| Law Office of HOWARD F. ANGIONE | 80-47 192nd St. Jamaica, N.Y. 11423 | (718) 468-7700 (718) 468-6566 (fax) |
The following provides a summary of the main provisions of an Irrevocable Trust that this office frequently recommends for individuals who have three objectives: (1) they want to assure that the value in their homes will eventually serve as an inheritance for their children, (2) they need to retain access to the income from their liquid assets during their lifetimes, and (3) when they die they want the assets in the Trust to go to their beneficiaries free of any liens based on care they may need in a nursing home at the end of their lives.
To be legally valid, such a Trust requires additional language not included in this summary, and it must be executed according to accepted legal standards.
SUMMARY OF IRREVOCABLE TRUST
Article 1: General ProvisionsThis Agreement is made between WILLIAM SMITH and SUSAN SMITH as Grantors and WILLIAM SMITH, SUSAN SMITH and their son ROBERT SMITH, as Trustees. This grantor-retained-interest Trust shall be known as the SMITH 2002 IRREVOCABLE TRUST. Its income will be reported under the Social Security number of WILLIAM SMITH during his lifetime and the Social Security number of SUSAN SMITH if she survives him. The Trust shall be legally identified as follows: WILLIAM SMITH and SUSAN SMITH, Trustees, or their successors in trust, under the SMITH 2002 IRREVOCABLE TRUST. This trust shall be irrevocable. The Grantors expressly waive all right to alter, amend, revoke or terminate the Trust or any of its terms. The Grantors retain the power, however, without the approval of Trustees, to remove assets from the Trust, provided the assets are replaced simultaneously with assets of equal value. If the Trust holds residential real property used by the Grantors, they shall retain the exclusive right to lifetime use, occupancy and possession of the real property for the rest of their lives, together with the right to any income from the property. The Trustees may accept additional property for the Trust in their discretion. The Grantors intend that this Trust conform to the Medicare Catastrophic Coverage Act of 1988, New York State Social Services Law 366, the Omnibus Budget Reconciliation Act of 1990 5041, the Omnibus Budget Reconciliation Act of 1993, and the subsequent regulations promulgated in compliance with the federal and state enabling statutes. Article 2: BeneficiariesThe Grantors are the beneficiaries of the Trust during their lifetimes. After the death of the last Grantor to die, the remaining Trustees are directed to divide the Trust property into four equal shares one each for the Grantors'' four children, Robert, Francis, Mary and Jane, per stirpes and administer the shares as provided in Article 3. Article 3: Use of Income and PrincipalNo Trust principal may be paid to the Grantors, their creditors, the Grantors'' estates or the creditors of the Grantors'' estate. During the lifetimes of the Grantors, the Trustees shall pay all the net income of the Trust to the Grantors. During the lifetimes of the Grantors, the Trustees may make gifts of up to $11,000 annually to each of the Grantors'' four children. At the deaths of both Grantors, the four beneficiaries shall have the option to allow the assets designated for them to remain in successor Trusts, protected from creditors, and be paid out to them at their request. Trust income shall be paid annually to the beneficiaries. If any beneficiary of a successor Trust is disabled, the assets for that beneficiary shall be placed in a Supplementary Needs Trust and be restricted to uses that will not supplant or diminish the benefits of any governmental program for which the beneficiary may be eligible. |
Article 4: Designation of TrusteesSo long as the Grantors remain alive, the Trust shall have a minimum of two and no more than three trustees. Actions of the Trust must be approved by at least two Trustees in writing, but the execution of financial documents may be done by a single Trustee. The initial Trustees are the Grantors and their son, Robert Smith. Trustees may resign, or they may be replaced if they become disabled as defined in Article 7. When successors Trustee are needed, they shall be, in order of their appointment, Francis Smith, Mary Smith and Jane Smith. Article 5: Powers and Authority of TrusteesThe Trustees shall have wide discretion to manage, buy and sell assets in accord with principles of the Prudent Investor Act. When there is uncertainty about whether assets should be treated as principal or income, the Trustees shall have discretion to make a determination consistent with accepted principles. The Trustees shall be entitled to retain and pay for advisers. The Trustees shall in their discretion be entitled to compensation. The Trustees shall provide an annual account for the trust, but the annual statements of banks and financial management firms will be adequate unless a beneficiary objects. Article 6: MiscellaneousThe Trust shall be administered in accordance with the laws of New York State. No money payable or distributable under this Trust shall be pledged, assigned, dissipated or encumbered by an beneficiary or remainderperson. Notices affecting the Trust must be given to all persons with a beneficial interest. Successor Trusts shall conform to the Rule of Perpetuities as defined in New York State. Article 7: DefinitionsThe term "Trustee" includes any successor Trustees. Disability shall be determined by written statement from either the physician who knows the person affected, or by two other individuals who have examined the individual. These two individuals may be geriatric care specialists, physicians, psychiatrists or psychologists. As used in this document, "discretion" means sole, exclusive and absolute discretion. Schedule A: Trust AssetsThis trust is being funded initially by transferring to the Trust the title to the Grantors'' residence, and by $15,000 placed in a financial management account in the name of the Trust. |
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