Free Joint Living Trust

It is recommended that you name an ALTERNATE successor trustee to serve if your first choice is unavailable or unwilling to serve. If your first choice cannot serve and you fail to name an alternate, your survivors and the court system will be left to make the decision for you.

You may name one alternate successor trustee to serve alone or alternate successor co-trustees to serve together.

There may be occasions when you may want to amend a Joint Living Trust after the Trust has become "operational." For example, you may want to change a beneficiary, name a different Trustee, or add a new provision.

There are several ways to amend the Trust. For minor deletions and/or additions, see the "Living Trust Amendment" document. For major and/or numerous changes, however, it is recommended that the Trust be "amended and restated" in its entirety. For such cases, this document offers an optional sentence that can be included in the Joint Living Trust. This sentence provides that the Trust agreement is "amending and restating" the existing Trust agreement. By including this reference to the existing Trust agreement, the new agreement has the effect of simply continuing the current, existing Trust which was established under the prior agreement, but with the desired changes.

This "continuation" means that a new trust is not being created, and therefore, it is not necessary to transfer assets from an "old" trust into a "new" trust. In order to amend and restate the Trust, you must deliver to the Trustee an appropriate written amendment or restatement, signed by both you and your spouse as Co-Grantors, and by the Trustee(s).

Operational Living Trust
A Trust is not considered "operational" until it has been signed and assets have been transferred into the Trust. Therefore, it is not necessary to use this "amending" feature if the prior trust agreement was signed, but not made operational by transferring assets into the trust. Instead, simply create the new trust and revoke the old trust (see the "Living Trust Revocation"). A lawyer should be consulted regarding any questions.

When the first spouse dies, the Trust provisions designate the beneficiaries who will receive that Grantor's property. At the option of that Grantor, these provisions can include specific bequests and immediate distribution of some or all of the trust assets contributed by that person. These provisions also can include retaining those assets within the trust for the benefit of the surviving spouse and/or the minor children. Because you do not know which spouse will survive the other, you can make specific distributions payable either upon your death (regardless of whether your spouse is surviving) or only upon the death of the surviving spouse. This latter choice allows the surviving spouse to continue to enjoy the property during his or her lifetime.

If the deceased Grantor was serving as a Trustee, the successor Trustee (which may be the surviving spouse, now as surviving Co-Trustee), will carry out the deceased Grantor's directions.

You may wish to require that your Trustee obtain a bond. A bond is similar to an insurance policy in that it covers against losses from misappropriation of assets by the Trustee.

However, most people choose not to require a bond because bonds:

1. are expensive,
   
2. frequently are not necessary if a bank is the Trustee because banks are already bonded, and
   
3. may necessitate greater court involvement.

Note: These bonds are also known as "fiduciary bonds." A fiduciary is a person or organization who is given the authority and responsibility over assets which are not owned by that fiduciary. For example, the Trustee has control over the trust assets.

Specific Distributions can include (a) intangible personal property, (b) tangible personal property, or (c) real property. The following are examples of these categories of specific bequests:

1. Intangible personal property.
   
   • An amount of cash
     
   • An entire bank account
     
   • Stocks, bonds or an entire brokerage account
     
   • A patent or copyright
     
   • Contract rights, such as the right to receive payments from a third party under a promissory note or an annuity
     
   • Business interests in a privately-held corporation or partnership

2. Tangible personal property.
   
   • Jewelry
     
   • Heirlooms
     
   • Antiques
     
   • Vehicles
     
   • A boat, snowmobile, motorcycle, or airplane
     
   • Clothing and personal effects
     
   • A household item OR "all household furnishings"

3. Real property.
   
   • House or condominium
     
   • Cabin or vacation home
     
   • Bare lot
     
   • Farm land

A trustee is the person or organization named in a trust who has the responsibility of carrying out the terms of the trust, including managing the trust's assets and making distributions to the beneficiaries.

The trustee should be dependable and capable of handling financial matters. A business background may be helpful, but is not required. Many banks have trust operations that provide trustee services, but of course, the bank will charge for its services.

Generally, the grantor of a living trust serves as the initial sole trustee until such time as (i) the grantor wants to turn over the trustee responsibilities to a successor trustee, (ii) the grantor is physically or mentally unable to serve as trustee, or (iii) the grantor dies.

Alternatively, you can nominate two or more persons (or institutions) to serve together as co-trustees. Decisions of co-trustees need to be unanimous, and therefore, the co-trustees need to be able to work together.

You also can provide the Trustee with additional powers. See Optional Trustee Powers for more information.

If a bank's trust department or other institution is selected as the Trustee, it is automatically understood that the Trustee will charge a fee for its services. However, if a family member or friend is chosen, there may be some dispute whether you intended for that individual Trustee to receive compensation for his or her services.

This optional power clarifies your intent by stating that the Trustee IS entitled to reasonable compensation for his or her services, and is entitled to reimbursement for out-of-pocket expenses incurred in the performance of the Trustee's duties.

Your estate is composed of your assets at the time of your death. Your assets may include the following:

• Joint Property
  
• Personal Property
  
• Life Insurance / Annuity / Retirement Plan Designations

The language of a Trust typically provides for payments and distributions of trust assets "to," or "for the benefit of," a beneficiary. However, it is often useful to clarify your intent that the Trustee is authorized to make payments directly to others who are providing something of value to the beneficiary.

The most common example is that the Trustee can make a payment directly to a college to cover a child's tuition. By including specific authority in the Trust for the Trustee to make such payments to others, the Trustee is better protected against claims that required payments to a beneficiary were never received by that beneficiary.

This document allows you to distribute the remaining trust assets by selecting from a variety of alternatives. For example, you can choose distribute the remaining trust assets to your children. If you have minor children, you can select a Trust for Children.

You also have the options of distributing the remaining trust assets to:

1. "one beneficiary" who may be a person (or a charity) other than a child, or

2. "several beneficiaries" in shares that are stated in percentages.

During your lifetime, payments of the net income of the Trust are made to you at fixed intervals. The amount of the payments can be changed from time to time at your request.

When you die, the Trust provisions designate the beneficiaries who will receive your property, much in the same manner as a will. At your option, these provisions can include specific distributions, distributions of tangible personal property, and immediate distributions of the remaining trust assets. These provisions also allow you to include a trust share that will be maintained for the benefit of your minor children through a trust for minor children.

The successor Trustee carries out these provisions in a role similar to that of an Executor.

Federal Estate Tax is a tax imposed at the federal level (in addition to possible estate and/or inheritance taxes imposed at the state level) for the privilege of transferring property at death.

This tax is imposed whether the assets pass under the Decedent's Will or Trust, or by the state laws of intestacy (without a Will). The tax is based on the total value of ALL assets owned by the Decedent at death, plus taxable gifts made during the Decedent's lifetime (the Decedent's "Gross Estate").

The 2010 Tax Act brought renewed the federal estate tax, but at much higher exclusion amount (the amount each person can transfer in total during life and at death without paying transfer tax) than previously and decreased the top marginal tax rate. For 2011, the estate tax exclusion amount is $5 million with a top tax rate of 35%. The exclusion amount will be adjusted for inflation in 2012.

Many states "protect" spouses with laws that permit a spouse to receive a portion of your estate even though your Pour-Over Will and/or Joint Living Trust do not provide for your spouse. If the intent in the Pour-Over Will and/or Joint Living Trust is to "disinherit" your spouse, you should consult with a lawyer regarding the legal rights of your spouse to receive property from your estate.

"Disinheriting" means to deprive another person (an heir or spouse) of property that would have been distributed to that person under the laws of intestacy (dying without a valid will). An agreement between you and your spouse, signed prior to marriage, may permit you to disinherit your spouse.

If substantially all of your assets will be transferred to a living trust, it is common practice for you to provide for distributions upon your death to your family, particularly your spouse (if married) and your children (if any), or in the case of a deceased child, to such child's children (if any). Such persons are said to be "the natural objects of your (the Grantor's) bounty".

If such persons exist but are not included in the Trust, a question may arise as to whether you simply made a mistake. Further, such excluded persons may attempt to challenge the Trust on this very basis, that is, that you simply made an error in excluding them from the Trust.

If you intend to exclude someone that might expect to be included in the Trust, it is advisable to include a statement in the Trust that makes it clear that the omission was intentional. Although this type of exclusion generally applies only to individuals, this provision can also be used to list organizations that will be excluded.

There are several important factors to consider in creating and using a Living Trust.

1. Use of this Document as a Planning Device. Creating a Joint Living Trust involves careful planning and consideration. Not all of the steps, including the very important step of transferring assets, can be completed while sitting at a computer. Although this interview will guide you through the process of creating a valid Joint Living Trust document, it may be appropriate to contact a lawyer regarding legal questions. In fact, it is expected that many people will use the Joint Living Trust document as a planning tool, especially if there are special circumstances or if your estate may exceed $5,000,000 at your death. If that is the case, then after using this Worksheet as an educational device, you may wish to finalize the Joint Living Trust document with the aid of legal counsel.

2. Transfer of Assets into the Trust. In addition to creating and signing the Joint Living Trust document, assets must be transferred into the trust. A Joint Living Trust only applies to the assets that are actually transferred into the Trust. For additional information on this very important point, read the Funding the Trust topic.

3. Pour-Over Will. The use of a Joint Living Trust does not eliminate the need for a will. You may have assets that you overlooked or that you purposefully do not wish to transfer into the Joint Living Trust. For example, it may be preferable not to transfer some personal property such as vehicles and a personal checking account. A Pour-Over Will handles the distribution of such assets upon your death by directing that such assets be transferred to the Trustee of the Joint Living Trust for final distribution. It is highly recommended that a Joint Living Trust not be signed unless a Pour-Over Will is also properly signed.

4. Tax Consequences. Generally, the income earned by the assets transferred into your Joint Living Trust will be taxable to you on your personal income tax return in the same manner as if the assets continued to be held personally by you during your lifetime.

5. Estate Planning. The estimated value of your assets, minus the estimated value of your liabilities is critical information in planning your estate. A high value -- more than $5,000,000 in value at your death -- suggests that more complex estate planning techniques may be required to minimize federal estate taxes.

6. Federal Estate Tax. The 2010 Tax Act brought renewed the federal estate tax, but at much higher exclusion amount (the amount each person can transfer in total during life and at death without paying transfer tax) than previously and decreased the top marginal tax rate. For 2011, the estate tax exclusion amount is $5 million with a top tax rate of 35%. The exclusion amount will be adjusted for inflation in 2012.

7. Living Trust. For singles or married persons desiring the advantages of a Living Trust, another alternative is to create a (single) Living Trust.

In addition to creating and signing a Joint Living Trust document, assets must be transferred into the Trust. A Joint Living Trust only applies to the assets that are actually transferred into the Trust. Assets can be transferred both at the time of the creation of the Trust and also at later times.

Separate transfer documents must be used for this purpose because the Trust document itself does not contain any language of conveyance or any list of assets. In most cases, the new named owner of the assets will be the trustee of the Trust.

For example, an account for Thomas T. and Janice J. Jones who have created a trust dated 11/27/2006 could be transferred into the Trust by changing the account name to "The Trustee of the Thomas T. and Janice J. Jones Joint Living Trust dated 11/27/2006."

Heirs-at-law are persons who would be entitled to the assets of your estate if you died without leaving a valid Will or Trust. The laws of each state define who are the heirs of persons who die as residents of that state. Although state laws vary somewhat, in general, your heirs are those persons who are most closely related to you by blood or adoption.

For example, the priority in most states is that your heirs are only your children, if you have children, with grandchildren or other descendants taking the share of a child who dies before you do. Only if you have no descendants will the definition of an heir be expanded to include your parents (either one), then your siblings (if any), with nieces and nephews (possibly other descendants of your siblings) taking the share of a deceased sibling. If your parents and all of their descendants are deceased, the circle is expanded to include your grandparents and all of their descendants. If no relatives at all can be found, your estate then "escheats" to your state of residence � generally, a rare occurrence. Because heirs are usually defined by state law to be related to you only through blood or adoption, your spouse is usually not your heir. But keep in mind that there are other kinds of state laws that protect spouses by guaranteeing your surviving spouse all or a portion of your estate.

If you are married and select the "heirs-at-law" option, only YOUR heirs will benefit unless you specifically choose to also benefit your spouse's heirs by allocating a percentage of your estate to your spouse's heirs.

If the Trust is being maintained for the benefit of more than one beneficiary, each of which is entitled to a specific share of the Trust, the Trustee will have to keep careful records of each beneficiary's share. Each such share typically earns income and pays its proportionate share of the Trust expenses.

The optional power to hold trust assets as a single fund allows the Trustee to maintain a single fund for joint investment and management purposes of the entire Trust, without the need for physical segregation of each beneficiary's share.

For example, one brokerage account and one bank account could be used by the Trust instead of multiple accounts, one such account for each beneficiary. Instead of establishing multiple accounts with brokers and banks, it is the Trustee who keeps a careful accounting of the trust shares. The Trustee allocates to each beneficiary's share a proportionate share of the trust's total income and expenses, and subtracts from each beneficiary's share the payments and distributions made to that beneficiary.

Allowing the Trustee to hold assets as a single fund often reduces the expense of operating the Trust.

A Joint Living Trust can be created by a person and that person's spouse. In some cases, this method is preferable to creating two separate Living Trusts, especially where assets to be contributed are held jointly and could not easily be divided to be placed into two separate trusts. Another advantage is that the joint trust is created in a single document rather than multiple documents.

Typically, the Joint Living Trust provides for both spouses, who are the Co-Grantors, to serve as the initial Co-Trustees. They serve for such time as they are able and willing to manage the assets of the Trust during their joint lifetime. After the death, "disability" or voluntary resignation of one, the other can continue as Trustee. When neither Grantor serves as Trustee, a successor Trustee takes over the management of the Trust.

The Joint Living Trust is "revocable," that is, it can be amended or revoked at a later time.

Payments
During the Grantors' lifetime, payments of the net income of the Trust are made to the Grantors at fixed intervals. The amount of the payments can be changed from time to time at the request of the Grantors.

When a Grantor dies, the Trust provisions designate the beneficiaries who will receive that Grantor's property, much in the same manner as a will. At the option of the Grantor, these provisions can include specific distributions and distributions of tangible personal property before the distributions of the remaining trust assets. The successor Trustee carries out these provisions in a role similar to that of an Executor. These provisions also allow the Grantors to include a trust share that will be maintained for the benefit of the Grantors' minor children through a trust for minor children.

Advantages of a Living Trust
The Joint Living Trust is often viewed as a preferable alternative to the Will. Some of the perceived advantages of the Joint Living Trust relate to privacy, reduced probate costs, and management of assets. For more information, see the Trust vs. Will Comparison topic. And for a review of what to consider when deciding on a Living Trust, see the Factors to Consider topic.

NOTE: This trust is not appropriate for couples whose combined estates (including life insurance proceeds and retirement plans) exceed the federal estate tax applicable exclusion amount ($5,000,000).

Most states permit an individual to own property with another individual in a manner known as "joint with rights of survivorship." In such a case, when the first joint owner dies, the property passes automatically to the surviving joint owner, even if the first owner attempted to give the property to a third person through his or her will.

In many cases this never becomes a problem because the joint property is owned between spouses, and the Wills or Trusts of the spouses provide that the property owned by the spouses should be given to the survivor of them anyway. In those situations, there is no conflict between the ownership of the joint property and the provisions of the Wills or Trusts.

On the other hand, if an individual owns property with another person "joint with rights of survivorship" and wants the property to pass to a third person under the Will or Trust, a lawyer should be consulted.

If property held "joint with rights of survivorship" is transferred into a trust, such survivorship status may be lost. An attorney should be consulted in connection with such a transfer.

Life insurance, annuity, and retirement plan agreements (and similar agreements) are contracts that permit the owner to name those who will receive the proceeds of such agreements, either as primary or alternate beneficiaries.

Your Joint Living Trust does NOT determine the beneficiary (recipient) of the proceeds of these agreements. Thus, when preparing your Joint Living Trust, you should review the agreements to make sure that the beneficiary designations of such agreements correspond to your wishes described in your Joint Living Trust.

A Trust is not considered "operational" until it has been signed and assets have been transferred into the Trust. Therefore, it is not necessary to use this "amending" feature if the prior trust agreement was signed, but not made operational by transferring assets into the trust. Instead, simply create the new trust. A lawyer should be consulted regarding any questions.

Occasionally, the Trustee may consider it appropriate to make a loan of Trust assets to a beneficiary. For example, the beneficiary may be ready to purchase a home or a business and could greatly benefit from a Trust distribution, but he or she is not scheduled to receive such a distribution from the Trust for another year or two.

By including this optional power, the Trustee has the flexibility to advance funds, in unusual circumstances, to a beneficiary before that beneficiary would otherwise receive those funds.

The advance would be in the form of a loan which the beneficiary is obligated to repay with interest. However, the Trustee may allow the beneficiary to repay the loan using money that the beneficiary would otherwise receive from the Trust.

Typically, a Joint Living Trust includes provisions that allow the Co-Grantors, who often serve as the initial Co-Trustees, to manage the assets of the Trust until such time as either Grantor:

1. becomes "disabled" (unable to manage his or her financial affairs),
   
2. simply prefers to have someone else (perhaps a bank's trust department) manage his or her affairs, or
   
3. dies.

In addition to the standard powers given to the Trustee, it is often desirable to provide the Trustee with specific, additional powers:

Holding Assets as a Single Fund

Compensation for Trustees

Making Loans to Beneficiaries

Distributing Assets to Benefit a Beneficiary

Personal Property is either tangible or intangible

Tangible personal property includes jewelry, furniture, cars, and other items that have a physical essence. Intangible personal property includes cash accounts, stocks, bonds, and other similar assets that are nonphysical.

A coin is tangible personal property, while 25 cents in a checking account is intangible personal property.

A Pour-Over Will is a specialized will that is used as a supplementary document to the Joint Living Trust. Its primary function is to "pour over" the Will writer's remaining assets (at the Will writer's death) into the Will writer's Joint Living Trust.

A Pour-Over Will includes a standard provision to name an Executor (Personal Representative in some states). It also includes an optional provision to name a Guardian, if the Will writer has minor children. Instead of the usual provisions that provide for the distribution of specific bequests, the Pour-Over Will simply distributes all of the Will writer's remaining assets to his or her Joint Living Trust. The Joint Living Trust then distributes that remaining property, together with the existing Trust assets, in accordance with the distribution provisions of the Joint Living Trust.

The Pour-Over Will must be signed with the same formalities as any other Will.

The Joint Living Trust document includes a provision for the protection of the Beneficiaries of the Trust, if a Children's Trust is created. The purpose of this provision is to prevent the Beneficiaries from impoverishing themselves by "selling" or "assigning" their interests in the trust to third parties.

For example, a 19-year-old might be tempted to "sell" or "trade" all or a portion of his or her interest in a trust for an expensive sports car. This provision does not prevent the 19-year-old from making a deal with the car dealer, but it does prevent the car dealer from enforcing the deal against the Trust. Sometimes these provisions are known as "spendthrift" provisions.

The Joint Living Trust offers a unique planning opportunity for parents with minor children. Assume you leave your remaining trust assets to your spouse, if your spouse survives you. If your spouse does not survive you, you can provide for a trust for your children.

You can provide that all of the remaining assets of the Trust will be retained by the Trustee for the benefit of your children, or you can provide that a percentage of the remaining assets of the Trust will go to a named beneficiary, with the remainder retained in the Children's Trust.

Providing for a trust for children can be appropriate if you:

1. have no children but intend to have children in the future,
   
2. have minor children, or
   
3. have children who are no longer minors, but who have not yet reached an age at which it is appropriate for them to receive a large distribution of you assets.

The "remaining trust assets" is a term used in the Joint Living Trust that is similar to the term "residuary estate" that is used in Wills. The remaining trust assets include the Grantors' assets that remain after paying debts and expenses and making distributions of specific bequests. In most Joint Living Trusts, the remaining trust assets include most of the assets.

1. The Joint Living Trust should be signed by both the Grantors and the Trustee(s). For states other than Florida, it is recommended (and may be required if real property is included among the trust assets) that these signatures be notarized; however, unlike a will, no witnesses are necessary. However, in Florida, a Joint Living Trust must be signed with the same formalities required for the signing of a will (see provisions 8 - 13 below).

2. After signing the Joint Living Trust document and creating the Trust, the next step which must be taken is to legally transfer specific assets into the Trust. The Trust provisions will only apply to assets that have been placed into the Trust. Assets can be transferred at the time of the creation of the Trust and/or at later dates, but it is recommended that assets be transferred as soon as possible after the Trust is signed. For a review of methods used to transfer specific types of assets into the Trust, re-read and/or print the Help topic Transferring Assets into the Trust, or see the "Living Trust Funding Worksheet."

3. The use of a Joint Living Trust does not eliminate the need for a will. The Grantors may have assets that they overlooked, or that they purposefully do not wish to transfer into the Joint Living Trust. For example, it may be preferable not to transfer some personal property such as vehicles and a personal checking account. A Pour-Over Will is useful to transfer such assets to the Trustee of the Joint Living Trust for final distribution. IT IS HIGHLY RECOMMENDED THAT A JOINT LIVING TRUST NOT BE SIGNED UNLESS A POUR-OVER WILL IS ALSO PROPERLY SIGNED BY EACH GRANTOR.

4. The original of the Trust should be kept in a secure location such as a safe deposit box at a bank. A photocopy should be given to the named Trustee if he or she is not the Grantor(s). A third copy could be kept in the Grantors' home files. The Grantors may wish to provide a copy to their lawyer and/or to the person named as successor Trustee. However, before distributing such copies, the Grantors should consider that it may become awkward to later retrieve these copies if they should decide to change the designation of successor Trustee.

5. The Trust includes provisions which reserve to the Grantors the right to revoke or amend the Trust. In order to do this, the Grantors must sign and deliver to the Trustee an appropriate written revocation or amendment.

6. If you indicated that your property or assets should be distributed in percentages, it is very important that each percentage section total equals 100%. Check the printed totals before signing the Trust.

7. The Grantors should initial on the bottom margin of each page of the Joint Living Trust. This is done to prevent the subsequent substitution of pages.

   FLORIDA ONLY (8 - 13):
   

8. This Joint Living Trust is not valid unless it is signed by the Grantors who are of "sound mind" and of the minimum age for this state. In most states, the minimum age is eighteen. Some states permit an individual below the minimum age to sign a Joint Living Trust if the person is married or in the military. Being of "sound mind" requires that the Grantors each: (a) know that he or she is signing a Joint Living Trust, (b) know the general nature and extent of his or her property, and (c) know the descendants or other relatives that would ordinarily be expected to share in the estate.

9. If the Grantors are unable to sign due to physical disability, another person may be able to sign on behalf of the Grantors, in the Grantors' presence, and at the express direction of the Grantors. However, this document does not provide the necessary language for another person to sign for the Grantors. For assistance with this procedure, a lawyer should be contacted.

10. The Joint Living Trust should be signed by the Grantors in the presence of three DISINTERESTED adult witnesses and a notary public. Many states require only two witnesses, but the signature of a third witness provides some protection against the possibility that one of the witness' signature will be invalid for some reason. For example, a person should not be a witness if that person is a beneficiary under the Joint Living Trust. In most states, if a beneficiary's signature is counted in order to satisfy the minimum number of witnesses, then the Joint Living Trust is not necessarily invalidated, but that "interested witness" may not receive a share of the estate any larger than if the Grantors had died without a trust or will.

11. All of the witnesses must watch the Grantors sign this Joint Living Trust. The Grantors should verbally declare that the document is intended to be their Joint Living Trust, but the witnesses need not read the Joint Living Trust or know of its contents.

12. Each witness must sign his or her name with the Grantors and the other witnesses present. The witnesses should be satisfied that the Grantors willingly signed the document as their free and voluntary act, and that the Grantors were of full age and sound mind.

13. The Florida Self-Proving Affidavit is a document which should be attached to the end of the Joint Living Trust, and which contains the Grantors' acknowledgment and the affidavit of the witnesses, made before a person authorized to take acknowledgments and administer oaths. The affidavit recites that the requisite formalities were observed in signing the Joint Living Trust. Although attaching the affidavit has nothing to do with the legality of the Joint Living Trust itself, it can speed the admission of the Joint Living Trust to probate (if necessary) after the death of the Grantors because it eliminates the need to have a witness appear at the probate proceeding to testify that the formalities in signing the Joint Living Trust were followed. The witnesses may not be available later when they are needed. A self-proved Joint Living Trust may be admitted to probate without additional witnesses or affidavits, but it is still subject to contest on such grounds as undue influence, lack of testamentary capacity, or prior revocation.

A "specific distribution" is a gift of cash, a specific item, or a category of items to a named person or organization before the bulk of the Trust is distributed. For example, a wedding ring, $1,000, an antique, a car, or "all of my remaining tangible personal property" can be given.

For example, a mother may want to make sure that her jewelry goes to her daughter. Grandparents may decide that they would like to give $1,000 to each of their five grandchildren. Specific distributions are usually followed by other provisions that distribute the remaining assets of the trust.

You are also allowed (next) to give all of your (remaining) tangible personal property (vehicles, clothing, furnishings, etc.) apart from the remaining trust assets.

Example: John wants to give $1000 to his favorite charity, his coin collection to his granddaughter, and all of his remaining tangible personal property (vehicles, clothing, furnishings, etc.) to his children from a prior marriage. But he wants his current spouse to be able to enjoy his tangible personal property for her entire lifetime, even if John dies first. Therefore, John selects "Specific items or cash then all remaining tangible personal property" as the type of specific distributions he will make. He gives the $1000 and the coin collection, to be distributed immediately upon his death (regardless of who dies first). He gives his (remaining) tangible personal property to his prior-marriage children, but only to be distributed "upon the death of the surviving Grantor."

If you are presumed to have died first, your spouse's estate will receive any bequest given to your spouse in your Will. These bequests will then pass to your spouse's beneficiaries under your spouse's Will.

If, instead, your spouse is presumed to have died first, any bequest given to your spouse in your Will or Trust instead will pass to the alternate beneficiaries of your Will. Each spouse can state that the other spouse is presumed to have died first.

A successor trustee should be named to serve upon the resignation, incapacity or death of the initial trustee(s). You may name one successor trustee to serve alone, or two successor co-trustees to serve together.

A good choice in many situations is to have an individual and a bank serve together as co-trustees. The individual can be a family member who is close to the beneficiaries and knows their needs. The bank may have a better background for handling investments, preparing tax returns, and providing accountings.

If the Trust will include a children's trust that will take effect at some point, it is recommended that you NOT choose one of the children as a trustee, even if that child is of adult age, because doing so can lead to conflicts among the children regarding distributions.

This document allows the user to include language which requires a named beneficiary to survive you by at least in order to receive a distribution. This provision is sometimes included because, if the named Beneficiary dies within thirty days after you, you may prefer that the distribution pass to your other beneficiaries, rather than to the persons named in the Beneficiary's own will or trust.

In fact, even if the Beneficiary's beneficiaries are acceptable to you (assuming that you know who they are or care who they are), by including this survival requirement, you can avoid having the distribution pass through the Beneficiary's estate, with possible death taxes assessed in that estate, before reaching the ultimate recipient.

The following describes how various assets are transferred into the Living Trust:

• Tangible personal property -- can be transferred into the Trust by using a Bill of Transfer. (See the "Bill of Transfer" document.)
  
• Bank accounts -- can be transferred into the Trust by using the appropriate form supplied by the bank. (See the "Trust Letter to Bank or Broker" document.)
  
• Stocks or bonds in a brokerage account -- can be transferred into the Trust by using the appropriate broker form. (See the "Trust Letter to Bank or Broker" document.)
  
• Stocks or bonds in certificate form -- can be transferred into the Trust by using a Bill of Transfer document. Consult your broker for assistance. (Also see the "Trust Letter to Bank or Broker" document.)
  
• Vehicles can be transferred into the Trust by using a change of title form. Contact your local Motor Vehicle Department for assistance.
  
• A life insurance policy -- can be transferred into the Trust by using a change of ownership/beneficiary form. Contact your insurance agent for assistance. (See the "Change of Beneficiary Letter" document.)
  
• An IRA or pension plan -- can be transferred into the Trust by using a change of ownership/beneficiary form, but it is NOT recommended. Contact your plan administrator or a lawyer for assistance.
  
• Real estate -- can be transferred into the Trust by using a deed. Contact a lawyer for assistance. (See the "Trust Letter to Mortgage Lender" document.)
  
• Business interests -- can be transferred into the Trust through various means. Contact a lawyer for assistance.
  
• Property that is jointly held -- (for example, real estate held jointly by spouses) can be transferred into a trust, but the process may require more careful planning because of the joint ownership.

The Children's Trust provides money for the health, education, maintenance, and support of your children until the youngest child reaches an "adult" age. Presumably, this is the same way that you would have provided for your children if you had survived: supporting all of them out of a common "pot" of assets according to each child's individual needs until the youngest one becomes independent. Often age 25 years is used because it offers the children an opportunity to attend college and "settle down" before receiving their trust shares outright.

When the youngest child reaches the specified "adult" age, the trust is divided into equal shares for the children and either:

1. distributed immediately, or
   
2. distributed in three installments.

Under the second option, Dave might specify that the final distribution should be made in three installments at ages 25 years, 28 years, and 31 years. Now when Justin attains age 25 years the trust is divided into three equal shares, one for each child. Joel receives two-thirds of his share (1/3 because he has attained age 25 years and 1/3 because he has attained age 28 years), and Jay and Justin will each receive one-third of their respective shares. All three will receive their remaining shares as they attain the appropriate ages.

An accounting is a report by the trustee that shows the values of the trust assets as of a specific date (usually the last day of a month). The accounting also shows the income and expenses of the trust for a specific period of time. For example, an "annual" accounting for 2011 would show the values of the trust assets on December 31, 2011, and the income and expenses of the trust for the 12-month period ending on December 31, 2011.

The accounting is needed so that income tax returns, if required (and they usually are), can be filed. The accounting also serves the very important purpose of allowing the beneficiaries the opportunity to review the performance of the trustee. For example, beneficiaries may want to offer comments to the trustee on the rate of return earned by the assets.

An accounting should be required at least annually, but it may be preferable from the beneficiaries' perspective to receive reports monthly, or perhaps quarterly. Bank trustees are well suited to provide reports more frequently, but individual trustees (especially ones not receiving compensation) are usually not as able to provide monthly or quarterly reports.

When selecting a trustee for the children's trust, it is recommended that you NOT choose one of the children, even if that child is of adult age. The reasons are several:

1. that child has a conflict of interest in distributing money to his or her siblings which depletes his or her own share,
   
2. the child becomes the "bad guy" if he or she refuses to honor a request for money from his or her siblings, and
   
3. there is some risk of adverse tax consequences to a trustee who is also a beneficiary of the trust.

Generally, most states protect a trustee from personal liability in the absence of fraudulent conduct or bad faith (deliberate wrongdoing). However, by specifically including a provision that relieves your trustee from personal liability, your intentions are clear and your trustee may be more willing to accept your request to serve.

Most Grantors decide to waive (not require) a bond because:

1. The Trustee chosen is trusted; and
   
2. Bonds:
   1. are expensive;
      
   2. are usually not necessary if a bank is the Trustee because most banks are already bonded; and
      
   3. require greater court involvement in some states because the court must ensure that the bond is handled properly.