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Introductory Clause

Article I. Declarations

1.1 Trust name

1.2 Identifications

1.3 Purpose

1.4 Additions

1.5 Registration

Article II. Retained Control

2.1 Amendment and revocation

Article III. Trustee

3.1 Definition

3.2 Named successor

3.3 [Additional trustee / Addition of beneficiary trustee]

3.4 Resignation

3.5 Removal of a trustee

3.6 Appointment of successor

3.7 Professional trustee

3.8 Successor in interest

3.9 Substitute fiduciary

3.10 Compensation

3.11 Acceptance

3.12 Trustee obligations

3.13 Limitations

3.14 Powers of cotrustees

3.15 Powers exercisable by one or more trustees

3.16 Third parties

3.17 Reliance on certificate

Article IV. Distribution for Settlor[and Spouse]

4.1 Income

4.2 Principal

4.3 At Settlor’s death

4.4 Family portion

4.5 Marital portion

Family Trust

4.6 Distributions

Marital Trust (General Power of Appointment)

4.7 General directions

Marital Trust (QTIP)


Spouse’s Trust (Single QTIP)


Article V. Distribution for Others

5.1 Allocation

5.2 Specific gifts

5.3 Tangible personal property

5.4 Balance of property

5.5 Shared trust / Separate trusts

Provisions Applicable to All Trusts

5.6 Representation

5.7 Payments to a guardian

5.8 Beneficiary’s personal use of trust assets

5.9 Retained share

5.10 Absence of beneficiaries

5.11 Conduit trust election

5.12 Payment of charitable gifts

Article VI. General Provisions

6.1 Allocation between family and marital portions

6.2 Periodic payments

6.3 Facility of payments

6.4 Production of income

6.5 Undistributed income

6.6 Ademption of specific gifts

6.7 Nonexoneration

6.8 Payments to minors and incapacitated persons

6.9 Receipt from a beneficiary

6.10 Spendthrift provision

6.11 Survival

6.12 Incapacity

6.13 Perpetuity savings clause

6.14 Treatment of additions

6.15 Settlor's intent regarding modifications/terminations of trust

6.16 Judicial modification/termination of trusts

6.17 Nonjudicial modification/termination of trusts

6.18 Distribution on termination

6.19 Life insurance

6.20 Powers of appointment

6.21 Separate asset account

6.22 Tax terminology

6.23 Notices

6.24 Construction

6.25 Definitions relating to beneficial interests

6.26 Child and descendant

6.27 Spouse

6.28 Taking against the will

6.29 Retirement plan

6.30 Business investments

Article VII. Administrative Powers

7.1 Take control of assets

7.2 Retention of assets

7.3 Receipt of assets

7.4 Life insurance

7.5 Split-dollar agreements

7.6 Contractual obligations

7.7 Charitable pledges

7.8 Deposits and investments

7.9 Acquisition and disposition

7.10 Repairs and alterations

7.11 Administer real estate

7.12 Leases

7.13 Mineral interests

7.14 Disclaimer

7.15 Abandon assets

7.16 Vote securities

7.17 Pay liabilities on securities

7.18 Nominee

7.19 Insurance

7.20 Borrow funds

7.21 Loans

7.22 Pledge for beneficiary loans

7.23 Compromise

7.24 Make payments

7.25 Exercise rights and options

7.26 Principal and income allocations

7.27 Agents

7.28 Attorneys

7.29 Legal proceedings

7.30 Sale or exchange

7.31 Business interests

7.32 Exoneration

7.33 Claims

7.34 Tax matters

7.35 Distributions

7.36 Transfer

7.37 Execute instruments

7.38 Benefits

7.39 Resolve disputes

7.40 Powers after termination

7.41 Common ownership

7.42 Situs of trust

7.43 Benefit of transaction

7.44 Selective allocation

7.45 Ancillary fiduciary

7.46 Deal with other fiduciaries

7.47 Delegation of powers

7.48 Medical records

7.49 Division of trust assets

7.50 Consolidate trusts

7.51 Distribution postponement

7.52 Environmental concerns

7.53 Digital assets

Article VIII. Accounts

8.1 Statements

8.2 Recipients

8.3 Inspection of records

8.4 Limitation on proceedings against trustee

8.5 Court approval

Article IX. Choice of Law

9.1 Governing law

[NAME] TRUST

[Choose one. DRAFTING NOTE: The preamble identifies Settlor and the one or those who initially serve as Trustee. Section 3.2 must be drafted to coordinate with the preamble.]

On [date], [name], as Settlor, establishes this Agreement with [name] as Trustee.

On [date], [name], as Settlor and Cotrustee, establishes this Agreement with [names] as Cotrustees.

On [date], [name], as Settlor and Trustee, establishes this Agreement.

On [date], [name], as Settlor and Cotrustee, establishes this Agreement with [name] as Cotrustee.

On [date], [name], as Settlor and [Cotrustee / Trustee], [and with [name] as Cotrustee,] amends this Agreement with reference to the following facts:

A. The [name] Trust was established by Settlor[, formerly referred to as “Grantor,”] on [date].

B. In Article [II /__] of the Agreement, Settlor reserved the right to amend the trust, in whole or in part. [Settlor previously exercised this right on [date].]

C. Settlor now wishes to [further] amend the Agreement to revise various provisions [and to remove [name] as [Cotrustee / Trustee] and name [name] as [Cotrustee / Trustee]] and, for the sake of clarity, has decided to completely restate the terms of the trust.

THEREFORE, IT IS AGREED that the [name] Trust is amended and restated in its entirety to read as follows:

Article I. Declarations

1.1 Trust name. The name of this trust is the [name] Trust.

[Choose one version of ¶1.2. DRAFTING NOTE: The definition of “child” and “descendant” is found in ¶6.24. If this standard definition is not appropriate or if Settlor intends to omit a child, that fact should be made clear here and in the definition section of Article VI.]

1.2 Identifications. [Settlor’s spouse is [name].] [Settlor’s only child is [name]. / Settlor’s living children are [name] and [name].]

1.2 Identifications. [Settlor’s spouse is [name].] Settlor has no children. [Settlor’s siblings are [name], [name], and [name].]

1.2 Identifications. Settlor has no spouse or children and does not wish to name any siblings.

1.2 Identifications. [Settlor’s spouse is [name].] Settlor’s living children are [name] and [name]. The omission of my child [name] and [his / her] descendants is intentional and is not the result of accident or mistake.

1.2 Identifications. [Settlor’s spouse is [name].] Settlor’s living children are [name] and [name]. [Settlor’s “child” or “children” means [these children / this child] and all children who may be born to or adopted by Settlor in the future. / Settlor’s “child” or “children” means only [these children / this child].] The omission of my child [name] and [his / her] descendants is intentional and [not the result of accident or mistake / not for lack of love and attention].

1.3 Purpose. This trust is established to provide management of assets during Settlor’s lifetime and to act as the means of distributing Settlor’s assets after Settlor has died.

Trustee agrees to hold, administer, and distribute the assets it receives in accordance with this Agreement.

1.4 Additions. Settlor or any other person may transfer assets to Trustee at any time by assignment, will, beneficiary designation, or any other means.

1.5 Registration. If permitted by law, this trust is exempt from registration.

Article II. Retained Control

2.1 Amendment and revocation. During Settlor’s lifetime, this Agreement may be revoked partially or completely or amended in any respect. This power may be exercised by Settlor at any time and without the consent of Trustee or anyone else, but the revocation or amendment must be in writing. No amendment, however, may increase the duties or responsibilities of Trustee without Trustee’s written consent. [As a cautionary note, no amendment should be made without determining the effect of the amendment on the characterization of the trust as foreign or domestic under federal income tax laws of the United States.]

Article III. Trustee

3.1 Definition. The term “Trustee” refers to the one or to those acting as Trustee or Trustees, regardless of number. Individual trusts under this Agreement need not have the same Trustee.

[Choose one version of ¶3.2. DRAFTING NOTE: Do not name the beneficiary of a discretionary trust as sole trustee (or sole successor trustee) if the trust does not limit the invasion of principal with an ascertainable standard unless you intend the trust to be included in the beneficiary’s taxable estate.]

3.2 Named successor. If the original trustee becomes unable or unwilling to serve, [name] shall succeed as Trustee.

3.2 Named successor. If the original trustee becomes unable or unwilling to serve, [name] and [name] shall succeed as cotrustees.

3.2 Named successor. If the original trustee becomes unable or unwilling to serve, the first person named below and the others as alternates or successors, in the order of preference listed, shall succeed the original trustee and any successor trustee:

[name]

[name]

[name]

3.2 Named successor. If an original trustee becomes unable or unwilling to serve, the remaining trustee shall continue to serve.

3.2 Named successor. If an original trustee becomes unable or unwilling to serve, the remaining trustees shall continue to serve. When all original trustees become unable or unwilling to serve, [name] shall succeed as Trustee.

3.2 Named successor. If an original trustee becomes unable or unwilling to serve, [name] shall succeed that person as a trustee.

[Each version of ¶3.3 is optional, and none or both may be included.]

3.3 Additional trustee. Trustee may appoint a [professional] cotrustee to serve under this Agreement.

3.3 Addition of beneficiary trustee. The beneficiary for whom a trust was established under Article V of this Agreement who has attained age 25 may elect to serve as cotrustee of his or her trust.

3.4 Resignation. A trustee may resign by notice to each current income beneficiary; each other then serving trustee; and, if there is no other then serving trustee, the next named successor trustee. If an individual trustee has given an agent under a durable power of attorney general authority to act with respect to the individual trustee’s personal finances, that agent of the individual trustee may give notice of resignation on the individual trustee’s behalf, and the resignation will be effective to the same extent as if the notice had been given personally by the individual trustee. The determination that an individual trustee is incapacitated, as defined in this Agreement, constitutes the resignation of that person as a trustee.

[DRAFTING NOTE: A beneficiary with a power to remove and appoint a trustee may be deemed to have a general power of appointment over the trust (although it should not be a general power if a professional or independent trustee is required or if the distribution provisions are limited to ascertainable standards).]

[3.5 Removal of a trustee. After the death or during the incapacity of Settlor in the case of each trust established under this Agreement, [Settlor’s spouse has / Settlor’s spouse has or, if incapacitated or deceased, a majority of the current income beneficiaries in the nearest generation to Settlor who are competent adults have / a majority of the current income beneficiaries in the nearest generation to Settlor who are competent adults have] the right to remove a [professional] trustee, with or without cause.] If exercised by a beneficiary, this power to remove a trustee is exercised in a nonfiduciary capacity and is not subject to any duty to act in good faith or in accordance with the terms and purposes of the trust or the interests of the beneficiaries. If exercised by any other person, such person is released from any and all liability arising from the exercise or nonexercise of the power except with respect to acts or omissions committed in bad faith or with reckless indifference to the purposes of the trust or the interests of the beneficiaries.

[DRAFTING NOTE: The restriction in the optional last sentence of the following paragraph (referencing IRC 672(c)) is intended to avoid having the powers of the trustee attributed to the person who holds the power to appoint a successor trustee. If the appointment is limited to a professional trustee or the trust is designed in a way that would permit the powerholder to serve as the sole trustee (e.g., all income to the powerholder, principal to the powerholder subject to an ascertainable standard, and no other current trust beneficiary), the optional last sentence need not be included. Use the last bracketed sentence if using the optional provision that permits the beneficiary to appoint a successor trustee to avoid having the beneficiary be deemed to have the trustee powers, unless discretionary distributions are limited to an ascertainable standard and the assets may not be used to meet the beneficiary’s support obligations.]

3.6 Appointment of successor. [If a successor trustee is or becomes unable or unwilling to serve, no one shall succeed that person so long as [a professional / another] trustee is then serving.] If, at any time, there is no designated successor willing and able to serve as Trustee of a trust established under this Agreement, [Settlor’s spouse may / Settlor’s spouse may or, if incapacitated or deceased, a majority of the current income beneficiaries in the nearest generation to Settlor who are competent adults may / a majority of the current income beneficiaries, or, if none, those who would be beneficiaries on the death of the current measuring life, in the nearest generation to Settlor who are competent adults may] appoint a successor [professional] trustee within 30 days of the vacancy. If the appointment is not made within 30 days of the vacancy,] a court having jurisdiction may appoint a successor [professional] trustee. [If the prior trustee is removed, neither a person who possesses or shares the power to remove a trustee, nor anyone who is related or subordinate (within the meaning of IRC 672(c)) to such a person may be appointed a successor, additional, or special trustee.] If exercised by a beneficiary, this power to appoint a successor trustee is exercised in a nonfiduciary capacity and is not subject to any duty to act in good faith or in accordance with the terms and purposes of the trust or the interests of the beneficiaries. If exercised by any other person, such person is released from any and all liability arising from the exercise or nonexercise of the power except with respect to acts or omissions committed in bad faith or with reckless indifference to the purposes of the trust or the interest of the beneficiaries.

[DRAFTING NOTE: The following optional section allows a trustee to appoint a successor. Care should be taken to ensure this section coordinates with the other provisions of Article III.]

3.6 Appointment of successor by trustee. For each trust established under this Agreement, Trustee may, by notice to each current trust beneficiary, appoint a successor trustee to serve when the current trustee becomes unable or unwilling to serve. The appointment shall become effective, however, only if there is no successor trustee named in the preceding sections of this Article who is willing and able to serve as Trustee when the vacancy arises. Trustee may amend or revoke a prior appointment of a successor trustee under this section by notice to each current trust beneficiary.

3.7 Professional trustee. The term “professional trustee” means a bank, trust company, other entity that provides trustee services to the general public, or an individual who regularly serves or holds himself or herself out generally as a fiduciary for trusts and estates. The term “professional trustee,” however, does not include any person who is related or subordinate (within the meaning of IRC 672(c)) to Settlor or any trust beneficiary.

3.8 Successor in interest. Any reference to a fiduciary in this Agreement or to an entity referenced in this Article shall include any successor in interest to that entity arising by merger, consolidation, reorganization in another form, or name change.

3.9 Substitute fiduciary. If Trustee is unable or unwilling to exercise one or more fiduciary powers, from time to time, regarding a specific trust matter or asset, Trustee may appoint, or petition a court having jurisdiction to appoint, a special trustee to exercise the fiduciary power on a temporary or permanent basis or may request that the court exercise the fiduciary power on a temporary or permanent basis.

3.10 Compensation. Each trustee is entitled to reimbursement for reasonable out-of-pocket expenses and may receive reasonable compensation for services performed. A trustee shall have no duty to notify the trust beneficiaries in advance of a change in the method or rate of Trustee’s compensation.

3.11 Acceptance. An eligible prospective trustee may accept the trusteeship by signing an acceptance of trust or by any other method permitted by law. Notice of the acceptance will be provided in accordance with applicable law. If a prospective trustee becomes eligible to serve because of the death, resignation, or removal of the prior trustee or because of the appointment of the prospective trustee, the acceptance must occur within a reasonable time or the prospective trustee shall be deemed to have rejected the trusteeship. If eligibility to serve occurs because of the attainment of a specified age, the notice of acceptance may be given at any time.

3.12 Trustee obligations. Trustee shall exercise good faith, ordinary prudence, and reasonable care in the discharge of Trustee’s duties under the terms of this Agreement. Trustee, however, is not liable for the acts, omissions, or defaults of any agent appointed with due care. A successor trustee is under no obligation to review the acts or to examine the accounts of a predecessor or any cotrustee of a predecessor. In no event is a successor trustee liable for acts, omissions, or failures to account properly before the successor’s acceptance of trusteeship.

3.13 Limitations. In exercising any powers conferred under this Agreement, Trustee shall be bound by the following limitations and requirements:

(a) Self-dealing.

(1) If a trustee other than Settlor owes a legal support obligation, an otherwise permitted discretionary distribution of income or principal in satisfaction of that legal support obligation will be authorized solely by the other trustees as if the trustee who

owes the support obligation was not then serving. If a trustee other than Settlor owes a legal support obligation and there is no other trustee then serving, a discretionary distribution of income or principal in satisfaction of that legal support obligation is prohibited.

(2) If a trustee other than Settlor is also a beneficiary, an otherwise permitted discretionary distribution of income or principal to or for the benefit of that beneficiary-trustee that goes beyond what is required to provide for that beneficiary-trustee’s health, education, maintenance, or support shall be authorized solely by the other trustees as if that beneficiary-trustee was not then serving. If a trustee other than Settlor is also a beneficiary and there is no other trustee then serving, a discretionary distribution of income or principal to or for the benefit of that beneficiary-trustee that goes beyond what is required to provide for that beneficiary-trustee’s health, education, maintenance, or support is prohibited.

(3) If a trustee other than Settlor is also a beneficiary, an otherwise permitted pledge of trust assets to guarantee or otherwise secure a loan made by a third party to that beneficiary-trustee shall be authorized solely by the other trustees as if that beneficiary-trustee was not then serving. If a trustee other than Settlor is also a beneficiary and there is no other trustee then serving, a pledge of trust assets to guarantee or otherwise secure a loan made by a third party to that beneficiary-trustee is prohibited.

(4) If a trustee is also a beneficiary, an otherwise permissible election to treat the portion of a trust consisting of Qualified Retirement Benefits, as provided in Article V, as a conduit trust in order to take advantage of the longest possible deferral of income tax distributions therefrom shall be made solely by the other trustees as if that beneficiary-trustee was not then serving. If a trustee is also a beneficiary and there is no other trustee then serving, such election is prohibited, unless a Special Trustee is appointed to make such election.

(b) Life insurance. Trustee shall not exercise any incidents of ownership over insurance owned by the trust on his or her life.

[Choose one version of ¶3.13(c).]

(c) Exercise of authority. Except as expressly provided to the contrary in this Agreement, when there is more than one trustee serving, the consent of a majority of all trustees who are U.S. citizens or domestic U.S. corporations shall constitute the act of Trustee.

(c) Exercise of authority. Except as expressly provided to the contrary in this Agreement, when there is more than one trustee serving, only the unanimous consent of all trustees who are U.S. citizens or domestic U.S. corporations shall constitute the act of Trustee.

3.14 Powers of cotrustees. If one of several trustees dies, resigns, or is removed, the remaining trustees have all rights, title, and powers of all previous trustees. If the trust instrument provides that a successor trustee is to be appointed to fill a vacancy, the remaining trustees may exercise the powers of all previous trustees until the successor is appointed.

3.15 Powers exercisable by one or more trustees. If there are more than two trustees, cotrustees may provide, by written agreement signed by all of them, that any one or more of the powers designated in this trust may be exercised by any designated one or more of the trustees. [No notice to beneficiaries need be given of such delegation.] If two or more trustees own securities, their acts with respect to voting have one of the following effects: (1) if only one trustee votes, in person or by proxy, that trustee’s act binds all of the trustees; (2) if more than one trustee votes, in person or by proxy, the act of the majority so voting binds all of the trustees; (3) if more than one trustee votes, in person or by proxy, but the vote is evenly split on a particular matter, each faction is entitled to vote the securities proportionately. A trustee is not relieved of liability by entering into an agreement under this section.

3.16 Third parties. A third party may assume without inquiry that Trustee is acting under an existing trust power and is properly exercising that power. If a third party is without actual knowledge that Trustee is exceeding a trust power or improperly exercising it, that party is fully protected in dealing with Trustee as if Trustee possessed and properly exercised that power.

3.17 Reliance on certificate. The certificate of Trustee that Trustee is acting according to the terms of this Agreement fully protects all persons dealing with Trustee.

Article IV. Distribution for Settlor [and Spouse]

4.1 Income. During Settlor’s lifetime and so long as Settlor is not incapacitated, Trustee shall pay the net income to Settlor or as Settlor directs. Upon Settlor’s incapacity, Trustee, in its discretion, shall apply income for Settlor’s benefit.

4.2 Principal. Trustee may pay to Settlor or apply for Settlor’s benefit amounts of principal (even to the exhaustion of the trust) as Trustee, in Trustee’s discretion, deems necessary or advisable to maintain Settlor’s customary standard of living. These payments may include premiums on life insurance on Settlor or Settlor’s dependents whether or not the policies are payable to this trust, and payments to protect Settlor’s assets.

[Choose one version of ¶4.3. DRAFTING NOTE: Use the first alternative to begin the process of dividing the estate into family (credit shelter) and marital portions at Settlor’s death. CAUTION: Beware of changes in beneficiaries due to tax law changes if your marital and family portions have different beneficiaries. Use the second alternative to allocate the entire estate to a qualified terminable interest property (QTIP) trust. Use the third alternative for an unmarried settlor.]

4.3 At Settlor’s death. Upon the death of Settlor, Trustee first shall allocate to a separate asset account any funds that are not liable for debts or expenses of administration. [If Chapter 11 of the Internal Revenue Code of 1986, as amended, is then in effect and if / If] Settlor’s spouse survives Settlor (regardless of the length of the survival period), Trustee shall divide principal into two portions, the family portion and the marital portion. Trustee shall make the division by following the directions set forth in the section below entitled “Allocation between family and marital portions.” [If Chapter 11 is not in effect or if / If] Settlor’s spouse fails to survive Settlor, Trustee shall allocate all property to the family portion. If it is difficult or impossible to determine whether Settlor or Settlor’s spouse has survived the other or if there is not sufficient evidence to make that determination, [Settlor shall be deemed to have survived Settlor’s spouse / Settlor’s spouse shall be deemed to have survived Settlor]. In all events, however, Trustee shall satisfy any general or specific devises in Settlor’s last will as directed by Settlor’s personal representative; or if none is appointed, Trustee shall do so in accordance with the instrument Trustee determines to be Settlor’s last will. Trustee shall treat as an advancement against the share of Settlor’s spouse passing under this Agreement the value of a homestead allowance, family allowance, exempt property allowance, or similar statutory benefit received by Settlor’s spouse from Settlor’s probate estate to the extent that the personal representative of Settlor’s estate has not offset the benefits against a gift to the spouse. Trustee shall first adjust any outright transfers to Settlor’s spouse and then, if there are no outright transfers or to the extent of any insufficiency, any transfer in trust with respect to which Settlor’s spouse is the sole current trust beneficiary.

4.3 Upon the death of Settlor, Trustee first shall allocate to a separate asset account any funds that are not liable for debts or expenses of administration. Trustee shall pay all charges against Settlor’s estate as provided in this section. Trustee may either advance funds to Settlor’s personal representative to meet any deficiency caused by debts, fees, expenses, taxes, and other charges against Settlor’s estate exceeding property in Settlor’s probate estate that can be liquidated reasonably or pay such charges directly. However, Trustee shall not pay debts or claims against Settlor’s estate with any funds that, at their source, are exempt from claims of Settlor’s creditors. In addition, to the extent that other assets are available, Trustee shall not use for payment of debts, transfer taxes, or expenses of administration any benefits payable to the trust under a retirement plan for which a trust beneficiary is treated as the designated beneficiary. All charges against Settlor’s estate, if paid by Trustee, shall be paid as an expense of administration without apportionment among the beneficiaries, unless otherwise directed in Settlor’s last will. In determining liabilities and charges under this section, Trustee may act upon evidence it deems reliable. If Settlor’s spouse survives Settlor (regardless of the length of the survival period), Trustee shall administer the remaining principal as provided in the section of this Article entitled “Spouse’s Trust.” If Settlor’s spouse fails to survive Settlor, Trustee shall administer the balance of the trust assets as provided in Article V. If it is difficult or impossible to determine whether Settlor or Settlor’s spouse has survived the other, or if there is not sufficient evidence to make that determination, [Settlor shall be deemed to have survived Settlor’s spouse / Settlor’s spouse shall be deemed to have survived Settlor]. In all events, however, Trustee shall satisfy any general or specific devises in Settlor’s last will as directed by Settlor’s personal

representative; or if none is appointed, Trustee shall do so in accordance with the instrument Trustee determines to be Settlor’s last will.

4.3 At Settlor’s death. Upon the death of Settlor, Trustee first shall allocate to a separate asset account any funds that are not liable for debts or expenses of administration. Trustee shall pay all charges against Settlor’s estate as provided in this section. Trustee may either advance funds to Settlor’s personal representative to meet any deficiency caused by debts, fees, expenses, taxes, and other charges against Settlor’s estate exceeding property in Settlor’s probate estate that can be liquidated reasonably or pay such charges directly. However, Trustee shall not pay debts or claims against Settlor’s estate with any funds that, at their source, are exempt from claims of Settlor’s creditors. In addition, to the extent that other assets are available, Trustee shall not use for payment of debts, transfer taxes, or expenses of administration any benefits payable to the trust under a retirement plan for which a trust beneficiary is treated as the designated beneficiary. All charges against Settlor’s estate, if paid by Trustee, shall be paid as an expense of administration without apportionment among the beneficiaries, unless otherwise directed in Settlor’s last will. In determining liabilities and charges under this section, Trustee may act on evidence it deems reliable. Trustee shall then divide and distribute the trust assets as provided in Article V. In all events, however, Trustee shall satisfy any general or specific devises in Settlor’s last will as directed by Settlor’s personal representative; or if none is appointed, Trustee shall do so in accordance with the instrument Trustee determines to be Settlor’s last will.

[DRAFTING NOTE: If using the first ¶4.3 alternative (division into family (credit shelter) and marital portions), use the following ¶¶4.4–4.8 and delete the spouse’s trust ¶4.4 found at the end of this article. If using the second ¶4.3 alternative (all to QTIP trust), delete the following ¶¶4.4–4.8 and use the spouse’s trust ¶4.4. If using the third ¶4.3 alternative (for an unmarried settlor), delete the rest of Article IV.]

[Choose one version of ¶4.4. The first alternative is for funding a family trust with a spouse as beneficiary. The second alternative is to bypass the spouse and distribute the family portion to descendants or others under Article V. The third alternative is to include specific charitable or other gifts with distribution of the balance of the family portion either to the family trust for the spouse or the descendants or others under Article V.]

4.4 Family portion. Upon the death of Settlor, Trustee shall pay all charges against Settlor’s estate as provided in this section. Trustee may either advance to Settlor’s personal representative funds to meet any deficiency caused by debts, fees, expenses, taxes, and other charges against Settlor’s estate exceeding property in Settlor’s probate estate that can be liquidated reasonably or pay such charges directly. However, Trustee shall not pay debts or claims against Settlor’s estate with any funds that, at their source, are exempt from claims of Settlor’s creditors. In addition, to the extent that other assets are available, Trustee shall not use for payment of debts, transfer taxes, or expenses of administration any benefits payable to the trust under a retirement plan for which a trust beneficiary is treated as the designated beneficiary. All charges against Settlor’s estate, if paid by Trustee, shall be paid as an expense of administration without apportionment among the beneficiaries, unless otherwise directed in Settlor’s last will. In determining liabilities and charges under this section,

Trustee may act on evidence it deems reliable. Trustee shall then administer the balance of the family portion as provided in the section of this Article entitled “Family Trust.”

4.4 Family portion. Upon the death of Settlor, Trustee shall pay all charges against Settlor’s estate as provided in this section. Trustee may either advance to Settlor’s personal representative funds to meet any deficiency caused by debts, fees, expenses, taxes, and other charges against Settlor’s estate exceeding property in Settlor’s probate estate that can be liquidated reasonably or pay such charges directly. However, Trustee shall not pay debts or claims against Settlor’s estate with any funds that, at their source, are exempt from claims of Settlor’s creditors. In addition, to the extent that other assets are available, Trustee shall not use for payment of debts, transfer taxes, or expenses of administration any benefits payable to the trust under a retirement plan for which a trust beneficiary is treated as the designated beneficiary. All charges against Settlor’s estate, if paid by Trustee, shall be paid as an expense of administration without apportionment among the beneficiaries, unless otherwise directed in Settlor’s last will. In determining liabilities and charges under this section, Trustee may act on evidence it deems reliable. Trustee shall then administer the balance of the family portion as provided in Article V.

4.4 Family portion. Upon the death of Settlor, Trustee shall pay all charges against Settlor’s estate from the family portion as provided in this section. Trustee may either advance to Settlor’s personal representative funds to meet any deficiency caused by debts, fees, expenses, taxes, and other charges against Settlor’s estate exceeding property in Settlor’s probate estate that can be liquidated reasonably or pay such charges directly. However, Trustee shall not pay debts or claims against Settlor’s estate with any funds that, at their source, are exempt from claims of Settlor’s creditors. In addition, to the extent that other assets are available, Trustee shall not use for payment of debts, transfer taxes, or expenses of administration any benefits payable to the trust under a retirement plan for which a trust beneficiary is treated as the designated beneficiary. All charges against Settlor’s estate, if paid by Trustee, shall be paid as an expense of administration without apportionment among the beneficiaries unless otherwise directed in Settlor’s last will. In determining liabilities and charges under this section, Trustee may act on evidence it deems reliable.

Trustee shall then make the following distributions from the principal of the family portion:

….

If any of the above-named individuals do not survive Settlor [or if any above-named organization is not in existence or is not then an organization described in IRC 170(c) and 2055(a) at Settlor’s death], the gift or gifts shall fail if there is no substitute beneficiary named. Trustee shall make the distributions at whatever reasonable times Trustee deems advisable. Interest shall be paid in accordance with governing law. Absent a problem in construing this section, a beneficiary who receives a distribution only under this section is to be informed only of that specific gift and is not to receive any inventory, accounting, or information about gifts to other beneficiaries. Trustee shall then administer the balance of the family portion as provided in [the section of this Article entitled “Family Trust” / Article V].

[Choose one version of ¶4.5.]

4.5 Marital portion. Trustee shall distribute the marital portion to Settlor’s spouse, free of trust.

4.5 Marital portion. Trustee shall hold the marital portion as provided in the section of this Article entitled “Marital Trust.”

Family Trust

4.6 Distributions. Trustee shall administer all property in the family trust, including the allocated portion of the separate asset accounts, as follows:

[Choose one version of ¶4.6(a).]

(a) Income. Trustee shall pay the net income to Settlor’s spouse.

(a) Income. Trustee [shall pay the net income / may accumulate income, or may pay all or part of the net income,] to one or more of Settlor’s spouse and Settlor’s descendants as Trustee in Trustee’s discretion deems appropriate under the circumstances existing at each distribution. Income distributions may be in unequal amounts and may exclude members of the potential class of distributees.

(a) Income. Trustee may accumulate income, or may pay all or part of the net income, to Settlor’s spouse as Trustee in Trustee’s discretion deems appropriate under the circumstances existing at each distribution.

[Choose one version of ¶4.6(b). DRAFTING NOTE: The invasion of principal provision is optional. If used, the first alternative must be chosen if the surviving spouse will be the sole trustee.]

(b) Invasion of principal for the spouse. Trustee may pay principal to Settlor’s spouse from time to time (even to the exhaustion of the trust) as necessary to provide for the spouse’s health, education, support, and maintenance in [his / her] accustomed manner of living. Trustee [shall look to the spouse’s other available resources / may, but need not, look to the spouse’s other available resources] when exercising this power.

(b) Invasion of principal for the spouse. Trustee may pay principal to Settlor’s spouse from time to time (even to the exhaustion of the trust) as, in Trustee’s discretion, is adequate and appropriate for [his / her] comfort, welfare, and best interests. Trustee [shall look to the spouse’s other available resources / may, but need not, look to the spouse’s other available resources] when exercising this power.

[(c) Invasion for descendants. Trustee may distribute principal to one or more of Settlor’s descendants (if it will not impair Settlor’s spouse’s security) in Trustee’s

discretion to provide for the distributee’s health, education, support, and maintenance in the distributee’s accustomed manner of living. When making distributions under this section, Trustee [shall have no duty to consider other resources available to the distributee, but may do so if Trustee deems it advisable / shall consider other resources available to the distributee / shall not consider other resources available to the distributee]. These distributions shall not be taken into consideration when allocating the principal upon termination of the family trust.]

[(d) Invasion for children. Trustee may distribute principal to one or more of Settlor’s children (if it will not impair Settlor’s spouse’s security) in Trustee’s discretion to provide that child with a home of his or her own or enable that child to embark on or pursue a business or professional venture. When making distributions under this section, Trustee [may consider / shall have no duty to consider / shall consider / shall not consider] other resources available to the distributee. Whenever principal is distributed for these purposes, the amount shall be treated as an advancement, without interest, to the child (or the child’s descendants) when Trustee allocates the principal upon termination of the family trust.]

[DRAFTING NOTE: To be used if either or both of ¶4.6(c) and (d) are selected, to state Settlor’s intention that the spouse be primary beneficiary of the family (credit shelter) trust.]

[(e) Intent. The economic welfare of Settlor’s spouse is Settlor’s primary concern, and that of the other beneficiaries is secondary. Therefore, if there is a conflict between the interests of the spouse and other beneficiaries, Trustee shall favor the spouse.]

[Choose one version of ¶4.6(f).]

(f) Testamentary power of appointment. Upon the death of Settlor’s spouse, Trustee shall distribute the family trust as Settlor’s spouse appoints by will. This power of appointment is a special power. If this power of appointment is not exercised or to the extent it is not effectively exercised, upon the death of Settlor’s spouse (or upon Settlor’s death if Settlor’s spouse fails to survive Settlor), Trustee shall divide and distribute the remaining trust assets as provided in Article V.

(f) Termination. Upon the death of Settlor’s spouse (or upon Settlor’s death if Settlor’s spouse fails to survive Settlor), Trustee shall divide and distribute the family trust as provided in Article V.

(f) Termination and power of appointment. The family trust shall terminate upon the first to occur of (1) the remarriage of Settlor’s spouse or (2) the death of Settlor’s spouse. Upon the death of Settlor’s spouse, if Settlor’s spouse has not remarried, Trustee shall distribute the family trust as Settlor’s spouse appoints by will. This power of appointment is a special power. Upon the death of Settlor’s spouse without an exercise of the power of appointment (or to the extent an exercise is ineffective) or the remarriage of Settlor’s

spouse, Trustee shall divide and distribute the remaining trust assets as provided in Article V. For purposes of this section, “remarriage” shall be deemed to include the lawful marriage of Settlor’s spouse to another person or a similar relationship between Settlor’s spouse and another person in which the parties cohabit.

Marital Trust

[Choose one version of ¶4.7. DRAFTING NOTE: The first alternative is a life estate plus general power of appointment trust. The second alternative is a QTIP trust.]

4.7 General directions. All property allocated to the marital portion shall be administered as follows:

(a) Income. From Settlor’s date of death, Trustee shall pay the net income to Settlor’s spouse.

[Choose one version of ¶4.7(b). DRAFTING NOTE: The invasion of principal provision is optional. If used, the first alternative must be chosen if the surviving spouse will be the sole trustee.]

(b) Invasion of principal. Trustee may distribute principal to Settlor’s spouse (even to the exhaustion of the marital trust) in Trustee’s discretion to provide for Settlor’s spouse’s health, education, support, and maintenance in [his / her] accustomed manner of living. When making distributions under this section, Trustee [may consider / shall have no duty to consider other resources available to the distributee, but may do so if Trustee deems it advisable / shall consider other resources available to the distributee / shall not consider other resources available to the distributee]. Trustee shall invade the principal of this marital trust before invading the principal of the family trust for Settlor’s spouse’s benefit unless this marital trust has been exhausted or, in Trustee’s discretion, invasion of the marital trust is impractical or inadvisable.

(b) Invasion of principal. Trustee may distribute principal to Settlor’s spouse (even to the exhaustion of the marital trust) in Trustee’s discretion to provide for Settlor’s spouse’s best interests. When making distributions under this section, Trustee [may consider other resources available to the distributee / shall have no duty to consider other resources available to the distributee, but may do so if Trustee deems it advisable / shall consider other resources available to the distributee / shall not consider other resources available to the distributee]. Trustee shall invade the principal of the marital trust before invading the principal of the family trust for Settlor’s spouse’s benefit unless the marital trust has been exhausted or, in Trustee’s discretion, invasion of the marital trust is impractical or inadvisable.

[Choose one version of ¶4.7(c). If Settlor desires to grant the spouse lifetime power over the marital trust, these are options. If no lifetime power is desired, omit this provision.]

(c) Lifetime power of appointment. Settlor’s spouse may appoint the principal during [his / her] life. This power of appointment is a special power. If any gift tax liability arises from an exercise of this power of appointment, Settlor’s spouse also may appoint for Settlor’s spouse’s benefit an amount sufficient to pay the gift tax liability.

(c) Lifetime power of appointment. Settlor’s spouse may appoint the principal during [his / her] life. This power of appointment is a general power.

(c) Withdrawal right. The beneficiary shall have the right in each calendar year to withdraw from principal, in one sum or installments, the greater of $5,000 or 5 percent of the aggregate fair market value of this trust as of the date of the lapse. The exercise of a right of withdrawal shall be made in writing by the beneficiary; or if the beneficiary is incapacitated, exercise may be made by the beneficiary’s legal representative acting in a fiduciary capacity, delivered to Trustee before the end of the calendar year. The right of withdrawal shall be noncumulative and shall lapse if not exercised before the end of the calendar year.

(d) Testamentary power of appointment. Upon the death of Settlor’s spouse, Trustee shall distribute the remaining trust assets as Settlor’s spouse appoints by will. This power of appointment is a general power.

(e) Distribution of balance. If the testamentary general power of appointment is not exercised or to the extent it is not effectively exercised, upon the death of Settlor’s spouse, Trustee [shall advance funds as directed by the personal representative of Settlor’s spouse’s estate for payment of debts, fees, expenses, taxes, and other charges against [his / her] estate. Trustee then] shall divide and distribute the remaining trust assets as provided in Article V.

Marital Trust

4.7 General directions. All property allocated to the marital portion shall be administered as follows:

(a) Tax election. Trustee is authorized to elect, in the absence of a personal representative for Settlor’s estate and under provisions of IRC 2056(b)(7), to have any portion or all of the marital trust qualify for a marital deduction in Settlor’s estate for federal estate tax purposes. By way of suggestion, Settlor indicates that this election should be made to minimize taxes in Settlor’s estate unless Trustee determines some tax should be paid or other considerations override the desirability of reducing taxes. Trustee shall not incur any liability for either electing or failing to make an election under this section so long as Trustee has acted in a prudent and responsible manner.

(b) Income. From Settlor’s date of death, Trustee shall pay the net income to Settlor’s spouse.

[Choose one version of ¶4.7(c). DRAFTING NOTE: The invasion of principal provision is optional. If used, the first alternative must be chosen if the surviving spouse will be the sole trustee.]

[(c) Invasion of principal. Trustee may distribute principal to Settlor’s spouse (even to the exhaustion of the marital trust) in Trustee’s discretion to provide for Settlor’s spouse’s health, education, support, and maintenance in [his / her] accustomed manner of living. When making distributions under this section, Trustee [may consider other resources available to the distributee / shall have no duty to consider other resources available to the distributee, but may do so if Trustee deems it advisable / shall consider other resources available to the distributee / shall not consider other resources available to the distributee]. [Trustee shall invade the principal of the marital trust before invading the principal of the family trust for Settlor’s spouse’s benefit unless the marital trust has been exhausted or, in Trustee’s discretion, invasion of the marital trust is impractical or inadvisable. / Trustee shall first invade the portion, if any, of the marital trust for which an election to qualify for the marital deduction was made before invading the portion not qualified for the deduction, unless the qualified portion has been exhausted or, in Trustee’s discretion, invasion of the qualified portion is impractical or inadvisable.]

[(c) Invasion of principal. Trustee may distribute principal to Settlor’s spouse (even to the exhaustion of the marital trust) in Trustee’s discretion to provide for Settlor’s spouse’s best interests. When making distributions under this section, Trustee [may consider other resources available to the distributee / shall have no duty to consider other resources available to the distributee, but may do so if Trustee deems it advisable / shall consider other resources available to the distributee / shall not consider other resources available to the distributee]. [Trustee shall invade the principal of the marital trust before invading the principal of the family trust for Settlor’s spouse’s benefit unless the marital trust has been exhausted or, in Trustee’s discretion, invasion of the marital trust is impractical or inadvisable. / Trustee shall first invade the portion, if any, of the marital trust for which an election to qualify for the marital deduction was made before invading the portion not qualified for the deduction, unless the qualified portion has been exhausted or, in Trustee’s discretion, invasion of the qualified portion is impractical or inadvisable.]

[(d) Withdrawal right. The beneficiary shall have the right in each calendar year to withdraw from principal, in one sum or installments, the greater of $5,000 or 5 percent of the aggregate fair market value of this trust as valued as of the date of the lapse. The exercise of a right of withdrawal shall be made in writing by the beneficiary; or if the beneficiary is incapacitated, exercise may be made by the beneficiary’s legal representative acting in a fiduciary capacity, delivered to Trustee before the end of the calendar year. The right of withdrawal shall be noncumulative and shall lapse if not exercised before the end of the calendar year.]

(e) Payment of taxes. At the death of Settlor’s spouse, Trustee shall pay the estate and inheritance taxes imposed on Settlor’s spouse’s estate (unless otherwise directed in Settlor’s spouse’s last will) from that portion of this trust that Trustee elected to qualify for a marital deduction in Settlor’s estate, to the extent that the total of those taxes is greater than would have been imposed if the assets that were qualified for the marital deduction were not subject to tax.

[Choose one version of ¶4.7(f). If the first option is chosen, the last phrase in ¶6.1(c) may be deleted.]

(f) Distribution of balance. Upon the death of Settlor’s spouse, Trustee shall divide and distribute the remaining trust assets as provided in Article V.

(f) Testamentary power of appointment. Upon the death of Settlor’s spouse, Trustee shall distribute the remaining trust assets as Settlor’s spouse appoints by will. This power of appointment is a special power. If this power of appointment is not exercised or to the extent it is not effectively exercised, upon the death of Settlor’s spouse, Trustee shall divide and distribute the remaining trust assets as provided in Article V.

Spouse’s Trust

4.4 General directions. All property allocated to the spouse’s trust shall be administered as follows:

(a) Tax election. Trustee is authorized to elect, in the absence of a personal representative for Settlor’s estate and under provisions of IRC 2056(b)(7), to have any portion or all of the spouse’s trust qualify for a marital deduction in Settlor’s estate for federal estate tax purposes. By way of suggestion, Settlor indicates that this election should be made to minimize taxes in Settlor’s estate unless Trustee determines some tax should be paid or other considerations override the desirability of reducing taxes. Trustee shall not incur any liability for either electing or failing to make an election under this section so long as Trustee has acted in a prudent and responsible manner.

(b) Income. From Settlor’s date of death, Trustee shall pay the net income to Settlor’s spouse.

[Choose one version of ¶4.4(c). DRAFTING NOTE: The invasion of principal provision is optional. If used, the first alternative must be chosen if the surviving spouse will be the sole trustee.]

[(c) Invasion of principal. Trustee may distribute principal to Settlor’s spouse (even to the exhaustion of the spouse’s trust) in Trustee’s discretion to provide for Settlor’s spouse’s health, education, support, and maintenance in [his / her] accustomed manner of living. When making distributions under this section, Trustee [may consider other resources available to the Settlor’s spouse / shall have no duty to consider other resources available to the Settlor’s spouse, but may do so

if Trustee deems it advisable / shall consider other resources available to the Settlor’s spouse / shall not consider other resources available to the Settlor’s spouse]. Trustee shall first invade the portion, if any, of the spouse’s trust for which an election to qualify for the marital deduction was made before invading the portion not qualified for the deduction, unless the qualified portion has been exhausted or, in Trustee’s discretion, invasion of the qualified portion is impractical or inadvisable.]

[(c) Invasion of principal. Trustee may distribute principal to Settlor’s spouse (even to the exhaustion of the spouse’s trust) in Trustee’s discretion to provide for Settlor’s spouse’s best interests. When making distributions under this section, Trustee [may consider other resources available to the Settlor’s spouse / shall have no duty to consider other resources available to the Settlor’s spouse, but may do so if Trustee deems it advisable / shall consider other resources available to the Settlor’s spouse / shall not consider other resources available to the Settlor’s spouse]. Trustee shall first invade the portion, if any, of the spouse’s trust for which an election to qualify for the marital deduction was made before invading the portion not qualified for the deduction, unless the qualified portion has been exhausted or, in Trustee’s discretion, invasion of the qualified portion is impractical or inadvisable.]

[(d) Withdrawal right. The beneficiary shall have the right in each calendar year to withdraw from principal, in one sum or installments, the greater of $5,000 or 5 percent of the aggregate fair market value of this trust as valued on the date of the lapse. The exercise of a right of withdrawal shall be made in writing by the beneficiary; or, if the beneficiary is incapacitated, exercise may be made by the beneficiary’s legal representative acting in a fiduciary capacity, delivered to Trustee before the end of the calendar year. The right of withdrawal shall be noncumulative and shall lapse if not exercised before the end of the calendar year. Trustee shall satisfy the withdrawal first from the portion, if any, of this trust for which an election to qualify for the marital deduction was made.]

(e) Payment of taxes. At the death of Settlor’s spouse, Trustee shall pay the estate and inheritance taxes imposed on Settlor’s spouse’s estate (unless otherwise directed in Settlor’s spouse’s last will) from that portion of this trust that Trustee elected to qualify for a marital deduction in Settlor’s estate, to the extent that the total of those taxes is greater than would have been imposed if the assets that were qualified for the marital deduction were not subject to tax.

[Choose one version of ¶4.4(f).]

(f) Distribution of balance. Upon the death of Settlor’s spouse, Trustee shall divide and distribute the remaining trust assets as provided in Article V.

(f) Testamentary power of appointment. Upon the death of Settlor’s spouse, Trustee shall distribute the remaining trust assets as Settlor’s spouse appoints by will. This power

of appointment is a special power. If this power of appointment is not exercised or to the extent it is not effectively exercised, upon the death of Settlor’s spouse, Trustee shall divide and distribute the remaining trust assets as provided in Article V.

Article V. Distribution for Others

5.1 Allocation. At the termination of a trust or portion under Article IV, Trustee shall divide and distribute the assets that remain in the trust or portion as provided in this Article, applying these provisions as of the termination of that portion or trust.

5.2 Specific gifts. [If Settlor survives [his / her] spouse,] Trustee shall make the following distributions from principal, except to the extent they have already been made, pursuant to this section, from other trusts or portions subject to this Article:

….

If any above-named individual does not survive Settlor [or if any above-named organization is not in existence or is not then an organization described in IRC 170(c) and 2055(a) at Settlor’s death], such gift or gifts shall fail if there is no substitute beneficiary named. Trustee shall make the distributions at such reasonable times as Trustee deems advisable. Interest shall be paid in accordance with governing law. Absent a problem in construing this section, a beneficiary who receives a distribution only under this section is to be informed only of that specific gift and is not to receive any inventory, accounting, or information about gifts to other beneficiaries.

5.3 Tangible personal property. Trustee shall distribute all tangible personal property to Settlor’s children who are then living in as nearly equal shares as possible.


(a) Dispute. If there is a dispute over which items each is to receive, Trustee shall place a value on each item (by appraisal if appropriate) and then each beneficiary shall select in rotation (the order of choice to be determined by lot) the items each desires until all have received approximately equal value.

(a) Dispute. If there is a dispute over which items each is to receive, Trustee shall determine the items each beneficiary will receive.

(b) Reference to list. Settlor may leave a list, either entirely in [his / her] handwriting or just signed by Settlor, indicating the disposition of items of tangible personal property. Such a list, if any, shall be treated as an amendment to this Agreement and shall control.

(c) Delayed distribution. If an item is more appropriate for distribution at a later date, it may be held by Trustee and be delivered to the beneficiary when Trustee deems best.

[Choose one version of ¶5.4. DRAFTING NOTE: The first alternative creates a shared trust if any child is under a stated age. The second alternative creates separate trusts for each beneficiary until later ages are attained. The third alternative provides for outright distribution to children and separate trusts for more remote descendants. The fourth alternative provides for outright distribution to descendants by right of representation. The shared or separate trust provisions of ¶5.5 must be used if one of the first three alternatives is chosen and may be omitted if the fourth is chosen.]

5.4 Balance of property. If any then living child of Settlor is under age [age], Trustee shall administer the remaining trust assets as a shared trust on the terms and conditions stated below. If no living child of Settlor is under that age, Trustee shall divide and distribute the remaining trust assets in the manner described in the case of the termination of the Shared Trust.

5.4 Balance of property. Trustee shall divide all other trust assets into shares among Settlor’s then living descendants by right of representation. Each share shall constitute a separate trust to be administered as provided below. However, Trustee shall pay to the beneficiary the amount, if any, the beneficiary is then entitled to receive and decides to withdraw.

5.4 Balance of property. Trustee shall divide all other trust assets into shares among Settlor’s then living descendants by right of representation. Each share allocated to a living child of Settlor shall be distributed, free of trust. Each other share shall constitute a separate trust to be administered as provided below. However, Trustee shall pay to the beneficiary the amount, if any, the beneficiary is then entitled to receive and decides to withdraw.

5.4 Balance of property. Trustee shall divide all other trust assets into shares among Settlor’s then living descendants by right of representation. Trustee shall distribute each share to the beneficiary for whom it was allocated, subject to the paragraph below entitled “Retained share.”

Shared Trust

[DRAFTING NOTE: Because of the potential tax consequences (including but not limited to income consequences under IRC 678(a)), a beneficiary should not be permitted to serve as sole trustee of the Shared Trust, even if discretionary distributions of income and/or principal are limited by an ascertainable standard.]

5.5 Shared trust. The assets of any shared trust shall be administered as follows:

(a) Income. Trustee may distribute or accumulate income of the shared trust or add it to principal. The distribution of current and accumulated income is governed by the provisions that authorize the use of principal.

(b) Principal. Trustee may distribute principal to one or more of Settlor’s children in Trustee’s discretion to [provide for the child’s health, education, support, and

maintenance in the child’s accustomed manner of living / provide funds for the child’s best interests]. When making distributions under this section, Trustee [may consider other resources available to the child / shall have no duty to consider other resources available to the child, but may do so if Trustee deems it advisable / shall consider other resources available to the child / shall not consider other resources available to the child]. Trustee may also distribute to a beneficiary, at such time or times as seems proper, tangible personal property held for the beneficiary.

(c) Intent. This trust is provided primarily for the benefit of Settlor’s children who have not attained age [age] and secondarily for the benefit of Settlor’s other descendants, to provide flexibility in meeting the needs of all descendants in a manner approximating what a parent would do if living. Trustee should encourage each younger beneficiary to obtain an education commensurate with that person’s talents, and Trustee should recognize that the children may have unequal and varying needs. It is expected that Trustee will make distributions to Settlor’s children who have attained age [age] only if those distributions will not jeopardize the economic security of Settlor’s children under that age. Any distribution to a child of Settlor who has attained age [age] shall be treated as an advancement, without interest, at the time the trust terminates and is distributed.

[Choose one version of ¶5.5(d).]

(d) Termination. When no living child of Settlor is under age [age], Trustee shall terminate the shared trust and shall divide and distribute the trust assets into shares among Settlor’s then living descendants by right of representation. [Trustee may continue to administer the various shares under the terms of the shared trust, but only for the benefit of the one for whom the share was set aside. The beneficiary has a continuing right to withdraw his or her entire share. If the beneficiary dies before withdrawing the entire share, Trustee shall pay the balance to the personal representative of the beneficiary’s estate.]

(d) Termination. When the youngest living child attains age [age] or dies before then and there is no other child under that age, Trustee shall terminate the shared trust and shall divide the trust assets into shares among Settlor’s then living descendants by right of representation. The share of each beneficiary who has not attained age [age of final distribution under ¶5.5] shall be administered as a separate trust, as provided below. Each other share shall be distributed to its beneficiary. Trustee, however, shall pay to the beneficiary the amount, if any, that the beneficiary is then entitled to receive and decides to withdraw. To facilitate identification, Trustee shall designate each separate trust with the name of the beneficiary for whom it was established.

Separate Trusts

5.5 Separate trusts. The assets of any separate trusts shall be administered as follows:

(a) Identification of trusts. Trustee may distribute or accumulate net income of a separate trust or add it to principal. The distribution of current and accumulated income is

governed by the provisions that authorize the use of principal. To facilitate identification, Trustee shall designate each Separate Trust with the name of the beneficiary for whom it was established.

[Choose one version of ¶5.5(b).]

(b) Income. Trustee may distribute or accumulate net income of a separate trust or add it to principal. The distribution of current and accumulated income is governed by the provisions that authorize the use of principal.

(b) Income. Trustee may distribute or accumulate net income of a separate trust or add it to principal. The distribution of current and accumulated income is governed by the provisions that authorize the use of principal. However, Trustee shall distribute current income to or for the benefit of the beneficiary on the beneficiary’s attaining age 21.

(b) Income. Trustee shall distribute net income to or for the benefit of the beneficiary. However, the beneficiary may elect in any year to have Trustee accumulate all or any portion of net income.

(c) Principal. Trustee may distribute principal to the beneficiary (even to the exhaustion of the separate trust) in Trustee’s discretion to [provide for the beneficiary’s health, education, support, and maintenance in the beneficiary’s accustomed manner of living / provide the beneficiary with a home of his or her own / enable the beneficiary to embark on or pursue a business or professional venture / provide for the expenses of the beneficiary’s wedding / provide funds for the beneficiary’s best interests]. When making distributions under this section, Trustee [may consider other resources available to the child / shall have no duty to consider other resources available to the child, but may do so if Trustee deems it advisable / shall consider other resources available to the child / shall not consider other resources available to the child]. Trustee also may distribute to the beneficiary, at such time or times as seems proper, tangible personal property held in his or her trust.

[Choose one version of ¶5.5(d).]

(d) Age withdrawal. After the date on which the beneficiary attains age [age], the beneficiary has a continuing right to withdraw an amount up to one-third of the value of the trust assets; after the date on which the beneficiary attains age [age], the beneficiary has a continuing right to withdraw an amount up to one-half of the value of the trust assets; and after the beneficiary attains age [age], the beneficiary has a continuing right to withdraw all trust assets. In each instance, the amount subject to withdrawal shall be computed on the date the beneficiary attains the specified age or, if later, the date of the creation of the separate trust. The computations shall assume that prior unexercised withdrawals were fully exercised and removed from the trust.

(d) Age withdrawal. After the date on which the beneficiary attains age [age], the beneficiary has a continuing right to withdraw an amount up to one-half of the value of

the trust assets; and after the beneficiary attains age [age], the beneficiary has a continuing right to withdraw all trust assets. The amount subject to withdrawal shall be computed on the date the beneficiary attains the specified age or, if later, the date of the creation of the separate trust.

(d) Age withdrawal. After the date on which the beneficiary attains age [age], the beneficiary has a continuing right to withdraw all trust assets.

[(e) Power of appointment. If the beneficiary dies before complete distribution, Trustee shall pay the trust assets as the beneficiary appoints by the beneficiary’s will. This power is a limited power of appointment [or, if granted, a conditional power of appointment] as to trust assets not yet subject to the right of withdrawal and is a general power of appointment as to trust assets that could have been, but were not then, withdrawn.]

(f) [Substitute transfer / Termination]. [If the power of appointment is not exercised or to the extent it is not effectively exercised, / If the beneficiary dies before complete distribution,] Trustee shall divide the trust assets into shares among the beneficiary’s then living descendants by right of representation or, if none, among the then living descendants by right of representation of the beneficiary’s nearest ancestor in Settlor’s lineage who has then living descendants. The beneficiary’s ancestor for such purpose, however, must be either Settlor or a descendant of Settlor. Each beneficiary’s share shall constitute a separate trust to be held, administered, and distributed as provided in this Article, or if there is a separate trust already created for the beneficiary, the share shall be added to that separate trust.

Provisions Applicable to All Trusts

[Choose one version of ¶5.6. DRAFTING NOTE: The first alternative contains the Estates and Protected Individuals Code definition. The second alternative contains the Revised Probate Code definition. The third alternative is a pure per stirpes definition.]

5.6 Representation. If trust assets pass under this Agreement “by right of representation” to the descendants of a specified individual, the assets shall be divided into as many equal shares as there are (1) then living descendants in the generation nearest to the specified individual that contains one or more then living descendants and (2) deceased descendants in the same generation who left then living descendants, if any. Each then living descendant in the nearest generation is allocated one share. The remaining shares, if any, are combined and then divided in the same manner among the then living descendants of the deceased descendants as if the then living descendants who were allocated a share and their then living descendants had predeceased the specified individual. A posthumous child is considered as living at the death of the child’s parent.

5.6 Representation. If trust assets pass under this Agreement “by right of representation” to the descendants of a specified individual, the assets shall be divided into as many equal shares as there are (1) then living descendants in the generation nearest to the specified

individual that contains one or more then living descendants and (2) deceased descendants in the same generation who left then living descendants, if any. Each then living descendant in the nearest generation is allocated one share. The share of each deceased person in the same generation is divided among his or her descendants in the same manner. A posthumous child is considered as living at the death of the child’s parent.

5.6 Representation. If trust assets pass under this Agreement “by right of representation” to the descendants of a specified individual, the assets shall be divided into as many equal shares as there are (1) then living children of the individual and (2) deceased children of the individual who have then living descendants. Each living child is allocated one share. The share of each deceased child is allocated among his or her descendants in the same manner as described in the first sentence of this section. A posthumous child is considered as living at the death of the child’s parent.

5.7 Payments to a guardian. If there is a guardian appointed for a beneficiary, Trustee shall supply funds to the guardian from the beneficiary’s share that are adequate to maintain and support the beneficiary and to protect the guardian, to the extent possible, from suffering any significant financial burden by reason of the appointment. Trustee also may pay to the guardian fair and reasonable compensation, determined in Trustee’s sole discretion, for services as guardian.

5.8 Beneficiary’s personal use of trust assets. Trustee may retain or acquire as trust assets real property or tangible personal property that Trustee permits one or more current trust beneficiaries to use rent free.

[Choose one version of 5.9. The first is the default option and permits retention only with respect to a distributee who has not attained age 21. The second option permits the Trustee to retain a distributable share under a much broader set of circumstances and for an indefinite period. Note that neither option is designed to facilitate Medicaid qualification.]

5.9 Retained share. If principal is distributable, upon the termination of a prior estate, to a person who has not attained age 21 and there is no other trust described to receive that distribution, Trustee shall hold the same in further trust under this paragraph. Trustee may distribute or accumulate income and may distribute principal to or for the benefit of the beneficiary as in Trustee’s discretion is necessary to provide the beneficiary with care and support, resources to meet medical or other extraordinary needs, and an education (including tuition, room and board, books, and incidentals). When the beneficiary attains age 21, the principal, together with any accumulated income, shall be paid over to him or her. If the beneficiary dies before attaining age 21, the principal, together with any accumulated income, shall be paid as the beneficiary may appoint by will. This power of appointment is a “general power.” In default of the beneficiary’s effective exercise of the power of appointment, Trustee shall allocate and distribute the remaining trust assets among the beneficiary’s then living descendants in shares determined by right of representation or, if none, among the then living descendants of the beneficiary’s nearest ancestor in Settlor’s lineage who has then living descendants in shares determined by right of representation. The beneficiary’s ancestor for such purpose, however, must be either Settlor or a descendant of

Settlor. As an alternative to such a further trust, Trustee may hold or distribute the principal in a manner authorized in the paragraph in Article VI entitled “Payments to minors and incapacitated persons.”

5.9 Retained share. Trustee may retain and hold in further trust all or any portion of a share of trust assets otherwise distributable to a beneficiary other than the settlor’s spouse if (1) the beneficiary is a person who has not attained age 21 and there is no other trust described to receive the distribution or (2) Trustee determines that there is a substantial possibility that the beneficiary will be unable or unwilling to use the distributed trust assets in the beneficiary’s best interests due to personal circumstance. Circumstances warranting retention include but are not limited to mental or physical incapacity, difficulty in exercising judgment about or attending to financial and property affairs, alcoholism, drug abuse, gambling, incarceration, pending or threatened bankruptcy, marital disharmony or pending divorce, pending or threatened litigation, or residence in a jurisdiction or affiliation with a group or sect where all or a majority of the distribution may be confiscated or appropriated by the government or others. Trustee shall be fully exonerated in its decision under this section to hold, continue to hold, or decline to hold trust assets in a further trust unless such decision is made in bad faith.

If the Trustee determines, in its sole discretion, to retain funds as set forth above, the Trustee may hold or distribute the beneficiary’s share of trust assets in a (1) retained share trust the terms of which are set forth below, (2) manner authorized in the section in Article VI entitled “Payments to minors and incapacitated persons,” or (3) pursuant to the original trust created under this Agreement that governed the trust assets at the time the Trustee decided to retain the assets except that any beneficiary’s right to withdrawal shall be disregarded. If applicable, the following provisions govern a retained share trust:

(a) Income. Net income shall be accumulated and added to principal.

(b) Principal. Trustee may invade principal for the benefit of the beneficiary if Trustee determines that it is appropriate in order to

(1) provide for the beneficiary’s reasonable comfort, welfare, and benefit;

(2) provide an education for the beneficiary if he or she is striving diligently for an education (including technical and trade training, camp and study-related travel, as well as college, postgraduate, and professional training);

(3) pay expenses caused by illness or other misfortune and provide extra goods and services that are over and above those expenses, goods, and services that are paid for by insurance, government programs, public assistance, or other resources known to Trustee to be available for these purposes;

(4) pay expenses of burial; or

(5) terminate the trust because the reason for which Trustee retained the beneficiary’s distributable share no longer applies under the beneficiary’s current circumstance.

(c) Termination. The trust shall terminate and the remaining share shall be distributed at the death of the beneficiary, unless terminated earlier through invasion of principal. Upon termination by death, Trustee [shall pay over the trust fund as the beneficiary may appoint by will. This power of appointment is a “general power.” In default of the beneficiary’s effective exercise of the power of appointment, Trustee] shall allocate and distribute the remaining trust assets among the beneficiary’s then living descendants in shares determined by right of representation or, if none, among the then living descendants of the beneficiary’s nearest ancestor in Settlor’s lineage who has then living descendants in shares determined by right of representation. The beneficiary’s ancestor for such purpose, however, must be either Settlor or a descendant of Settlor.

[Choose one version of ¶5.10.]

5.10 Absence of beneficiaries. If, at any time, there is no one to take under the other provisions of this Agreement, Trustee shall distribute the trust assets to those persons who would inherit Settlor’s estate as if Settlor had then died intestate under the Michigan law then in effect, with the shares and proportions determined by that law. In the case, however, of a separate trust comprising assets made subject to this Agreement by the exercise of a nongeneral power of appointment, if the class of permissible appointees under the power does not include all those persons who would inherit Settlor’s estate if Settlor had died intestate under Michigan law in effect at the time for the application of this section, Trustee shall distribute the assets of that trust only among those heirs who are permissible appointees under the power as though the heirs who are impermissible appointees are deceased, and, if there is no heir who is a permissible appointee, the assets shall be distributed according to the controlling document(s) or statute(s) that would govern their disposition if the power had not been exercised.

5.10 Absence of beneficiaries. If, at any time, there is no one to take under the other provisions of this Agreement, Trustee shall distribute the trust assets one-half to those persons who would inherit Settlor’s estate and the other one-half to those persons who would inherit Settlor’s spouse’s estate in each case as if Settlor and Settlor’s spouse had then died intestate under Michigan law then in effect, with the shares and proportions determined by that law. In the case, however, of a separate trust comprising assets made subject to this Agreement by the exercise of a nongeneral power of appointment, if the class of permissible appointees under the power does not include all those persons who would inherit Settlor’s or Settlor’s spouse’s estate if Settlor or Settlor’s spouse had died intestate under Michigan law in effect at the time for the application of this section, Trustee shall distribute the assets of that trust, as provided in this section, only among those heirs of Settlor or Settlor’s spouse who are permissible appointees under the power as though the heirs who are impermissible appointees are deceased, and, if there is no heir who is a permissible appointee, the assets shall be distributed according to the controlling document(s) or statute(s) that would govern their disposition if the power had not been exercised. For purposes of this section, a governmental entity is not an heir of either Settlor or Settlor’s spouse if there is at least one natural person who is an heir of either Settlor or Settlor’s spouse and who is entitled to take assets of the trust in question under this section, in which case, all of the assets of the trust in

question shall be distributed among the heir(s) who are natural persons entitled to take such assets under this section.

5.10 Absence of beneficiaries. If, at any time, there is no one to take under the other provisions of this Agreement, Trustee shall distribute the trust assets [to Settlor’s parents if both are then living or, if only one is then living, to Settlor’s parent who is then living or, if neither parent is then living,] to the then living descendants of Settlor’s parents by right of representation. In the case, however, of a separate trust comprising assets made subject to this Agreement by the exercise of a nongeneral power of appointment, if the class of permissible appointees under the power does not include all of [Settlor’s then living parents and ]the then living descendants of Settlor’s parents, Trustee shall distribute the assets of that trust, as provided in this section, only among those of [Settlor’s then living parents and ]the then living descendants of Settlor’s parents who are permissible appointees under the power as though the persons who are impermissible appointees are deceased, and, if there is no person who is a permissible appointee, the assets shall be distributed according to the controlling document(s) or statute(s) that would govern their disposition if the power had not been exercised.

5.10 Absence of beneficiaries.


(a) In general. Except as provided in subsection (b) below, if, at any time, there is no one to take under the other provisions of this Agreement, Trustee shall distribute the trust assets to the following beneficiaries (specific beneficiaries) in the proportions specified. [If any beneficiary named to receive a share is not then living, the share shall be distributed proportionately to the beneficiaries who are then living.]

(1) [Percentage] to [name of individual]




If any specific beneficiary is not then living or in existence, the share shall lapse. If a share lapses, the other shares shall be increased proportionately. If all shares lapse, Trustee shall distribute the trust assets to those persons who would inherit Settlor’s estate as if Settlor had then died intestate under the law of Michigan then in effect, with the shares and proportions determined by that law.

(a) In general. Except as provided in subsection (b) below, if, at any time, there is no one to take under the other provisions of this Agreement, Trustee shall distribute the trust assets to the following beneficiaries (specific beneficiaries) in the proportions specified. [If any beneficiary named to receive a share is not then in existence or is not then an

organization described in IRC 170(c) and 2055(a), the share shall be distributed proportionately to the beneficiaries that are then in existence and so described.]

(1) [Percentage] to [name of organization]





(a) In general. Except as provided in subsection (b) below, if, at any time, there is no one to take under the other provisions of this Agreement, Trustee shall distribute the trust assets to the following beneficiaries (specific beneficiaries) in the proportions specified. [If any beneficiary named to receive a share is not then living or if any named organization is not then in existence as an organization described in IRC 170(c) and 2055(a), the share shall be distributed proportionately to the beneficiaries who are then living or in existence and so described.]

(1) [Percentage] to [name of organization/individual]





(b) Certain appointive trusts. In the case of a separate trust comprising assets made subject to this Agreement by the exercise of a nongeneral power of appointment, if the class of permissible appointees under the power does not include all of the specific beneficiaries, Trustee shall distribute the assets of that trust only among those specific beneficiaries that are permissible appointees under the power as though the share provided for an impermissible appointee had lapsed. If there is no specific beneficiary that is a permissible appointee, Trustee shall distribute the assets of the trust as provided

in subsection (a) as if all of the specific beneficiaries’ shares had lapsed, provided that if the class of permissible appointees under the power does not include all those persons who would inherit Settlor’s estate if Settlor had died intestate under Michigan law in effect at the time for the application of this section, Trustee shall distribute the assets only among those heirs who are permissible appointees as though the heirs who are impermissible appointees are deceased, and, if there is no heir who is a permissible appointee, the assets shall be distributed according to the controlling documents or statutes that would govern their disposition if the power had not been exercised.

5.11 Conduit trust election. Notwithstanding any other provision of this Agreement, if any benefits under a retirement plan that are subject to the minimum distribution rules of IRC 401(a)(9) and the treasury regulations thereunder (“Qualified Retirement Benefits”) are payable to the Trustee of any trust established under this Agreement and such trust would otherwise fail to qualify as a conduit trust because the trust is not a permissible “designated beneficiary” as contemplated by IRC 401(a) and Treas Reg 1.401(a)(9)-4, A-5(b), thereby requiring all Qualified Retirement Benefits to be withdrawn within 5 years, Trustee, subject to the section entitled “Limitations,” shall have the power to elect to have such trust qualify as a conduit trust with respect to that portion of the trust consisting of Qualified Retirement Benefits as permitted under IRC 401(a) and the treasury regulations thereunder. Following such election, only the current trust beneficiary or current trust beneficiaries shall receive the minimum required distributions from such plan.

(a) Notice. Trustee shall inform the qualified trust beneficiaries of such designated trust by written notice of Trustee’s election on or before the date on which designated beneficiaries of such Qualified Retirement Benefits must finally be determined for purposes of IRC 401(a) and the treasury regulations thereunder.

(b) Intent. Settlor intends that each trust designated to receive Qualified Retirement Benefits meet the requirements of IRC 401(a)(9) and the treasury regulations as a trust the current beneficiaries of which (and only the current beneficiaries of which) will be treated as the designated beneficiaries of such Qualified Retirement Benefits.

(c) Minimum required distributions. Trustee shall withdraw from the retirement plan each year the minimum required distribution as determined under IRC 401(a)(9). If there is more than one retirement plan payable to the designated trust, Trustee may elect to take the aggregate minimum required distribution from any one or combination of retirement plans as permitted under the Internal Revenue Code. Following Trustee’s receipt of such distribution, Trustee shall pay all amounts withdrawn or received from a retirement plan to or for the benefit of the current beneficiary or current beneficiaries by the end of the calendar year in which the distribution is received in such increments as Trustee deems appropriate. Trustee is further prohibited from accumulating any amounts withdrawn or received from a retirement plan beyond the end of the calendar year in which the distribution is so required.

5.12 Payment of charitable gifts. Unless otherwise specified, Trustee, in satisfying gifts to charitable organizations, shall first use assets that represent income in respect of a decedent.

If retirement plan benefits are used to satisfy gifts to charitable organizations, distribution must be made before September 30 of the calendar year following the participant’s death or such other date established by the Internal Revenue Code or treasury regulations to ascertain the identity of a retirement plan designated beneficiary.

Article VI. General Provisions

[DRAFTING NOTE: Paragraph 6.1 coordinates with the first alternative to ¶4.3. If using the second or third alternative to ¶4.3, delete this section and renumber the remaining sections in Article VI. Note that if optional language in ¶4.3 is used, this section takes effect only if Chapter 11 of the IRC has not been repealed.]

6.1 Allocation between family and marital portions.

(a) Trustee shall allocate to the Family Trust all separate asset account assets excludable from the tax base for Settlor’s transfer tax purposes and all assets, proceeds, or interests with respect to which the marital deduction would not be allowed (other than by reason of the non-U.S.-citizen status of Settlor’s spouse) if allocated to the marital portion.

Trustee may allocate to the family portion, as appropriate, all policies of life insurance owned by Settlor on the life of another and assets with respect to which a federal estate tax credit for foreign death taxes is allowable. Trustee shall not allocate to the family portion assets that represent income in respect of the decedent unless there are insufficient other assets to fund the family portion completely; and in that event, Trustee is given discretion to allocate assets that represent income in respect of the decedent to the family portion.

[Choose one version of ¶6.1(b)–(d). DRAFTING NOTE: The first alternative is a pecuniary marital formula with minimum net-worth funding that can be modified if a pecuniary credit formula is desired. The second alternative is a percentage formula with pick-and-choose funding. The third alternative is a fixed percentage pecuniary marital formula that provides for minimum net-worth funding of the marital portion. The fourth alternative is a fixed percentage fractional marital formula. The third and fourth alternatives ensure that both trusts are funded. Caution: Formulas solely dependent on tax terms for formulas could result in unintended consequences as the tax laws change, including disinheritance of spouse or children. Fractional or pecuniary savings clauses or minimum value clauses may be appropriate. Samples are below in the bracketed language.]

(b) If Settlor’s spouse survives Settlor, Trustee shall allocate a pecuniary amount to the marital portion. The amount shall be the smallest amount that, if allowed as a federal estate tax marital deduction, will result in the least possible federal estate tax liability by reason of Settlor’s death, taking into consideration the federal applicable exclusion amount, the federal credit or deduction for taxes paid to a state, all deductions allowed on the federal estate tax return, and exclusions and reductions in value to which the estate is entitled (such as those under IRC 2031(c) and 2032A) and after all other specific gifts under this Agreement and under Settlor’s last will have been paid or satisfied in full.

[Notwithstanding the foregoing, the marital portion [plus any other assets included in Settlor’s estate, received by Settlor’s spouse other than under this Agreement and allowed as a marital deduction] shall not be less than [$[amount] / an amount equal to [percentage] of the trust assets after debts and expenses / the trust assets after debts and expenses plus those other assets received by Settlor’s spouse].]

Trustee shall allocate to the family portion the balance of the assets constituting Settlor’s trust estate.

[DRAFTING NOTE: If using a QTIP marital trust, delete the first sentence of (c).]

(c) Notwithstanding the provisions of paragraph (b), if Settlor’s spouse survives Settlor but fails to live for six months following Settlor’s death, Trustee shall reduce the amount allocable to the marital portion by the smallest amount that will result in Settlor’s estate and Settlor’s spouse’s estate being taxed in the same marginal federal estate tax bracket, determined as if the spouse died immediately after Settlor’s death and as if the spouse’s estate is valued as of the date and in the manner in which Settlor’s estate is valued for federal estate tax purposes. If property is received by Trustee directly or indirectly as the result of a disclaimer by Settlor’s spouse or if Settlor’s spouse disclaims any part of the marital portion, Trustee shall set aside the disclaimed property as a disclaimer trust, to be administered on the same terms and conditions as those that apply to the family portion or trust except, if serving as a trustee, Settlor’s spouse shall not exercise any discretion (unless governed by an ascertainable standard relating to health, education, support, or maintenance) regarding distribution of the disclaimer trust and, in all events, Settlor’s spouse shall have no power of appointment over the disclaimer trust.

(d) The amount of the marital portion shall be based on finally determined federal estate tax values and the valuation date selected for federal estate tax purposes. In selecting a valuation date for the purpose of the federal estate tax, Settlor directs Trustee to select the date that will result in the greatest tax benefit to Settlor’s estate, regardless of the effect this selection may have on the amount provided by this Article for Settlor’s spouse. In satisfying the amount given to the marital portion, Trustee shall value principal assets allocated to the marital portion at their income tax basis; provided, however, that the aggregate fair market value at the date or dates of distribution of all principal assets allocated to the marital portion shall amount to no less than the pecuniary amount of the marital portion. The income tax basis of assets included in Settlor’s gross estate shall be their finally determined value for federal estate tax purposes.

(b) If Settlor’s spouse survives Settlor, Trustee shall allocate to the family portion a percentage interest in the balance of the assets (after the allocations under (a) above) constituting Settlor’s trust estate. The interest allocated shall be the largest percentage that can pass free of federal estate tax by reason of the federal applicable exclusion amount, the federal credit or deduction for transfer taxes paid to a state, all deductions allowed on the federal estate tax return (other than the marital and charitable deductions for assets passing outside the family portion), and exclusions and reductions in value to which the estate is entitled (such as those under IRC 2031(c) and 2032A), such items

being reduced, however, by all other interests and property that are includable in Settlor’s gross estate and that pass to the family portion under (a) above or to persons other than Settlor’s spouse (unless distributable from the family portion) for which no exemption, deduction, or credit against or exclusion from federal estate tax is allowed. The percentage shall be determined valuing the balance of the assets constituting Settlor’s trust estate without regard to exclusions from the estate, reductions in taxable value, or allowable deductions. If the family portion, determined under the foregoing formula, is insufficient to satisfy debts, taxes, and other charges against the family portion, including outright distributions that are payable from the family portion as part of the settlement of Settlor’s estate, Trustee shall increase the percentage interest allocable to the family portion to the smallest percentage necessary to provide also for the payment of all of those items. [Notwithstanding the foregoing, the marital portion [plus any other assets included in Settlor’s estate, received by Settlor’s spouse other than under this Agreement and allowed as a marital deduction] shall not be less than [$[amount] / an amount equal to [percentage] of the trust assets after debts and expenses / the trust assets after debts and expenses plus those other assets received by Settlor’s spouse].]

Trustee shall allocate to the marital portion the remaining percentage interest constituting Settlor’s trust estate.

[DRAFTING NOTE: If using a QTIP marital trust, delete first sentence of (c).]

(c) Notwithstanding the provisions of paragraph (b), if Settlor’s spouse survives Settlor but fails to live for six months following Settlor’s death, Trustee shall reduce the percentage allocable to the marital portion and increase the percentage allocable to the family portion by the smallest percentage that will result in Settlor’s estate and Settlor’s spouse’s estate being taxed in the same marginal federal estate tax bracket as if the spouse died immediately after Settlor’s death and as if the spouse’s estate is valued as of the date and in the same manner in which Settlor’s estate is valued for federal estate tax purposes. If property is received by Trustee directly or indirectly as the result of a disclaimer by Settlor’s spouse or if Settlor’s spouse disclaims any part of the marital portion, Trustee shall set the disclaimed property aside as a disclaimer trust, to be administered on the same terms and conditions as those that apply to the family portion or trust, except, if serving as a trustee, Settlor’s spouse shall not exercise any discretion regarding distribution of the disclaimer trust, and in all events Settlor’s spouse shall have no power of appointment over the disclaimer trust.

(d) The percentage interests of the family and marital portions shall be based on finally determined federal estate tax values and the valuation date selected for federal estate tax purposes. In selecting a valuation date for the purpose of the federal estate tax, Settlor directs Trustee to select the date that will result in the greatest tax benefit to Settlor’s estate, regardless of the effect this selection may have on the amount provided by this Article for Settlor’s spouse.

The percentage of Settlor’s estate allocated to each portion shall, for distribution purposes, be applied to the distributed assets valued at their fair market values at the date or dates of distribution, and the percentage shall be adjusted to reflect any partial distributions and the payment of charges against Settlor’s estate. Trustee may distribute principal assets disproportionately among the portions in cash, in kind, or partly in cash and in kind.

(b) If Settlor’s spouse survives Settlor, Trustee shall allocate to the marital portion, as of the date of Settlor’s death, principal in a pecuniary amount equal to [percentage] of the value of Settlor’s adjusted gross estate. Such amount shall be reduced by the aggregate value of all property in Settlor’s gross estate passing to or for the benefit of Settlor’s spouse, other than under this Agreement. “Adjusted gross estate” means Settlor’s gross estate decreased by the aggregate amount of deductions allowed to Settlor’s estate under IRC 2053 and 2054, if applicable.


(c) If property is received by Trustee directly or indirectly as the result of a disclaimer by Settlor’s spouse, or if Settlor’s spouse disclaims any part of the marital portion, Trustee shall set aside the disclaimed property as a disclaimer trust, to be held, administered, and distributed on the same terms and conditions as those that apply to the family portion or trust, except, if serving as a trustee, Settlor’s spouse shall not exercise any discretion regarding distribution of the disclaimer trust, and in all events Settlor’s spouse shall have no power of appointment over the disclaimer trust.

(d) The amount of the marital portion shall be based on finally determined federal estate tax values and the valuation date selected for federal estate tax purposes. In selecting a valuation date for the purpose of the federal estate tax, Settlor directs Trustee to select the date that will result in the greatest tax benefit to Settlor’s estate, regardless of the effect this selection may have on the amount provided by this Article for Settlor’s spouse. In satisfying the amount given to the marital portion, Trustee shall value principal assets allocated to the marital portion at their income tax basis; provided however, that the aggregate fair market value at the date or dates of distribution of all principal assets allocated to the marital portion shall amount to no less than the pecuniary amount of the marital portion. The income tax basis of assets included in Settlor’s gross estate shall be their finally determined value for federal estate tax purposes.

(b) If Settlor’s spouse survives Settlor, Trustee shall allocate to the marital portion, as of the date of Settlor’s death, a fractional share of principal equal to [percentage] of the value of Settlor’s adjusted gross estate. Such amount shall be reduced by the aggregate value of all property in Settlor’s gross estate passing to or for the benefit of Settlor’s spouse, other than under this Agreement. “Adjusted gross estate” means Settlor’s gross estate decreased by the aggregate amount of deductions allowed to Settlor’s estate under IRC 2053 and 2054, if applicable.


(c) If property is received by Trustee directly or indirectly as the result of a disclaimer by Settlor’s spouse, or if Settlor’s spouse disclaims any part of the marital portion, Trustee shall set aside the disclaimed property as a disclaimer trust, to be held, administered, and distributed on the same terms and conditions as those that apply to the family portion or trust, except, if serving as a trustee, Settlor’s spouse shall not exercise any discretion regarding distribution of the disclaimer trust and in all events Settlor’s spouse shall have no power of appointment over the disclaimer trust.

(d) The percentage interests of the family and marital portions shall be based on finally determined federal estate tax values and the valuation date selected for federal estate tax purposes. In selecting a valuation date for the purpose of the federal estate tax, Settlor directs Trustee to select the date that will result in the greatest tax benefit to Settlor’s estate, regardless of the effect this selection may have on the amount provided by this article for Settlor’s spouse.

The percentage of Settlor’s estate allocated to each portion shall, for distribution purposes, be applied to the distributed assets valued at their fair market values at the date or dates of distribution, and the percentage shall be adjusted to reflect any partial distributions and the payment of charges against Settlor’s estate. Trustee may distribute principal assets disproportionately among the portions in cash, in kind, or partly in cash and in kind.

6.2 Periodic payments. When income is required to be distributed to a beneficiary, income payments shall be made at least quarterly. In determining the amount of periodic payments, Trustee may estimate the annual net income, making a final adjustment after the close of its accounting period. When discretionary payments of income or principal are made, if permitted for federal income tax purposes, Trustee may elect to treat some or all of any amounts distributed within the first 65 days of a tax year as having been made on the last day of the prior tax year.

6.3 Facility of payments. Whenever income or principal may be paid to a beneficiary, Trustee may, in Trustee’s discretion, apply payments for the benefit of the beneficiary.

[DRAFTING NOTE: Paragraph 6.4 may be deleted if there is no marital deduction trust (QTIP or Power of Appointment).]

6.4 Production of income. Settlor intends that Trustee exercise all powers to produce a reasonable amount of income from any trust for Settlor’s spouse under this Agreement qualifying for a marital deduction in Settlor’s estate. Accordingly, Settlor’s spouse may direct Trustee in writing at any time to make productive or convert within a reasonable time any unproductive trust assets. If this trust is the recipient of installment payments from a retirement plan, a contract for deferred compensation, or any other installment obligation (whether as a result of a contract provision, a beneficiary designation, an election by Settlor

or Trustee, or otherwise), Settlor’s spouse is the intended beneficiary of income from those assets, and Trustee shall allocate to income such part or all of the installments received that represent income earned by the retirement plan or other asset or, if earnings are not stated, shall allocate to income an amount that represents a reasonable rate of return on the asset. If less than the income earned by the retirement plan or other asset is distributed currently, Trustee shall either require additional distributions from the plan or other payor or convert other assets and then add the proceeds of the additional receipts or conversions to income so that, in all events, all income earned on assets held by Trustee is allocated to income and distributed currently to Settlor’s spouse.

6.5 Undistributed income. When an income beneficiary dies, any accrued but undistributed income shall be paid, when distributable, to the holder or holders of the next estate.

6.6 Ademption of specific gifts. If Settlor has directed that specific property be given to a beneficiary under this Agreement but Trustee does not hold or receive that property at the time or as a result of Settlor’s death, the gift is adeemed and fails. Notwithstanding the foregoing, if a condemnation award, insurance proceeds, or a recovery for injury to the property unpaid is paid to or received by Trustee, the beneficiary has the right to a general pecuniary gift that is equal to the amount of the condemnation award, the insurance proceeds, or the recovery.

6.7 Nonexoneration. Unless Settlor has specifically directed otherwise, a specific gift of property made under this Agreement passes subject to any mortgage or other security interest existing on Settlor’s date of death, without right of exoneration, regardless of a general directive in Settlor’s will or in this Agreement to pay Settlor’s debts.

6.8 Payments to minors and incapacitated persons. If a distribution is payable to a minor, or to a person who is incapacitated as defined in the section of this Article entitled “Incapacity,” Trustee may make payment to the beneficiary, to any person or entity for the beneficiary’s benefit, or to a custodian for the beneficiary under any applicable uniform transfers to minors act.

6.9 Receipt from a beneficiary. Whenever payments are made to a minor or to a person who is incapacitated as defined in this Agreement, the receipt of the person, the person’s natural guardian, or the person’s legal representative shall exonerate Trustee. Trustee need not see to the proper application of the distribution.

6.10 Spendthrift provision. A beneficiary may not assign any portion of his or her beneficial interest in income or principal. No creditor of any beneficiary may attach, interfere with, take, or reach by any legal or equitable process any part of a beneficiary’s interest in satisfaction of any debt or liability of the beneficiary before actual receipt by the beneficiary after payment from Trustee. Trustee may withhold distributions to any beneficiary (other than income payable to Settlor’s spouse from trust assets that qualify for the marital deduction) whose interest would or likely could become payable to anyone other than the beneficiary.

6.11 Survival. Unless otherwise specified in this instrument, no person (other than Settlor’s spouse) shall be considered to have survived another or to be living upon the death of another if he or she dies within 30 days after the death of the other person. In addition, a lineal descendant of a parent of Settlor, Settlor’s spouse, or Settlor’s former spouse in the generation nearest to Settlor who dies within 90 days after Settlor shall be considered as failing to survive and to have predeceased Settlor with respect to all property that, if a condition of survival for 90 days were imposed, would, in the alternative, pass to a lineal descendant of the one who dies; but this additional rule shall apply with respect to a collateral relative of Settlor, Settlor’s spouse, or Settlor’s former spouse only if Settlor then has no living lineal descendant. Unless otherwise specifically provided in this Agreement, a gift fails if a beneficiary does not survive and there is no substitute beneficiary indicated in this Agreement who satisfies the conditions for taking. Any person who is not identified as a substitute beneficiary in this document shall not take under the provisions of an antilapse statute.

[DRAFTING NOTE: Under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), physicians may not be willing to give their opinions without a HIPAA authorization. The authorization should allow fiduciaries, agents, successor trustees, and perhaps others to obtain health care disclosures. Note that this may involve the trustee’s granting HIPAA authorizations if the trustee is an individual other than the settlor, who should sign an authorization as part of his or her estate plan.]

6.12 Incapacity. A fiduciary or a beneficiary shall be deemed to be incapacitated if a licensed physician certifies or, if required, a court having jurisdiction determines that due to physical or mental conditions the person is unable to exercise judgment about or attend to property or financial matters. Settlor desires that, if requested, any fiduciary or successor fiduciary sign an authorization under the Health Insurance Portability and Accountability Act permitting any cofiduciary or named successor fiduciary to receive medical information necessary to confirm his or her ability or inability to serve as a fiduciary.

6.13 Perpetuity savings clause. If a beneficial interest is (or would be but for the effect of a perpetuities savings clause) subject to a wait-and-see period of 90 years or less under the applicable rule against perpetuities and the interest does not vest earlier, it shall vest indefeasibly, as provided below, on the date that is 21 years after the date of death of the last survivor of all beneficiaries under this Agreement (vested and contingent) who are living on the date from which the rule against perpetuities runs with reference to that interest (whether that date is the date of execution of this instrument or of a prior instrument, the date of death of Settlor or someone else, or another date). The interest shall, on that date, vest indefeasibly in the persons who own that contingent or defeasible interest. If the persons or shares cannot be ascertained, each such interest shall vest indefeasibly in the then income beneficiaries of the trust or its portion, in proportion to their income interests. If their proportions are not fixed, the interest shall vest indefeasibly in the beneficiaries by right of representation, the generation immediately preceding the beneficiary or beneficiaries in the nearest degree of relationship to Settlor being the one from whom representation is measured. If one or more of the beneficiaries is not related to Settlor, the rules in IRC 2651 shall be used to determine relationship. To “vest indefeasibly” means that the interest shall continue in trust (according

to its terms) but be subject to a general power of appointment held by the beneficiary and either exercisable presently or by will; and if the interest continues in trust until its termination, the interest, in default of appointment, shall be paid to the beneficiary, if living, or, if not living, to the beneficiary’s estate.

6.14 Treatment of additions. If an addition is made to a trust under this Agreement by the exercise of a nongeneral power of appointment or otherwise and if the rule against perpetuities runs from different dates with reference to the assets, if the assets have different tax attributes, if the assets are of a different nature, or if it is otherwise in the best interests of the beneficiaries, Trustee shall hold, administer, and distribute the addition as an undivided share or as a separate trust with governing provisions that are identical to the trust to which the assets were added.

6.15 Settlor’s intent regarding modification/termination of trusts. Modification or termination of trusts should be accomplished in recognition that Settlor has established the Trusts under this Agreement for the purpose of providing for the beneficiaries while protecting and preserving trust assets from the forces of dissipation, including taxation, claims of creditors, imprudent investing, difficult or poor economic conditions, or careless consumption. Settlor recognizes that unanticipated circumstances or changes in law may result in more efficient means to effectuate these purposes. Hence, Settlor hopes that the provisions governing the modification or termination of trusts as provided in this Article VI will be broadly interpreted.

6.16 Judicial modification/termination of trusts. A court having jurisdiction, acting on the petition of a trustee or an interested person, but only following notice to each trust beneficiary to whom notice must be given under applicable law or court rule and to each trustee, may modify any trust established under this Agreement

(a) if, because of circumstances not anticipated by Settlor, modification in accordance with Settlor’s probable intention will further the purposes of the trust;

(b) if continuation of the trust on its current terms would be impractical or wasteful or would impair the trust’s administration;

(c) to conform the terms of the trust, even if unambiguous, to Settlor’s intention if it is proved by clear and convincing evidence that both Settlor’s intent and the terms of the trust were affected by a mistake of fact or law, whether in expression or inducement;

(d) to achieve Settlor’s tax objectives in a manner not contrary to Settlor’s probable intention; or

(e) for any of the reasons stated under the section of this Agreement titled “Nonjudicial Modification/Termination of Trusts.”

The presence of a spendthrift clause shall not prevent the modification or termination of a trust when modification or termination of a trust is otherwise justified under the terms of this section.

6.17 Nonjudicial modification/termination of trusts. Trustee, other than and without the participation of a trustee who has a beneficial interest in the trust, acting in its discretion and in accordance with this article, but only following notice to each trustee of the trust and to each qualified trust beneficiary, may modify or terminate any trust established under this Agreement without consent given by any trust beneficiary and regardless of the circumstances in which beneficiaries may find themselves from time to time if Trustee determines that

(a) modification or termination is consistent with any material purpose of the trust and the interests of any beneficiary who did not consent are adequately protected;

(b) the continued existence of the trust is not necessary under the circumstances then existing for achievement of (1) a significant income or transfer tax benefit, (2) asset management assistance for the current trust beneficiaries, or (3) the protection of resources for trust beneficiaries throughout and until the expiration of the specified term of the trust, although a material purpose of each trust under this Agreement, is no longer necessary; or

(c) the trust property has been reduced to a value that is insufficient to justify the cost of administration.

Trustee shall not be liable for either exercising or failing to exercise its discretion under this section. In exercising its discretion under this section Trustee shall consider the likelihood of further significant additions to the trust. The presence of a spendthrift clause shall not prevent the modification or termination of a trust when modification or termination is otherwise justified under the terms of this section.

6.18 Distribution on termination. Trustee may distribute the trust assets of a trust that has been terminated under the preceding section as follows:

(a) [to Settlor’s spouse if [he / she] is a current income beneficiary or, if [he / she] is not, then] in equal shares among the current income beneficiaries in the oldest generation, provided that current trust beneficiaries shall take by right of representation the share of a deceased ancestor who would have been a current income beneficiary if alive;

(b) to the beneficiaries in accordance with the value of their proportionate interests in the manner provided for in the Agreement upon termination of that trust;

(c) as agreed on by the qualified trust beneficiaries; or

(d) in such other manner as a court having jurisdiction may direct.

In no event [shall the trust assets of a trust that qualified for the marital deduction in Settlor’s estate be distributed to anyone other than Settlor’s spouse if [he / she] is then a beneficiary of that trust, nor] shall the trust assets of a trust that qualified for the charitable deduction in Settlor’s estate be distributed to anyone other than a beneficiary described in IRC 2055(a). Distributions upon termination are subject to the section of Article V entitled “Retained share.”

6.19 Life insurance. Any person may designate Trustee as a beneficiary of an insurance policy or plan paying death benefits. Designation of Trustee as a beneficiary of an insurance policy does not impose an obligation on Trustee to maintain the policy in force or to pay premiums. An insurer need not inquire into or take notice of the provisions of this Agreement or the disposition of the policy proceeds. The owner of a policy or the participant under a plan paying death benefits holds all incidents and obligations of ownership. All incidents of ownership in policies owned by Trustee on the life of a trustee are vested in, and may be exercised solely by, the other trustees or appointed special trustees. After Settlor’s death, a beneficiary of a trust under this Agreement that has not been qualified for the marital deduction and over which the beneficiary does not possess a general power of appointment may not withdraw any portion of the principal of the trust that consists of an insurance policy, or an interest in a policy, insuring the beneficiary’s life. Upon the death of the insured, Trustee shall use its best efforts to collect and receive all sums payable under the policies of insurance under which it is a beneficiary, subject to all loans and charges against such policies as may have accrued. If litigation is required to enforce payment of any proceeds, Trustee is entitled to recover its expenses out of other trust assets, or, if there are none, Trustee is entitled to indemnification from other sources in a manner satisfactory to Trustee as a precondition to instituting suit.

6.20 Powers of appointment. The following provisions apply to all powers of appointment created by this Agreement. The provisions of the Michigan Powers of Appointment Act of 1967 also apply, to the extent they are not inconsistent with the following:

(a) Definitions.

(1) A “general power” of appointment means a power that may be exercised without restriction as to appointees and that may be exercised in favor of the powerholder’s estate.

(2) A “nongeneral power” of appointment includes both a special power of appointment and a limited power of appointment, which are defined as follows:

[Choose one version of subsection (A).]

(A) A “special power” of appointment, if the term is used, means a power that may not be exercised in favor of the powerholder, his or her creditors, his or her estate, or the creditors of his or her estate.

(A) A “special power” of appointment, if the term is used, means a power that may be exercised only in favor of [Settlor’s descendants / spouses of Settlor’s descendants / charitable organizations described in IRC 170(c) / charitable organizations described in IRC 170(c), 2055(a), and 2522(a)][The term “spouse” includes a widow or widower of a descendant of Settlor (so long as the marriage had not been terminated by divorce or annulment before the descendant’s death) even if the widow or widower remarries.].

[Choose one version of subsection (B).]

(B) A “limited power” of appointment, if the term is used, means a power that may not be exercised in favor of the powerholder, his or her creditors, his or her estate, or the creditors of his or her estate.

(B) A “limited power” of appointment, if the term is used, means a power that may be exercised only in favor of [Settlor’s descendants (other than the powerholder) / spouses of Settlor’s descendants / charitable organizations, transfers to which are deductible under IRC 170(c) / charitable organizations, transfers to which are deductible under IRC 170(c), 2055(a), and 2522(a)]. [The term “spouse” includes a widow or widower of a descendant of Settlor (so long as the marriage had not been terminated by divorce or annulment before the descendant’s death) even if the widow or widower remarries.]

With respect to any retirement plan benefit payable to the trust and for which the powerholder is treated as the designated beneficiary, a special or limited power may be exercised only in favor of individuals who are permissible appointees and who are younger than the powerholder.

(C) A “conditional power” is a power of appointment described in this section. “Granting Trustee” refers to the trustee(s) other than a beneficiary to whom a conditional power is granted. Granting Trustee may give to a beneficiary a testamentary general power of appointment as defined in IRC 2041 over all or part of the trust assets held in trust for the beneficiary, may withdraw such a power previously granted by Granting Trustee, and may divide trust assets into separate shares or trusts, one over which a general power is granted and the other over which it is not granted. Granting Trustee may condition the beneficiary’s exercise of a conditional power of appointment on the Granting Trustee’s consent. Granting Trustee may irrevocably release the right to grant or withdraw conditional powers. Notice of such release or of a grant or withdrawal of a power shall be filed with Trustee and given to the beneficiary on whom the power is conferred. Settlor desires that Granting Trustee grant a general power of appointment to a beneficiary if inclusion of trust assets in the beneficiary’s estate for federal estate tax purposes would save significant transfer taxes at the beneficiary’s death. Granting Trustee shall not be liable for acting or failing to act under this section, for any change in beneficial interest, or for causing any

additional taxes. Granting Trustee’s determination that the grant or withdrawal of a conditional power is advisable binds all persons.

(b) Terms of appointment. The powerholder may (except as otherwise limited), at any time or from time to time, appoint all or a portion of the assets to such one or more persons or entities in such manner and in such proportions as he or she indicates. In exercising any power of appointment, the powerholder, to the extent permitted by law and except as otherwise specifically provided in this instrument, may (1) appoint outright or in trust, (2) appoint life estates to one or more objects of the power with remainders to others, (3) appoint to grandchildren or more remote descendants even though the parents of such appointees are living, (4) impose conditions and restraints, (5) create new powers (general or nongeneral, testamentary or inter vivos) in an appointee, or (6) delegate powers.

(c) Exercise and release. Any power to appoint by will may be exercised by the will of the powerholder, even though the will is executed before Settlor’s death. Any other power of appointment is presently exercisable. A powerholder may exercise a power that is presently exercisable or release a power of appointment by a writing that is signed and acknowledged by the powerholder and delivered to Trustee. A power of appointment may be exercised or released only by an instrument that makes specific reference to the power as a power existing under this Agreement and identifies the trust by its name, by the name of Settlor, or by the date of its establishment.

(d) Partial default. No person who is an appointee of property pursuant to the exercise or partial exercise of a power may share as a taker in default of property subject to the power of appointment unless the person contributes the property appointed to him or her to the fund to be distributed in default of appointment.

(e) Existence of a will. In disposing of trust assets subject to a testamentary power of appointment, Trustee is fully protected in relying on an instrument that is admitted to probate in any jurisdiction as the will of the powerholder or in acting on the assumption that the powerholder died intestate if Trustee has no notice of the existence of a will of the powerholder within three months from the death of the powerholder.

(f) Perpetuities provisions. All testamentary general powers of appointment and nongeneral powers of appointment granted under this instrument or created by exercise of a power granted under this instrument shall be exercised only within the period that begins on the date from which the rule against perpetuities runs with reference to the power and runs until the date that is 21 years after the date of death of the last survivor of all beneficiaries and contingent beneficiaries of all trusts created under this instrument who were living on the beginning date. If a beneficial interest created by the exercise of a power of appointment is not indefeasibly vested on the date that is 21 years after the date of death of the last survivor of all beneficiaries and contingent beneficiaries of all trusts created under this instrument living on the date from which the rule against perpetuities runs with reference to validity of interests created upon exercise (whether that date is the date of execution of this instrument, the date of the exercise of the power, the date of the

creation of the power, the date of the creation or exercise of an earlier power, or another date), the interest shall, on that date, vest indefeasibly in the person(s) who own(s) that contingent or defeasible interest. If the person(s) or share(s) cannot be ascertained, each such interest shall vest indefeasibly in the then income beneficiaries of the trust or its portion, in proportion to their income interests. If their proportions are not fixed, such interest shall vest indefeasibly in the beneficiaries by right of representation, the generation immediately preceding the beneficiary or beneficiaries in the nearest degree of relationship to Settlor being the one(s) from whom representation is measured. If one or more of the beneficiaries is not related to Settlor, the rules in IRC 2651 shall be used to determine relationship. To “vest indefeasibly” means that the interest shall continue in trust (according to its terms) but be subject to a general power of appointment held by the beneficiary and either exercisable presently or by will; and if the interest continues in trust until its termination, the interest, in default of appointment, shall be paid to the beneficiary, if living, or, if not living, to the beneficiary’s estate.

(g) Limitation. The holder of a nongeneral power of appointment that is created by Settlor may not appoint trust assets, which have been added to this trust by the exercise by Settlor or another of an earlier power of appointment, in such a manner that it will postpone the vesting of any estate or interest in such assets or suspend the absolute ownership or power of alienation of such assets for a period ascertainable without regard to the date of creation of the earlier power, the exercise of which brought the assets into this trust. Except as provided below, if the holder of a nongeneral power of appointment (created by Settlor) creates a second power of appointment, the second power may not be exercised in a manner that will postpone the vesting of any estate or interest in trust assets or suspend the absolute ownership or power of alienation of assets for a period ascertainable without regard to the date of creation of the power through whose exercise the second power was created. These provisions are intended to preclude the inadvertent inclusion of assets in the estate of Settlor (or other powerholder) for federal estate tax purposes under the provisions of IRC 2041(a)(3) and to negate a constructive addition to a trust that is exempt from the tax on generation-skipping transfers.

The exception to the second rule of the preceding sentences is that a holder of a nongeneral power of appointment (created by Settlor) may grant to a permissible appointee a presently exercisable general power of appointment, but this exception does not apply to assets transferred to the trust by the exercise of an earlier power of appointment. It is Settlor’s understanding that the validity of interests created by the exercise of a presently exercisable general power of appointment would be tested from the date of exercise. Thus, the creation of a presently exercisable general power of appointment would make the exercise of the nongeneral power a taxable event. Settlor intends that the holder of a nongeneral power have the authority (but only with respect to the portion of the trust that does not represent an addition by the exercise of an earlier power of appointment) to convert the exercise of the nongeneral power to a taxable event in this manner.

6.21 Separate asset account. As used in this Agreement, a “separate asset account” means an account that is in all respects subject to the provisions of this Agreement, except that it

shall not be liable in any way for the payment of any debts or expenses of administration of Settlor’s probate estate. Trustee may terminate a separate asset account and add its assets to other trust property whenever there is no reason for its continued segregated existence.

6.22 Tax terminology. For purposes of this Agreement, tax terms shall have the same meaning as those terms, or their equivalents, have under the Internal Revenue Code and federal treasury regulations in effect from time to time.

6.23 Notices. Any notice required under this Agreement must be in writing and is effective when delivered or mailed to the party to whom notice is to be given. A required notice may be waived by the recipient before or after the required time of notice, and the waiver shall be appropriately documented.

6.24 Construction. In construing this instrument, consideration shall be given to the fact that the singular and plural and the masculine, feminine, and neuter may have been used interchangeably. The text and not the headings of the Articles and paragraphs of this Agreement shall control construction or interpretation of this Agreement.

6.25 Definitions relating to beneficial interests. As used in this Agreement, (1) the term “primary beneficiary” means the descendant in the nearest generation to Settlor for whom a share of the assets is set aside upon termination of a prior interest and for whom a trust is established under this Agreement to hold the assets comprising that share; (2) the term “current trust beneficiary” means one who is currently entitled or eligible to receive a mandatory or discretionary distribution of income or principal; (3) the term “current income beneficiary” means one who is currently entitled or eligible to receive a mandatory or discretionary distribution of income; and (4) the term “qualified trust beneficiary” means one who is a current trust beneficiary or one who could be a current trust beneficiary if the interests of the current trust beneficiaries terminated without causing the trust to terminate or who would be a current trust beneficiary if the trust were to terminate; and (5) the term “trust beneficiary” does not include one who holds a power of appointment but holds no other interest in the trust.

6.26 Child and descendant. Unless named in the paragraph of Article I entitled “Identifications,” a “child” or “descendant” of Settlor or of another is limited to those persons so defined under Michigan law but does not include persons adopted after age 21 or any adoptee older than the adoptive parent. [The omission of my child [name] and [his / her] descendants is intentional and is not the result of accident or mistake. / The omission of my child [name] and [his / her] descendants is not for lack of love and affection.]

6.27 Spouse. The terms “Settlor’s spouse” or “spouse” shall only mean the person, if any, to whom Settlor is married at the time this Agreement is established or is last amended. Settlor’s spouse shall be deemed to have predeceased Settlor if they are divorced or their marriage is annulled. A decree of separation that does not terminate the status as a married couple is not a divorce.

6.28 Taking against the will. If Settlor’s spouse elects to take against Settlor’s will, the provisions of this Agreement shall be construed as if Settlor left no surviving spouse.

6.29 Retirement plan. A “retirement plan” means an actual or deemed individual or Roth retirement account, as described in IRC 408 and 408A; an annuity or mutual fund custodial account, as defined in IRC 403(b); a pension, profit-sharing, stock bonus, or other retirement plan that is qualified under IRC 401(a); and any other retirement plan or arrangement that is subject to the “minimum distribution rules” or equivalent rules under any other Code section.

6.30 Business investments. The following special provisions shall apply with respect to any ownership interest (Interest) in ________________, or any successor entity, including an entity resulting from a merger, acquisition, or other business restructuring (Company), held as a trust asset:

(a) Retention or purchase. The Interest is an investment that Trustee may retain indefinitely. Trustee may also purchase any ownership interest in any Company. Trustee shall not be liable for such retention despite any resulting risk or lack of diversification or marketability and although the interest is not of a kind considered by law suitable for trust investments.

(b) Decisions by individual trustee. The voting and all other decisions with respect to the Interest, including its retention or sale, shall be made by the individual trustee or trustees, unless a corporate trustee is the only trustee. While such authority is vested in the individual trustee, the individual trustee shall have the sole fiduciary responsibility with respect to the Interest. A corporate trustee shall have no responsibility or obligation with respect to the Interest other than accounting and safekeeping, unless the corporate trustee is the only trustee, in which case the corporate trustee possesses all normal fiduciary responsibilities.

(c) Officer, director, manager, or employee. An individual trustee may also serve as a company officer, director, manager, or employee and may be compensated for services performed in both capacities. Service in both capacities shall not be deemed a conflict of interest with the trustee’s fiduciary duties. If a conflict arises between the duties as a trustee and the duties as a company officer, director, manager, or employee, the latter shall control.

(d) Principal invasions. Trustee has been authorized to invade principal for the benefit of the beneficiaries of the trusts under this Agreement. Notwithstanding this authorization, Trustee may refuse to invade principal if the invasion would require a distribution or sale of the Interest. Trustee shall not be liable for refusing to invade principal for this reason.

[(e) S corporation stock. If a trust established under this Agreement holds stock that is S corporation stock and the trust is not otherwise a permitted shareholder under IRC 1361(c)(2)(A)(i), the following special provisions shall apply with respect to that trust:

(1) Qualified subchapter S trust (QSST). If the trust will never have more than one income beneficiary at any given time and the current income beneficiary is a citizen or resident of the United States, Settlor desires that, except as provided to the contrary in subsection (2) below, the beneficiary make the election described in IRC 1361(d)(2) (QSST election) in a timely manner. The terms of a trust for which a QSST election has been made shall be as otherwise provided under this Agreement, except that, from the date the QSST election is made (or, if earlier, the effective date of the QSST election) until the termination of the trust, the following provisions shall apply and override any contrary provision found elsewhere in this Agreement:

(A) During the life of the current income beneficiary, there shall be only one income beneficiary of the trust.

(B) Any principal distributed during the life of the current income beneficiary may be distributed only to the current income beneficiary and not in satisfaction of the support obligation of any other person.

(C) The exercise of any power of appointment over the trust during the current income beneficiary’s lifetime shall only be in favor of the current income beneficiary and only to the extent that the current income beneficiary is a permitted appointee of the power.

(D) The income interest of the current income beneficiary shall terminate on the earlier of the death of the current income beneficiary or the termination of the trust.

(E) On the termination of the trust during the lifetime of the current income beneficiary, the trust shall distribute all of its assets to the current income beneficiary.

(F) So long as the QSST election is effective and the trust continues to hold S corporation stock, Trustee shall distribute currently all trust income (within the meaning of IRC 643(b)) to the current income beneficiary.

(2) Electing small business trust. If (i) in Trustee’s discretion, it appears that the QSST election is unavailable, will not be timely made, or is not as desirable as the Electing Small Business Trust (ESBT) election under IRC 1361(e); and (ii) the current and contingent beneficiary or beneficiaries of the trust consist only of individuals who are U.S. citizens or residents, estates, or organizations described in IRC 170(c)(2)–(5), or a combination of them, none of which acquired its interest in the trust by purchase; Trustee shall make the election described in IRC 1361(e) for the trust to be treated as an ESBT. The election for the trust to be treated as an ESBT shall not alter the terms of the trust as otherwise provided in this Agreement.

(3) Additional powers of Trustee. In addition to the powers provided elsewhere in this Agreement, Trustee shall have the following powers with respect to any S corporation stock, a trust for which the QSST election has been made, or a trust that has elected to be treated as an ESBT:

(A) to distribute S corporation stock to Settlor’s probate estate if this Trust is the residuary beneficiary of the estate and the retention of the stock could, through the lapse of time or otherwise, result in the loss of S corporation status

(B) to refuse to make directed payments of obligations of the estate of Settlor’s spouse if such directions are received more than two years from the date of Settlor’s spouse’s death, but only to the extent that payment would require disposition of S corporation stock and such directed payments could result in the loss of S corporation status

(C) to allocate S corporation stock away from a disqualified trust, whether to a qualified trust or to an individual beneficiary outright

(D) to divide the trust assets and allocate the S corporation stock to a separate trust or trusts for which a QSST election will be made or that will qualify as an ESBT

(4) Construction and amendment. The provisions of any trust established under this Agreement that holds stock that is S corporation stock shall be construed and may be amended by a court as necessary to permit a trust holding S corporation stock to qualify to make a QSST election, or to qualify as an ESBT, except to the extent such construction or amendment would result in the loss to Settlor’s estate of a deduction or credit against federal estate tax. For purposes of example and not by way of limitation, such construction and amendment shall include the removal or modification of powers contained in this Agreement.]

Article VII. Administrative Powers

Trustee has the power to perform every act that a reasonable and prudent investor would perform incident to the collection, preservation, management, use, and distribution of the trust assets to accomplish the desired result of administering the trust legally and in the best interests of the trust beneficiaries, without the approval of any court or beneficiary. During Settlor’s lifetime, however, Settlor may direct Trustee with respect to any matter concerning the administration, distribution, or investment of trust assets. Trustee shall have no liability for following Settlor’s direction. Trustee may rely on the action of an agent under power of attorney for Settlor, a beneficiary, or another as the action of the principal. Subject to the foregoing, and except as otherwise provided in this Agreement, Trustee possesses, in addition to or in substitution for, but not otherwise in limitation of, common-law and statutory powers, the authority to

7.1 Take control of assets. Take possession, custody, or control of assets transferred to the trust and accept or reject additions to the trust.

7.2 Retention of assets. Retain assets that Trustee may receive, including assets in which Trustee is personally interested, in accordance with the Michigan Prudent Investor Rule set forth in MCL 700.1501–.1512.

7.3 Receipt of assets. Receive assets from fiduciaries or other sources that are acceptable to Trustee.

7.4 Life insurance. Retain or invest in life insurance policies without regard to diversification, production of income, or other elements of the prudent investor rule inasmuch as Settlor recognizes that the ownership of life insurance may be appropriate to attain one or more of Settlor’s objectives.

7.5 Split-dollar agreements. Enter into a split-dollar agreement relating to any policies of life insurance held by Trustee and to collaterally assign, transfer, or divide such policies as required or permitted by such agreement.

7.6 Contractual obligations. Perform, compromise, or refuse to perform a contract of Settlor that is an obligation of the trust, as Trustee may determine under the circumstances. In performing an enforceable contract by Settlor to convey or lease land, if the contract for a conveyance requires the giving of a warranty, the deed or other instrument of conveyance to be given by Trustee may contain the warranty required. The warranty is binding on the trust as though made by Settlor but does not bind Trustee except in the Trustee’s fiduciary capacity. Trustee, among other possible courses of action, may do either of the following:

(a) Conveyance. Execute and deliver a deed of conveyance for cash payment of all sums remaining due or the purchaser’s note for the sum remaining due secured by a mortgage on the land.

(b) Contingent conveyance. Deliver a deed in escrow with directions that the proceeds, when paid in accordance with the escrow agreement, be paid to Trustee, as designated in the escrow agreement.

7.7 Charitable pledges. Satisfy Settlor’s written charitable pledge irrespective of whether the pledge constituted a binding obligation of Settlor or was properly presented as a claim, if in the Trustee’s judgment, Settlor would have wanted the pledge completed under the circumstances.

7.8 Deposits and investments. Deposit trust assets in a financial institution, including a financial institution operated by or affiliated with Trustee, and invest and reinvest trust assets[, subject to the section in Article VI entitled “Business investments,”] as would a prudent investor acting in accordance with the Michigan Prudent Investor Rule, and deposit securities with a depositary or other financial institution. In exercising these powers, Trustee, consistent with its fiduciary duty, may invest in and terminate investments in securities,

common trust funds, and deposit accounts of a professional trustee or any of its affiliates or in a mutual fund of which any professional trustee or any of its affiliates serve as investment adviser or in any other capacity; purchase and retain securities that are underwritten by a professional trustee or any affiliate either individually or as a member of a syndicate; make investment transactions through a brokerage company that is affiliated with a professional trustee; and purchase annuities, insurance policies, and other insurance or investment products through an insurance company that is affiliated with a professional trustee.

7.9 Acquisition and disposition. Acquire or dispose of an asset, including assets in this or another state or country, in any manner for cash or on credit, at public or private sale, and manage, develop, improve, exchange, partition, or change the character of a trust asset for any purpose, on any terms or conditions.

7.10 Repairs and alterations. Make an ordinary or extraordinary repair or alteration in a building or other structure, demolish any improvements, or raze an existing or erect a new party wall or building.

7.11 Administer real estate. Subdivide, develop, or dedicate land to public use; make or obtain the vacation of a plat or adjust a boundary; adjust a difference in valuation on exchange or partition by giving or receiving consideration; grant or retain easements; dedicate an easement to public use with or without consideration; or otherwise deal in real property, or any interest therein, as Trustee deems appropriate and without regard to the duration of such interests.

7.12 Leases. Enter for any purpose into a lease as lessor or lessee, with or without an option to purchase or renew, for a period within or extending beyond the duration of the trust.

7.13 Mineral interests. Enter into a lease or an arrangement for the exploration and removal of minerals or other natural resource or enter into a pooling or unitization agreement for a period within or extending beyond the duration of the trust.

7.14 Disclaimer. Disclaim property or interests in property transferred to Trustee and powers conferred on Trustee as authorized by common law or statute, provided that if a trust qualifies for a transfer tax deduction, only the trust beneficiary or an agent or a fiduciary acting on his or her behalf may disclaim a beneficial interest of that trust.

7.15 Abandon assets. Abandon or decline to administer property if, in Trustee’s opinion, the property is valueless or is so encumbered or in such a condition that it is of no benefit to the trust.

7.16 Vote securities. Vote or decline to vote a stock or other security in person, by general or limited proxy, or in another manner provided by law, or enter into or continue a voting agreement or trust for a period within or extending beyond the duration of the trust.

7.17 Pay liabilities on securities. Pay a call, an assessment, or other amount chargeable or accruing against or on account of a security.

7.18 Nominee. Hold assets in the name of a nominee or in another form without disclosure of the interest of the trust. Trustee, however, is liable for an act of the nominee in connection with assets so held.

7.19 Insurance. Insure the trust assets against damage, loss, or liability and insure Trustee, Trustee’s agents, and the trust beneficiaries against liability arising from the administration of the trust.

7.20 Borrow funds. Borrow money or other assets, with or without security (including by mortgage, pledge, guarantee, or hypothecation of any trust assets) for any purpose from Trustee or others and mortgage or pledge trust assets for a period within or extending beyond the duration of the trust, all on terms and conditions the trustee considers to be fair and reasonable under the circumstances; [use and deal in margin accounts with a securities broker;] and repay borrowed money from trust assets.

7.21 Loans. Make loans out of trust assets, including loans to a trust beneficiary, on terms and conditions the trustee considers to be fair and reasonable under the circumstances. Trustee has a lien on future distributions for repayment of loans made to a trust beneficiary under this subdivision.

7.22 Pledge for beneficiary loans. Pledge trust assets for, or otherwise guarantee, loans made by others to a trust beneficiary; and while the trust is revocable, pledge trust assets for, or otherwise guarantee, loans made to a business entity or enterprise in which Settlor has an interest.

7.23 Compromise. Effect a fair and reasonable compromise with a debtor or obligor or extend, renew, or in any manner modify the terms of an obligation owing to the trust. If Trustee holds a mortgage, pledge, or other lien on property of another person, Trustee may, instead of foreclosure, accept a conveyance or transfer of encumbered assets from the owner in satisfaction of the indebtedness secured by a lien.

7.24 Make payments. Pay a tax, an assessment, Trustee’s compensation, or another expense incident to the administration of the trust and advance or expend funds for the protection or maintenance of trust assets.

7.25 Exercise rights and options. Sell or exercise a subscription or conversion right and exercise stock options, warrants, subscription, or conversion rights.

7.26 Principal and income allocations. Allocate an item of income or expense to either trust income or principal, as permitted or provided by law. Trustee (other than a trustee who is a trust beneficiary) may (1) consistent with Treas Reg 1.643(a)-3(b), allocate to income or to principal, or partly to income and partly to principal, all or part of the realized gains from the sale or exchange of trust assets and (2) consistent with Treas Reg 1.643(a)-3(e), deem any discretionary distribution of principal as being paid from capital gains realized during the year and specify the tax character of any unitrust amount paid. Trustee may take any action

that may be necessary for any such allocation, deeming, or specification to be respected for tax purposes.

7.27 Agents. Employ, and pay reasonable compensation for services performed by, a person, including an auditor, an investment adviser, an accountant, an appraiser, a broker, a custodian, a rental agent, a Realtor, or an agent, even if the person is associated with Trustee, for the purpose of advising or assisting Trustee in the performance of an administrative duty; act without independent investigation on such a person’s recommendation; and, instead of acting personally, employ or appoint one or more agents to perform an act of administration, whether or not discretionary.

7.28 Attorneys. Employ, and pay reasonable compensation for services performed by, an attorney to perform necessary legal services or to advise or assist Trustee in the performance of Trustee’s administrative duties, even if the attorney is associated with Trustee, and to act without independent investigation on the attorney’s recommendation. If the attorney is associated with Trustee, no portion of the reasonable compensation paid to the attorney shall be considered a profit made by Trustee and Trustee shall not be accountable to any trust beneficiary for the reasonable compensation paid to the attorney.

7.29 Legal proceedings. Prosecute, defend, arbitrate, settle, release, compromise, or agree to indemnify an action, a claim, or a proceeding in any jurisdiction or under an alternative dispute resolution procedure. Trustee may act under this section for the protection of Trustee and the protection of trust assets in the performance of Trustee’s duties.

7.30 Sale or exchange. Sell, exchange, partition, or otherwise dispose of, or grant an option with respect to, trust assets for any purpose, on any terms or conditions, for a period within or extending beyond the duration of the trust.

7.31 Business interests. Consent to or participate in, directly or through a committee or other agent, the reorganization, consolidation, merger, dissolution, or liquidation of any business or enterprise; continue or participate in any business or enterprise in any manner, in any form, for any length of time; or change the form, in any manner, of a business or enterprise in which Settlor was engaged at the time of death.

7.32 Exoneration. Provide for the exoneration of Trustee from personal liability in a contract entered into on behalf of the trust.

7.33 Claims. Collect, pay, contest, settle, release, agree to indemnify against, compromise, or abandon a claim of or against the trust, including a claim against the trust by Trustee.

7.34 Tax matters. Do any of the following:

[DRAFTING NOTE: The portability election allows the estate of a deceased spouse to transfer the decedent’s unused estate tax exclusion amount to the surviving spouse. This section will come in automatically if Settlor is married, and it serves as a backup to the portability provisions that should be given in the Will.]

[(a) Portability election. If no personal representative has been, or is expected to be, appointed for Settlor’s probate estate, the following provisions shall apply with respect to the election described in IRC 2010(c)(5)(A) (portability election):

(1) Instructions in will. If Settlor’s last Will provided instructions with respect to the portability election, Trustee shall carry out those instructions (and shall be entitled to the same exculpation from liability) as if those instructions were included in this Agreement and directed to Trustee rather than to Settlor’s personal representative.

(2) No instructions in will. To the extent that Settlor’s last Will did not provide instructions with respect to the portability election, Trustee is authorized, but not required, in Trustee’s sole discretion, to file a federal estate tax return (even if a federal estate tax return would not otherwise be required for Settlor’s estate), make all required elections on that return, and take all other actions necessary to make the portability election. Trustee shall not be liable to any interested person for the decision to make, or not make, the portability election if the decision is made in good faith and with a reasonable basis. The cost associated with making the portability election, including the cost of preparing and filing a federal estate tax return for Settlor’s estate that would not otherwise have been required, shall be paid as a general expense of administering Settlor’s estate. If the portability election is made, Trustee shall provide a complete copy of Settlor’s federal estate tax return, with all attachments, to Settlor’s surviving spouse.]

(b) Tax elections. Make, revise, or revoke any available allocation, agreement, consent, or election affecting any tax in conjunction with Settlor’s personal representative, if any, that is appropriate in order to carry out Settlor’s estate planning objectives and to reduce the overall burden of taxation, both in the present and in the future. This authority includes but is not limited to (1) electing to take expenses as estate tax or income tax deductions; (2) electing to allocate the exemption from the tax on generation-skipping transfers among transfers subject to estate or gift tax, giving preference to the allocation of the exemption to generation skips intended by Settlor over those resulting from a disclaimer; (3) electing date of death or alternate valuation date for federal estate tax purposes[; and (4) electing to have all or a portion of any transfer for a spouse’s benefit qualify for the marital deduction]. Trustee’s decision shall bind all beneficiaries. Trustee may, but need not, make compensating adjustments between principal and income.

(c) Tax status of assets. Exclude or include any asset from the gross estate for federal estate tax purposes.

(d) Valuation of assets. Value any asset for federal estate tax purposes.

(e) Taxes and assessments. Pay taxes, assessments, penalties, and interest and contest or sue for refunds of those payments.

[(f) Join in tax returns. If Settlor is or was married, join with the surviving spouse or the surviving spouse’s personal representative in the execution and filing of any joint income tax return and consenting to any gift tax return filed by the surviving spouse or the surviving spouse’s personal representative.]

7.35 Distributions. Make distribution or division of trust assets in cash or in kind or both; allot a different kind or disproportionate portion of or an undivided interest in trust assets among beneficiaries and determine the value of allotted trust assets; or distribute an unclaimed share in the same manner as provided by law.

7.36 Transfer. Transfer the assets of a trust to another jurisdiction and appoint, compensate, or remove a successor trustee, individual or corporate, for trust assets in another jurisdiction, with any trust powers set out in this Article that Trustee delegates to the successor trustee.

7.37 Execute Instruments. Execute and deliver an instrument that accomplishes or facilitates the exercise of a power vested in Trustee.

7.38 Benefits. Select a mode of payment under any employee benefit or retirement plan, annuity, or life insurance payable to Trustee, exercise rights thereunder, including exercise of the right to indemnification for expenses and against liabilities, and take appropriate action to collect or assign the proceeds or the accounts, in whole or in part.

7.39 Resolve disputes. Resolve a dispute concerning the interpretation of the trust or its administration by mediation, arbitration, or other procedure for alternative dispute resolution.

7.40 Powers after termination. Exercise the powers on termination of the trust appropriate to wind up the administration of the trust and distribute the trust assets to the persons entitled to those assets.

7.41 Common ownership. Hold trust assets that would otherwise constitute multiple distinct trusts under this Agreement in common ownership, in a common fund, or as separate shares of a single trust unless actual division becomes necessary or desirable from time to time. Each of the several trusts held in common shall have an undivided interest in the combined property, fund, or trust and shall be treated as a separate share within the meaning of IRC 663(c). For example, this election may be made to reduce the number of income tax returns filed or to reduce record-keeping costs with respect to trust assets. Trustee shall not be liable for either electing or failing to make an election under this section. This section shall not however, permit a disclaimer trust to be held as a separate share of another trust.

7.42 Situs of trust. Change the situs and principal place of administration of any trust under this Agreement by notice to each current beneficiary. If a trust under this Agreement is registered, it may be registered in [county], Michigan, in the jurisdiction in which the trust is being administered, or in a jurisdiction in which any trustee resides.

7.43 Benefit of transaction. Deal with the trust on a fair, arm’s-length basis, having in mind that any potential benefit from the transaction must inure to the trust and not to a trustee individually. This shall include the right of a professional fiduciary to deal with its own stock and to borrow from its own commercial department. If a professional fiduciary is acting as Trustee and its own stock or that of its parent or holding company is held as part of the trust, it shall delegate to its cotrustee the power to vote such stock; or if acting as sole Trustee, it shall vote such stock pursuant to the directions of a majority in number of the then income beneficiaries who are competent adults.

7.44 Selective allocation. Selectively allocate assets when making divisions of or distributions from the trust or enter into agreements with the trustees of other trusts created by Settlor or others to selectively allocate assets of all trusts as if they were parts of a single plan of disposition whenever the effectiveness of distributions to beneficiaries under this Agreement would be increased by that allocation. The effectiveness of distributions may be increased when the selective allocation preserves the validity of the exercise of a power of appointment, minimizes tax consequences, facilitates administration, or increases total distributions to beneficiaries while maintaining Settlor’s overall plan of allocation and distribution among beneficiaries. This power may not be exercised if it would result in the loss to the trust estate of a credit or deduction against federal estate tax in Settlor’s estate.

7.45 Ancillary fiduciary. Petition for or appoint another as ancillary fiduciary, appoint another to act as Trustee over assets in another state or country, and pay expenses of ancillary administration.

7.46 Deal with other fiduciaries. Enter into any transaction authorized by this Article with the fiduciary of any other trust or estate, even though the other fiduciary is also a trustee under this Agreement.

7.47 Delegation of powers. Delegate to a cotrustee any fiduciary powers under this Agreement, except that no power to make discretionary distributions to that cotrustee other than a power subject to an ascertainable standard may be delegated to him or her. Notice of the delegation need not be provided to any trust beneficiary.

7.48 Medical records. Have access to Settlor’s entire medical and medical billing record.

7.49 Division of trust assets. Divide the trust assets or sever trusts into two or more separate portions or trusts and allocate assets between them in order to simplify or rationalize administration for generation-skipping transfer tax purposes, segregate assets for management purposes, or meet other trust objectives; and combine portions or trusts that have previously been divided. If trusts are divided, severed, or combined, Trustee shall do so in a manner that satisfies applicable statutory and regulatory requirements in order to maintain existing or available exemptions from the tax on generation-skipping transfers, and the terms before division or severance that would qualify the trust for any tax deduction, exclusion, election, exemption, or other special federal tax status must remain the same in each of the newly created trusts.

7.50 Consolidate trusts. Consolidate trusts that contain substantially identical provisions established for the same beneficiary or beneficiaries and administer these trusts as one trust, with one of the trusts serving as the resulting trust. If the rule against perpetuities speaks from different dates with reference to the trusts or if there are other variations in terms, consolidation may still take place, but the trust assets may be maintained in separate accounts if necessary to recognize and give effect to the differences.

7.51 Distribution postponement. Postpone an otherwise required distribution to a beneficiary, in whole or in part, for a reasonable time following the death of Settlor [or Settlor’s spouse] to permit Trustee to purchase assets from, or loan funds to, the decedent’s estate or trusts created by Settlor [or Settlor’s spouse], or to exercise other powers under this Article. If a distribution is postponed, however, Trustee shall distribute net income to the beneficiary in all events.

7.52 Environmental concerns. Respond to environmental concerns and hazards affecting trust assets, including but not limited to the following:

(a) Inspection and response. Inspect assets and the operation of business activities, including assets held in or operated by sole proprietorships, partnerships, corporations, limited liability companies, or any other form of entity, for the purpose of determining compliance with environmental law affecting such assets and respond to any actual or threatened violation of any environmental law affecting assets held by or tendered to Trustee.

(b) Remediation. Take any action necessary to prevent, abate, or otherwise remedy any actual or threatened violation of any environmental law affecting assets held by Trustee, either before or after the initiation of an enforcement action by any governmental body.

(c) Refusal of assets. Refuse to accept assets in trust if Trustee determines that the assets to be transferred to the trust either are or may be contaminated by a hazardous substance or have been or are being used for any activity directly or indirectly involving a hazardous substance that could result in liability to the trust or otherwise impair the value of the trust assets.

(d) Settle claims. Settle or compromise at any time all claims against the trust that may be asserted by any governmental body or private party involving the alleged violation of any environmental law affecting assets held in the trust.

(e) Disclaim. Disclaim a power granted by a document, statute, or rule of law that, in the sole discretion of Trustee, may cause Trustee to incur personal liability under an environmental law.

(f) Declination or resignation. Decline to serve or resign as Trustee if Trustee reasonably believes that there is or may be a conflict of interest between it in its fiduciary capacity and in its individual capacity because of potential claims or liabilities that may

be asserted against it on behalf of the trust because of the type or condition of assets held therein.

(g) Special trustee. Appoint an independent special Trustee to hold title to any assets tendered to the trust and take any reasonably required action, as set out above, relating to environmental law, until the time that Trustee determines no substantial risk exists if the tendered assets were to become a part of the trust assets or abandons the tendered assets.

(h) Costs. Charge the cost of any inspection, review, abatement, response, cleanup, settlement of claim, or remedial action authorized in these provisions against the trust assets.

(i) Definitions and limitations. For purposes of these provisions, “environmental law” means any federal, state, or local law, rule, regulation, or ordinance relating to protection of the environment or human health; and “hazardous substance” means any substance defined as hazardous or toxic or otherwise regulated by any environmental law. Trustee shall not be personally liable to any beneficiary or other party for any decrease in the value of assets in the trust by reason of Trustee’s compliance with any environmental law, including any reporting requirement under such law. Neither the acceptance by Trustee of assets nor a failure by Trustee to inspect assets or business operations shall create any inference that there is or may be any liability under any environmental law with respect to such assets or business operations. The authority granted by these provisions is solely to facilitate the administration and protection of trust assets and is not to impose greater responsibility or liability on Trustee than imposed by law absent these provisions.

7.53 Digital assets. If no personal representative has been, or is expected to be, appointed for Settlor’s probate estate, Trustee may access, modify, control, archive, transfer, delete, and terminate Settlor’s digital assets and the content in any location, including usernames, passwords, and any other electronic credentials related to Settlor’s digital assets or digital devices. Trustee may access, use, and control Settlor’s digital devices in order to access Settlor’s digital assets or communicate with and make requests to a digital custodian in order to exercise any of the powers provided herein.

(a) For purposes of this Trust, “digital asset” means an electronic record in which a user has a right or interest and does not include an underlying asset or liability unless the asset or liability is itself an electronic record, such as Bitcoin. Examples of digital assets shall include but not be limited to information created, generated, sent, communicated, received, or stored by electronic means on any electronic device that can receive, store, process, or send digital information, including but not limited to personal computers, tablets, peripherals, storage devices, cellular telephones, and any other similar device that currently exists or may exist as technology develops, including e-mail accounts, digital music files, digital photographs, digital videos, blogs, vlogs, written documents, software licenses, social media accounts, file-sharing accounts, financial accounts, bank accounts, domain registrations, web-hosting accounts, tax preparation and service accounts, online stores, affiliate programs stored on any media in any mode locally or remotely, and any

other digital media currently in existence or that may exist as technology develops, regardless of the ownership of the physical device on which the media is stored. “Digital custodian” shall mean a person that carries, maintains, processes, receives, or stores a digital asset of a user.

(b) To the maximum extent permitted by law, Trustee is an authorized user and the powers granted herein shall be considered or deemed to be Settlor’s consent for all purposes of the Michigan Fiduciary Access to Digital Assets Act, MCL 700.1001 et seq., the Electronic Communications Privacy Act, 18 USC 2510 et seq., the Stored Communications Act, 18 USC 2701 et seq., the Computer Fraud and Abuse Act, 18 USC 1030 et seq., and any other applicable state enactment of the Revised Uniform Fiduciary Access to Digital Assets Act as they may be amended or substituted from time to time.

Article VIII. Accounts

8.1 Statements of account. Trustee shall keep a true account of the affairs of the trust. Except as provided in the section below entitled “Recipients,” at least annually and on termination of a trust, Trustee shall render a statement of account. A statement of account is a report by Trustee of the trust property, liabilities, receipts, and disbursements, including the source and amount of Trustee’s compensation, a listing of the trust assets, and, if feasible, their respective market values. No particular format or formality is required for a report unless a court specifies its content and presentation. The statement shall be delivered as soon as practicable after the close of the accounting period or on termination of the trust.

[Choose one version of ¶8.2. DRAFTING NOTE: During a settlor’s disability, MCL 700.7603(2) requires the trustee to keep each beneficiary who would be a qualified trust beneficiary if settlor were then deceased reasonably informed of the trust administration to the extent that settlor has no designated agent or settlor’s sole designated agent is a trustee. The following four alternatives for ¶8.2 include both a variation that complies with MCL 700.7603(2) and a variation that relieves the trustee from the requirements of MCL 700.7603(2) when the settlor’s spouse serves as a trustee and as settlor’s sole designated agent.]

[The first alternative (first variation) ¶8.2 (default version) provides that accounts are sent only to current beneficiaries. It complies with MCL 700.7603(2).]

8.2 Recipients. Unless Settlor directs otherwise, Trustee need not render accounts as long as Settlor is a trustee. When an account is rendered for a trust under this Agreement, Trustee shall provide an account to Settlor if living and to [each current trust beneficiary / the primary beneficiary for whom the trust was established, but shall not provide any account to any other beneficiary]. During any period in which Settlor is incapacitated, Trustee shall provide accounts to Settlor’s designated agent or, if there is no designated agent or if the sole agent is a trustee, to each beneficiary who would be a qualified trust beneficiary if Settlor were then deceased. Trustee may provide accounts to any other beneficiary if Trustee deems it advisable but is not required to do so. If any account recipient is another trust, accounts shall be delivered to the trustee of the other trust. If any account recipient is a

minor or otherwise incapacitated, delivery shall be made to his or her designated agent, to the conservator of his or her estate, or, if none, then to his or her parent, nearest of kin, or an adult with whom he or she is living.

[The first alternative (second variation) ¶8.2 (default version) provides that accounts are sent only to current beneficiaries and excuses compliance with MCL 700.7603(2) where settlor’s spouse serves as a trustee and as settlor’s sole designated agent.]

8.2 Recipients. Unless Settlor directs otherwise, Trustee need not render accounts so long as Settlor is a trustee. When an account is rendered for a trust under this Agreement, Trustee shall provide an account to Settlor if living and to [each current trust beneficiary / the primary beneficiary for whom the trust was established, but shall not provide any account to any other beneficiary]. During any period in which Settlor is incapacitated, Trustee shall provide accounts to Settlor’s designated agent or, if there is no designated agent or if the sole agent is a trustee, to each beneficiary who would be a qualified trust beneficiary if Settlor were then deceased. Notwithstanding the foregoing, Trustee shall not be obligated to provide accounts to such beneficiaries while Settlor is disabled so long as Settlor’s designated agent is Settlor’s spouse. Trustee may provide accounts to any other beneficiary if Trustee deems it advisable but is not required to do so. If any account recipient is another trust, accounts shall be delivered to the trustee of the other trust. If any account recipient is a minor or otherwise incapacitated, delivery shall be made to his or her designated agent, to the conservator of his or her estate, or, if none, then to his or her parent, nearest of kin, or an adult with whom he or she is living.

[The second alternative (first variation) ¶8.2 provides that accounts are sent only to the surviving spouse during his or her lifetime and complies with MCL 700.7603(2).]

8.2 Recipients. Unless Settlor directs otherwise, Trustee need not render accounts so long as Settlor is a trustee. If Settlor is living but is not a trustee, Trustee shall account only to Settlor or, if Settlor is incapacitated, to Settlor’s designated agent. If there is no designated agent or if the sole agent is a trustee, Trustee shall account to each beneficiary who would be a qualified trust beneficiary if Settlor were then deceased. Following Settlor’s death and during the lifetime of Settlor’s spouse, with respect to each trust under this Agreement of which Settlor’s spouse is a current income beneficiary, Trustee shall provide an account to Settlor’s spouse, but Trustee has no obligation to provide any account to any other beneficiary but may if Trustee deems it advisable. Upon the death of Settlor’s spouse, Trustee shall provide an account to [each current trust beneficiary / the primary beneficiary for whom a trust was established under this Agreement] but has no obligation to provide any account to any other beneficiary. If any account recipient is another trust, accounts shall be delivered to the trustee of the other trust. If any account recipient is a minor or otherwise incapacitated, delivery shall be made to his or her designated agent, to the conservator of his or her estate, or, if none, then to his or her parent, nearest of kin, or an adult with whom he or she is living.

[The second alternative (second variation) ¶8.2 provides that accounts are sent only to the surviving spouse during his or her lifetime and excuses compliance with MCL

700.7603(2) where settlor’s spouse serves as a trustee and as settlor’s sole designated agent.]

8.2 Recipients. Unless Settlor directs otherwise, Trustee need not render accounts so long as Settlor is a trustee. If Settlor is living but is not a trustee, Trustee shall account only to Settlor or, if Settlor is incapacitated, to Settlor’s designated agent. If there is no designated agent or if the sole agent is a trustee, Trustee shall account to each beneficiary who would be a qualified trust beneficiary if Settlor were then deceased. Notwithstanding the foregoing, Trustee shall have no obligation to provide accounts to such beneficiaries during any period in which Settlor is incapacitated so long as Settlor’s designated agent is Settlor’s spouse. Following Settlor’s death and during the lifetime of Settlor’s spouse, with respect to each trust under this Agreement of which Settlor’s spouse is a current income beneficiary, Trustee shall provide an account to Settlor’s spouse, but Trustee has no obligation to provide any account to any other beneficiary but may if Trustee deems it advisable. Upon the death of Settlor’s spouse, Trustee shall provide an account to [each current trust beneficiary / the primary beneficiary for whom a trust was established under this Agreement but has no obligation to provide any Account to any other beneficiary. If a current trust beneficiary is another trust, accounts shall be delivered to the trustee of the other trust. If any account recipient is a minor or otherwise incapacitated, delivery shall be made to his or her designated agent, to the conservator of his or her estate, or, if none, then to his or her parent, nearest of kin, or an adult with whom he or she is living.

[The third alternative (first variation) ¶8.2 provides that accounts are sent only to the surviving spouse and adult children and complies with MCL 700.7603(2).]

8.2 Recipients. Unless Settlor directs otherwise, Trustee need not render accounts so long as Settlor is a trustee. If Settlor is living but is not a trustee, Trustee shall account only to Settlor or, if Settlor is incapacitated, to Settlor’s agent. If there is no designated agent or if the sole agent is a trustee, Trustee shall account to each beneficiary who would be a qualified trust beneficiary if Settlor were then deceased. Following Settlor’s death, with respect to each trust under this Agreement of which Settlor’s spouse or an adult child of Settlor is then a current trust beneficiary, Trustee shall provide an account to Settlor’s spouse and to each adult child who is then a current trust beneficiary. Trustee has no obligation to provide any account to any other beneficiary but may if Trustee deems it advisable. Upon the death of Settlor’s spouse, Trustee shall provide an account to [each then current trust beneficiary / the primary beneficiary for whom a trust was established under this Agreement] but has no obligation to provide any account to any other beneficiary. If any account recipient is another trust, accounts shall be delivered to the trustee of the other trust. If any account recipient is a minor or otherwise incapacitated, delivery shall be made to his or her designated agent, to the conservator of his or her estate, or, if none, then to his or her parent, nearest of kin, or an adult with whom he or she is living.

[The third alternative (second variation) ¶8.2 provides that accounts are sent only to the surviving spouse and adult children. It excuses compliance with MCL 700.7603(2) where settlor’s spouse serves as a trustee and as settlor’s sole designated agent.]

8.2 Recipients. Unless Settlor directs otherwise, Trustee need not render accounts so long as Settlor is a trustee. If Settlor is living but is not a trustee, Trustee shall account only to Settlor or, if incapacitated, to Settlor’s agent. If there is no designated agent or if the sole agent is a trustee, Trustee shall account to each beneficiary who would be a qualified trust beneficiary if Settlor were then deceased. Notwithstanding the foregoing, Trustee shall have no obligation to provide accounts to such beneficiaries during any period in which Settlor is incapacitated so long as Settlor’s designated agent is Settlor’s spouse. Following Settlor’s death, with respect to each trust under this Agreement of which Settlor’s spouse or an adult child of Settlor is then a current trust beneficiary, Trustee shall provide an account to Settlor’s spouse and to each adult child who is then a current trust beneficiary. Trustee has no obligation to provide any account to any other beneficiary but may if Trustee deems it advisable. Upon the death of Settlor’s spouse, Trustee shall provide an account to [each then current trust beneficiary / the primary beneficiary for whom a trust was established under this Agreement] but has no obligation to provide any account to any other beneficiary. If any account recipient is another trust, accounts shall be delivered to the trustee of the other trust. If any account recipient is a minor or otherwise incapacitated, delivery shall be made to his or her designated agent, to the conservator of his or her estate, or, if none, then to his or her parent, nearest of kin, or an adult with whom he or she is living.

[The fourth alternative (first variation) ¶8.2 provides that accounts are sent according to MCL 700.7814(3)but requires that the request be reasonable and, by definition in ¶6.25, excludes those who hold only a power of appointment. It complies with MCL 700.7603(2).]

8.2 Recipients. Unless Settlor directs otherwise, Trustee need not render accounts so long as Settlor is a trustee. When an account is rendered for a trust under this Agreement, Trustee shall provide an account to [each current trust beneficiary / the primary beneficiary for whom the trust was established under this Agreement] and, on reasonable request, to each other trust beneficiary. During any period in which Settlor is disabled, Trustee shall provide accounts to Settlor’s designated agent or, if there is no designated agent or if the sole agent is a trustee, to each beneficiary who would be a qualified trust beneficiary if Settlor were then deceased. If any account recipient is another trust, accounts shall be delivered to the trustee of the other trust. If any account recipient is a minor or otherwise disabled, delivery shall be made to his or her designated agent, to the conservator of his or her estate, or, if none, then to his or her parent, nearest of kin, or an adult with whom he or she is living.

[The fourth alternative (second variation) ¶8.2 provides that accounts are sent according to MCL 700.7814(3) but requires that the request be reasonable and, by definition in ¶6.25, excludes those who hold only a power of appointment. It excuses compliance with MCL 700.7603(2) where Settlor’s spouse serves as a trustee and as Settlor’s sole designated agent.]

8.2 Recipients. Unless Settlor directs otherwise, Trustee need not render accounts so long as Settlor is a trustee. When an account is rendered for a trust under this Agreement, Trustee shall provide an account to [each current trust beneficiary / the primary beneficiary for whom the trust was established under this Agreement] and, upon reasonable request, to

each other trust beneficiary. During any period in which Settlor is disabled, Trustee shall provide accounts to Settlor’s designated agent or, if there is no designated agent or if the sole agent is a trustee, to each beneficiary who would be a qualified trust beneficiary if Settlor were then deceased. Notwithstanding the foregoing, Trustee shall have no obligation to provide accounts to such beneficiaries while Settlor is disabled so long as Settlor’s designated agent is Settlor’s spouse. If any account recipient is another trust, accounts shall be delivered to the trustee of the other trust. If any account recipient is a minor or otherwise disabled, delivery shall be made to his or her designated agent, to the conservator of his or her estate, or, if none, then to his or her parent, nearest of kin, or an adult with whom he or she is living.

8.3 Inspection of records. The books and records of Trustee relating to a trust under this Agreement shall be open at all reasonable times to inspection but only by those entitled to an account as provided in the section entitled “Recipients” (or their accredited representatives), unless otherwise ordered by a court having jurisdiction or required by statutory or common law. Nevertheless, while Settlor is living, is competent, and has power to revoke, only Settlor shall have this right of inspection.

8.4 Limitation on proceedings against trustee. Unless previously barred by adjudication, waiver, consent, ratification, estoppel, or other limitation, a claim by a beneficiary against a trustee for breach of trust is barred unless a proceeding to assert the claim is commenced within one year after the beneficiary is sent an account or other report that (1) provides sufficient information so that the beneficiary knows of the potential claim or should have inquired into the potential claim’s existence and (2) informs the beneficiary of the time allowed for commencing a proceeding.

8.5 Court approval. Trustee is entitled at any time to have a judicial settlement of its account and to charge against the trust reasonable attorney fees, expenses, and other costs incident to the judicial proceeding.

Article IX. Choice of Law

9.1 Governing law. Trustee accepts the trust established by this Agreement under Michigan law. All questions concerning its validity, construction, and administration, except as otherwise specifically provided, shall be determined under Michigan law. To govern the administration of any trust under this Agreement, however, Trustee may elect to apply the law of another state where Trustee resides or has a place of business. Trustee may not elect to apply another law if the election would modify beneficial interests or limit the liability of Trustee. Trustee must give notice of an election to change governing law to each beneficiary entitled to an annual account for that trust. The effective date of the change of governing law shall be the date of or specified in the notice.

Settlor has signed this Agreement on the date written above. By signing this Agreement, Trustee accepts the fiduciary obligations imposed by this Agreement and [the individual trustee] agrees to sign an authorization under the Health Insurance Portability and Accountability Act permitting

any cotrustee or successor trustee to access medical information necessary to confirm Trustee’s ability or inability to serve as trustee.

WITNESSES:

/s/____________

/s/____________

/s/____________Settlor [and Cotrustee]

/s/____________[Trustee / Cotrustee]

STATE OF MICHIGAN________ COUNTY

))

Acknowledged before me in [county], Michigan, on [date], by [name of person acknowledged]./s/____________[Notary public’s name, as it appears on application for commission]Notary public, State of Michigan, County of [county].My commission expires [date].[If acting in county other than county of commission: Acting in the County of [county].]Drafted by and when recorded return to: [Name and address of drafting attorney]

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