Education Trust Agreement - Template, Sample Form Pro · US-law
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EDUCATION TRUST OF ________
An Irrevocable Trust Established Under the Laws of the State of ________
This Education Trust Agreement (the “Agreement” or “Trust”) is made and entered into as of ________, by and between ________ (the “Grantor”), whose address is:
________
and ________ (the “Trustee”), whose address is:
________
In consideration of the mutual covenants and promises set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Grantor and the Trustee agree as follows:
§ I. NAME OF TRUST.
1. This Trust shall be known as the “Education Trust of ________.” The assets and dealings of the Trust may, however, be held and conducted in the name of the Trustee and, to the extent otherwise permitted herein, also in the name of the Beneficiary.
§ II. PURPOSE; IRREVOCABILITY.
2. The purpose of this Agreement is to create a trust that will receive, hold, and manage assets to support the education of ________ (the “Beneficiary”), whose address is:
________
3. For the purpose of making distributions under this Trust, the term “education” shall include reasonable costs for college, university, graduate or professional school, trade or vocational schools, job training, tuition, fees, books, supplies, equipment, room, board, transportation, and other reasonable costs that develop the Beneficiary’s income-earning capabilities, as the Trustee, in the Trustee’s sole and reasonable discretion, may determine.
4. THIS TRUST IS IRREVOCABLE. The Grantor expressly acknowledges and agrees that this Trust, and each and every provision hereof, is irrevocable. The Grantor expressly waives, relinquishes, and renounces any right to alter, amend, modify, revoke, or terminate this Trust, in whole or in part, and no such right is reserved to the Grantor or any other person, except that the Trustee may exercise any administrative or judicial reformation or non-judicial settlement remedies available under applicable state law for the limited purposes permitted thereby.
5. The Grantor renounces and disclaims any and all possible beneficial interest in or benefit from this Trust, including any reversionary interest, and intends that the transferred property be irrevocably removed from the Grantor’s ownership and control.
§ III. FUNDING OF TRUST.
6. The Grantor has transferred, assigned, conveyed, and delivered, and/or will transfer, assign, convey, and deliver, to the Trustee the property described in Schedule A attached hereto and made a part hereof. Said property, together with any and all other property which may hereafter be assigned, conveyed, or delivered to the Trustee by the Grantor or any other person as hereinafter provided, is intended to constitute the trust estate and shall be held by the Trustee in trust for the uses and purposes and subject to the terms and conditions set forth in this Agreement.
7. The Grantor, or any other person, with the consent of the Trustee, may at any time and from time to time deed, grant, devise, bequeath, gift, or otherwise cause additional property to be transferred to and administered as a part of the trust estate created hereunder. Any such transfer may be evidenced by the receipt of the Trustee, and each such receipt shall be conclusive evidence of the consent of the Trustee to the transfer thereof.
§ IV. DISTRIBUTIONS TO THE BENEFICIARY.
8. Until the Beneficiary attains the age of ________ years, the Trustee may distribute to or for the sole benefit of the Beneficiary as much of the net income and/or principal of the Trust as the Trustee, in the Trustee’s sole and absolute discretion, may reasonably determine is necessary or advisable for the Beneficiary’s education.
9. Any income which the Trustee does not distribute to or for the benefit of the Beneficiary shall be accumulated and added to the principal of the Trust, to be held, administered, and distributed as part thereof.
§ V. TERMINATION OF TRUST.
10. When the Beneficiary attains the age of ________ years, the remaining trust assets, including all accrued, accumulated, and undistributed income, shall be distributed outright and free of trust to the Beneficiary, and this Trust shall then terminate, subject to the provisions of § VI below.
§ VI. CONTINUATION OF TRUST.
11. As an alternative to mandatory termination of this Trust at age ________ years, the Beneficiary may request that this Trust be continued.
12. If the Beneficiary makes a written request to continue this Trust within sixty (60) days after the Beneficiary attains the age of ________ years, the Trustee shall continue the Trust until the Beneficiary attains the age of ________ years.
a. During such additional period, the Trustee shall distribute to or for the benefit of the Beneficiary as much of the income and/or principal as the Trustee, in the Trustee’s sole discretion, may determine is necessary for the Beneficiary’s education. In making such distributions, the Trustee shall take into consideration any other income and property known by the Trustee to be available to the Beneficiary for such purposes.
b. When the Beneficiary attains the age of ________ years, the remaining trust assets shall be distributed outright and free of trust to the Beneficiary, and this Trust shall then terminate.
§ VII. DEATH OF BENEFICIARY.
13. If the Beneficiary dies before attaining the age at which this Trust shall terminate, the following provisions shall apply:
b. Alternate Distribution. If the Beneficiary fails to validly exercise the foregoing general testamentary power of appointment, the Trustee shall distribute the remaining trust assets as follows:
The residue of the Beneficiary’s Trust shall be distributed to the Beneficiary’s surviving spouse. If the spouse does not survive the Beneficiary, the residue shall be distributed to the Beneficiary’s then-living children, in equal shares. If a child of the Beneficiary does not survive the Beneficiary, such deceased child’s share shall be distributed in equal shares to the children of such deceased child who survive the Beneficiary, by right of representation. If no child of the Beneficiary survives the Beneficiary, and none of the Beneficiary’s deceased children are survived by any children, the residue of the Beneficiary’s Trust shall be distributed to the following beneficiary: ________.
If none of the above-named beneficiaries survive the Beneficiary, the residue of the Beneficiary’s Trust shall be distributed to the Beneficiary’s heirs-at-law, their identities and respective shares to be determined in accordance with the intestacy laws of the State of ________ in effect at the date of the Beneficiary’s death.
c. Failure of the Trustee to Receive Notice. If the Trustee does not receive actual notice of the existence of a will or other instrument exercising the general testamentary power of appointment within ninety (90) days after the Beneficiary’s death, the Trustee may distribute the trust assets under the preceding paragraph as if such power had not been exercised. However, if the power was in fact exercised, this provision shall not prevent the appointee of such a power from enforcing the power as exercised.
d. Types of Distributions. Distributions to a beneficiary may be made (i) outright to such beneficiary; (ii) to any other trust that has been created for such beneficiary; or (iii) to a custodial account for such beneficiary under the applicable Uniform Transfers to Minors Act (or equivalent legislation) of the relevant state. The Trustee shall have sole discretion to determine which alternative to employ.
§ VIII. LIMITATIONS ON POWERS.
14. No power granted to the Trustee in this Agreement or under applicable law shall be construed to permit the Grantor, the Trustee, or any other person to purchase, exchange, or otherwise deal with or dispose of all or any part of the principal or income of this Trust for less than adequate and full consideration in money or money’s worth, or to enable the Grantor to borrow all or any part of the principal or income of the Trust, directly or indirectly, without adequate interest and adequate security.
15. No person, other than the Trustee acting in a fiduciary capacity, shall have or exercise the power to vote or direct the voting of any stock or other securities of the Trust, to control the investments of the Trust, whether by directing investments or reinvestments, or to reacquire or exchange any property of the Trust by substituting other property of equivalent value. The provisions of this Agreement are intended to ensure that the trust estate is not includible in the Grantor’s gross estate under Sections 2036 through 2038 of the Internal Revenue Code, and shall be construed accordingly.
§ IX. SPENDTHRIFT PROVISION.
16. No beneficiary of this Trust shall have any right, power, or authority to sell, transfer, assign, pledge, mortgage, hypothecate, anticipate, or otherwise encumber, in advance, any of the income or principal of the Trust, or any interest therein.
To the maximum extent permitted by law, no income or principal of the Trust shall be liable for, attached by, taken to satisfy, or otherwise subject to the debts, contracts, liabilities, engagements, obligations, or torts of any beneficiary, nor shall the same be subject to any claim of any creditor of any beneficiary through legal or equitable process or otherwise. This provision constitutes a spendthrift provision within the meaning of the applicable provisions of the Uniform Trust Code as enacted in the governing state.
This provision shall not be construed as restricting in any way the exercise of any power of appointment granted herein or the right of any beneficiary to disclaim any interest under this Trust.
§ X. TRUSTEE POWERS.
17. Subject to the other provisions of this Agreement, and in addition to any other powers and authority granted by law or necessary or appropriate for the proper administration of this Trust, the Trustee (and any successor Trustee) shall have the following rights, powers, and authority, without order of court and without notice to anyone:
a. Receive Assets. To receive, hold, maintain, administer, collect, invest, and reinvest any trust assets, and to collect and apply the income, profits, and principal of the Trust in accordance with the terms of this Agreement.
b. Receive Additional Assets. To receive additional assets from other persons and sources, including assets by testamentary disposition; all such additional assets shall be held and administered under, and be subject to, the terms of this Agreement.
c. Retain Assets. To retain any asset, including uninvested cash or original investments, regardless of whether it is of the kind authorized by this Agreement for investment and whether it leaves a disproportionately large part of the Trust invested in one type of property, for so long as the Trustee deems advisable.
d. Dispose of or Encumber Assets. To sell, option, mortgage, pledge, lease, or convey real or personal property, publicly or privately, upon such terms and conditions as may appear proper, and to execute all instruments necessary to effect such authority.
e. Settle Claims. To compromise, settle, or abandon claims in favor of or against the Trust.
f. Manage Property. To manage real estate and personal property, borrow money, exercise options, procure insurance, and register securities as may appear proper.
g. Allocate Between Principal and Income. To make allocations of charges and credits between principal and income as in the sole discretion of the Trustee may appear proper, consistent with the applicable Uniform Principal and Income Act, and to create reserves for taxes, depreciation, and other lawful purposes.
h. Employ Professional Assistance. To employ and compensate legal counsel, accountants, investment advisors, and other persons deemed necessary for proper administration, and to delegate authority when such delegation is advantageous to the Trust and consistent with the prudent investor rule.
i. Distribute Property. To make division or distribution in money or in kind, or partly in either, at values to be determined by the Trustee, and the Trustee’s judgment shall be binding upon all interested parties.
j. Enter into Contracts. To bind the Trust by contracts or agreements without assuming individual liability for such contracts.
k. Exercise Stock Ownership Rights. To vote, execute proxies to vote, join in or oppose any plans of reorganization, and exercise any other rights incident to the ownership of any stocks, bonds, or other properties of the Trust.
l. Duration of Powers. To continue to exercise the powers provided under this Trust notwithstanding the termination of the Trust, until all of the assets of the Trust have been distributed.
m. Compensation and Expenses. To receive reasonable compensation for trustee services provided under this Agreement, and to be reimbursed for and to pay all reasonable expenses and charges of the Trust.
o. Methods of Distribution. To make payments to or for the benefit of the Beneficiary (including in the event the Beneficiary is under a legal disability) in any of the following ways: (i) directly to the Beneficiary; (ii) directly for the education of the Beneficiary; (iii) to the legal or natural guardian of the Beneficiary; or (iv) to any person who at the time shall have custody and care of the Beneficiary. The Trustee shall not be obligated to oversee the application of the funds so paid, and the receipt of the person to whom the funds were paid shall be a full acquittance of the Trustee.
p. Loans. To make loans to the Beneficiary for education purposes upon such terms as the Trustee deems reasonable.
§ XI. TRUSTEE PROVISIONS.
18. Successor Trustee. If at any time a Trustee cannot serve by reason of the Trustee’s disability, death, resignation, removal, or any other reason, then ________, whose address is set forth below, is hereby appointed as the successor Trustee:
________
If the foregoing named successor Trustee is unable or unwilling to serve, then ________ shall serve as successor Trustee. A Trustee may resign upon at least thirty (30) days’ written notice to the Grantor (if living) and to the Beneficiary or the Beneficiary’s legal representative.
19. Financial Reports. The Trustee shall provide financial reports to the Grantor on a ________ basis for so long as the Grantor is living. Thereafter, financial reports shall be provided at least annually to the Beneficiary. If the Beneficiary is under any legal incapacity, the financial reports shall be provided to the Beneficiary’s guardian (natural or otherwise) or conservator. Financial reports shall include a balance sheet listing the assets and their values, an income statement showing income and expenses, and a listing of distributions made on behalf of the Beneficiary.
20. No Bond. No bond or other security shall be required of any Trustee, unless required by applicable law.
21. Institutional Trustee. Any institutional trustee serving under this Trust must have a total capital account of at least Fifteen Million Dollars ($15,000,000), maintain an established Trust Department or Trust Division, and be qualified to act as a trustee under the laws of the United States or of any state thereof. The acceptance of trusteeship by any institutional trustee shall constitute full evidence of its agreement to these provisions.
22. Liability of the Trustee. The Trustee shall be liable only for the Trustee’s acts and omissions constituting bad faith, willful misconduct, or gross negligence. No successor Trustee shall be liable for any acts or omissions of any prior Trustee, nor shall any successor Trustee be obligated to inquire into or be in any way accountable for the prior administration of the trust property.
§ XII. NON-COURT TRUST.
23. Unless otherwise required by law, the Trustee shall administer this Trust as a non-court trust, without the necessity of notice to or approval of any court or person. As provided by law, the Trustee may petition a court of competent jurisdiction to take jurisdiction over this Trust where the Trustee deems such action necessary or advisable.
§ XIII. GOVERNING LAW.
24. This Agreement, and the validity, construction, administration, and enforcement hereof, shall be governed by and construed in accordance with the laws of the State of ________, without regard to its conflict-of-laws principles. The principal place of administration of the Trust shall initially be ________.
§ XIV. RULE AGAINST PERPETUITIES.
25. Notwithstanding any other provision of this Agreement to the contrary, the trust created by this Agreement shall terminate no later than twenty-one (21) years after the death of the last surviving beneficiary of this Agreement who is living at the time of the death of the Grantor, at the end of which period the distribution of all principal and all accrued, accumulated, and undistributed income shall be made to the persons then entitled to such distributions, in the manner and proportions herein stated, free of trust.
§ XV. SEVERABILITY.
26. If any provision of this Agreement is held to be invalid, illegal, or unenforceable for any reason, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and this Agreement shall be construed and enforced as if such invalid, illegal, or unenforceable provision had never been contained herein.
§ XVI. MISCELLANEOUS PROVISIONS.
27. The titles at the heads of the sections and paragraphs of this Trust are inserted for reference purposes only and are not to be considered as forming a part of this Trust in interpreting its provisions. All words used in this Trust in any gender shall extend to and include all genders, and any singular words shall include the plural and vice versa. Any pronouns shall be taken to refer to the person or persons intended regardless of gender or number.
28. For the purpose of determining the appropriate distributions under this Trust, no person or organization shall be deemed to have survived the Grantor unless such person or entity is also surviving or in existence on the thirtieth (30th) day after the date of the Grantor’s death.
29. No fiduciary who is a natural person shall, in the absence of fraud, bad faith, willful misconduct, or gross negligence, be individually liable to any beneficiary of the trust estate, and the trust estate shall indemnify and hold harmless such natural person from any and all claims or expenses in connection with or arising out of that fiduciary’s good-faith actions or non-actions, except for such actions or non-actions which constitute fraud, bad faith, willful misconduct, or gross negligence.
30. No-Contest Clause. If any beneficiary named in this Agreement contests in any court the validity of this Trust or any of its provisions, or institutes any proceeding to set aside, nullify, or void this Trust or any of its provisions, then such person and all persons claiming under or through such person shall not be entitled to any devise, legacy, bequest, distribution, or benefit under this Trust, and the interest or share of such contesting beneficiary shall be disposed of as if that contesting beneficiary had predeceased the Grantor without surviving issue, to the maximum extent permitted by applicable law.
31. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.
SIGNATURES
IN WITNESS WHEREOF, I have signed my name on this ________ day of the month of ________ of the year ________, in the City of ________, the State of ________, declaring and publishing this instrument as an Education Trust, in the presence of the undersigned witnesses, who witnessed and subscribed this Education Trust at my request and in my presence. I attest that I have signed this instrument willingly (or willingly directed another to sign on my behalf), that I execute it as my free and voluntary act for the purposes expressed in the Trust, and that I am eighteen (18) years of age or older, of sound mind, and under no constraint or undue influence.
______________________________________
________, Grantor
IN WITNESS WHEREOF, I have signed my name on this ________ day of the month of ________ of the year ________, in the City of ________, the State of ________, acknowledging and accepting my appointment as the Trustee in this Education Trust, in the presence of the undersigned witnesses, who witnessed and subscribed this Education Trust at the Grantor’s request and in the Grantor’s presence. I attest that I have signed this instrument willingly (or willingly directed another to sign on my behalf), that I execute it as my free and voluntary act for the purposes expressed in the Education Trust, and that I am eighteen (18) years of age or older, of sound mind, and under no constraint or undue influence.
______________________________________
________, Trustee
WITNESS STATEMENT
SIGNED AND DECLARED by ________ on this ________ day of the month of ________ of the year ________ to be their Education Trust, in our presence, in the City of ________, the State of ________, who at their request, in their presence, and in the presence of each other, all being present at the same time, have signed our names as witnesses. We do hereby attest that the Grantor signs this instrument willingly (or willingly directs another to sign for the Grantor), and that each of us, in the presence and hearing of the Grantor, hereby signs this Education Trust as a witness to the Grantor’s signing, and that to the best of our knowledge the Grantor is eighteen (18) years of age or older, of sound mind, and under no constraint or undue influence.
___________________________
Witness #1 Signature
___________________________
Witness #1 Printed Name
___________________________
Witness #1 Street Address
___________________________
Witness #1 City, State
___________________________
Witness #2 Signature
___________________________
Witness #2 Printed Name
___________________________
Witness #2 Street Address
___________________________
Witness #2 City, State
NOTARY ACKNOWLEDGMENT
STATE OF ________
COUNTY OF ________
Subscribed, sworn to, and acknowledged before me by ________, the Grantor, and by ________, the Trustee,
and subscribed and sworn to before me by ________ and ________, witnesses,
this ________ day of ________, 20________.
(seal)
(signed)___________________________
___________________________
Notary Public, State of ________
My commission expires: ________
SCHEDULE A
List of Assets to be Held in the Trust
The Grantor has transferred, assigned, conveyed, and delivered to the Trustee the following assets to be held, managed, and distributed under the terms of this Education Trust as described above:
________
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