EXHIBIT 1
XXXXXX AND XXXXX XXXXXXXX FAMILY TRUST
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June 5, 1991
Page 10 of 77
TABLE OF CONTENTS
ARTICLE 1
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INTRODUCTORY PROVISIONS
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1.1 TRUST ESTATE 1
1.2 NAMES OF TRUSTS 1
1.3 TRUSTEE 1
1.4 TRUSTORS 1
1.5 FAMILY DECLARATIONS 1
1.6 CHARACTER OF TRUST PROPERTY 2
1.7 NO CONTRACT FOR TRUST DISPOSITION 2
ARTICLE 2
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TRUST DURING TRUSTORS' JOINT LIVES
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2.1 PAYMENTS IN TRUSTEE'S DISCRETION 2
2.2 TRUSTORS' POWER TO DIRECT PAYMENTS 3
2.3 TRUSTORS' USE OF RESIDENCE 3
2.4 LIMITATIONS IF TRUSTOR INCAPACITATED 3
2.5 TRUSTEE'S EXERCISE OF DISCRETION 4
ARTICLE 3
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DIVISION ON DEATH OF FIRST SPOUSE
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3.1 DIVISION OF COMMUNITY PROPERTY 4
3.2 DECEASED SPOUSE'S EXPENSES 5
3.3 DIVISION INTO SEPARATE TRUSTS-IF XXXXX IS THE
SURVIVING SPOUSE 5
3.4 DIVISION INTO SEPARATE TRUSTS-IF ED IS THE
SURVIVING SPOUSE 6
3.5 MARITAL DEDUCTION AMOUNT 6
3.6 DISCLAIMERS BY SURVIVING SPOUSE 7
ARTICLE 4
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TRUSTS DURING SURVIVING SPOUSE'S LIFETIME
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A. SURVIVOR'S TRUST
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4.1 DISCRETIONARY PAYMENTS BY TRUSTEE 8
4.2 SURVIVING SPOUSE'S POWER TO DIRECT PAYMENTS 8
4.3 INCAPACITY OF SURVIVING SPOUSE 8
4.4 GENERAL POWER OF APPOINTMENT 9
B. MARITAL TRUST
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4.5 QTIP ELECTION 9
4.6 QUALIFIED AND NONQUALIFIED MARITAL TRUST 10
4.7 EXEMPT AND NONEXEMPT MARITAL TRUST 10
4.8 ADMINISTRATION OF MARITAL TRUSTS 10
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4.9 INCOME PAYMENTS FROM MARITAL TRUSTS 10
4.10 PRINCIPAL PAYMENTS FROM MARITAL TRUSTS 10
4.11 LIMITED POWER OF WITHDRAWAL 11
4.12 LIMITED POWER OF APPOINTMENT 11
4.13 MARITAL DEDUCTION LIMITATIONS 11
C. EXEMPTION TRUST
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4.14 PAYMENTS FROM EXEMPTION TRUST 12
4.15 LIMITED POWER OF APPOINTMENT 12
4.16 SURVIVING SPOUSE'S RESIDENCE 13
4.17 EXERCISE OF DISCRETION 13
ARTICLE 5
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DISTRIBUTION AFTER DEATH OF SURVIVING SPOUSE
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5.1 COLLECTION OF TRUST ASSETS 13
5.2 SURVIVING SPOUSE'S EXPENSES 14
5.3 DISTRIBUTION OF PERSONAL ARTICLES 14
5.4 DIVISION INTO SEPARATE SHARES 14
5.5 TRUSTS FOR TRUSTORS' CHILDREN 15
5.6 XXXXX AND XXXXX'S TRUST 16
5.7 TRUSTS FOR TRUSTORS' DESCENDANTS 18
5.8 DISTRIBUTION OF ANY REMAINDER 19
5.9 TERMINATION OF ALL TRUSTS 20
ARTICLE 6
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REVOCATION AND AMENDMENT
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6.1 REVOCATION DURING TRUSTORS' JOINT LIVES 20
6.2 AMENDMENT DURING TRUSTORS' JOINT LIVES 20
6.3 REVOCATION AND AMENDMENT BY SURVIVING SPOUSE 21
6.4 REVOCATION AND AMENDMENT PERSONAL TO TRUSTORS 21
6.5 TRUSTS IRREVOCABLE AFTER FIRST SPOUSE'S DEATH 21
ARTICLE 7
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TRUSTEE PROVISIONS
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7.1 SUCCESSOR TRUSTEES 21
7.2 DESIGNATION OF SUCCESSORS 22
7.3 RESIGNATION OF TRUSTEE 22
7.4 TRUSTEE'S COMPENSATION 22
7.5 EMPLOYMENT OF AGENTS AND ADVISORS 22
7.6 DISCLAIMER OF ADMINISTRATIVE POWERS 23
7.7 EXERCISE OF POWERS IN FIDUCIARY CAPACITY 23
7.8 WAIVER OF BOND 23
7.9 TRUSTEE'S LIABILITY 23
7.10 CO-TRUSTEE'S LIABILITY 23
7.11 SUCCESSOR TRUSTEE'S LIABILITY 23
7.12 NOTICE OF EVENTS AFFECTING INTERESTS 24
7.13 AUTHORITY OF COTRUSTEES 24
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ARTICLE 8
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ADMINISTRATIVE POWERS OF TRUSTEE
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8.1 GENERAL AUTHORITY OF TRUSTEE 24
8.2 TRUSTEE'S STANDARD OF CARE 24
8.3 TRUSTEE'S INVESTMENT AUTHORITY 24
8.4 AUTHORITY TO RETAIN PROPERTY 24
8.5 MANAGEMENT OF SECURITIES 25
8.6 EXERCISE OF VOTING RIGHTS 25
8.7 NOMINEE HOLDING AUTHORIZED 25
8.8 BORROWING AND ENCUMBERING 26
8.9 INSURING TRUST PROPERTY 26
8.10 LITIGATION AND COMPROMISE OF CLAIMS 26
8.11 TRUSTEE'S POWERS ON DISTRIBUTION 26
8.12 TRUSTEE'S POWERS SURVIVE TRUST TERMINATION 26
ARTICLE 9
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ACCOUNTING AND TAX PROVISIONS
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9.1 ACCOUNTING BY TRUSTEE 27
9.2 DETERMINATION OF PRINCIPAL AND INCOME 27
9.3 ALLOCATION OF INCOME AND EXPENSES 27
9.4 ADJUSTMENT FOR TAX CONSEQUENCES 27
9.5 PURCHASE AND REDEMPTION OF FLOWER BONDS 27
ARTICLE 10
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TRUST ADMINISTRATION PROVISIONS
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10.1 ADDITIONS TO TRUST 28
10.2 NO PHYSICAL DIVISION REQUIRED 28
10.3 TRANSACTIONS WITH TRUSTOR'S PROBATE ESTATE 28
10.4 RESTRICTION ON ASSIGNMENT 29
10.5 DISCLAIMER BY BENEFICIARIES 29
10.6 PAYMENTS FOR EDUCATION 29
10.7 LOANS TO BENEFICIARY 29
10.8 BENEFICIARY UNDER LEGAL DISABILITY 29
10.9 DISTRIBUTION TO CUSTODIAN 29
1O.10 DEFERRAL OF DIVISION OR DISTRIBUTION 30
10.11 WITHHOLDING DISTRIBUTION SUBJECT TO CLAIMS 30
10.12 EXERCISE OF POWERS OF APPOINTMENT 30
10.13 NO-CONTEST CLAUSE 31
10.14 CHOICE OF LAW 31
10.15 CERTIFICATION OF TRUST 31
10.16 OCCUPANCY OF RESIDENCE BY CHILDREN AND GUARDIANS 31
ARTICLE 11
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DEFINITIONS
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11.1 TRUSTEE 32
11.2 CURRENT BENEFICIARY 32
11.3 DEATH TAXES 32
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11.4 DECEASED SPOUSE 32
11.5 DESCENDANTS 32
11.6 EDUCATION 32
11.7 INTERNAL REVENUE CODE 33
11.8 BY RIGHT OF REPRESENTATION 33
11.9 SURVIVING SPOUSE 33
11.10 SURVIVOR'S TRUST 33
11.11 MARITAL TRUST 33
11.12 MARITAL TRUSTS 33
11.13 QTIP ELECTION 33
11.14 EXEMPTION TRUST 33
11.15 XXXXX AND XXXXX'S TRUST 33
ARTICLE 12
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RULES OF CONSTRUCTION
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12.1 SHALL AND MAY 34
12.2 STATUTES, CODES AND REGULATIONS 34
12.3 GENDER AND NUMBER 34
12.4 SEVERABILITY CLAUSE 34
12.5 USE OF HEADINGS 34
12.6 ARTICLE AND PARAGRAPH REFERENCES 34
CERTIFICATION BY TRUSTORS
ACCEPTANCE BY TRUSTEE
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DECLARATION OF TRUST
XXXXXX XXXXXXXX XXX and XXXXX X. XXXXXXXX, the trustee, declare that XXXXXX
XXXXXXXX XXX and XXXXX X. XXXXXXXX, the trustors, hereby create the XXXXXX AND
XXXXX XXXXXXXX FAMILY TRUST. All property subject to this instrument, including
any additional property transferred to the trustee from time to time, shall be
held, administered, and distributed in accordance with the terms of this
instrument.
ARTICLE 1
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INTRODUCTORY PROVISIONS
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1.1 TRUST ESTATE. All property subject to this instrument is referred to
as the "trust estate." Additional property acceptable to the trustee may be
added to the trust estate at any time by the trustors or by any other person.
1.2 NAMES OF TRUSTS. The initial trust created by this instrument and
continuing during the trustors' joint lives is called the "XXXXXX AND XXXXX
XXXXXXXX FAMILY TRUST." Each additional trust created in this instrument may be
referred to by the name given to it in Article 3 or by any other convenient
name designated by the trustee in a written instrument filed with the trust
records.
1.3 TRUSTEE. XXXXXX XXXXXXXX XXX and XXXXX X. XXXXXXXX are collectively
the initial trustee. The successor trustees are named in Article 7 of this
instrument. All references to the trustee in this instrument shall include any
trustee or co-trustees acting under this instrument at any time.
1.4 TRUSTORS. The term "trustors" as used in this instrument refers only
to XXXXXX XXXXXXXX XXX and XXXXX X. XXXXXXXX, the initial trustors of this
trust. The terms "trustor" and "spouse" may refer to either trustor depending
on the context.
1.5 FAMILY DECLARATIONS. The trustors have two (2) children living on
the date of this instrument, whose names and dates of birth are:
XXXXX XXXXXXX XXXXXXXX APRIL 5, 1978
XXXXXX XXXXX XXXXXXXX IV JULY 1, 1985
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All references in this instrument to a "child of the trustors" and any similar
terms shall refer only to the trustors' children named above.
XXXXXX XXXXXXXX XXX ("Ed") has two (2) children from a prior marriage living on
the date of this instrument, whose names and dates of birth are:
XXXXX XXXXXXXX XXXXXXXX MARCH 24, 1965
XXXXX XXXXXX XXXXXXXX FEBRUARY 27, 1968
All references in this instrument to a "Ed's child" and any similar terms shall
refer only to Ed's children named above.
1.6 CHARACTER OF TRUST PROPERTY. Any community property or separate
property transferred to this trust shall remain community property or separate
property, as the case may be. Any community property or separate property
distributed or withdrawn from this trust, including any income or appreciation
of that property, shall remain community property or separate property, as the
case may be, unless there has been a valid transmutation of the property at the
time the distribution or withdrawal is made. Notwithstanding the foregoing, the
trustee shall have full power to convey and otherwise manage and control the
trust property in accordance with the provisions of this instrument without the
joinder or consent of either trustor.
1.7 NO CONTRACT FOR TRUST DISPOSITION. Except for this instrument,
neither trustor has made any agreement controlling the disposition of the trust
property and this instrument shall not be construed as evidence of any such
agreement.
ARTICLE 2
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TRUST DURING TRUSTORS' JOINT LIVES
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During the joint lifetimes of the trustors, the trustee shall hold,
administer, and distribute the trust estate for the benefit of the trustors as
provided in this Article 2.
2.1 PAYMENTS IN TRUSTEE'S DISCRETION. In the absence of written
instructions from the trustors, the trustee shall pay to or apply for the
benefit of the trustors as much of the net income and principal of the trust
estate as the trustee, in the trustee's discretion, considers appropriate for
the trustors' support, care, comfort, and general welfare, in accordance with
their accustomed manner of living. In making these payments, the trustee may
take into account, to the extent the trustee considers advisable, the trustors'
other
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income and financial resources outside this trust. Any net income not
distributed shall be accumulated and added to principal. Consistent with the
trustee's fiduciary duties, the trustee may pay more to or apply more for the
benefit of one trustor than the other. The trustee may make payments to either
trustor for the account of the community, provided that the trustor receiving
the payments shall have the same duty to use the payments for the trustors'
benefit as he or she has with respect to any other community property. The
trustee's powers under this paragraph shall be subject to the limitations of
paragraph 2.4.
2.2 TRUSTORS' POWER TO DIRECT PAYMENTS. Subject to the limitations of
paragraph 2.4 below, the trustee shall pay to or apply for the benefit of the
trustors as much of the net income and principal of the trust estate as either
or both trustors may request in writing from time to time. In addition, the
trustors, acting jointly, may at any time direct the trustee in writing to make
single or periodic payments from the trust estate to any other person or
organization. The trustee shall promptly comply with the trustors' written
directions concerning payments and shall have no responsibility to inquire into
or determine the purposes for which the payments are made.
2.3 TRUSTORS' USE OF RESIDENCE. The trustors may continue to occupy,
without the payment of rent, any residential property included in the trust
estate. The trustors, acting jointly, may direct the trustee in writing to sell
any such residence and to purchase, rent, or lease a replacement residence
selected by the trustors. The trustee shall pay from the trust estate any rent
or lease payments, mortgage or trust deed payments, property taxes, assessments,
insurance premiums, maintenance expenses and ordinary repairs on any residential
property included in the trust estate.
2.4 LIMITATIONS IF TRUSTOR INCAPACITATED. If the trustee, in the
trustee's discretion, determines that either trustor has become physically or
mentally incapacitated and unable to manage his or her financial affairs, the
trustee's discretion concerning payments under paragraph 2.1 shall be limited by
the provisions of this paragraph and the trustors' powers to direct payments
under paragraph 2.2 shall cease to be effective. As long as one trustor is
incapacitated, the trustee shall pay to the other trustor for the account of the
community, or shall apply for the benefit of either or both trustors, as much of
the net income and principal of the trust estate as the trustee, in the
trustee's discretion, considers necessary for the trustors' proper support,
health, and maintenance in accordance with their accustomed manner of living.
In deciding on these payments, the trustee shall take into account the trustors'
other income and financial resources outside this trust, so far as
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known to the trustee and reasonably available for the trustors' use. Any net
income not distributed shall be accumulated and added to principal. During the
incapacity of one trustor, the non-incapacitated trustor may withdraw as much of
the accumulated income and principal of the trust estate as he or she may
request from the trustee in writing. Any trust income or principal paid to or
withdrawn by the non-incapacitated trustor shall be held and administered as
community property. This paragraph shall cease to apply if the trustee
determines that the incapacitated trustor has regained the ability to manage his
or her financial affairs. In determining the incapacity of a trustor, the
trustee may rely on a written certificate from two licensed physicians who have
examined the trustor. If the trustee determines that both trustors are
incapacitated and unable to manage their financial affairs, the trustee shall
apply all payments from the trust estate directly for the trustors' benefit.
2.5 TRUSTEE'S EXERCISE OF DISCRETION. The trustee shall exercise the
power to invade principal of the trust estate for the benefit of the trustors in
a liberal manner and the rights of other beneficiaries in the trust shall be of
secondary importance.
ARTICLE 3
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DIVISION ON DEATH OF FIRST SPOUSE
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On the death of the first spouse, the trustee shall divide and distribute
the trust estate as provided in this Article 3.
3.1 DIVISION OF COMMUNITY PROPERTY. In this instrument, the first spouse
to die is called the "deceased spouse" and the survivor is called the "surviving
spouse." On the death of the deceased spouse, the trustee shall promptly
collect any property added to the trust estate as a result of the deceased
spouse's death, such as property distributed to the trustee under the deceased
spouse's will and any life insurance or retirement plan benefits payable to the
trustee. The trustee shall then divide the trust estate into two shares, called
the "decedent's share" and the "survivor's share." The decedent's share shall
consist of the deceased spouse's one-half interest in the trustors' community
property, together with any of the deceased spouse's separate property, held or
received by the trustee. The survivor's share shall consist of the remaining
trust assets. In making this division, the trustee may allocate the trustors'
community property in divided or undivided interests, pro rata or non-pro rata,
using reasonable values determined by the trustee as of the date of division.
Subject to
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any contrary provisions in the deceased spouse's will or in any beneficiary
designations, all property added to the trust estate at the deceased spouse's
death shall be divided and allocated as provided in this Article 3.
3.2 DECEASED SPOUSE'S EXPENSES. After the death of the deceased spouse,
the trustee shall pay the following items from the trust estate: (1) the
deceased spouse's last illness and funeral expenses; (2) the deceased spouse's
debts, to the extent they are valid and enforceable immediately before the
deceased spouse's death; (3) attorney's fees and other expenses incurred in
administering this trust and the deceased spouse's probate estate; and (4) any
death taxes payable by reason of the deceased spouse's death, including any
death taxes attributable to property passing outside the trust estate. The
trustee shall allocate these payments between the decedent's share and the
survivor's share as follows: (1) payments of the deceased spouse's last illness
and funeral expenses shall be charged only against the decedent's share; (2)
payments of the deceased spouse's debts shall be charged proportionately against
the decedent's share and the survivor's share in accordance with California law
in effect at the death of the deceased spouse; (3) payments of attorney's fees
and other expenses of administration shall be charged against the decedent's
share, except for administration expenses properly attributable to the surviving
spouse, which shall be charged against the survivor's share; and (4) payments of
the deceased spouse's death taxes shall be charged against the decedent's share,
without apportionment or charge against any beneficiary of the trust estate or
any transferee of property passing outside the trust estate, except that any
increase in the deceased spouse's death taxes resulting from disclaimers made by
the surviving spouse shall be charged only against the disclaimed property.
3.3 DIVISION INTO SEPARATE TRUSTS-IF XXXXX IS THE SURVIVING SPOUSE.
After paying or adequately providing for payment of the deceased spouse's debts
and expenses, the trustee shall divide the remaining balance of the trust estate
into three separate trusts, called the "Survivor's Trust," the "Marital Trust"
and "Xxxxx and Xxxxx's Trust," as follows:
3.3.1 SURVIVOR'S TRUST. The Survivor's Trust shall consist of the
remaining assets of the survivor's share of the trust estate, consisting of
the balance of the surviving spouse's interest in the trustors' community
property (and any of the surviving spouse's separate property) included in
or added to the trust estate, together with any undistributed income of the
assets included in the survivor's share.
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3.3.2 MARITAL TRUST. The Marital Trust shall consist of that
portion of the decedent's share, called the "marital deduction amount,"
determined in accordance with the provisions of paragraph 3.5 below.
3.3.3 XXXXX AND XXXXX'S TRUST. Xxxxx and Xxxxx's Trust shall
consist of the remaining balance of the decedent's share.
3.4 DIVISION INTO SEPARATE TRUSTS-IF ED IS THE SURVIVING SPOUSE. If ED
is the surviving spouse, than after paying or adequately providing for payment
of the deceased spouse's debts and expenses, the trustee shall divide the
remaining balance of the trust estate into three separate trusts, called the
"Survivor's Trust," the "Marital Trust" and the "Exemption Trust," as follows:
3.4.1 SURVIVOR'S TRUST. The Survivor's Trust shall consist of the
remaining assets of the survivor's share of the trust estate, consisting of
the balance of the surviving spouse's interest in the trustors' community
property (and any of the surviving spouse's separate property) included in
or added to the trust estate, together with any undistributed income of the
assets included in the survivor's share.
3.4.2 MARITAL TRUST. The Marital Trust shall consist of that
portion of the decedent's share, called the "marital deduction amount,"
determined in accordance with the provisions of paragraph 3.5 below.
3.4.3 EXEMPTION TRUST. The Exemption Trust shall consist of the
remaining balance of the decedent's share.
3.5 MARITAL DEDUCTION AMOUNT. The marital deduction amount to be
allocated to the Marital Trust shall consist of the minimum pecuniary amount
necessary as a marital deduction to entirely eliminate (or reduce to the maximum
extent possible) any federal estate tax payable by reason of the death of the
deceased spouse, after taking into account the following:
(1) The net value of all other property included in the deceased spouse's
gross estate that qualifies for the federal estate tax marital
deduction and that passes or has passed to or in trust for the
surviving spouse, whether under this instrument, under the deceased
spouse's will, by right of survivorship, or otherwise;
(2) All other deductions taken in determining the deceased spouse's
federal estate tax; and
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(3) All credits allowed for federal estate tax purposes in the deceased
spouse's estate, other than a credit for death taxes paid in the
estate of a person whose death occurs after the death of the deceased
spouse, or the credit allowed for state death taxes, unless at least
some such state death tax would be payable to a state regardless of
the federal credit. No credit shall be taken into account in
determining the marital deduction amount if the credit will result in
disallowance of the estate tax marital deduction.
In determining the marital deduction amount, final federal estate tax values
shall control, except that any disclaimer by the surviving spouse of assets
otherwise qualifying for the federal estate tax marital deduction in the
deceased spouse's estate shall be disregarded for the purposes of this
computation. The trustee may satisfy the marital deduction amount in cash or in
kind, including undivided interests in kind, or partly in each, but only with
assets included in the deceased spouse's gross estate that qualify for the
federal estate tax marital deduction. Assets allocated in kind shall be valued
at their net fair market values as finally determined for federal estate tax
purposes, provided that the trustee shall select the assets used to satisfy the
marital deduction amount so that any appreciation or depreciation in values
occurring between the applicable valuation date and the date of allocation is
fairly representative of the appreciation or depreciation in the value of all
assets available for allocation. Assets eligible for a foreign death tax credit
in the deceased spouse's estate shall be used only if all other assets of the
deceased spouse's estate are insufficient to fully fund the marital deduction
amount. The terms "gross estate" and "marital deduction" as used in this
instrument shall have the same meanings as under the estate tax provisions of
the Internal Revenue Code.
3.6 DISCLAIMERS BY SURVIVING SPOUSE. If the surviving spouse effectively
disclaims an interest in all or any part of the property allocated to the
Marital Trust, then the Marital Trust or portion, as the case may be, shall be
administered and distributed as if the disclaimed interest had been omitted from
the terms of the Marital Trust; but if the surviving spouse disclaims all
beneficial interests in property allocated to the Marital Trust, then the
disclaimed property shall be added to and become part of the Exemption Trust.
If the surviving spouse effectively disclaims an interest in all or any part of
the property allocated to the Exemption Trust, then the Exemption Trust or
portion, as the case may be, shall be administered and distributed as if the
disclaimed interest had been omitted from the terms of the Exemption Trust; but
if the surviving spouse disclaims all beneficial interests in property allocated
to the Exemption Trust, then the disclaimed property shall be distributed
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as provided in Article 5 of this instrument as if the surviving spouse had died
immediately after the deceased spouse.
ARTICLE 4
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TRUSTS DURING SURVIVING SPOUSE'S LIFETIME
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During the lifetime of the surviving spouse, the trustee shall hold,
administer, and distribute the trust estate for the benefit of the surviving
spouse as provided in this Article 4.
A. SURVIVOR'S TRUST
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4.1 DISCRETIONARY PAYMENTS BY TRUSTEE. In the absence of written
directions from the surviving spouse, the trustee shall pay to or apply for the
benefit of the surviving spouse as much of the net income and principal of the
Survivor's Trust as the trustee, in the trustee's discretion, considers
appropriate for the surviving spouse's support, care, comfort, and general
welfare, in accordance with the surviving spouse's accustomed manner of living.
Any net income not distributed shall be accumulated and added to principal. The
trustee shall exercise the power to invade principal of the Survivor's Trust for
the surviving spouse in a liberal manner and the rights of other beneficiaries
in the trust shall be of secondary importance.
4.2 SURVIVING SPOUSE'S POWER TO DIRECT PAYMENTS. The trustee shall pay
to or apply for the benefit of the surviving spouse, or to any other person or
organization designated by the surviving spouse, as much of the net income or
principal of the Survivor's Trust as the surviving spouse may direct in writing
from time to time. Subject to the provisions of paragraph 4.3 (dealing with the
surviving spouse's incapacity), the trustee shall promptly comply with the
surviving spouse's written directions and shall have no responsibility to
inquire into or determine the purposes for which the payments are made.
4.3 INCAPACITY OF SURVIVING SPOUSE. If the trustee, in the trustee's
discretion, determines that the surviving spouse has become physically or
mentally incapacitated and unable to manage his or her financial affairs, the
trustee's discretion concerning payments under paragraph 4.1 shall be limited by
the provisions of this paragraph and the surviving spouse's power to direct
payments under paragraph 4.2 shall cease to be effective. During such period of
incapacity, the trustee shall pay to or apply for the benefit of the surviving
spouse as much of the net income and principal of the Survivor's Trust as the
trustee, in the trustee's discretion, considers necessary for the surviving
spouse's proper support, health, and maintenance in accordance with his or
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her accustomed manner of living. In deciding on these payments, the trustee
shall take into account, to the extent the trustee considers advisable, all
other income and financial resources of the surviving spouse outside the
Survivor's Trust, known to the trustee and reasonably available for the
surviving spouse's use. In determining the incapacity of the surviving spouse,
the trustee may rely on a written certificate from two licensed physicians who
have examined the surviving spouse. This paragraph shall cease to apply if the
trustee determines that the surviving spouse has regained the ability to manage
his or her financial affairs.
4.4 GENERAL POWER OF APPOINTMENT. On the death of the surviving spouse,
the trustee shall distribute all or any part of the assets then remaining in or
added to the Survivor's Trust, including undistributed income, to such one or
more persons and entities, including the surviving spouse's own estate, in such
proportions and on such terms and conditions, either outright or in trust, as
the surviving spouse may appoint in an acknowledged written instrument delivered
to the trustee which specifically refers to and exercises this power of
appointment. Any of the Survivor's Trust not effectively appointed by the
surviving spouse in this manner shall be distributed as provided in Article 5.
B. MARITAL TRUST
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4.5 QTIP ELECTION. The trustee is authorized, in the trustee's sole
discretion, to make or not make a "QTIP election" (as defined in Section 1.1.1.3
below) to treat all or any portion of the Marital Trust as qualified terminable
interest property for the purpose of qualifying the trust, or a specific portion
of it, for the federal estate tax marital deduction in the deceased spouse's
estate. In deciding on the election, the trustee shall consider all relevant
factors, including, but not limited to: (1) the potential benefits and
detriments of reducing the estate tax on the deceased spouse's estate and
increasing the tax on the surviving spouse's estate; and (2) the potential
benefits of eliminating from the surviving spouse's estate any appreciation in
the value of the Marital Trust assets that may occur between the death of the
deceased spouse and the death of the surviving spouse. The discretion of the
trustee with regard to this election shall be absolute, notwithstanding any
beneficial or adverse effect that making or not making the election may have on
the deceased spouse's estate, on the surviving spouse's estate, or on the
beneficiaries or their respective estates. The trustee shall not be liable to
any beneficiary of the trust estate for decisions made in good faith with regard
to making or not making this election.
4.6 QUALIFIED AND NONQUALIFIED MARITAL TRUST. If the trustee does not
make a QTIP election with respect to all of the assets allocated to the Marital
Trust, then the trustee shall divide the
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Marital Trust into separate trusts to reflect this partial election according to
the values of assets allocated to each trust at the time the division is made.
The trust with respect to which the QTIP election is made is referred to as the
"Qualified Marital Trust" and the trust with respect to which the QTIP election
is not made is referred to as the "Nonqualified Marital Trust."
4.7 EXEMPT AND NONEXEMPT MARITAL TRUST. If the trustee makes a QTIP
election with respect to the entire Marital Trust, then the trustee shall divide
the Marital Trust into two additional trusts, called the "Exempt Marital Trust"
and the "Nonexempt Marital Trust." The Exempt Marital Trust shall consist of an
amount equal to the deceased spouse's generation-skipping transfer tax ("GST")
exemption, reduced by the aggregate amount of the deceased spouse's GST
exemption that has been allocated by the trustee or the executor of the deceased
spouse's will to other transfers of property by the deceased spouse during his
or her lifetime or as a result of the deceased spouse's death. The Nonexempt
Marital Trust shall consist of any remaining assets of the Marital Trust. If
the trustee makes a QTIP election with respect to only a portion of the Marital
Trust, then the trustee shall divide only the Qualified Marital Trust into
Exempt and Nonexempt trusts in the manner provided in this paragraph.
4.8 ADMINISTRATION OF MARITAL TRUSTS. Each additional trust into which
the Marital Trust is divided in accordance with the foregoing provisions shall
be held and administered by the trustee as a separate trust, but each trust
shall be distributed according to the same terms, except as otherwise provided
below. Such trusts are collectively referred to herein as the "Marital Trusts."
4.9 INCOME PAYMENTS FROM MARITAL TRUSTS. During the surviving spouse's
lifetime, the trustee shall pay to or apply for the benefit of the surviving
spouse the entire net income of the Marital Trusts, in quarter-annual or more
frequent installments. On the death of the surviving spouse, the trustee shall
distribute any accrued or undistributed income of the Marital Trusts to the
personal representative of the surviving spouse's estate.
4.10 PRINCIPAL PAYMENTS FROM MARITAL TRUSTS. If the trustee considers the
net income of the Marital Trusts to be insufficient, the trustee shall also pay
to or apply for the benefit of the surviving spouse as much of the principal of
the Marital Trusts as the trustee, in the trustee's discretion, considers
reasonably necessary for the surviving spouse's proper support, health and
maintenance, in accordance with the surviving spouse's accustomed manner of
living. In deciding on these payments, the trustee shall take into
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consideration, to the extent the trustee considers advisable, all other income
and financial resources of the surviving spouse outside the Marital Trusts. To
the extent practicable, the trustee shall make all such discretionary invasions
of principal from the Nonexempt Marital Trust.
4.11 LIMITED POWER OF WITHDRAWAL. In addition to any other payments that
the surviving spouse is entitled to receive from the Marital Trusts, the trustee
shall also pay to the surviving spouse from the principal of the Nonexempt
Marital Trust such amounts as the surviving spouse may request in writing from
time to time, provided that such payments shall not exceed in the aggregate the
greater of the following amounts in any calendar year: (1) five thousand
dollars ($5,000.00) or (2) five percent (5%) of the value of the principal of
the Nonexempt Marital Trust determined at the end of the calendar year. This
right of withdrawal shall be noncumulative, so that if during a calendar year
the surviving spouse does not withdraw the full amount to which he or she is
entitled under this paragraph, the right to withdraw any amount no so withdrawn
shall lapse at the end of that calendar year.
4.12 LIMITED POWER OF APPOINTMENT. The surviving spouse shall have a
limited power of appointment over the principal of the Marital Trusts remaining
undistributed at his or her death. On the death of the surviving spouse, the
trustee shall distribute all or any part of the remaining principal of the
Marital Trusts to such one or more of the group composed of the trustors'
descendants and the spouses of such descendants, in such proportions and on such
terms and conditions, either outright or in trust, as the surviving spouse may
appoint in an acknowledged written instrument delivered to the trustee which
specifically refers to and exercises this power of appointment. Any principal
of the Marital Trusts not effectively appointed by the surviving spouse in this
manner shall be held, administered and distributed as provided in Article 5 of
this instrument.
4.13 MARITAL DEDUCTION LIMITATIONS. The trustors intend that the Marital
Trust qualify for the marital deduction allowed under the estate tax provisions
of the Internal Revenue Code. If and to the extent that the trustee elects to
qualify the Marital Trust or any portion of the trust for the federal estate tax
marital deduction, the trustee shall not take any action or have any powers that
will impair the marital deduction and all provisions of this instrument shall be
interpreted to conform to this objective. If any provision cannot be so
construed it shall be deemed void. Notwithstanding any contrary provisions in
this instrument, the following provisions and limitations shall apply to the
Marital Trusts: (1) During the surviving spouse's lifetime, the surviving
spouse shall have the power to direct the trustee in writing to make all or any
part of the principal of
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the Marital Trusts productive or to convert promptly any unproductive part into
productive property; (2) The trustee shall invest and reinvest the assets of the
Marital Trusts so that the aggregate return on all investments of the Marital
Trusts are reasonable in light of then existing circumstances; (3) The trustee
shall establish reasonable reserves for depreciation and depletion; (4) For
bonds purchased at a discount, the trustee shall, at least annually, accumulate
and pay the discount as interest from trust principal or from the proceeds on
the sale or redemption of the bonds; and (5) If the trustee redeems treasury
bonds at par in payment of the deceased spouse's federal estate taxes, the
trustee shall consider any accrued interest on such bonds in calculating the
income payable to the surviving spouse from the Marital Trusts.
C. EXEMPTION TRUST
---------------
4.14 PAYMENTS FROM EXEMPTION TRUST. All net income of the Exemption Trust
shall be accumulated and added to principal. Subject to the limitations stated
below, the trustee shall have the power to pay to or apply for the benefit of
the surviving spouse as much of the accumulated income and principal of the
Exemption Trust as the trustee, in the trustee's discretion, considers necessary
for the surviving spouse's proper support, health, and maintenance, after taking
into account the surviving spouse's other sources of income and financial
resources outside the Exemption Trust. To the extent practicable, the trustee
shall make no payments to the surviving spouse from the Exemption Trust unless
both the Survivor's Trust and the Marital Trust have first been exhausted.
Notwithstanding the foregoing, as long as the surviving spouse is acting as
trustee of the Exemption Trust, no payments shall be made to the surviving
spouse from the Exemption Trust, unless the surviving spouse has irrevocably
appointed a co-trustee to act with respect to the Exemption Trust, in which case
the co-trustee may exercise the power to invade principal of the Exemption Trust
as provided in this paragraph.
4.15 LIMITED POWER OF APPOINTMENT. On the death of the surviving spouse,
the trustee shall distribute all or any part of the assets then remaining in or
added to the Exemption Trust, including all accumulated income, to such one or
more of the trustors' descendants or the spouses of such descendants, in such
proportions and on such terms and conditions, either outright or in trust, as
the surviving spouse may appoint in an acknowledged written instrument delivered
to the trustee which specifically refers to and exercises this power of
appointment. Any of the Exemption Trust not effectively appointed by the
surviving spouse in this manner shall be distributed as provided in Article 5.
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4.16 SURVIVING SPOUSE'S RESIDENCE. After the death of the deceased
spouse, the surviving spouse shall have the right to continue to occupy, without
payment of rent, all real property in the trust estate that the trustors were
using for residential purposes at the time of the deceased spouse's death,
whether on a full or part time basis. The trustee is expressly authorized to
continue to hold any residential property that the trustee receives or acquires
as part of the trust estate for as long as the surviving spouse continues to
occupy it. The surviving spouse may direct the trustee in writing to sell any
such residential property and to purchase, rent, or lease a replacement
residence selected by the surviving spouse. However, to the extent that an
interest in the residential property is allocated to the Exemption Trust, the
value of the interest in any replacement residence included in that trust shall
be of comparable or lower value. The trustee shall pay out of the income or
principal of each trust to which an interest in the property has been allocated
a pro rata share of the trust deed payments, property taxes, assessments,
insurance premiums, maintenance expenses, and ordinary repairs on the property,
or any rent or lease payments, based on the proportionate interest in the
property included in each trust.
4.17 EXERCISE OF DISCRETION. In exercising the discretion to invade
principal of the trusts created during the surviving spouse's lifetime, the
trustee shall be mindful of the fact that the trustors' primary concern in
establishing these trusts is the welfare of the surviving spouse and that the
rights of other beneficiaries in the trusts shall be of secondary importance.
ARTICLE 5
---------
DISTRIBUTION AFTER DEATH OF SURVIVING SPOUSE
--------------------------------------------
After the death of the surviving spouse, any of the trust estate that has
not been effectively disposed of by the surviving spouse's exercise of a power
of appointment shall be held, administered, and distributed as provided in this
Article 5.
5.1 COLLECTION OF TRUST ASSETS. On the death of the surviving spouse,
the trustee shall promptly collect any property added to the trust estate as a
result of the surviving spouse's death, such as property distributed to the
trustee under the surviving spouse's will and any life insurance or retirement
plan benefits payable to the trustee. Subject to any contrary provisions in the
surviving spouse's will or in any beneficiary designations, all assets added to
the trust estate on the death of the surviving spouse shall be allocated to the
Survivor's Trust.
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5.2 SURVIVING SPOUSE'S EXPENSES. On the death of the surviving spouse,
the trustee, in the trustee's reasonable discretion, may pay any of the
following out of the trust estate: (1) the surviving spouse's last illness and
funeral expenses; (2) debts of the surviving spouse, to the extent they are
valid and enforceable immediately before the surviving spouse's death; (3)
attorney's fees and other costs incurred in administering this trust and the
surviving spouse's probate estate; and (4) any death taxes payable by reason of
the surviving spouse's death, including death taxes attributable to property
passing outside the trust estate. Payments of the surviving spouse's debts and
last illness and funeral expenses shall be charged first to the Survivor's
Trust, to the extent it is sufficient, and then to the Marital Trust. Payments
of attorney's fees and other expenses of administration shall be charged to the
Survivor's Trust, except for expenses properly attributable to the Marital Trust
or to the Exemption Trust, which shall be charged against the property included
in those trusts. Unless the surviving spouse provides contrary directions
regarding apportionment of death taxes in his or her will, payments of the
surviving spouse's death taxes shall be charged and recovered by the trustee in
accordance with applicable federal and state tax laws and proration statutes.
5.3 DISTRIBUTION OF PERSONAL ARTICLES. As soon as practicable after the
death of the surviving spouse, the trustee shall distribute all tangible
articles of a household or personal nature that have been included in or added
to the trust estate in any manner, such as personal automobiles, household
furniture, furnishings, appliances, books, objects of art, family heirlooms,
photographs, jewelry, clothing and personal effects, together with any insurance
on those assets, to each then living child of the trustors, to be divided
between them in shares of substantially equal net value as they shall agree, or
as the trustee, in the trustee's discretion, shall determine if they are unable
to agree on a division. If no child of the trustors is living at the time for
distribution, the assets described in this paragraph shall be disposed as part
of the remaining trust assets.
5.4 DIVISION INTO SEPARATE SHARES. After paying or adequately providing
for payment of any of the surviving spouse's debts, expenses and death taxes
that the trustee elects to pay and on making the distribution of personal
articles directed above, the trustee shall divide the remaining assets of the
trust estate into as many equal shares as there are children of the trustors
then living and children of the trustors then deceased leaving descendants then
living. The trustee shall allocate one equal share to each living child of the
trustors and one equal share to each group composed of the living descendants of
a deceased child of the trustors. Each such share shall be retained in trust
and administered and distributed as further provided below.
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5.5 TRUSTS FOR TRUSTORS' CHILDREN. Each share set aside for a living
child of the trustors shall be divided into a separate trust ("the Child's
Trust") to be held and administered for the benefit of the child during the
child's lifetime, as follows:
5.5.1 As long as the child is under age 30, the trustee shall pay to
or apply for the benefit of the child as much of the net income and
principal of the child's trust as the trustee, in the trustee's discretion,
considers necessary for the child's proper support, health and education.
Any income not distributed shall be accumulated and added to principal.
5.5.2 After the child reaches age 30, the trustee shall pay to or
apply for the benefit of the child the entire net income of the child's
trust, in quarter-annual or more frequent installments. If the trustee
considers the income of the child's trust to be insufficient, the trustee
shall also pay to or apply for the benefit of the child as much of the
principal of the child's trust as the trustee, in the trustee's discretion,
considers necessary for the child's proper support, health, and education.
In deciding on these payments, the trustee shall take into consideration,
to the extent the trustee considers advisable, the child's other income,
financial resources and sources of support outside the child's trust, so
far as known to the trustee and reasonably available for the child's use.
5.5.3 At any time after the child reaches age 30, the trustee shall
distribute to the child as much of the trust as the child may request in
any acknowledged written instrument delivered to the trustee, but, in no
event, in excess of one-third (1/3) of the value of the child's trust,
determined as of that date.
5.5.4 At any time after the child reaches age 35, the trustee shall
distribute to the child as much of the child's trust as the child may
request in any acknowledged written instrument delivered to the trustee,
but, in no event, in excess of one-half (1/2) of the value of the child's
trust, determined as of that date.
5.5.5 When the child reaches age 40, the trustee shall terminate the
child's trust and distribute the remaining assets of the child's trust,
including any accrued or undistributed income of that trust, outright to
the child, free of trust.
5.5.6 If the child dies before receiving full distribution of the
child's trust share, the trustee shall then distribute the remaining
balance of the child's share to such one or more persons and entities,
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including the child's own estate, on such terms and conditions, either
outright or in trust, as the child may appoint in a will or codicil which
specifically refers to and exercises this general testamentary power of
appointment.
5.5.7 Any assets of the deceased child's trust that are not
effectively appointed by the child in the manner provided above shall be
distributed as follows:
(a) If the deceased child leaves descendants who are then
living, the unappointed balance of the child's trust shall be divided
into separate shares and administered and distributed for the benefit
of the descendants of the deceased child according to the provisions
of paragraph 5.7 below, provided that the trust for each descendant
shall terminate no later than the time provided by paragraph ? below.
(b) If the deceased child leaves no living descendants, the
balance of the child's trust shall be distributed to the trustors'
then-living descendants, by right of representation. However, if any
part of that balance would otherwise be distributed to a person for
whose benefit a trust is then being administered under this
instrument, then that portion shall not be distributed outright but
shall instead be added to that trust and administered according to
its term.
5.6 XXXXX AND XXXXX'S TRUST. Each share set aside for Xx's daughters
XXXXX and XXXXX (the "daughters" or "daughter") shall be divided into a separate
trust ("the daughter's Trust") to be held and administered for the benefit of
the daughter during the daughter's lifetime, as follows:
5.6.1 The trustee shall pay to or apply for the benefit of the
daughter the entire net income of the daughter's trust, in quarter-annual
or more frequent installments. If the trustee considers the income of the
daughter's trust to be insufficient, the trustee shall also pay to or apply
for the benefit of the daughter as much of the principal of the daughter's
trust as the trustee, in the trustee's discretion, considers necessary for
the daughter's proper support, health, and education. In deciding on these
payments, the trustee shall take into consideration, to the extent the
trustee considers advisable, the daughter's other income, financial
resources and sources of support outside the daughter's trust, so far as
known to the trustee and reasonably available for the daughter's use.
Page 30 of 77
5.6.2 At any time after the expiration of five (5) years after Xx's
death, the trustee shall distribute to the daughter as much of the trust as
the daughter may request in any acknowledged written instrument delivered
to the trustee, but, in no event, in excess of one-third (1/3) of the value
of the daughter's trust, determined as of that date.
5.6.3 At any time after the expiration of ten (10) years after Xx's
death, the trustee shall distribute to the daughter as much of the
daughter's trust as the daughter may request in any acknowledged written
instrument delivered to the trustee, but, in no event, in excess of one-
half (1/2) of the value of the daughter's trust, determined as of that
date.
5.6.4 After the expiration of fifteen (15) years after Xx's death,
the trustee shall terminate the daughter's trust and distribute the
remaining assets of the daughter's trust, including any accrued or
undistributed income of that trust, outright to the daughter, free of
trust.
5.6.5 If the daughter dies before receiving full distribution of the
daughter's trust share, the trustee shall then distribute the remaining
balance of the daughter's share to such one or more persons and entities,
including the daughter's own estate, on such terms and conditions, either
outright or in trust, as the daughter may appoint in a will or codicil
which specifically refers to and exercises this general testamentary power
of appointment.
5.6.6 Any assets of the deceased daughter's trust that are not
effectively appointed by the daughter in the manner provided above shall be
distributed as follows:
(a) If the deceased daughter leaves descendants who are then
living, the unappointed balance of the daughter's trust shall be
divided into separate shares and administered and distributed for the
benefit of the descendants of the deceased daughter according to the
provisions of paragraph 5.7 below, provided that the trust for each
descendant shall terminate no later than the time provided by
paragraph ? below.
(b) If the deceased daughter leaves no living descendants, the
balance of the daughter's trust shall be distributed to the trustors'
then-living descendants, by right of representation. However, if any
part of that balance would otherwise be distributed to a person for
whose benefit a trust is then being administered under this
instrument, then that
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portion shall not be distributed outright but shall instead be added
to that trust and administered according to its term.
5.7 TRUSTS FOR TRUSTORS' DESCENDANTS. Each share of descendants of a
deceased child of the trustors shall be further divided into separate shares for
those descendants, by right of representation. Each share set aside for a
descendant who is then age 35 or older shall be distributed outright to that
descendant, free of trust. Each share set aside for a descendant who has not
then reached age 35 shall be held, administered and distributed in a separate
trust for the benefit of that descendant as follows:
5.7.1 As long as the descendant is under age 21, the trustee shall
pay to or apply for the benefit of the descendant as much of the net income
and principal of the descendant's trust as the trustee, in the trustee's
discretion, considers necessary for the descendant's proper support, health
and education. Any income not distributed shall be accumulated and added
to principal.
5.7.2 After the descendant reaches age 21, the trustee shall pay to
or apply for the benefit of the descendant the entire net income of the
descendant's trust, in quarter-annual or more frequent installments. If
the trustee considers the net income of the descendant's trust to be
insufficient, the trustee shall also pay to or apply for the benefit of the
descendant as much of the principal of the descendant's trust as the
trustee, in the trustee's discretion, considers necessary for the
descendant's proper support, health and education. When deciding on
payments to be made from the descendant's trust, the trustee may take into
account, to the extent the trustee considers advisable, any of the
descendant's other income, financial resources, and sources of support
outside the descendant's trust, so far as known to the trustee and
reasonably available for the descendant's use, including the descendant's
capacity for gainful employment after completion of his or her education.
5.7.3 At any time after the descendant reaches age 25, the trustee
shall distribute to the descendant as much or all of the descendant's trust
as the descendant may request in any acknowledged written instrument
delivered to the trustee but, in no event, in excess of one-half (1/2) of
the value of the descendant's trust, determined as of that date.
5.7.4 When the descendant reaches age 35, the trustee shall
terminate the descendant's trust and distribute the remaining balance of
the trust to the descendant.
Page 32 of 77
5.7.5 If the descendant dies before receiving full distribution of
his or her trust share, the trustee shall then distribute the remaining
balance of the descendant's share to such one or more persons and entities,
including the descendant's own estate, on such terms and conditions, either
outright or in trust, as the descendant may appoint in a will or codicil
which specifically refers to and exercises this general testamentary power
of appointment.
5.7.6 Any assets of the deceased descendant's trust that are not
effectively appointed by the descendant in the manner provided above shall
be distributed as follows:
(a) If the deceased descendant leaves descendants then living,
the balance of the descendant's trust shall be distributed to his or
her then living descendants, by right of representation. However, if
a person entitled to receive distribution is then under age 25, the
trustee shall not distribute that person's share outright, but shall
instead distribute the share to a custodian serving on behalf of the
beneficiary until age 25 under the California Uniform Transfers to
Minors Act. If no such custodian is then acting, the trustee shall
name a custodian from among those persons qualified to serve, which
may include the trustee. The trustee shall be free of liability and
discharged from any further accountability for distributions made in
accordance with the provisions of this paragraph.
(b) If the deceased descendant leaves no descendants then-
living, the balance of the descendant's trust shall be distributed to
the trustors' then-living descendants, by right of representation.
However, if any part of that trust balance would otherwise be
distributed to a person for whose benefit a trust is then being
administered under this instrument, that portion shall not be
distributed outright but shall instead be added to that trust and
administered according to its terms.
5.8 DISTRIBUTION OF ANY REMAINDER. If at any time before full
distribution of the trust estate the trustors and all of the trustors'
descendants are deceased and no other disposition of the trust property is
directed by this instrument, the remaining trust assets shall then be divided
and distributed one-half to the heirs of XXXXXX XXXXXXXX XXX and one-half to the
heirs of XXXXX X. XXXXXXXX. The identities and respective shares of those heirs
shall be determined in all respects as though the death of each trustor had
occurred
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immediately after the event requiring distribution under this paragraph and
according to the laws of the State of California then in effect relating to
intestate succession.
5.9 TERMINATION OF ALL TRUSTS. Unless terminated earlier in accordance
with other provisions of this instrument, all trusts created under this
instrument, or by the exercise of any power of appointment granted by this
instrument, shall terminate twenty-one (21) years after the death of the last
survivor of the trustors and the trustors' descendants who are living at the
death of the deceased spouse. The trustee shall distribute the principal and
undistributed income of each trust so terminated to the income beneficiary of
that trust. If at the time of termination the right to income is not fixed by
the term of the trust, distribution shall be made to the person who is then
entitled or authorized, in the trustee's discretion, to receive trust income.
ARTICLE 6
---------
REVOCATION AND AMENDMENT
------------------------
6.1 REVOCATION DURING TRUSTORS' JOINT LIVES. As long as both trustors
are living, either trustor acting alone, or both trustors acting together, may
revoke this trust or withdraw all or any portion of the trust assets by signing
and delivering written instructions to the trustee designating the assets to be
revoked. On receipt of such instructions, the trustee shall promptly deliver
the designated trust assets to the trustors. Any community property revoked or
withdrawn from this trust shall remain the trustors' community property. If
this trust is revoked with respect to all or a major portion of the assets
subject to it, the trustee shall be entitled to retain sufficient assets
reasonably necessary to secure payment of liabilities lawfully incurred in
administering the trust, unless the trustors agree to indemnify the trustee
against any loss or expense.
6.2 AMENDMENT DURING TRUSTORS' JOINT LIVES. The trustors may amend the
terms of this instrument at any time during their joint lifetimes by a written
instrument signed and acknowledged by both trustors and delivered to the
trustee. No amendment shall substantially increase the duties or liabilities of
the trustee or change the trustee's compensation without the trustee's consent
and the trustee shall have no obligation to act under an amendment unless the
trustee accepts it. If a trustee is removed because of a refusal to accept an
amendment, the trustors shall pay any amounts due to the trustee and shall
indemnify the trustee against any liability lawfully incurred in administering
the trust.
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6.3 REVOCATION AND AMENDMENT BY SURVIVING SPOUSE. The surviving spouse
may revoke the Survivor's Trust in whole or in part by signing and delivering
written instructions to the trustee designating the assets to be revoked. On
revocation, the trustee shall promptly comply with the surviving spouse's
instructions. In addition, the surviving spouse may amend the terms of the
Survivor's Trust by a signed and acknowledged written instrument delivered to
the trustee. The surviving spouse's powers of revocation and amendment shall be
subject to the qualifications applicable to the trustors in paragraphs 6.1 and
6.2 above.
6.4 REVOCATION AND AMENDMENT PERSONAL TO TRUSTORS. The trustors' powers
to revoke and amend this trust are personal to them and may not be exercised on
their behalf by any other person, except that if a conservator has been
appointed for either trustor, such conservator may exercise a trustor's powers
after obtaining approval from the court that appointed the conservator.
6.5 TRUSTS IRREVOCABLE AFTER FIRST SPOUSE'S DEATH. Except for the
Survivor's Trust, all trusts created in this instrument after the death of the
deceased spouse shall be irrevocable and unamendable and no person, including
the surviving spouse, shall have any power to revoke, amend, or terminate those
trusts.
ARTICLE 7
---------
TRUSTEE PROVISIONS
------------------
7.1 SUCCESSOR TRUSTEES. XXXXXX XXXXXXXX XXX and XXXXX X. XXXXXXXX shall
serve as the initial trustee of all trusts created under this instrument as long
as they are collectively able and willing to act. On the death of XXXXXX
XXXXXXXX XXX, or on his resignation or inability to serve for any reason, then
the successor trustee named in paragraph 7.1.1 below shall serve as trustee of
XXXXX and XXXXX'S TRUST and XXXXX X. XXXXXXXX shall serve as sole trustee of all
other trusts created under this instrument. On the death of XXXXX X. XXXXXXXX,
or on her resignation or inability to serve for any reason, XXXXXX XXXXXXXX XXX
shall serve as sole trustee of all trusts created under this instrument.
7.1.1 If XXXXXX XXXXXXXX XXX is the surviving trustee, then upon his
death, resignation or inability to serve for any reason, the following
named individuals shall serve as successor trustees hereunder, in the order
named:
First Successor Appointee: XXXXXX XX XXXXXX
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Second Successor Appointee: XXXX XXXXXXX
Third Successor Appointee: XXXXXX XXXXX
7.1.2 If XXXXX X. XXXXXXXX is the surviving trustee, then upon her
death, resignation or inability to serve for any reason, the following
named individuals shall serve as successor trustees hereunder, in the order
named:
First Successor Appointee: XXXXXXX XXXXX
Second Successor Appointee: XXXXXXXXXXX XXXXXXX
Third Successor Appointee: XXXXXX XXXXXXX
7.2 DESIGNATION OF SUCCESSORS. If at any time there is no trustee able
or willing to act under this instrument, any person interested in the trust may
petition the appropriate court for appointment of a successor.
7.3 RESIGNATION OF TRUSTEE. Any trustee acting under this instrument may
resign as trustee at any time by giving written notice of resignation to the
current beneficiary of each affected trust, to the acting co-trustee of that
trust, if any, and to the designated successor trustee of that trust.
Resignation shall be effective on acceptance of office by the successor trustee.
7.4 TRUSTEE'S COMPENSATION. Each individual trustee acting under this
instrument shall be entitled to reasonable compensation from the trust estate
for services rendered as trustee; and each trustee shall be entitled to
repayment out of the trust estate for expenses properly incurred in the
administration of the trust.
7.5 EMPLOYMENT OF AGENTS AND ADVISORS. The trustee may employ
accountants, attorneys, corporate fiduciaries, custodians, investment or tax
advisors, and any other agents or advisors, even if they are associated or
affiliated with the trustee, to advise and assist the trustee in the
administration of the trust and in the management of any trust assets, and the
trustee may rely on the advice given by these agents. The trustee may pay
reasonable compensation from the trust estate for all services performed by
these agents and such payments shall not decrease the compensation to which an
individual trustee would otherwise be entitled.
7.6 DISCLAIMER OF ADMINISTRATIVE POWERS. Any trustee acting under this
instrument may disclaim, release or restrict the scope of any power held in
connection with any trust, including any administrative power, whether that
power is expressly granted in this instrument or implied by law, by a
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written instrument specifying the power to be disclaimed, released or restricted
and the nature of any such restriction. Any disclaimed or released power may be
exercised by the then acting co-trustee.
7.7 EXERCISE OF POWERS IN FIDUCIARY CAPACITY. Each trustee acting under
this instrument shall exercise the powers vested in the trustee in good faith
and in accordance with the trustee's fiduciary duties. No trustee shall have
the power by reason of any administrative powers granted in this instrument to
enlarge or shift the beneficial interests of a trust except as an incidental
consequence of the discharge of the trustee's fiduciary duties.
7.8 WAIVER OF BOND. No bond shall be required of any person named as
trustee in this instrument or of any person designated as trustee in the manner
specified in this instrument.
7.9 TRUSTEE'S LIABILITY. No individual trustee acting under this
instrument shall be liable to any person interested in the trust estate for any
act or failure to act, except for the trustee's own willful misconduct, bad
faith, or gross negligence. No trustee shall be liable or responsible for any
act, omission or default of any other trustee, unless the trustee has knowledge
of facts that might reasonably be expected to put the trustee on notice.
7.10 CO-TRUSTEE'S LIABILITY. No trustee shall be liable or responsible
for any act, omission or default of any other trustee, unless such trustee has
knowledge of facts that might reasonably be expected to put the trustee on
notice.
7.11 SUCCESSOR TRUSTEE'S LIABILITY. No successor trustee acting under
this instrument shall be liable for any act, omission or default of a
predecessor trustee. Unless requested in writing within 60 days of appointment
by a current beneficiary of the trust, a successor trustee shall have no duty to
investigate or review any action of a predecessor trustee. A successor trustee
may accept as correct the accounting records of the predecessor trustee without
further investigation and without liability to any person claiming or having an
interest in the trust.
7.12 NOTICE OF EVENTS AFFECTING INTERESTS. Unless the trustee receives
notice of the occurrence of an event affecting the beneficial interests of a
trust, the trustee shall not be liable to any beneficiary for distributions made
or other actions taken in good faith as though the event had not occurred. The
trustee shall not be liable to any creditor for making distributions authorized
by this instrument unless the trustee has received actual written notice of the
creditor's claim.
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7.13 AUTHORITY OF COTRUSTEES. As long as XXXXXX XXXXXXXX XXX and XXXXX
X. XXXXXXXX are acting as cotrustees under this instrument, the signature of, or
any action taken by, either XXXXXX XXXXXXXX XXX or XXXXX X. XXXXXXXX, acting
alone, shall be binding upon the trust and may be relied on by third parties
dealing with the trustees.
ARTICLE 8
---------
ADMINISTRATIVE POWERS OF TRUSTEE
--------------------------------
8.1 GENERAL AUTHORITY OF TRUSTEE. To carry out the purposes of each
trust held under this instrument and subject to any additions or limitations
stated elsewhere herein, the trustee shall have all powers now or hereafter
conferred on trustees by law, including all powers granted by the California
Trust Law. The powers confirmed by this paragraph shall be in addition to all
powers expressly conferred on the trustee in this instrument.
8.2 TRUSTEE'S STANDARD OF CARE. In administering the trust held under
this instrument, the trustee shall act with the care, skill, prudence and
diligence under the circumstances then prevailing, including but not limited to
the general economic conditions at the time and the anticipated needs of the
trust and its beneficiaries, that a prudent person acting in a like capacity and
familiar with such matters would use in the conduct of an enterprise of like
character and with like aims to accomplish the purposes of the trust as
determined from this instrument.
8.3 TRUSTEE'S INVESTMENT AUTHORITY. Within the limitations of the
foregoing standard of care, the trustee is authorized to invest and reinvest
trust funds in any kind of real or personal property and in any kind of
investment. The trustee shall have full authority to invest and reinvest trust
funds without being restricted as to the form of investments that the trustee
may otherwise be permitted to make by law and the trustee may consider
individual investments as part of an overall investment strategy.
8.4 AUTHORITY TO RETAIN PROPERTY. The trustee may continue to hold in
the form in which received any securities or other property received as part of
this trust, including unproductive or underproductive property, as long as the
trustee deems advisable.
8.5 MANAGEMENT OF SECURITIES. The trustee is authorized to buy, sell,
and trade in stocks, bonds, and securities of every nature, including short
sales, and for such purposes the trustee may
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establish and maintain margin accounts with securities dealers or brokers and
may pledge any securities held or purchased by the trustee with such dealers and
brokers as security for loans and advances made to the trustee. The trustee
shall have all the rights, powers, and privileges of an owner of the securities
held in this trust, including, but not limited to, the power to vote and give
proxies; to enter into shareholders' agreements; to pay calls, assessments, and
other sums chargeable or accruing against or on account of such securities; to
sell or exercise stock subscription of conversion rights; to consent, directly
or through a committee or other agent, to the reorganization, consolidation,
merger, liquidation, sale, or dissolution of a corporation or other business
enterprise; and to participate in voting trusts and pooling arrangements
(whether or not extending beyond the term of the trust), and incident thereto,
to deposit securities with and transfer title and delegate discretion to any
protective or other committee as the trustee deems advisable.
8.6 EXERCISE OF VOTING RIGHTS. The trustee may exercise voting rights
with respect to any shares of stock of a domestic or foreign corporation, any
membership in a nonprofit corporation, or any other trust property, either in
person or by proxy, and the trustee may waive notice of a meeting or consent to
the holding of a meeting and authorize, ratify, approve, or confirm any action
that may be taken by shareholders, members, or property owners.
8.7 NOMINEE HOLDING AUTHORIZED. The trustee is expressly authorized to
hold securities or any other trust property registered or recorded in the
trustee's name as trustee under this instrument, or in the trustee's individual
name, as nominee, without disclosing this trust, or in the individual name of
any other person, firm, or corporation, including any bank, trust company, or
securities brokerage house, as nominee, without disclosing this trust, or the
trustee may hold securities unregistered in such condition that title will pass
by delivery.
8.8 BORROWING AND ENCUMBERING. The trustee shall have the power to
borrow money for any trust purpose and to encumber trust property to secure the
indebtedness of the trust or the joint indebtedness of the trust and a co-owner
of trust property.
8.9 INSURING TRUST PROPERTY. The trustee shall have the power to carry,
at the expense of the trust, insurance of such kinds and in such amounts as the
trustee considers advisable to protect the trust property against damage or loss
and to protect the trustee against liability with respect to third parties.
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8.10 LITIGATION AND COMPROMISE OF CLAIMS. The trustee shall have the
power to commence or defend, at the expense of the trust, any actions, claims,
or proceedings for the protection of the trust property or for the protection of
the trustee in the performance of the trustee's duties. The trustee may pay or
contest any claim by or against the trust, adjust or settle any claim or
litigation by compromise, arbitration, or otherwise, and release, in whole or in
part, any claim belonging to the trust. The trustee's powers under this
paragraph shall apply during the term of the trust and after distribution of
trust assets. However, the trustee shall have no obligations or duties with
respect to any claims or litigation occurring after distribution of trust
property unless the trustee is adequately indemnified by the distributee for any
loss in connection with such matters.
8.11 TRUSTEE'S POWERS ON DISTRIBUTION. In any case in which the trustee
is required to divide trust property into parts or shares for the purpose of
distribution or otherwise, the trustee shall have the discretion to make the
division or distribution in undivided interests or in kind, or partly in cash
and partly in kind, using reasonable values determined by the trustee. For this
purpose, the trustee may make such sales of the trust property as the trustee
deems necessary on such terms and conditions as the trustee considers advisable.
The trustee shall have no obligation to make a pro rata division or distribution
among beneficiaries similarly situated; and the trustee may make a non-pro rata
division between shares and non-pro rata distributions to beneficiaries, as long
as the assets allocated to the separate shares or distributed to the
beneficiaries have equivalent or proportionate fair market values.
8.12 TRUSTEE'S POWERS SURVIVE TRUST TERMINATION. All of the trustee's
powers, duties, and immunities shall continue after the time for termination of
each trust and until the trustee has made final distribution of the trust
property.
ARTICLE 9
---------
ACCOUNTING AND TAX PROVISIONS
-----------------------------
9.1 ACCOUNTING BY TRUSTEE. While both trustors are living, the trustee
shall not be required to account to the trustors, unless an accounting is
requested in writing by either trustor. After the death of one spouse, the
trustee shall not be required to account to the surviving spouse, unless an
accounting is requested in writing by the surviving spouse. Written approval of
the trustee's account by the trustors, or by the surviving spouse, as the case
may be, shall be final and conclusive with respect to all transactions disclosed
in it
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as to all trust beneficiaries. After the death of the surviving spouse, the
trustee shall account in the manner provided by the California Trust Law.
9.2 DETERMINATION OF PRINCIPAL AND INCOME. The trustee shall determine
all matters with respect to what is principal and income of the trust estate and
the apportionment and allocation of receipts and expenses between those accounts
in accordance with the California Revised Uniform Principal and Income Act. Any
such matters not provided for either in this instrument or in the California
Revised Uniform Principal and Income Act shall be determined by the trustee, in
the trustee's reasonable discretion.
9.3 ALLOCATION OF INCOME AND EXPENSES. Income accrued or unpaid on trust
property when received into the trust shall be treated as any other income.
Except as otherwise expressly provided in this instrument, income accrued or
held undistributed by the trustee at the termination of a trust shall be
distributed to the next succeeding beneficiaries of the trust in proportion to
their interest in that income. Among successive beneficiaries of a trust, all
taxes and current expenses shall be prorated on a daily basis and charged to the
period to which they relate.
9.4 ADJUSTMENT FOR TAX CONSEQUENCES. The trustee is authorized, in the
trustee's reasonable discretion, to take any action and to make any election to
minimize the tax liabilities of each trust and its beneficiaries, to allocate
the benefits among the various beneficiaries, and to make adjustments in the
rights of any beneficiaries, or between the income and principal accounts, to
compensate for the consequences of any tax election or any investment or other
administrative decision that the trustee believes has had the effect of directly
or indirectly preferring one beneficiary or group of beneficiaries over others.
9.5 PURCHASE AND REDEMPTION OF FLOWER BONDS. The trustee is authorized
to purchase, at less than par, United States government bonds that are
redeemable at par in payment of federal estate taxes ("flower bonds"). The
trustee may purchase these bonds in such amounts as the trustee, in the
trustee's discretion, considers advisable, if the trustee believes that either
trustor is in substantial danger of death. For this purpose, the trustee may
partition a part of the trustors' community property and make the purchase from
either or both portions. The trustee may purchase the bonds on margin and may
borrow funds and give security for that purpose. The trustee shall resolve any
doubt concerning the desirability of making the purchase and its amount in favor
of making the purchase and in purchasing a larger, even if somewhat excessive,
amount. The trustee shall not be liable to either trustor, to any heir of
either trustor, or to any beneficiary of this trust for losses resulting
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from purchases made in good faith. Notwithstanding anything to the contrary in
this instrument, the trustee shall redeem all such flower bonds to the fullest
extent possible in payment of a deceased trustor's federal estate tax liability,
without apportionment or charge against any beneficiary of the trust estate or
any transferee of property passing outside the trust estate. The executor or
administrator of the deceased trustor's estate, or if none is appointed, the
trustee acting under this instrument, shall select the redemption date of the
bonds. In determining the income payable to the surviving spouse from the
Marital Trust, the trustee shall take into account all accrued interest on bonds
redeemed in payment of a deceased trustor's federal estate tax.
ARTICLE 10
----------
TRUST ADMINISTRATION PROVISIONS
-------------------------------
10.1 ADDITIONS TO TRUST. With the consent of the trustee, additional
property from any source may be added to the trust estate at any time. The
trustee is expressly authorized to accept property transferred to this trust by
the will of either trustor, by either trustor's conservator, or by an agent
acting on behalf of either trustor under a durable power of attorney.
10.2 NO PHYSICAL DIVISION REQUIRED. There need be no physical segregation
or division of the various trusts created in this instrument except as
segregation or division may be required by termination of any of the trusts, but
the trustee shall keep separate accounts for the different undivided interests.
10.3 TRANSACTIONS WITH TRUSTOR'S PROBATE ESTATE. The trustee is expressly
authorized to lend money to the probate estate of either trustor, or to any
trust created by either trustor, and to purchase property from the probate
estate of either trustor, or from any trust created by either trustor, on such
terms and conditions as the trustee considers advisable.
10.4 RESTRICTION ON ASSIGNMENT. The interest of a beneficiary in the
principal or interest of this trust shall be free from the claims of creditors
and from attachment, execution, bankruptcy, or other legal process to the
fullest extent of the law, and the interest of a beneficiary shall not be
transferable by voluntary or involuntary assignment or by operation of law,
except that a beneficiary may assign all or any part of his or her interest in a
trust to any one or more of his or her descendants.
10.5 DISCLAIMER BY BENEFICIARIES. Any beneficiary of this trust may
disclaim all or any part of any interest in property to which the beneficiary is
entitled under this instrument. Except as otherwise
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provided herein, any disclaimed interest shall be distributed as if the
beneficiary had predeceased both trustors. No other interest of the beneficiary
shall be affected by the disclaimer unless that interest has also been
disclaimed.
10.6 PAYMENTS FOR EDUCATION. Whenever provision is made in this
instrument to pay for the education of a beneficiary, the term "education" shall
include college, graduate, postgraduate, professional, and vocational studies as
long as such studies are pursued to advantage by the beneficiary at an
institution of the beneficiary's choice. In determining payments to be made to
a beneficiary for education, the trustee shall take into account the
beneficiary's reasonably related living and traveling expenses.
10.7 LOANS TO BENEFICIARY. The trustee is authorized to make loans out of
the trust estate to any beneficiary of the trust estate on such terms and
conditions as the trustee determines to be fair and reasonable under the
circumstances and to guarantee loans to a beneficiary by encumbrances on trust
property.
10.8 BENEFICIARY UNDER LEGAL DISABILITY. The trustee may pay any amount
distributable to a beneficiary, without regard to whether the beneficiary is
under a legal disability, by paying the amount directly to the beneficiary or by
paying the sum to another person for the use or benefit of the beneficiary.
10.9 DISTRIBUTION TO CUSTODIAN. If a beneficiary otherwise entitled to
receive distribution from the trust estate is under age 25 at the time for
distribution, the trustee shall not distribute that beneficiary's share
outright, but shall instead distribute that share to a custodian serving on
behalf of the beneficiary until age 25 under the California Uniform Transfers to
Minors Act. If no such custodian is then acting, the trustee may name a
custodian from among those persons qualified to serve, which may include the
trustee. The trustee shall be free of liability and shall be discharged from
any further accountability for distributions made in accordance with this
paragraph.
10.10 DEFERRAL OF DIVISION OR DISTRIBUTION. Whenever the trustee is
directed by the provisions of this instrument to make a division or distribution
of trust assets on the death of either trustor, the trustee may, in the
trustee's discretion, defer that division or distribution until the deceased
trustor's federal estate tax has been finally determined. If the trustee defers
the distribution or division of trust assets, the deferred division or
distribution shall be made as if it had taken place at the time prescribed in
this instrument in the
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absence of this paragraph, and the rights of the beneficiaries of those assets
under other provisions of this instrument shall be deemed to have accrued and
vested as of that prescribed time.
10.11 WITHHOLDING DISTRIBUTION SUBJECT TO CLAIMS. At the time for
distribution of any property held in this trust, the trustee shall have the
authority to withhold from distribution, without payment of interest, all or any
part of the trust property, as long as the trustee, in the trustee's discretion,
determines that the property may be subject to conflicting claims, to tax
deficiencies, or to liabilities, contingent or otherwise, properly incurred in
the administration of the trust, provided, however, that the foregoing shall not
affect the vesting of any interest in any trust created under this instrument or
the accrual and payment of trust income to any beneficiary.
10.12 EXERCISE OF POWERS OF APPOINTMENT. Except as otherwise specifically
provided in this instrument, the provisions regarding distribution of each trust
shall be subject to the exercise of any power of appointment over that trust
conferred in this instrument. Any property subject to a power of appointment
conferred in this instrument shall be deemed not to have been effectively
appointed by the holder of the power if the holder has failed to exercise the
power, has effectively revoked an exercise of the power, has irrevocably
released, disclaimed or renounced the power, or if the holder's attempted
exercise of the power is invalid or ineffective for any reason. If no document
purporting to exercise the power of appointment has been brought to the
attention of the trustee within six months after the death of the holder, the
trustee may distribute the trust property subject to the power in accordance
with the terms of this instrument as if the power had not been exercised. If a
document purporting to exercise the power is subsequently located, the trustee
shall not be liable to the appointees under that exercise and the rights of the
appointees and the persons receiving property from the trustee shall be governed
by applicable law.
10.13 NO-CONTEST CLAUSE. If a beneficiary under this instrument, alone or
in conjunction with any other person or persons, contests or attacks the
validity of this instrument in any court or seeks to obtain an adjudication in
any proceeding in any court that this trust or any of its provisions are void,
or otherwise seeks to void, nullify, or set aside this trust or any of its
provisions, or if a beneficiary contests or attacks either trustor's last will
or any provisions of those xxxxx in any proceeding designed to thwart their
wishes as expressed in those xxxxx, then that beneficiary's right to take any
interest given to that beneficiary in this instrument shall be determined as it
would have been determined had the beneficiary predeceased the execution of this
trust
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instrument without surviving descendants. The trustee is authorized to defend,
at the expense of the trust, any contest or attack on this trust or any of its
provisions.
10.14 CHOICE OF LAW. All questions concerning the validity, construction,
interpretation and administration of the trusts created in this instrument shall
be governed by the laws of the State of California in force from time to time,
regardless of whether the place of administration is changed to another state.
10.15 CERTIFICATION OF TRUST. Any bank, stock broker, transfer agent, or
other third party dealing with the trustee may rely on a written certificate of
the trustee or the trustee's attorney as to the existence of this trust and the
trustee's authority under this instrument. The trustee may omit the dispositive
provisions of this instrument in any copy submitted to a third party and no
third party shall have any duty to inquire into or be concerned with the
dispositive provisions of the trust.
10.16 OCCUPANCY OF RESIDENCE BY CHILDREN AND GUARDIANS. After the death of
the surviving spouse, trustors' minor children, the guardian of trustors' minor
children, and the children of any such guardian, shall have the right to
continue to occupy, without payment of rent, all real property in the trust
estate that the trustors were using for residential purposes at the time of the
surviving spouse's death, whether on a full or part time basis. The trustee is
expressly authorized to continue to hold any residential property that the
trustee receives or acquires as part of the trust estate for as long as the
trustors' minor children continue to occupy it. The trustee is authorized, in
the trustee's discretion to sell any such residential property and to purchase,
rent, or lease a replacement residence selected by trustee after consultation
with the trustors' minor children and the guardian of trustors' minor children.
The trustee shall pay out of the income or principal of each trust to which an
interest in the property has been allocated a pro rata share of the trust deed
payments, property taxes, assessments, insurance premiums, maintenance expenses,
and ordinary repairs on the property, or any rent or lease payments, based on
the proportionate interest in the property included in each trust.
ARTICLE 11
----------
DEFINITIONS
-----------
Except as otherwise provided in this instrument, the following definitions
shall apply in interpreting this instrument, unless the context clearly requires
otherwise.
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11.1 TRUSTEE. All references to "the trustee" shall include any trustee or
co-trustees under this instrument at any time, except that a reference to the
trustee of a particular trust shall include only the acting trustee of that
trust. All references to the trustee in the singular shall include all acting
co-trustees.
11.2 CURRENT BENEFICIARY. The "current beneficiary" of a trust means the
beneficiary or group of beneficiaries who are then entitled or authorized in the
trustee's discretion to receive current distributions out of income or principal
of the trust.
11.3 DEATH TAXES. As used in this instrument, the term "death taxes"
means all estate, inheritance, and other death taxes, including interest and
penalties, except for special use valuation recapture taxes and any federal or
state tax imposed on a generation-skipping transfer other than a "direct skip"
as that term is defined in the federal tax laws.
11.4 DECEASED SPOUSE. The term "deceased spouse" as used in this
instrument shall have the meaning set forth in paragraph 3.1 above.
11.5 DESCENDANTS. The term "descendants" means children, grandchildren,
and their lineal descendants of all generations. A class designation of
descendants, children or grandchildren includes persons legally adopted into the
class during minority and persons naturally born into the class in or out of
wedlock. A reference to "descendants" in the plural includes a single
descendant whenever the context so requires.
11.6 EDUCATION. The term "education" as used in this instrument shall
have the meaning set forth in paragraph ? above.
11.7 INTERNAL REVENUE CODE. The term "Internal Revenue Code" as used in
this instrument shall mean the Internal Revenue Code of 1986, as amended from
time to time.
11.8 BY RIGHT OF REPRESENTATION. Whenever distribution under this
instrument is to be made "by right of representation," the property to be
distributed shall be divided into as many equal shares as there are living
children of the designated ancestor, if any, and deceased children who leave
descendants then living. Each living child of the designated ancestor shall
receive one share and the share of each deceased child who leaves descendants
then living shall be divided in the same manner.
11.9 SURVIVING SPOUSE. The term "surviving spouse" as used in this
instrument shall have the meaning set forth in paragraph 3.1 above.
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11.10 SURVIVOR'S TRUST. The term "Survivor's Trust" as used in this
instrument shall have the meaning set forth in paragraph 3.3.1,3.4.1 above.
11.11 MARITAL TRUST. The term "Marital Trust" as used in this instrument
shall have the meaning set forth in paragraph 3.3.2,3.4.2 above.
11.12 MARITAL TRUSTS. The term "Marital Trusts" as used in this instrument
shall have the meaning set forth in paragraph 4.8 above.
11.13 QTIP ELECTION. The term "QTIP election" as used in this instrument
shall mean the election under Section 2056(b)(7) of the Internal Revenue Code.
11.14 EXEMPTION TRUST. The term "Exemption Trust" as used in this
instrument shall have the meaning set forth in paragraph 3.4.3 above.
11.15 XXXXX AND XXXXX'S TRUST. The term "Xxxxx and Xxxxx's Trust" as used
in this instrument shall have the meaning set forth in paragraph 3.3.3 above.
ARTICLE 12
----------
RULES OF CONSTRUCTION
---------------------
Except as otherwise provided in this instrument, the following rules of
construction shall apply in interpreting this instrument, unless the context
clearly requires otherwise.
12.1 SHALL AND MAY. When this instrument states that the trustee shall
perform an act, the trustee is required to perform the act. When this
instrument states that the trustee may do an act, the trustee's decision to do
or not do the act shall be made in the exercise of the trustee's fiduciary
discretion.
12.2 STATUTES, CODES AND REGULATIONS. All references to specific acts,
statutes and codes shall include any amended or successor laws.
12.3 GENDER AND NUMBER. Masculine, feminine and neuter pronouns, and
singular and plural words, each include the others whenever the context so
indicates.
12.4 SEVERABILITY CLAUSE. If any provision of this instrument is
unenforceable, the remaining provisions shall nevertheless remain in effect.
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12.5 USE OF HEADINGS. The Article and paragraph headings in this
instrument are for convenient reference only and are not intended to be fully
descriptive of the contents. In no event shall the headings be relied upon in
interpreting this instrument.
12.6 ARTICLE AND PARAGRAPH REFERENCES. Whenever reference is made in this
instrument to a specific Article or paragraph, the reference is to the Article
or paragraph of this instrument.
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CERTIFICATION BY TRUSTORS
We, the undersigned trustors, certify that we have read this Declaration of
Trust and that it correctly states the terms under which the trust property is
to be held, administered, and distributed by the trustee. We hereby approve the
Declaration of Trust in all respects and request that the trustee execute it.
Executed on June 5, 1991, at Los Angeles, California.
TRUSTORS
/s/ Xxxxxx Xxxxxxxx XXX
-----------------------------
XXXXXX XXXXXXXX XXX
/s/ Xxxxx X. Xxxxxxxx
-----------------------------
XXXXX X. XXXXXXXX
ACCEPTANCE BY TRUSTEE
Accepted on June 5, 1991, at Los Angeles, California.
TRUSTEES
/s/ Xxxxxx Xxxxxxxx XXX
------------------------------
XXXXXX XXXXXXXX XXX
/s/ Xxxxx X. Xxxxxxxx
------------------------------
XXXXX X. XXXXXXXX
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