Life TRUST Planning

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Article I. Trust Estate

 

            A.        Original Trust Estate

 

            The Settlor agrees that they have transferred to the Trustee the property described in the Schedule.  The Trustee did not pay anything for the property when they accepted it on behalf of the Trust.

 

            B.        Additions to Trust Estate

 

            Additional property of any kind may be added to the Trust Estate by the Settlor or by anyone else, except the Beneficiary.  This may be done at any time and from time to time.  Property may be given to the Trust while the donor is living, or the donor may leave the property to the Trust in the donor's will or Living Trust. The property may also be in the form of a future gift by naming the Trust as beneficiary of a life insurance policy, employee benefit plan or retirement plan.  Anyone can make a gift to the Trust just as they would to a person.

 

Article II. Irrevocability of the Trust

 

            This Trust may not be revoked or changed and no part of the Trust Estate shall be paid or loaned or applied to or for the benefit of the Settlor.

 

Article III. Distributions to the Beneficiary

 

A.        Payments of Income and Principal.

The Trustee may, whenever the Trustee decides to, make any payment or distribution (in cash or in specie and whether income or capital) for the Beneficiary. The Trustees shall, in their unfettered discretion, decide how much of the net income or principal of the Trust Estate is necessary to take care of the needs of the Beneficiary.  This money may not be paid directly to the Beneficiary.  It may be paid to a Personal Representative  who will use the money to pay for the Beneficiary's needs.  He or she will report to the Trustee how the money was used.  Depending on the procedure the Trustee and Personal Representative decide upon together, the Personal Representative must either send the Trustee the receipts for these payments or send the Trustee  a written report on how the money was used.   Alternatively, the Trustee may pay for the Beneficiary's needs directly, keeping careful records of how the money was spent. The receipt of the person receiving such payment shall be sufficient discharge to the Trustees. The Trustees are authorized to make any election or elections on behalf of the Beneficiaries for the purposes of the Income Tax Act (Canada) or any similar legislation of any Province or other jurisdiction in force from time to time.

 

 

B.        Without in any way limiting the absolute and uncontrolled discretion of the Trustee, the Trustee agrees to exercise such discretion taking into account the financial or other benefits the Beneficiary would receive from other sources if payments from this Trust were not available, or if such payments were limited as to amount or time.  To the extent that the

Trustee considers it to be necessary of advisable, for the benefit and protection of the Beneficiary, the Trustee shall take such steps as are necessary or desirable to maximize such benefits. 

 

C.        In order to maximize such benefits, the Trustee is specifically authorized to make payments out of this Trust to the Beneficiary, or on or for the Beneficiary’s behalf or benefit in such amount or amounts and at such time or times as the Trustee considers to it to be in the best interest of the Beneficiary.

 

D.        Spendthrift Provision

            No part of the Trust Estate shall be subject to the claims of any creditor of the Beneficiary. This is true even if they have a legal judgment against the Beneficiary. 

 

            This Trust is intended to be conserved and maintained for the benefit of the Beneficiary for the Beneficiary's entire lifetime.  No part of the Trust Estate shall ever be considered or determined to be a part of the Beneficiary's estate.  Also, no part of the Trust Estate shall ever be subject to or available to pay for any claims of any creditors who have provided any form or kind of care or services to the Beneficiary.  Stated simply, the Beneficiary does not own any part of the Trust Estate, so the Beneficiary can not give any part of the Trust Estate to anyone else.

 

Article IV. Termination

 

A.        Termination upon death of the Beneficiary

 

            This Trust ends when the Beneficiary dies.  At that time the Trustee may pay any death taxes that are due because the Beneficiary has died.  The Trustee may also pay any expenses of the Beneficiary's funeral and burial or cremation expenses and any cost of distributing the Beneficiary's estate.  If other satisfactory provisions have been made for paying these expenses, the Trustee shall not pay them.

 

            The Trustee has the right to make the Beneficiary's  final arrangements, after consulting with the Beneficiary's family members and the Letter Of Intent.

 

            The Trustee shall distribute any remaining balance of the Trust Estate to the Remaindermen to do with as they wish, unless the Settlor has given special instructions (such as the creation of a trust for a particular beneficiary) in the Schedule.

 

 

B.        Distribution to the Remaindermen

 

The share of the Trust Estate each Remainderman  will receive is set out in the Schedule. The Schedule also states whether a Remainderman receives his or her share per stirpes or whether the Trust Estate is divided among the Remaindermen who are living at the time of distribution.

 

Article V. Office Of Trustee

 

            A.        Successor Trustee(s)

 

            The Successor Trustee(s) shall become Trustee whenever the original Trustee or Trustees become unable or unwilling to serve as Trustee.  The Successor Trustees will serve in the order and at the time set out in the Schedule.

 

            When the Settlor has named more than one Co-Trustee, the Settlor wants one of the Co-Trustees to continue to serve even if the other one does not serve for any reason (unless the Settlor has given different instructions in the Schedule).  A Successor Trustee can name another Successor Trustee if there is no other Successor Trustee named in the Schedule who is able to or wants to serve as Trustee.  A time may come when there is no Trustee available to serve or to appoint another Trustee.  In that event the Judge of a Court that has the right to appoint Trustees in the area where the Beneficiary lives may name a Successor Trustee.  This must be done as provided in the laws of the Province where the Beneficiary is living at the time.

 

            B.        Proof of need for the appointment of a new Successor Trustee

 

            1.         A Trustee may appoint a Successor Trustee by giving a written notice to the person who is being appointed. A copy of the notice must also be given to the Beneficiary or to the Beneficiary's  Personal Representative .

 

            2.         A Trustee may become disabled or want to resign as Trustee for some other reason. The Trustee may make this known by writing a letter stating that the Trustee is resigning. The Trustee shall deliver this resignation to the Successor Trustee. The Trustee may for some reason be unable to do this.  In that case, the person who can act for the Trustee such as the Trustee's  Power Of Attorney can write the resignation for the Trustee.  Alternatively, the Successor Trustee may have a licensed physician or a licensed clinical psychologist who has examined the resigning Trustee state in writing that the Trustee is unable to serve. A Court order that says the Trustee is incompetent will also be a reason for appointing a Successor Trustee.

            3.         When a Trustee dies, a copy of the death certificate will be proof that a Successor Trustee  should be appointed.  This copy of the death certificate should be filed in the Advance Lifetime Directive binder where the original Trust Agreement is kept.

 

            4.         A person who is named in the Schedule as a Trustee or Successor Trustee may resign or refuse to accept the appointment.  This must be done by a written notice.  The notice must be given to the Beneficiary or Personal Representative and to the Successor Trustee or to the person who can appoint a Successor Trustee.

 

                        The Trustee who is resigning must keep on serving as Trustee until a Successor Trustee has agreed to serve as Trustee.  The resigning Trustee must provide the Successor Trustee with the information and documents the Successor Trustee needs to take over the duties of the Trustee and take possession of the Trust Estate.  No Court has to approve this change of Trustees.

 

            C.        Reasonable payment for serving as Trustee

 

            The Trustee may pay himself or herself a reasonable amount from the Trust Estate  for all ordinary services performed for the Trust.  This amount should be no more than banks in the local area charge for trust management services. The Trustee may also pay himself or herself an additional amount for extraordinary services performed for the Trust. These payments may be paid for services performed during each calendar year the Trustee serves as Trustee.  No Court need approve these payments. If a Trustee serves for only a part of a calendar year, the Trustee may pay himself for the part of the year he or she served.

 

            D.        Employment of Consultants

 

            The Trustee does not have to perform all the services the Trust requires by himself or herself.  The Trustee may employ others to do some services and pay them from the Trust Estate. Examples of the type of persons a Trustee might employ are: Personal Representatives, custodians, attorneys, investment advisers, trust departments, or other agents or advisors. The Trustee may rely on the advice given by these persons.  The Trustee shall decide how much to pay these persons for their services, but the amount paid must be reasonable.  The amount paid them will be in addition to the amount paid the Trustee for his or her services.

 

            E.         Guidance for Trustee

 

            The Settlor has left a Letter Of Intent in the Advance Lifetime Directive with this Trust.  It is Settlor's intent that the Letter Of Intent be a guide to the Trustee in determining what the Beneficiary  needs. Because these needs will evolve during the Beneficiary's  life, the Settlors intend to update the Letter Of Intent from time to time by adding new information.  The Settlors intend that this Letter Of Intent be considered as a continuing expression of their concerns for the welfare of the Beneficiary and an expression of how the Trust should address those concerns. If some provision of the Letter Of Intent  should conflict with the provisions of this Trust Agreement, the Trust Agreement shall control.

 

 

            F.         Liability of Trustee

 

            No Trustee shall be liable to any person interested in this Trust for anything the Trustee has done or not done while acting in good faith as Trustee of this Trust. If the Trustee intentionally does something wrong, however, they may be liable.  The Trustee is responsible for bad faith, intentional misconduct or gross negligence (extreme carelessness) in the performance of his or her duties.

 

            G.        Liability of former Trustee

 

            Any Successor Trustee may accept as correct any accounting of Trust assets made by a former Trustee.  The Successor Trustee does not have to accept them as correct. It is up to the Successor Trustee.  The Successor Trustee may request an audit or take any other reasonable action to find out whether the former Trustee did something wrong.  If the Successor Trustee finds that the former Trustee did something wrong intentionally or was extremely careless, he or she may sue the former Trustee to recover anything that was lost.

 

 

Article VI. Powers Of Trustee

 

            The Trustee shall have the following powers and duties.  The Trustee shall also be able to decide when and how he will use these powers and duties.  The Trustee shall also have any powers and duties which the law gives the Trustee.  If these powers and duties are limited somewhere else in this Trust Agreement or on the Schedule, the stated limitations will apply.

 

A.        The Trustee may hold any or all of the Trust Estate in the form of investment in which it was received.

 

B.        The Trustee may sell at public or private sale any portion or all of the  assets in the Trust Estate. (Of course, the proceeds of the sale will become part of the Trust Estate.)  The Trustee may mortgage or pledge or lease any asset or portion of the Trust Estate.  A lease may extend beyond the terms of this Trust, if it is necessary to do so to uphold the terms of a lease agreement. The terms of any such transaction shall be up to the Trustee.

 

C.        The Trustee may invest and re-invest the Trust Estate in the kinds of investments a reasonable and prudent person would choose to invest in, given the Settlors' intent in creating this trust.  These investments may include real or personal property, stocks, bonds, notes, mortgages, land minerals, royalties, leaseholds and any other assets he or she thinks are reasonable.  The Trustee may also participate in partnerships, joint ventures and other business enterprises.

D.        The Trustee may also construct, repair, improve or demolish any buildings or improvements upon any real property held in the Trust.

 

E.         The Trust may own stocks, bonds or securities of a corporation, If so, the Trustee may vote, like any other shareholder, on any reorganization, consolidation, merger or dissolution of such corporation.

 

F.         The Trustee may hold investments or any part of the Trust Estate in common or  undivided interests with other persons. 

 

G.        The Trustee may demand and receive money or anything else that is owed to the Trust.  When payment or property is received, the Trustee  may give a receipt for it.  The Trustee may settle or compromise any claims owed to the Trust.  If the Trustee decides it is prudent to do so, the Trustee may abandon any claim in favor of or against the Trust.

 

H.        The Trustee  may borrow funds for the Trust in such amounts and for such purposes as the Trustee decides are proper. A proper purpose might be to obtain funds for the repair of a trust asset.  The Trustee may also purchase property for the Trust based on the credit of the Trust.  The Trustee may have to secure the repayment of any loans or credit given to the Trust. If so, the Trustee may sign notes, mortgages or other evidences of indebtedness to secure such credit or loans. The Trustee may also repay any such indebtedness out of assets of the Trust Estate.

 

I.          The Trustee may carry insurance at the expense of the Trust of such kinds and amounts as the Trustee decides is advisable.  This insurance shall be for the protection of the Trust Estate against damage or loss.  The insurance may also cover the Trustee's liability with respect to claims of third parties.

 

J.         The Trustee may vote in person or by proxy any shares of stock which may be a part of the Trust Estate.

 

K.        The Trustee may lend money to any person or persons upon such terms as the Trustee may decide.  If the Trustee does so, the Trustee must require adequate interest and security to protect the interest of the Trust and the Beneficiary.

 

L.         The statements in the next sentence will not take away any of the rights of the Trustee listed in A through K above or any other provision of this Trust Agreement. The Trustee can do everything with the Trust Estate, that is not specifically prohibited by applicable law or regulation, that any reasonable and prudent person can do with his or her own property and funds, as long as it is done solely for the benefit of the Beneficiary and the Trust  .

 

M.       The Trustee must use his or her best judgment in each separate situation and follow the best course available for the benefit of the Trust and the Beneficiary.  When the Trustee does this, it is not necessary to get the approval of a Court.  The fact that the Trustee may obtain some coincidental benefit from an action because he or she is Trustee for other Trusts or is an agent for other persons or corporations as a stockholder, director or otherwise, does not change this.  The Trustee has a very high standard of duty to this Trust, however, and must at all times use the highest degree of care to be sure that what he or she is doing is for the best interest of the Trust and the Beneficiary.

 

N.        The Trustee may purchase policies of life insurance and annuities for the benefit of the Trust and pay for them as an investment and as part of the Trust Estate.  This may be done at any time and from time to time. The Trustee may use either principal or interest of the Trust Estate to pay these premiums.  It is up to the Trustee.  The Trustee may also decide to purchase policies on the lives of other persons with the death benefits payable to the Trust.  If the Trustee does this, the policies will be a part of the Trust Estate.

 

            1.         The Trustee may pay all premiums and other charges which are charged to keep an insurance policy in force.  The Trustee may also choose not to pay such premiums and charges.  It is up to the Trustee.

 

            2.         The Trustee may decide to change a policy by canceling it or converting it or doing something else that will make a serious change in the policy. If so, the Trustee must first give the insured a notice in writing, telling what the Trustee intends to do.  If the insured is disabled, the notice must be given to the insured's guardian or other Personal Representative.  Each notice of this sort must be in writing and must be delivered at least fifteen (15) days before any action on the policy is taken.

 

            3.         The Trustee shall treat any dividend received on a policy as principal rather than income.

 

            4.         The Trustee may receive proof of death on a person who was insured for the benefit of the Trust.  The Trustee may find that a policy has matured before the death of the insured.  In either case the Trustee shall collect any amounts due the Trust.  Any amounts the Trustee collects in this way, except interest paid by the insurance company, shall be held as principal of the Trust Estate.

 

            5.         The Trustee may accept any payments due the Trust under any settlement arrangements made before the death of the insured.  The Trustee may also take advantage of any rights available under such arrangements.

            6.         The Trustee may settle any policy claim in a manner the Trustee thinks is best for the Trust.  This includes arbitration, compromise or other means of adjustment.  The Trustee does not have to accept settlement options available under the policy.  The Trustee's receipt for payment is all the insurer needs to show that the claim has been fully settled.  The insurer does not have to check up on the Trustee to see what is done with the proceeds of a policy.

 

            Even though the Trustee can do all things listed above, the Trustee should always contact a tax expert for advice to determine if the manner of premium payment will cause a tax problem for the Trust.

 

O.        The Trustee may enter into agreements with taxing authorities as to the proper way to administer the Trust.  The agreements may relate to the liability of the Trust for taxes.  They may also limit the decisions the Trustee may make in future transactions or any other matter which may be in the best interest of the Trust Estate and the Beneficiary.  

 

P.         The Trustee may, if the Trustee decides to, permit any heir of the Settlor who is living on any real property which is a part of the Trust Estate to continue living there.  The Trustee shall decide what rent or other payment, if any, the person living there will be required to pay to the Trust.

 

Q.        The Trustee may, if the Trustee decides to, permit any person or persons to reside upon any real property which is a part of the Trust Estate where the Beneficiary is residing. The Trustee shall decide what rent or other payment, if any, shall be paid to the Trust by the person who is living there. The Trustee may let such person or persons stay on such real property rent free if they will provide care, supervision or simple companionship for the Beneficiary. The Trustee may decide that such person or persons should pay the taxes, insurance, maintenance and ordinary repairs on such real property. It is up to the Trustee.

 

R.        It may be that the Trustee will need to divide a portion or portions of the Trust Estate into parts or shares for the purpose of distribution or for some other reason.  If this happens, the Trustee may make these divisions using a reasonable method selected by the Trustee.  The persons who are to receive the distributions may each have equal and identical rights to the property being distributed.  This does not require the Trustee to distribute exactly the same types of property to each such person.  The Trustee may distribute assets of the Trust Estate in the same form they were owned by the Trust. On the other hand, the Trustee may distribute a portion in money and the balance in the form in which it was being held in the Trust Estate.  The Trustee may sell as much of the Trust property as the Trustee thinks is necessary in order to make the distribution.  The Trustee must make the decision.

 

S.        The Trustee shall have all the power he or she needs to do anything necessary and proper to qualify the Beneficiary for benefits which the Trustee determines are or should be available to or for the Beneficiary. He or she may apply for these benefits for the Beneficiary.  This is true even if this will benefit the Trustee,  as well as the Beneficiary.

 

T.        The Trustee has a duty to keep the Beneficiary reasonably informed of the  Trust and its administration.  The Trustee may do this by sending the Beneficiary a report at least once a year, telling him or her what the Trust owns,  and what distributions the Trustee has made during that year.  The Trustee may do this in any one or more of the following ways:

 

            1.         The Trustee may send the report to the Personal Representative, of the Beneficiary.  The report may also be sent to any suitable person who lives with or who cares for the Beneficiary .

 

            2.         The Trustee may send the notice to a custodian serving on behalf of the Beneficiary under Canadian law or Provincial law.

 

            The Trustee is not responsible for finding out how the distributed funds were used.  When the Trustee gets a receipt from the Personal Representative or any other person who receives the distribution, that is all that the Trustee needs to show that the distribution has been made properly.  As long as the Trustee acts in good faith, no one can challenge how the distribution was made or how it was spent.  This is the decision of the Trustee.

 

U.        The Trustee shall not be required to be a resident of any Province or of Canada.

 

 

ARTICLE VII. GENERAL ADMINISTRATIVE PROVISIONS

 

A.        Partial  invalidity

 

            Some part or portion of this Trust Agreement may be void or unenforceable.  This does not mean that the rest of the Trust Agreement can not be carried out.  The rest of the Trust  will still be valid and can be carried into effect.

B.        Headings

 

            Headings are used in  this Trust Agreement so that the different parts of the Trust Agreement will be easy to find.  The same is true in the Table Of Contents.  These headings are not a part of the language which follows the headings.

 

C.        Situs of Trust

 

            The situs of the Trust is the Province which has legal control of this Trust.  This is usually the Province where the Beneficiary is living on the Effective Date of this Discretionary Trust.  This Province is set out in the Schedule.  If the Beneficiary moves to another Province, the Beneficiary or his or her Personal Representative  should notify the Trustee in writing. When the Trustee receives this written notice, the Trustee should decide whether or not it is necessary to change the situs of this Trust to the other Province.  This decision is up to the Trustee, but the decision must conform to the applicable law at that time.

 

           

D.        Application to a Court

 

            The Settlor does not intend that any Court shall have control of this Trust.  If there is a dispute as to what the Trust Agreement means or if an accounting needs to be approved by a court, however,  the Settlor  directs the Trustee to apply to the proper Court for assistance.  When the problem is solved, the Settlors intend that such Court shall have no further control of this Trust.

 

E.         Statutes, Codes and Regulations

 

            If a statute, code or regulation is referred to in this Trust Agreement,  it shall also mean any new ones that take the place of those statutes, codes, or regulations.

 

F.         Severability

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            If any part or provision of this Trust is unenforceable or cannot be carried out, the rest of the Trust shall be carried into effect.

 

G.        Name of the Trust

 

            The name of the Trust created in this Trust Agreement  is set out in the Schedule.

 

H.        Confidentiality Regarding Provisions

 

            It is the intent of the Settlor that the provisions of this Trust Agreement are to be kept confidential as to all persons.  That means that nobody is to be told what is in this Trust Agreement.  An exception to this is the requirement for an annual report to the Beneficiary (see Article VI, paragraph T).   Financial institutions, such as banks, who are holding portions of the Trust Estate may also need to see a copy of the Trust.  The Trustee should determine whether it is appropriate to provide a copy to anyone making such a request.

 

ARTICLE VIII. PERSONAL REPRESENTATIVE

 

            If the Beneficiary has a Personal Representative, the name and other necessary information about the Personal Representative is set out in the Schedule.  Successor Personal Representatives are also set out in the Schedule.