revocable living trusts offer no tax advantages (they are not a separate taxable entity for income tax purposes, and the marital and by-pass trusts which they include for estate tax purposes can be provided cheaper and more simply in a will). The fact that a revocable trust can be changes is also why revocable living trusts provide little or no asset protection benefits.

The Grantor has been advised with respect to the difference between revocable and irrevocable trusts and hereby declares that any trust formed under this Trust Agreement, and the Trust Estate created hereby, are to be revocable, so that Grantor, during Grantor's life, may change, amend or modify, in any manner and to any extent, the provisions of this Trust Agreement. The Grantor has retained every right and power to alter, amend, revoke or terminate any Trust provision or interest, whether under this Trust Agreement, or any rule of law. Grantor may revoke this Trust, or amend any provision of this Trust, by giving Notice to the Trustee.

IV. DISTRIBUTION OF INCOME AND PRINCIPAL -- PRIMARY PROVISIONS GENERALLY.

A. Revocable Living Trust Distribution Provisions.

Note: Modify the provisions below to meet your specific and personal goals for the beneficiaries. Generally, distributions during Grantor's lifetime are paid or applied for the benefit of the Grantor only, unless otherwise indicated by the facts. If you have family or other loved ones dependent on your support they can or should be included. If your estate is substantial enough to be subject to estate tax, consider authorizing the making of gifts to designated persons.

Caution: Distributions to persons other than the grantor may be taxable gifts. The gift tax implications must be considered when they exceed $10,000 per year per person, exclusive of payments directly to unsteadiness for qualified tuition or medical care providers.

1. Distributions During Grantor's Lifetime - Grantor Not Disabled.

Note: the first "phase" of a revocable living trust is while you (the grantor) are alive and not disabled.

a. During Grantor's lifetime, the Trustee shall hold the Trust Estate, in trust, to pay or apply to or for the benefit of any one or more of the following persons: Grantor. The net income of the Trust shall be applied in amounts, whether equal or unequal, as the Trustee (@without regard to any Independent Trustee, even where applicable), in the exercise of absolute discretion, may consider desirable for the health, education, support or maintenance of the Grantor. The judgment of the Trustee, as to the propriety and amount of such payment, shall be conclusive.

Note: The following language must be tailored to meet your specific desires.

It is the express desire of the Grantor that the Trustee apply income liberally, without concern for the retention of any monies for future or remainder beneficiaries.

b. The Trustee may accumulate any of the net income not paid or applied for the benefit of the Lifetime Beneficiary, and add it to the principal of this Trust at least annually and thereafter to hold, administer and dispose of it as a part of the Trust Estate.

Note: The following paragraph may be modified to reflect permissible donees, e.g., children of Grantor.

c. Gifts may be made from the trust in directly to #CHILDREN NAMES ("Children") *#THRONES only, or trusts for the benefit of such persons. @#Gifts hereunder may be #unlimited #limited to *#DESCRIBE LIMITATION.

2. Distributions During Grantor's Life - Grantor Disabled.

Note: The "second phase" of a revocable living trust is when you (the grantor) are disabled. Carefully determine what requirements or conditions must be met for you to be disabled. If these conditions are met what should happen? Generally, the successor trustee or co-trustees take over management of your trust since you are unable to. But what other provisions should apply? Should gifts still be permitted? How and when should funds be disbursed? When and how should these provisions revert if you recover? What standard should be used to determine if you are no longer disabled.

Note: Trust assets should be expended for the Grantor's care if the Grantor is disabled. What standard? Any special instructions for care?

a. During Grantor's disability, as defined below, the Trustee shall administer the Trust Estate for the care of Grantor, and shall expend any amounts of Trust income or principal as the Trustee, in the exercise of absolute discretion, shall deem necessary or advisable in accordance with the following provisions.

Note: The following is one possible definition of disability and when the disability is over.

b. The Grantor shall be deemed to be disabled when:

(1) Grantor is unable to manage Grantor's affairs and property effectively for reasons such as mental illness, mental deficiency, physical illness or disability, advanced age, chronic use of drugs, chronic intoxication, confinement, kidnapping, detention by a foreign power or disappearance where such condition is confirmed in a writing signed by any Two (2) Trustees or Successor Trustees named herein (whether or not such persons are then acting as Trustees).

(2) For any other reason allowable by statute or law in the State.

(3) In addition to any other method acceptable to any third party relying upon the effectiveness of the appointment of any Trustee or successor Trustee, or any method allowed by law, it shall be deemed conclusive proof that the appointment of such person is effective upon a sworn statement being executed by a Trustee then acting (other than Grantor), One (1) of Grantor's natural children and any One (1) doctor properly licensed to practice in the State or the state where Grantor is then institutionalized, confined or resident, or any Two (2) doctors properly licensed to practice in the State or the state where Grantor is then institutionalized, confined or resident. Also, any additional or successor Trustee may be appointed where (as set forth below) such successor Trustee receives written certification from Two (2) physicians regularly attending the Grantor (or a then serving Trustee), at least One (1) of which physicians is board certified in the specialty most closely associated with the alleged disability, that the Grantor (or the then serving Trustee) has become physically or mentally incapacitated, regardless of cause and regardless of whether or not there has been an adjudication of incompetence, mental illness, or need for a committee, conservator, guardian or other personal representative.

(4) Grantor is unable to manage Grantor's affairs and property effectively for reasons such as mental illness, mental deficiency, physical illness or disability, advanced age, chronic use of drugs, chronic intoxication, confinement, kidnapping, detention by a foreign power or disappearance @where such condition is confirmed in a writing signed by any Two (2) Trustees or Successor Trustees named herein (whether or not such persons are then acting as Trustees).

(5) For any other reason allowable by statute or law.

#Note: The paragraph below also must be modified to fit the client's facts.

(6) In addition to any other method acceptable to any third party relying upon the effectiveness of the appointment of any Trustee or successor Trustee, or any method allowed by law, it shall be deemed conclusive proof that the appointment of such person is effective upon a sworn statement being executed by a Trustee then acting (other than Grantor), #Grantor's spouse, #One (1) of Grantor's natural children and any One (1) doctor properly licensed to practice in the State or the state where Grantor is then institutionalized, confined or resident, or any Two (2) doctors properly licensed to practice in the State or the state where Grantor is then institutionalized, confined or resident. Also, any additional or successor Trustee may be appointed where (as set forth below) such successor Trustee receives written certification from Two (2) physicians regularly attending the Grantor (or a then serving Trustee), at least One (1) of which physicians is board certified in the specialty most closely associated with the alleged disability, that the Grantor (or the then serving Trustee) has become physically or mentally incapacitated, regardless of cause and regardless of whether or not there has been an adjudication of incompetence, mental illness, or need for a committee, conservator, guardian or other personal representative.

c. The Grantor shall be deemed to have recovered from any such disability when@:

(1) The other then serving Trustee receives written certification from Two (2) physicians regularly attending the Grantor, at least One (1) of which physicians is board certified in the specialty most closely associated with the alleged disability, that the Grantor is no longer physically or mentally incapacitated, and that Grantor is again able to manage his or her own financial affairs.

(2) @For any other reason allowable by statute or law in the State.

(3) Grantor is no longer unable to manage Grantor's affairs and property effectively for reasons such as mental illness, mental deficiency, physical illness or disability, advanced age, chronic use of drugs, chronic intoxication, confinement, kidnapping, detention by a foreign power or disappearance, and the reversal or absence of such condition or situation is confirmed in a writing signed by any Two (2) Trustees or Successor Trustees named herein (whether or not such persons are then acting as Trustees).

The Trustee shall not be liable to any person, including Grantor, for the removal of the Grantor as a Trustee, if he or she acted in good faith on the certificates obtained in accordance with this provision.

d. Where Grantor is disabled, the next person selected from the provision below @entitled "Additional or Successor Trustee" shall serve as co-Trustee in place of Grantor.

e. During any disability of the Grantor, the Grantor directs that the following standards be used as the standards for income and principal distributions instead of the Standard for Payment set forth elsewhere in this Trust Agreement:

Note: Tailor the provisions below to fit the facts.

(1) Grantor directs that Grantor have the best medical and health care provided to Grantor and that the Trustee shall distribute Trust income and principal accordingly.

(2) Grantor directs that every effort reasonable be made to enable Grantor to continue to reside in Grantor's personal residence for as long as possible, and that every reasonable effort be made to accommodate Grantor's health care needs in such home rather than relocating to a health care facility.

(3) In the event that Grantor must be relocated to any nursing or health care facility, Grantor directs that every effort possible be made that any such facility be operated under *RELIGIOUS PREFERENCE auspices.

f. Notwithstanding anything in this Trust to the contrary, any restrictions on distributions provided in the provision below governing Distributions To A Person Under A Disability, shall not apply to restrict any distributions to Grantor when Grantor is disabled, or following any period of Grantor's disability.

Note: The provision below is included in a revocable living trust to reflect additions and distributions after the death of the Grantor. These trust provisions will often track the Grantor's will, but do not necessarily have to.

3. Distributions Following Death of Grantor.

Note: The "third phase" in a revocable living trust is often the death of the grantor.

a. Trustee Should Collect Additional Assets.

Note: The following phrases permit or instruct the Trustee to accept or receive the assets indicated, but more must occur. If the title or beneficiary designations to these assets does not reflect the trust the Trustee may have no authority to obtain the assets.

Following the death of the Grantor, the Trustee shall collect and add to the Trust Estate: (i) Amounts payable under insurance policies on the life of the Grantor held in this Trust; (ii) Amounts payable under insurance on the life of the Grantor in which the Trustee has been designated beneficiary; (iii) Amounts payable under the Grantor's employee benefit plans in which the Trustee has been designated as beneficiary; and (iv) Property payable to the Trustee by the legal representatives of the Grantor's estate pursuant to the provisions of the Grantor's last will and testament. The Trustee shall then deal with and dispose of these additions as part of the Trust Estate as provided in the following provision.

b. Trustee To Make Payments For Taxes, Bequests, and Other Items.

To the extent that the Trustee is either requested in writing by the executor or personal representative of the Grantor's estate, or required as a legal obligation of this Trust under federal or applicable state law, the Trustee shall pay:

Note: The following clauses could be coordinated with the estate tax allocation clause in the will. In addition, if there are any specific bequests in the will, and the probate estate is insufficient to pay the specific bequests, then the trustee could be given the authority to pay the estate taxes and the specific bequests. A host of complexities can arise when an estate is divided between probate (i.e. will) and revocable living trust which does not go through probate and a large tax cost is due. Caution should be exercised.

(1) Any expenses of Grantor's last illness and funeral, as well as any of Grantor's debts, as soon after Grantor's death as would be advantageous to the administration of Grantor's estate. These debts, however, shall not include: (i) Payment in full of obligations secured by mortgages on real estate or cooperative apartments, which debts the Trustee shall only pay in the sole and absolute discretion of the Trustee; or (ii) Payment in full of debts owing insurance companies secured by insurance policies, which debts shall first be satisfied out of the proceeds of the policies securing them. This provision shall not serve to revive any of Grantor's debts barred by the statute of limitations.

(2) Any cash bequests and general legacies for which the Grantor's estate lacks sufficient cash and marketable securities; and

(3) All estate, inheritance, succession, transfer, and other death taxes imposed by any domestic or foreign jurisdiction by reason of Grantor's death upon Grantor's taxable estate for the purposes of any such tax to the extent required: (i) under the provisions of this Trust; (ii) the provisions of Grantor's last will and testament, or (iii) in the discretion of the Trustee:

(a) Such payments shall be charged against and paid from the property disposed of under this Trust which would not qualify for the unlimited marital or charitable deductions, if applicable. To the extent that there is insufficient property meeting such criteria, such payments shall be charged against other assets under this Trust.

Note: The following provision must be tailored to fit your facts. Will there also be a marital/QTIP trust? a QDOT (trust for non-citizen spouse to qualify for the estate tax marital deduction)? If not, modify or delete the following as appropriate. Again, these provisions may be similar to those contained in your will (consider whether there should be a pour-over will to distribute probate assets to the trust) if there is a Revocable Living Trust).

(b) Notwithstanding anything herein to the contrary, the following taxes (and any corresponding state or foreign taxes) are, however, excluded from the previous direction and shall be apportioned and paid in the manner provided by applicable law (including without limitation state apportionment law and Code Sections 2207, 2207A and 2207B) taking into account provisions of the instrument governing such property:

i) taxes on general power of appointment property includible in my gross estate under Code Section 2041;

ii) any generation-skipping transfer ("GST") tax under Chapter 13 of the Code, which shall be charged to the property constituting the generation-skipping transfer on which such tax is imposed, as provided in Code Section 2603(b); and

(c) Taxes on any other assets included in Grantor's estate, but not passing under Grantor's last will and testament or this Trust, shall be apportioned against the legal owners of such assets and they shall not, unless required by federal or *STATE NAME law, be paid out of this Trust.

(d) The Trustee shall not be liable to any person for payments made in reliance on the written request of the executor or personal representative of the Grantor's estate, or made in reliance on an opinion of counsel that such taxes are required to be paid as a legal obligation of this Trust under federal or applicable state law.

(4) Notwithstanding anything herein to the contrary, the Trustee shall not distribute to Grantor's estate the proceeds of any life insurance policy to pay debts, liens, or other claims, which would not otherwise be subject to such debts, liens or other claims.

Note: The next provision may be applicable, if on the death of the grantor there is a surviving spouse, and a credit shelter trust and QTIP Trust is being created. Discuss this with your estate planner and tax adviser.

c. Distributions to Spouse of Grantor Subject to Renunciation.

Note: Discuss the pros and cons of providing for a disclaimer arrangement with your estate planner. If you have children, the reference to later children's trusts may be appropriate, depending on the age of the children and other facts. If no trusts are to be provided for children, or you have heirs who are not children the reference below should be modified and later provisions will have to be replaced with distribution provisions that address your particular circumstances.

(1) The Trustee shall distribute #the remaining Trust Estate to Grantor's spouse, should she survive Grantor for Ninety (90) days. Should Grantor's spouse not survive Grantor for @Ninety (90) days, the Trustee shall distribute the Trust Estate as provided in the provision below, "#*Distribution To Multiple Children's Trusts".

(2) Should Grantor's spouse renounce any portion or all of this distribution, and such renunciation is effective for purposes of federal income tax and applicable state law, such distribution shall instead be distributed as provided in the following paragraphs:

(a) The portion of such assets renounced which equal the maximum dollar amount that would be taxed for federal estate tax purposes at marginal federal estate tax rates which are less than the then highest marginal federal estate tax rate shall be distributed to, and become part of, the Credit Shelter Trust, established herein. The purpose and intent of this provision is to permit Grantor's surviving spouse to determine to take advantage of the graduated federal estate tax rates in Grantor's estate where Grantor pre-deceases Grantor's spouse.

(b) Any assets renounced by Grantor's spouse above the amount provided for in the preceding paragraph shall be distributed in accordance with the provision

#"QTIP Trust for Surviving Spouse".

#"#*Distribution To Multiple Children's Trusts", below.

Note:#The following credit shelter trust is created in the trust for the first spouse to die.

d. Applicable Exclusion (By-Pass/Credit Shelter) Trust for Grantor's Surviving Spouse.

Note: The following paragraph addresses protecting assets equal to the applicable exclusion amount ($625,000 in 1998 increasing to $1 million by 2006).

(1) If Grantor's spouse survives Grantor, then the Trustee shall set aside, in trust as provided below, the largest amount of assets which will not result in any federal estate tax payable in Grantor's estate after giving effect to the unified credit to which Grantor's estate is entitled, as well as any other credits applicable to Grantor's estate. In determining the credits applicable, state death tax credit shall only be considered to the extent that it will not result in an overall increase in the aggregate (state and federal) death tax liability due as result of Grantor's death. The amount so calculated shall be reduced by the following: (i) The value of property transferred under the provisions of Grantor's will, and property which passes outside of Grantor's Will, which is included in Grantor's gross estate and which does not qualify for the marital deduction (or for which no marital deduction is claimed in Grantor's estate); and (ii) Administration expenses and principal payments on debts that are not allowed as deductions for Grantor's federal estate tax; and (iii) the amount of any adjusted taxable gifts as defined under Code Section 2001, which were made by Grantor after December 31, 1976. For the purpose of establishing the amount disposed of by this provision the values finally fixed in the federal estate tax proceeding relating to Grantor's estate shall be used.

In making the determinations required under this provision it is Grantor's intent, but not requirement, that this applicable exclusion (unified Credit) Shelter Trust be funded so as to make the maximum use of Grantor's unified credit, even if the result is a reduction in the amount to be given out-right to Grantor's spouse, or for the benefit of Grantor's spouse in a QTIP or QDOT Trust, if any, below.

(2) Any Credit Shelter Trust established under the preceding provision of this Trust shall be administered as follows:

(a) The Trustee shall hold, manage and invest the amounts held in this Credit Shelter Trust as a separate trust, and in accordance with the provisions herein. The Trustee shall collect and receive any income on assets in the Credit Shelter Trust, and shall pay it to the extent and at such times as the Trustee, in accordance with the Standard For Payment (set forth below), for such one or more members of a class consisting of Grantor's spouse, #and Grantor's Children, #and other descendants living from time to time, (collectively, the "#Recipients"). Any net income not so paid over or applied for the benefit of the persons named in this provision, shall be accumulated and added to the principal of this Credit Shelter Trust, at least annually, and thereafter shall be held, administered and disposed of as a part of this Credit Shelter Trust.

Note: Carefully define and coordinate throughout this Trust the definition of the beneficiaries at each phase of the revocable living trust. Typically, the "third phase" (see above) of a revocable living trust is the death of the grantor. Often this is followed by a by-pass (applicable exclusion) trust and/or martial distribution or trust. Following this phase, which typically ends at the death of the surviving spouse, the final distribution plan is put into place. This could be distributions to children (or other heirs if no children). This is typically the fourth phase and last phase in the revocable living trust.

(b) The Trustee is also authorized to pay to, or apply for the benefit of, one or more members of a class consisting of the #Recipients such parts of the principal of the trust as the Trustee in absolute discretion shall deem necessary or advisable in accordance with the Standard For Payment, set forth below. These payments and applications may be made irrespective of the fact that such payments may exhaust the principal of the trust being held for the benefit of any persons. The determinations of the Trustee as to the amount of principal payments or applications under this provision shall be final and conclusive on all persons with any interest in this Trust. Upon the making of any payments or applications under this provision the Trustee shall be fully released and discharged from any further liability or accountability.

Note: If the spouse has a right of withdrawal, then unless exercised in the year of death, the greater of $5,000 or 5% of the trust assets would be included in the taxable estate of the surviving spouse. When this right is added to a QTIP trust there is no estate tax issue since the entire QTIP trust is taxable in the surviving spouse's estate in any event. The tax issue becomes relevant if this power were added to the by-pass trust above.

(c) Grantor's spouse shall have the right to request of the Trustee of this Credit Shelter Trust to pay over to such surviving spouse, upon written request, out of the principal of this Credit Shelter Trust, in each successive calendar year commencing with the calendar year in which Grantor's death occurs, a sum not exceeding the greater of Five Thousand Dollars ($5,000) or Five Percent (5%) of the assets of the principal of this Credit Shelter Trust valued as of the date of the receipt of such request, provided, however, that only one such request may be made in any one calendar year, and such right to withdraw sums of principal shall not be cumulative from year to year.

(3) This Credit Shelter Trust shall be irrevocable.

Note: the reference in the provision following should be coordinated with your ultimate distribution objectives.

(4) Following the death of Grantor's spouse, the principal and any undistributed income not then added to principal of this Credit Shelter Trust, shall be disposed of in the manner provided in the provision below

#"Distribution Outright To Children and Issue of Deceased Child".

#"Dispositions After Death of Grantor and Grantor's Spouse".

Note: The following provision must be tailored to reflect your dispositive scheme which should generally be identical (or at least coordinated with if the will is not a pure pour-over) to those in your will. As an example for purposes of this sample draft, we have assumed that the remaining assets be distributed in accordance with the provision entitled "Remaining Trust Estate Distributed in Equal Shares To Specified Beneficiaries".

B. Remaining Assets; Secondary Distribution Provisions.

All the rest and remainder of the Trust Estate and any accumulated but unpaid income of any Trust formed hereunder, wherever situated, not distributed pursuant to the provisions above, ("Remaining Trust Estate") shall be disposed of @in accordance with the provision entitled "Remaining Trust Estate Distributed in Equal Shares To Specified Beneficiaries".

Note: The following provisions will vary significantly from document to document in order to reflect the dispositive objectives of various grantors.

1. Remaining Trust Estate Distributed in Equal Shares To Specified Beneficiaries.

The Trustee shall divide the Remaining Trust Estate into the number of equal shares required by this provision, and distribute same to the persons @named or referred to below. Should any such @gift lapse, then the remaining persons shall continue to share in such Trust Estate, in the proportions set forth. The number of shares into which such Trust Estate shall be divided shall be the number of share for those distributees referred to below, and which distributions have not lapsed by the death of the distributees . The following distributees shall take under this provision:

a. One (1) Share to #CHILD1-NAME, who resides at #CHILD-1ADDRESS, outright and free of trust. If such distributee shall not be alive at such time, or shall disclaim or renounce any portion or all of the preceding distribution, then this distribution shall lapse.

b. One (1) Share to #CHILD2-NAME, who resides at #CHILD-2ADDRESS, outright and free of trust. If such distributee shall not be alive at such time, or shall disclaim or renounce any portion or all of the preceding distribution, then this distribution shall lapse.

Note: The following provides for a contingent beneficiary in the event that your heirs or family have predeceased your. It is always prudent to address "what if" scenarios in drafting trusts. Ask if the contingent beneficiaries should be other non-immediate family members? A charity?

2. Alternate Distribution When Preceding Distributions Fail.

Note: The many "#" indicate some of the many options which might be considered. Again, these provisions must be tailored to meet your personal objectives.

If any trust under the preceding provisions shall terminate as a result of the death of the beneficiary who was the beneficiary of such trust prior to

#such beneficiary reaching age Thirty-Five (35) years, #*#OTHER EVENT the Trustee shall transfer the Trust Estate of such trust,

#in equal parts to

#per stirpes to

#that beneficiary's then living issue. If there are no living issue, then per stirpes to the Grantor's then living issue. If any of Grantor's living issue is a beneficiary of a trust under the preceding provisions, then the amount such person is entitled to shall be added to the Trust Estate of that trust and shall be dealt with accordingly. If there are no living issue of the Grantor, then the Trustee shall divide the Trust Estate of that trust into the number of equal parts as there are parts in the following provisions, and transfer that Trust Estate to the following:

(1) One (1) parts to *ALTERNATE ONE, who resides at *ALTERNATE1-ADDRESS, or such beneficiary's issue, per stirpes if such beneficiary is deceased.

(2) One (1) parts to *ALTERNATE TWO, who resides at *ALTERNATE2-ADDRESS, or such beneficiary's issue, per stirpes if such beneficiary is deceased.

(3) One (1) parts to *ALTERNATE THREE, who resides at *ALTERNATE3-ADDRESS, or such beneficiary's issue, per stirpes if such beneficiary is deceased.

#to the then living descendants of Grantor's parents (but specifically excluding Grantor), *PARENTS NAME, as shall then be living, per stirpes.

#one half to the then living descendants of Grantor's parents (but specifically excluding Grantor), *PARENTS NAME, as shall then be living, per stirpes; and one half to the then living descendants of Grantor's deceased spouse's parents, as shall then be living, per stirpes. In the event that either set of parents pre-decease leaving no issue surviving me, then the bequest to that set of parents shall lapse.

Any assets not distributed pursuant to the above shall be distributed to Grantor's heirs at law under the laws of descent and distribution of the State as if Grantor had died intestate at@ that time. However, in no event shall Grantor or Grantor's estate #or Grantor's spouse or Grantor's spouse's estate# have any reversionary or similar interest in this trust or the any assets contained herein.

Note: The following provision covers minors receiving inheritances in the event that their parent is the grantor or predeceases the grantor. The inheritance is held in trust until age 35 or such other age as the client wishes, with mandatory principal distributions at age 25, 30 and 35. Consider income distributions, i.e., at what age should they become mandatory, if at all.

C. Beneficiary Under Age Thirty Five (35).

Note: The following provisions provide one approach to holding assets of a minor in trust. The options are unlimited. The key points are to provide protection for the minor and to protect the assets for the minor's future benefit.

a. If any individual ("Minor-Beneficiary") under the age of Thirty Five (35) years (who is not specifically made subject to a prior provision of this Trust governing distributions to such Minor-Beneficiary) becomes entitled to any property under any Trust established under this Trust Agreement, or any property from any trust created hereunder upon the termination thereof, the share set aside for such person shall be held further in trust by the Trustee for the following uses and purposes: to manage, invest and reinvest the same, to collect the income thereof and, to distribute such principal and interest in accordance with the Distribution by Age provided for #in the following provisions

("Distribution By Age"):

(1) To pay One (1) of such parts to the issue of each deceased Minor-Beneficiary, per stirpes, according to the provisions of this provision governing distributions to a Minor-Beneficiary Under Age Thirty Five (35).

(2) To pay One (1) of such parts to each Minor-Beneficiary who has attained the age of Thirty Five (35) years.

(3) To pay Two-Thirds (2/3) of One (1) of such parts to each of the Minor-Beneficiary who has attained the age of Thirty (30) years but has not attained the age of Thirty Five (35) years, and to hold the remainder of such part according to the terms and conditions of this provision.

(4) To pay One-Third (1/3) of One (1) of such parts to each Minor-Beneficiary who has attained the age of Twenty Five (25) years but has not attained the age of Thirty-Five (35) years, and to hold the remainder of such part according to the terms and conditions of this provision.

(5) To hold One (1) of such parts or the remaining portion thereof (whichever shall be applicable for each Minor-Beneficiary) as a separate trust fund in trust for the benefit of each Minor-Beneficiary who shall not have attained the age of Thirty Five (35) years, and to manage, administer, invest and reinvest the principal of such part, collect and receive the income and principal thereof, and pay over and distribute the income and principal as follows:

(a) Until the termination of the trust, the Trustee shall pay over to each Minor-Beneficiary who has reached the age of Eighteen (18) years all of the net income of such part, at convenient intervals but not less often than annually.

(b) Until the Minor-Beneficiary for whose benefit a part is held in trust attains the age of Thirty Five (35) years, the Trustee, at any time that they deem it advisable, may apply for the benefit of such Minor-Beneficiary, or pay over to such Minor-Beneficiary, so much, all or none of the principal of such Minor-Beneficiary's part, as the Trustee shall deem advisable to provide for such Minor-Beneficiary in accordance with the Standard For Payment, (defined below).

(c) Upon any Minor-Beneficiary reaching the age of Twenty Five (25) years the Trustee shall distribute to that Minor-Beneficiary One-Third (1/3) of the remaining principal of that part. Upon any @Minor-Beneficiary reaching the age of Thirty (30) years the Trustee shall distribute to that Minor-Beneficiary One-Half (1/2) of the remaining principal of that part. Upon any Minor-Beneficiary reaching the age of Thirty Five (35) years the Trustee shall distribute to that Minor-Beneficiary any remaining principal of that part, together with all undistributed income.

(d) Upon the death of such Minor-Beneficiary before reaching the age of Thirty-Five (35) years:

Note: If child, creditors of the child, and creditors of the Child's estate are excluded, then the Child Minor-Beneficiary would not have a general power of appointment and the generation skipping transfer tax (GST) issues would have to be addressed. Carefully consider these with your tax adviser.

i) The Trustee shall transfer the principal of the trust to such persons other than the Minor-Beneficiary, his or her estate, #but including his or her creditors and the creditors of his or her estate, to such extent, in such amounts or proportions, and in such lawful interests or estates, whether absolute or in trust, as such Minor-Beneficiary may by his or her last will and testament appoint by a specific reference to this power.

Note: If the minor does not exercise the power of appointment by including in his or her will a provision stating how the assets should be distributed, then the provision following will govern how the assets are distributed.

ii) If the power of appointment is for any reason not validly exercised in whole or in part by such Minor-Beneficiary, the principal of the trust, to the extent not validly appointed by such Minor-Beneficiary, shall, upon his or her death, be transferred to such Minor-Beneficiary's then living descendants, per stirpes, or, if no such descendant is then living, then the principal of the trust, shall upon his or her death, be transferred to #in equal shares to such Minor-Beneficiary's siblings then living, or the issue of any deceased sibling, per stirpes. @If there are living siblings or issue of any deceased sibling, then the principal of the trust, shall be transferred #to the Grantor's issue, per stirpes.

Such shares to be disposed of as provided for in this provision. Any Minor-Beneficiary of such amounts under the age of Thirty-Five (35) shall have such amounts held in trust as provided herein, unless the application of the provision concerning the Rule of Perpetuities would require otherwise.

b. If any tangible personal property shall at any time be held as part of such individual's trust, the Trustee shall have no duty to convert the same into productive property and the expenses of the safekeeping thereof, including insurance, shall be a proper charge against the assets of the trust.

c. If the Trustee shall determine at any time not to transfer in trust or not to continue to hold in trust any part or all of such property, they shall have full power and authority to transfer and pay over such property, or any part thereof, without bond, to such individual, if an adult under the law of the state of his or her domicile at the time of such payment, or to his or her parent, the guardian of his or her person or property, or to a custodian for such individual under any Uniform Gifts to Minors Act or Uniform Transfers to Minors Act, pursuant to which a custodian is acting or may be appointed, or to the person with whom such individual resides.

d. The receipt of such individual, if an adult, or the parent, guardian or custodian or any other person to whom any principal or income is transferred and paid over pursuant to any of the herein provisions shall constitute a full discharge to the Trustee from all liability with respect to such transfer.

V. OPERATIVE TRUST PROVISIONS.

Note: This provision is included in a trust if there is any possibility that the trust may hold stock in an S corporation so as to qualify the trust as a Qualified S Corporation Trust or "QSST". (1) S corporation stock may also be held by electing small business trusts (ESBT), i.e., trusts that have more than one potential beneficiary. Thus, a shareholder can put S corporation stock in a "sprinkle" trust without causing the S corporation to lose its qualification. (2) The post-death period during which grantor trusts (i.e., a revocable living trust) and testamentary trusts may hold S corporation stock is increased to two years (from 60 days). This provides more time and flexibility in dealing with S corporation stock held by these trusts after the death of the Grantor. Be certain that your business attorney considers these matters in drafting the shareholders' agreement for the corporation. Also, if the entities have not yet been formed give consideration to using limited liability companies, since they may be a preferable option depending on state law.

A. S Corporations and Qualified S Corporation Trust (QSST).

1. With respect to any part of the Trust Estate which is stock in a corporation electing under the provisions of Code Section 1362 to be taxed as an S corporation ("S corporation Assets"), this Trust Agreement is intended to be a Qualified Subchapter S Trust, as such term is defined under Code Section 1361(d). Notwithstanding any provision to the contrary in this Trust Agreement the Trustee shall, with respect to such stock, operate such part of any such trust in a manner consistent with such requirements. All provisions of this Trust Agreement which affect such part of any such trust shall be construed consistently with the requirements of a Qualified Subchapter S Trust.

2. Notwithstanding anything herein to the contrary, as to the S corporation Assets, the Trustee shall:

a. During the life of the beneficiary of such part of such trust there shall be only One (1) current income beneficiary of any such part of such trust formed under this Trust Agreement. In the event that more than one person could be a current income beneficiary under any such part of such trust under this Trust Agreement which could hold stock in an S Corporation, the Trustee is authorized to divide such trust into as many individual trusts as necessary in order to comply with the applicable provisions of the Code, if the Trustee deems appropriate in their absolute discretion.

b. All of the income, as defined in Code Section 643(b), of the S corporation Assets shall be distributed currently to the current income beneficiary.

c. Any corpus distributed during the life of such current income beneficiary, pursuant to the provisions elsewhere in this Trust, may be distributed only to such beneficiary.

d. The income interest of the current income beneficiary in this Trust shall terminate on the earlier of such beneficiary's death or the termination of this Trust.

e. If this Trust terminates during the life of the current income beneficiary, the Trustee shall distribute all S corporation Assets to such beneficiary.

f. If upon the death of the beneficiary of such part, if such trust would not meet the requirements of a Qualified Subchapter S Trust, then the Trustee shall distribute the S corporation Assets to the person or persons then constituting income beneficiaries of such part of such trust, if and only if, such distribution would enable the S corporation Assets to continue to meet the requirements of an S corporation in their hands. Any such distribution shall be made within the time periods required by the Code to prevent disqualification of the S corporation elections of the S corporation Assets.

g. The Trustee is authorized to make any minor technical corrections necessary to the terms of this Trust Agreement to assure that, with respect to the S corporation Assets, such part of such trust shall continue to meet the requirements of a Qualified Subchapter S Trust.

h. The Trustee may pay to the current income beneficiary, in addition to all other payments provided under this Trust, an amount approximately equal to the federal, state and local income taxes imposed on the current income beneficiary with respect to the S corporation Assets, on account of any income or gain allocated to trust principal, according to applicable accounting principles.

B. S Corporations and Electing Small Business Trusts (ESBT).

1. With respect to any part of the Trust Estate which is stock in a corporation electing under the provisions of Code Section 1362 to be taxed as an S corporation ("S corporation Assets"), this Trust Agreement is intended to be an Electing Small Business Trust, as such term is defined under Code Section 1361(c)(2)(A)(v). Notwithstanding any provision to the contrary in this Trust Agreement the Trustee shall, with respect to such stock, operate such part of any such trust in a manner consistent with such requirements. All provisions of this Trust Agreement which affect such part of any such trust shall be construed consistently with the requirements of an Electing Small Business Trust.

2. Notwithstanding anything herein to the contrary, as to the S corporation Assets, the Trustee shall:

a. The Trust shall not have any beneficiaries other than individuals, estates or charitable organizations described in Code Section 170 (c)(2), (3), (4) and (5).

b. No interests in the Trust shall have been or shall be acquired by purchase.

c. An election to be a Small Business Trust applies to the Trust.

d. The Trust has not made a QSST election with respect to any stock held by the Trust and is not a tax-exempt trust.

e. The Trustee is authorized to make any minor technical corrections necessary to the terms of this Trust Agreement to assure that, with respect to the S corporation Assets, such part of such trust shall continue to meet the requirements of an Electing Small Business Trust.

C. Post-Death Eligibility of Trust to be S Corporation Shareholders.

This Trust shall continue to be an S Corporation shareholder for a period not to exceed two (2) years from the death of the Grantor, without regard to whether the entire Trust corpus is includible in the Grantor's estate. After such period, the Trust shall not be authorized to hold such stock.

D. Generation Skipping Transfer Tax (GSTT) Provisions.

Note: This provision is included in a revocable living trust if there is any possibility that a "skip" person may receive a distribution from the trust. If GST issues are possibly relevant, be certain to consult with a tax adviser to be certain that GST considerations are addressed in your overall planning. This may include designating specific trusts or gift plans designed to maximize the use of the annual gift tax exclusion and $1 million (to be indexed) GST exemption amount. This planning has not been addressed in this trust.

With respect to the tax on generation-skipping transfers set forth in Chapter 13, the Generation Skipping Transfer Tax (the "GSTT") of the Code, the Grantor grants the following powers to the Trustee:

1. The power to allocate any portion of the Grantor's GSTT exemption, as set forth in Code Section 2631(a), as amended, or any successor statute, not allocated during the Grantor's lifetime, or by Grantor's executor, to any property with respect to which the Grantor is treated as the transferor for purposes of Chapter 13 of the Code, including, but not limited to, any property transferred by the Grantor during the Grantor's lifetime, at such time and in such manner as set forth in Code Section 2632 or any successor statute and the regulations promulgated there under.

2. The power to divide property in any Trust or part thereof being held under this Trust Agreement with an inclusion ratio, as defined in Code Section 2642(a)(1), of neither One (1) nor Zero (0) into Two (2) or more separate Trusts representing fractional shares of the property being divided, with One (1) or more of said shares having an inclusion ratio of Zero (0) and the other share or shares having an inclusion ratio of One (1).

3. With respect to all, or any part, of the principal of any such Trust or part thereof being held under any trust formed under this Trust Agreement which may be subject to the GSTT, by an instrument filed with the Trust records:

a. The power to create in a beneficiary, #other than Grantor's spouse, *SPOUSE NAME, a general power of appointment within the meaning of Code Section 2041, as amended, that may dispose of the property upon the death of that beneficiary. However, the exercise of such power shall require the consent of the Trustee, other than the beneficiary, provided that such consent requirement shall not prevent the power from being treated as a general power of appointment as defined in Code Section 2041. If such consent requirement prevents the power from being treated as a general power of appointment, said requirement shall be interpreted and applied in the minimum manner necessary in order to qualify it as a general power of appointment.

b. The power to eliminate such a general power of appointment for all or any part of the principal as to which such power was previously created.

c. The power to irrevocably release the right to create or eliminate such power.

d. The power to divide the Trust Estate into Two (2) fractional shares based upon the then portion of the Trust Estate that would be included in the gross estate of the beneficiary holding such power if he or she died immediately before such division (in which case the power shall be over the entire principal of One (1) share and over no part of the other share) and each such share shall be administered as a separate trust. However, the Trustee, other than any beneficiary, shall in their sole discretion have the right to thereafter combine such separate trusts into a single trust. In authorizing such action, the Grantor's expresses hope, but does not require, that a general power will be kept in effect when the Trustee, other than any beneficiary, believe the inclusion of the property affected by such general power of appointment in the beneficiary's gross estate, may achieve a significant savings in transfer taxes by having an estate tax rather than a GSTT imposed on the property subject to the general power of appointment, which may also permit a greater use of the GSTT exemption under Code Section 2631(a) of any beneficiary, or spouse of any beneficiary.

e. The power to exercise the special election provided by Code Section 2652(a)(3) as to any trust created for the benefit of Grantor's spouse which qualifies for the marital deduction. If the Trustee shall so elect and an allocation of GST exemption is made to such trust, the Trustee may, in such Trustee's sole discretion, set apart a fractional share of the such trust in a separate trust to cause its inclusion ratio to be zero.

VI. Distribution Standards, Generally.

A. Standard For Payment.

Note: Watch the implications of the following provisions to the marital deduction. If a distribution is to be made to the grantor's surviving spouse, it is best to use an out-right bequest, QTIP (or other qualifying marital trust).

1. No Limitations Shall Apply During Life of Grantor of Revocable Living Trust.

While Grantor is alive, there shall be no restriction or limitation of any nature on the distributions made to Grantor or for the benefit of Grantor.

Note: The provisions below are intended to provide that trust distributions (principal and income) be in accordance with an "ascertainable standard" as defined by the tax laws.

2. Ascertainable Standard For Payment of Income and Principal.

Unless specifically provided to the contrary in this Trust Agreement, any payment of principal or income by the Trustee shall be made in accordance with the ascertainable standards contained in the provisions following ("Standard For Payment"):

3. #Standard For Payment of Principal.

The Trustee of any trust created under this Trust Agreement are authorized, at any time, with respect to any beneficiary of any Trust formed under this Trust Agreement then eligible to receive the net income from such trust, to pay to, or apply for the benefit of such persons such sums out of the principal of such trust (including the entire principal amount), as the Trustee considers advisable to provide for such beneficiary in accordance with the broadest definition of an "ascertainable standard" as such term is defined by Code Section 2041(b)(1)(A), the regulations under Section 20.2041-1, including but not limited to Treasury Regulation Section 20.2041-1(c)(2). This shall include the power to consume, or invade principal for the benefit of the particular beneficiary as limited by an ascertainable standard relating to the health, education, support or maintenance of such person. Such power shall be limited to the reasonably measurable terms of the beneficiary's needs for health, education or support (or any combination of such items). The words support and maintenance are not limited to the bare necessities of life. This power shall include: the power to support such beneficiary in reasonable comfort; provide for the maintenance in health and reasonable comfort of such beneficiary; support such beneficiary in such beneficiary's accustomed manner of living (this shall not limit, however, distributions where greater distributions could be made in accordance with an ascertainable standard even though such distributions exceed the beneficiary's accustomed manner of living); provide for the education, including college and professional education of such beneficiary; and provide for the health, medical, dental, hospital, nursing expenses and expenses of invalidism of such beneficiary.

4. Standard For Payment of Income.

The Trustee shall pay any portion, or all of the income of any trust formed under this Trust Agreement to the designated beneficiaries of such trust in accordance with the instructions provided for any such trust. Where no specific instructions are so provided, or such instructions are unclear, the amount of income distributed shall be payable in the discretion of the Trustee, in accordance with the ascertainable standard described in the preceding provision. Notwithstanding anything in this Trust to the contrary, this provision shall not be interpreted or applied in a manner to restrict the required income distributions from any trust intended to qualify for the unlimited estate or gift tax marital deduction.

B. Special Distribution Standards.

1. Guidelines for Discretionary Distributions.

It is the desire of the Grantor that in making any discretionary distributions of income or principal the Trustee shall take into account other resources that the beneficiary may have at his or her disposition.

2. Spendthrift Clause.

Note: Consider using the following restriction only for a revocable living trust where the grantor (you) wishes to have no restrictions on the use of funds during his or her life.

The following provision shall only apply following Grantor's death:

Except as may be otherwise provided in this Trust Agreement, no transfer disposition, charge or encumbrance on the income or principal of any trust created under this Trust Agreement, by any beneficiary by way of anticipation shall be valid or in any way binding upon the Trustee. The right of any beneficiary to any payment of income or principal is subject to any charge or deduction which the Trustee makes against it under the authority granted to them by any statute, law or by any provision of this Trust Agreement. No beneficiary shall have the right to transfer, dispose of, assign, or encumber such income or principal until the assets shall be paid to that beneficiary by the Trustee. No income or principal shall be liable to any claim of any creditor of any such beneficiary.

3. Distributions to Person Under Legal Obligation.

Note: The following paragraph could, in some form, be included if a trustee could be a parent or other responsible person for a beneficiary. If the trustee/parent has the power to use the trust assets to discharge their legal obligation of support, whether or not this power is limited by an ascertainable standard, the income earned by the trust assets will be taxed at the parent's rate. In addition, the assets may be included in the trustee's estate, since the parent is indirectly benefiting him or herself and that power is taxable under Sections 2041 and 2514. This is one of the reasons for having another co-trustee and to provide in the trust document that the parent/trustee is barred from participating in the exercise of any discretion to determine the propriety, or amounts of payments to the trustee's dependents. Should this apply to the grantor since the assets are included in the grantor's estate in any event?

The following provision shall not apply to distributions made by Grantor where Grantor is serving as a Trustee:

The Trustee shall not pay or expend the Trust Estate in a manner that would discharge any Trustee's legal obligation to support a particular beneficiary, if any. Therefore, no Trustee shall have the power or discretion, or be deemed to be a Trustee with respect to the making of payments, applications or allotments of income or principal to, or for the use or benefit of, himself or herself as a beneficiary of any Trust hereunder or for any person whom such Trustee, in his or her individual capacity, is legally obligated to support if such payment or application would constitute the discharge of any part of such Trustee's support obligation. No Trustee shall make payments to himself or herself or for his or her benefit where such payments or application would cause the inclusion of the assets form which such payments are made in the Trustee's personal estate. Where a Trustee is prohibited from taking an action as a result of this provision, then the other serving Trustee who is permitted after the application of this provision to serve, shall then serve alone with respect to such action (the "Independent Trustee"). If no Trustee is then qualified to serve as an Independent Trustee, the person listed herein as the next successor Trustee shall be appointed as Co-Trustee.

Note: The following paragraph is generally not used since it could permit a parent to pay a child's necessities, etc.

Note: The divorce provision may or may not be included, depending on your situation and feelings.

4. Divorce.

If a divorce judgment is entered into between Grantor and Grantor's spouse, *SPOUSE NAME, then Grantor's spouse shall be deemed to have predeceased Grantor as effective on the date of such judgment, and all provisions of this Trust Agreement, and any trust formed hereunder, shall be interpreted accordingly.

Note: It is important that you identify the names and addresses of successor agents in case the initial trustee (or co-trustees) are unable to act. The reasons for having co-trustees as opposed to one trustee may include: (1) to share the burden of trust administration, (2) provide continuity in trust administration when Grantor/Co-Trustee becomes disabled, (3) etc.

VII. TRUSTEE - RIGHTS, OBLIGATIONS AND POWERS.

A. TRUSTEE SELECTION.

1. Additional or Successor Trustee.

a. #If either of the Two (2) persons named above to serve as Trustee are unable or unwilling to serve, then *AGENT3-NAME, who resides at *AGENT-3ADDRESS, shall serve as Co-Trustee. If *AGENT3-NAME is unable or unwilling to serve, then *AGENT4-NAME, who resides at *AGENT-4ADDRESS shall serve as Co-Trustee. If *AGENT4-NAME is unable or unwilling to serve, then *AGENT5-NAME, who resides at *AGENT-5ADDRESS, shall serve as Co-Trustee.

*# [Add names of any additional alternate Trustees furnished by you].

b. If Grantor is unable or unwilling to serve, then *AGENT3-NAME, who resides at *AGENT-3ADDRESS, shall serve as Co-Trustee. If *AGENT3-NAME is unable or unwilling to serve, then *AGENT4-NAME, who resides at *AGENT-4ADDRESS shall serve as Co-Trustee. #If *AGENT4-NAME is unable or unwilling to serve, then *AGENT5-NAME, who resides at *AGENT-5ADDRESS, shall serve as Co-Trustee.*#*.

(1) Trustee May Appoint Additional Trustee.

Note: The provision below is used in case the individuals listed above are unable or unwilling to act. The last acting trustee is authorized to appoint an additional trustee.

If at any time any person is the last acting Trustee under any Trust created hereunder, such Trustee is authorized to designate, in such Trustee's reasonable discretion, any individual or succession of individuals, or bank or trust compa