This post contains Articles Four of a sample living trust agreement. My clients have asked me the same question frequently. To answer these questions, I dedicated BoomX Show episodes to answering these questions. I video taped the episode with my iPhone in the studio. These short videos are meant to liven up the tutorial with a BoomX feel to it. But, I admit, they are also far from professionally produced. The text of the sample Article is displayed below.
For purposes of this Article, incapacitated Grantor’s trust property refers to the net income and principal of the incapacitated Grantor’s separate property and the net income and principal of the incapacitated Grantor’s share of the community property, during any period when a Grantor is incapacitated.
Our Trustee shall administer the incapacitated Grantor’s trust property as follows.
(a) Distributions for the Incapacitated Grantor’s Benefit
Our Trustee shall regularly and conscientiously make appropriate distributions of income and principal for the benefit of the incapacitated Grantor under the circumstances existing at the time each distribution is made.
Appropriate distributions under this Subsection include the payment of any of the incapacitated Grantor’s enforceable legal obligations and premiums for insurance policies owned by the incapacitated Grantor or by our trust, including life, medical, disability, property and casualty, errors and omissions, and longterm health care policies.
Our Trustee is authorized to honor pledges and continue to make gifts to charitable organizations that the incapacitated Grantor has regularly supported in the customarily given amounts.
The examples included in this Subsection are for purposes of illustration only and are not intended to limit the authority of our Trustee to make any distribution for the incapacitated Grantor’s benefit that our Trustee determines appropriate.
(b) Manner of Making Distributions
Our Trustee may make distributions for the incapacitated Grantor’s benefit in any one or more of the following ways:
to the incapacitated Grantor, but only to the extent he or she is able to manage these distributions;
to other persons and entities for the incapacitated Grantor’s use and benefit;
to an agent or attorney in fact authorized to act for the incapacitated Grantor under a legally valid durable power of attorney executed by the incapacitated Grantor before his or her incapacity; and
to the incapacitated Grantor’s guardian or conservator who has assumed responsibility for the incapacitated Grantor under any court order, decree, or judgment issued by a court of competent jurisdiction.
(c) Distributions for the Other Grantor’s Benefit and for the Benefit of Our Dependents
Our Trustee may distribute as much of the net income and principal of the incapacitated Grantor’s trust as our Trustee considers necessary for the health, education, maintenance or support of the other Grantor.
Our Trustee may also distribute as much of the net income and principal of the incapacitated Grantor’s trust as our Trustee considers necessary for the health, education, maintenance or support of other persons who our Trustee determines are dependent on the incapacitated Grantor for support.
(d) Guidance for Our Trustee Regarding Distributions
When making distributions under Subsections (a) and (c), our Trustee shall give consideration first to the incapacitated Grantor’s needs and the needs of the other Grantor, and then to the needs of those persons dependent on the incapacitated Grantor.
When making distributions under Subsection (c), we request that our Trustee, in its sole and absolute discretion, consider other income and resources available to the dependents. Our Trustee may make unequal distributions, distributions to some but not all dependents, or no distributions.
A distribution made to a beneficiary under this Section will not be considered an advancement, and will not be charged against the share of the beneficiary that may be distributable under any other provision of this trust.