This post contains Article One 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.
The Joe Sample and Jane Sample Living Trust
The date of this trust is May 31, 2017. The parties to this trust are Joe Alexander Sample and Jane Kristin Sample (the Grantors) and Joe Sample and Jane Sample (collectively, our Trustee).
We intend to create a valid trust under the laws of Washington and under the laws of any state in which any trust created under this trust document is administered. The terms of this trust prevail over any provision of Washington law, except those provisions that are mandatory and may not be waived.
For convenience, our trust may be referred to as:
“The Joe Sample and Jane Sample Living Trust dated May 31, 2017.”
To the extent practicable, for the purpose of transferring property to our trust or identifying our trust in any beneficiary or pay-on-death designation, our trust should be identified as:
“Joe Sample and Jane Sample, Trustees, or their successors in interest, of the Joe Sample and Jane Sample Living Trust dated May 31, 2017, and any amendments thereto.”
For all purposes concerning the identity of our trust or any property titled in or payable to our trust, any description referring to our trust will be effective if it reasonably identifies our trust and indicates that the trust property is held in a fiduciary capacity.
Third parties may require documentation to verify the existence of this trust, or particular provisions of it, including the name of our Trustee or the powers held by our Trustee. To protect the confidentiality of this instrument, our Trustee may use an affidavit or a certification of trust that identifies our Trustee and sets forth the authority of our Trustee to transact business on behalf of our trust instead of providing a copy of this instrument. The affidavit or certification may include pertinent pages from this instrument, including title or signature pages.
A third party may rely upon an affidavit or certification of trust that is signed by our Trustee with respect to the representations contained in it. A third party relying upon an affidavit or certification of trust will be exonerated from any liability for actions the third party takes or does not take in reliance upon the representations contained in the affidavit or certification of trust.
A third party dealing with our Trustee will not be required to inquire into this trust’s terms or the authority of our Trustee, or to see to the application of funds or other property received by our Trustee. Our Trustee’s receipt of any money or property paid, transferred, or delivered to our Trustee will be a sufficient discharge to the third party from all liability in connection with its application. A written statement by our Trustee is conclusive evidence of our Trustee’s authority. Third parties are not liable for any loss resulting from their reliance on a written statement by our Trustee asserting our Trustee’s authority or seeking to effect a transfer of property to or from the trust.
Any person or entity may transfer any property to our trust in any manner authorized by law.
(a) Initial Funding of Our Trust
By executing this instrument, we transfer, convey, and assign to our Trustee the trust property described in the attached schedules.
(b) Acceptance by Our Trustee
By executing this instrument, our Trustee accepts and agrees to hold the property transferred to the trust as trust property. All property transferred to our trust after the date of this trust must be acceptable to our Trustee. Our Trustee may refuse to accept any property. Our Trustee shall hold, administer, and dispose of all accepted trust property for our benefit and for the benefit of our beneficiaries, in accordance with the terms of this trust.
(c) Community Property
Any community property transferred to our trust, including the proceeds from the property’s sale or exchange, will retain its character as community property during our lives, to the same extent as if it had not been transferred to our trust.
(d) Separate Property
Separate property transferred to our trust will retain its character as separate property. Our separate property may be identified as the separate property of either of us on the attached schedules. The separate property of either of us, including proceeds from the property’s sale or exchange, will remain separate property. Each of us has the unrestricted right to remove all or any part of our separate property at any time.
An amount that is payable to our trust on a life insurance policy that is the separate property of either of us will retain its character as separate property.
(e) Joint Property
If joint tenancy property with right of survivorship is transferred to our trust, we will be considered to have severed the joint tenancy immediately before transferring the property, and no right of survivorship will exist with respect to this property.
(a) Action on Behalf of Our Trust
Whenever both of us are serving as Trustee, either or both of us may act for and conduct business on behalf of our trust without the consent of any other Trustee.
Whenever one of us is alive but not serving as Trustee, and the other is serving as Trustee, the one who is serving as Trustee may act for and conduct business on behalf of our trust without the consent of any other Trustee.
After one of us dies, the ability of the survivor of us, when serving as Trustee, to conduct business on behalf of us without the consent of any other Trustee is subject to the terms and conditions of our trust.
(b) Amendment, Restatement, or Revocation
Acting jointly, we may amend, restate, or revoke this instrument, in whole or in part, for any purpose.
Acting jointly, we retain the absolute right to amend, restate, or revoke any term or provision of this trust in whole or in part. Each of us individually retains the right to revoke any term or provision of this trust in whole or in part as to each of our separate property.
Any amendment, restatement, or revocation must be made in writing and delivered to our then-serving Trustee.
Either of us may add property to our trust. Both of us, acting jointly may remove any property from our trust. Each of us, acting alone, may remove our own separate property from our trust. Community property removed from our trust will retain its character as community property.
We retain the right to control the distribution of income and principal from our trust. We may direct our Trustee to distribute as much of the net income and principal of the trust property as we consider advisable to us or to other persons or entities. Our Trustee may distribute the net income and principal to us or for our unrestricted use and benefit, even to the exhaustion of all trust property. Any undistributed net income is to be added to the principal of our trust.
Unless otherwise directed, our Trustee shall distribute the net income from the community property to us at least quarterly and shall distribute the net income from a Grantor’s separate property to that Grantor at least quarterly.
Our Trustee may also distribute principal of the community property for the unrestricted use of either or both of us and the principal of a Grantor’s separate property for the unrestricted use and benefit of that Grantor, even to the exhaustion of all trust property. Any undistributed net income is to be added to the principal of our trust.
We reserve the absolute right to review and change our Trustee’s investment decisions as to the community property. Each of us reserves the absolute right to review and change our Trustee’s investment decisions as to our respective separate property. But our Trustee is not required to seek our approval before making investment decisions.
By reserving the broad rights and powers set forth in Section 1.07 of this Article, we intend to qualify our trust as a Grantor Trust under Internal Revenue Code Sections 671 to 677. This means that, for federal income tax purposes, each of us will be treated as the owner of one-half of all the community property held in our trust and as the owner of our respective separate property as if we held the property individually.
During any period that our trust is a Grantor Trust, the Taxpayer Identification Number of our trust will be Joe Alexander Sample’s Social Security number, in accordance with Treasury Regulation Section 301.6109-1(a)(2).