Sample Will Trust Language
1. Statement of Intent. The provisions below endeavor to establish up to Three (3) trusts for my heirs. I recognize that the federal Basic Exclusion Amount may change in the future and that the state exclusion may also change or may remain the same.
a. The first trust shall be the “State Exclusion Trust” up to the lesser of: 1) the total estate, 2) the state exclusion amount, or 3) the federal exclusion amount.
b. The second trust shall be the “Exclusion/QTIP Trust” and shall be the lesser of: 1) the excess of the federal Basic Exclusion Amount over the state exclusion amount, 2) or the remainder of my estate. The executor of my estate may elect to qualify any, all or none of this trust for the federal and state estate tax marital deduction.
c. The third trust shall be the “Residuary QTIP Trust” and shall be any excess over the above two trusts, if any. This trust shall qualify for the federal and state estate tax marital deduction.
2. State Exclusion Trust.
a. Basic Exclusion Amount. The Basic Exclusion Amount available to my estate shall be the maximum Basic Exclusion Amount in effect under federal law in the year of my death, reduced by the following:
i. The value of property transferred under previous provisions of this Will which do not qualify for the marital deduction or charitable deduction (or for which no marital deduction or charitable deduction is claimed).
ii. Property passing outside this Will which is included in my gross estate and does not qualify for the marital deduction or charitable deduction (or for which no marital deduction or charitable deduction is claimed).
iii. Expenses and principal payments on debts that are not allowed as deductions for my federal estate tax.
iv. The amount of any adjusted taxable gifts as defined under Code Section 2001, which were made by me after December 31, 1976. Such amount shall be referred to as the "Basic Exclusion Amount".
b. Bequest of Basic Exclusion Amount. If my spouse survives me:
i. I give, devise and bequeath the pecuniary sum which is the largest dollar amount which will not create a federal or state estate tax on my death, to the Trustee of my State Exclusion Trust, in trust, (“State Exclusion Trust”) to be disposed of in accordance with the provision below "Application of State Exclusion Trust".
ii. I recognize at the time of the execution of this will that the state exclusion for the state in which I am domiciled may serve as the cap on any funding to this trust. I recognize that if I become domiciled in a different state prior to my death and without changing this will, that the impact of this distribution scheme may be changed and this bequest may be affected. I recognize that the federal Basic Exclusion Amount may be changed in the future.
iii. I give the balance of the Basic Exclusion Amount, remaining after distribution to the State Exclusion Trust, if any, to my Trustee, in trust for the benefit of my spouse (“Exclusion/QTIP Trust”), to be disposed of as provided in the provision below entitled “QTIP Trust for Surviving Spouse”.
c. Application of State Exclusion Trust.
(1) The Trustee shall hold, manage and invest and the amounts held in this State Exclusion Trust. The Trustee shall collect and receive any income, and shall pay over or apply any portion, none, or all, of the net income from and/or the principal of such trust at such times, to or for the benefit of my spouse, as the Trustee shall determine necessary or advisable in accordance with the Standard for Payment, as defined below. Any net income not so paid over or applied for the benefit of my spouse, shall be accumulated and added to the principal of the Trust Estate, at least annually, and thereafter shall be held, administered and disposed of as a part of the Trust Estate of this State Exclusion Trust.
(2) These payments and applications may be made irrespective of the fact that such payments may exhaust the principal of the trust. The determinations of the Trustee as to the amount of principal payments or applications under this provision shall be final and conclusive on all persons with any interest in this Trust. On the making of any payments or applications under this provision my Trustee shall be fully released and discharged from any further liability or accountability with respect to such payments or applications.
d. Termination of State Exclusion Trust. This trust shall terminate on the death of my spouse whereupon the Trustee shall transfer and pay over the Trust Estate as provided in the provision below entitled “Distribution for Issue”.
3. Residuary Estate.
a. Residuary Estate Generally. All the rest, residue and remainder of my property, wherever situated, and all property which I shall be entitled to dispose of at my death (excluding, however, any property over which I may have a power of appointment), after deducting all my debts, funeral expenses and any expenses of the administration of my estate (my "residuary estate") shall be disposed of in the provisions below.
b. Residuary to Spouse or Issue According to Provisions Below.
i. If my spouse survives me, I give, devise and bequeath my residuary estate to the Trustees, in trust for the benefit of my spouse (“Residuary QTIP Trust”), to be disposed of in accordance with the provision below entitled "QTIP Trust for Surviving Spouse”.
ii. This Residuary QTIP Trust shall be in addition to the Exclusion/QTIP Trust provided for above.
iii. Both the Residuary QTIP Trust and the Exclusion/QTIP Trust shall be administered under the general provisions following governing “QTIP Trust.”
iv. If my spouse does not survive me, I give, devise and bequeath my residuary estate in accordance with the provision below entitled “Distribution for Issue”.
c. QTIP Trust for Surviving Spouse.
i. My Trustee shall hold, manage, and invest the amounts held in the QTIP Trust (which shall refer to either or both of the Residuary QTIP Trust and the Exclusion/QTIP Trust as the context implies) for the benefit of my spouse.
(1) My Trustee shall pay or apply all of the net income thereof to or for the benefit of my spouse in annual or more frequent installments.
(2) My Trustee shall distribute to my spouse, so much, or all, of the principal of such Trust, in accordance with the Standard for Payment defined below.
ii. My Executor shall, in my Executor's discretion, determine whether or not to elect to qualify all, any part, or none of the Exclusion/QTIP Trust for the marital deduction provided in Code Section 2056. My Executor is hereby indemnified and held harmless for any decision regarding this election.
iii. If all, or any part, of the Exclusion/QTIP Trust has been qualified for the marital deduction (while my Executor is not prohibited from choosing not to qualify a portion of the Residuary QTIP Trust for the marital deduction, it would likely all be qualified for the marital deduction), then the following provisions shall apply to that portion, or all of such trust intended to qualify for the marital deduction:
(1) If required by applicable tax law or regulation to qualify this trust for the unlimited marital deduction, then in the year of my spouse's death, I direct my Trustee to distribute all of the remaining net income earned by the trust, through and including the date of my spouse's death, to the estate of my spouse.
(2) I direct that my spouse shall have the right and power to compel my Trustee of this QTIP Trust to convert any non-productive property held in this trust into income producing property and that any provision of this Will which would prevent the allowance of the marital deduction for Federal estate tax purposes shall not apply to this trust. However, if this QTIP trust thereafter is invested and distributed using total return unitrust concepts, this right shall not be exercised in a manner that conflicts with total return investing and/or unitrust distribution concepts.
(3) Notwithstanding any of the foregoing provisions of my Will, on the death of my spouse, except to the extent that my spouse's will by specific reference to this provision directs to the contrary, my Trustee shall pay the increase in all estate, inheritance, legacy, succession, transfer or other death taxes, including any interest and penalties, imposed by any domestic or foreign taxing authority on the death of my spouse by reason of the inclusion in my spouse's gross estate of all or any part of the principal of such trust.
(a) Such increase shall be determined by the difference between the amount of all of such taxes actually paid by the estate of my spouse and the amount of such taxes which would have been paid by the estate of my spouse if all or part of the principal of such trust would not have been included in the estate of my spouse.
(b) Such payments shall be made from the principal of such trust which shall be included in the gross estate of my spouse. Such payments shall be made, either to the personal representatives of my spouse's estate, or directly to such taxing authority, as my Trustee shall determine.
(c) My Trustee may rely upon the certification, in writing, of the personal representatives of my spouse's estate, and shall have no further duty or responsibility to inquire in the determination or apportionments of such taxes.
(d) Upon making any such payment in such increase, my Trustee shall have no further liability regarding the same.
iv. Notwithstanding the foregoing, and without intending this as an absolute direction, I request that my Trustees not make any distribution of principal to or for the benefit of my spouse from the QTIP Trust which has not been elected to qualify for the unlimited estate marital deduction, until after the Trustees have exhausted, to the extent practical and advisable, the principal held in the QTIP Trust which has been elected to qualify for the unlimited estate marital deduction.
v. On the death of my spouse, the Trustee shall transfer and pay over the Trust Estate in accordance with the provision below entitled "Distribution for Issue".
CAUTION: THIS IS AN ILLUSTRATIVE CLAUSE ONLY. IT WAS DRAFTED SHORTLY AFTER THE 2010 TAX ACT WAS PASSED MERELY TO SERVE AS A POINT OF DISCUSSION FOR THE IMPACT OF THE LAW. IT IS NOT A COMPLETE DOCUMENT, NOR CURRENT REPRESENTATION OF THE LATEST LAW OR DRAFTING TECHNIQUES IN THIS AREA.
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