This form may be used to provide for the management of jointly owned property after divorce. It may be incorporated by reference in the decree of divorce and the agreement incident to divorce.
Operating Trust Agreement for Jointly Owned Property after Divorce
This Operating Trust Agreement for Jointly Owned Property after Divorce is made by the joint owners, [name], Trustee, and [name], Beneficiary. The parties agree as follows:
1.The parties desire to own as tenants in common certain properties described in Schedule 1 of this agreement. Because these properties are difficult to evaluate, may periodically require additional cash contributions, and may periodically be sold, refinanced, or forfeited because other investors no longer desire to keep their interests in the asset, the parties agree that Trustee will act as trustee for Beneficiary in connection with Beneficiary’s one-half undivided interest in the properties. Trustee’s rights to manage and hold these properties are described in the following paragraphs.
2.Beneficiary consents for Trustee to act as trustee for Beneficiary’s one-half undivided interest in the properties described in Schedule 1 of this agreement. Trustee recognizes Trustee’s duty to exercise reasonable prudence and care in the management of Beneficiary’s property as if it were Trustee’s own. In that regard, Beneficiary acknowledges that the properties are also owned one-half by Trustee, and, in that respect, Beneficiary acknowledges that Trustee’s management and preservation of the properties should be of benefit to both parties.
3.Trustee will have the right, in Trustee’s sole and undivided discretion, to sell or vote for the sale of any asset held individually or held in a partnership under such terms and conditions as Trustee deems most appropriate. Trustee may from time to time elect not to make cash contributions required for the preservation of the properties. Before the property interest is forfeited, it must be offered to Beneficiary under the same terms and conditions. Beneficiary must be given ten days’ written notice of any such forfeiture of the property, affording Beneficiary the option to take over full and complete ownership. Beneficiary may then elect to make the cash contribution and to take over full and complete ownership of the property without further claim from Trustee. Trustee has the right at any time to declare any property covered by this agreement to be worthless. Upon such declaration, that property will be automatically removed from the terms of this agreement and may be claimed by Beneficiary, at Beneficiary’s option, as Beneficiary’s separate property.
4.Trustee will maintain a separate bank account through which all contributions and receipts will be made. Trustee will receive no compensation for the management and preservation of the properties. Beneficiary will have the right to periodically examine the books and records or designate an authorized person to do so. All receipts from the property, whether from sale, rental, or otherwise, must be deposited in the operating account. No money may be taken from the account other than for the management and preservation of the properties or for placement in an interest-bearing account. When all assets in the trust have been sold, transferred, or forfeited, and not before that time, any funds on deposit in the operating account will be distributed as follows:
a.Trustee will be reimbursed for all contributions and expenses made or incurred by Trustee with respect to the properties during the term of this agreement; and
b.the remaining funds will be divided 50 percent to Trustee and 50 percent to Beneficiary.
5.Trustee has the right to make reasonable and necessary expenditures in the management and preservation of the properties and the right to employ any contractors, brokers, attorneys, accountants, and the like that are reasonably necessary to manage and preserve the properties. Trustee also has the right to execute, acknowledge, and deliver any instruments necessary for the preservation, management, and sale of the properties.
SIGNED on ________________________________.
[Name], Trustee
[Name], Beneficiary
State of Texas)
County of)
This instrument was acknowledged before me on __________________________ by [name], Trustee.
Notary Public, State of Texas
State of Texas)
County of)
This instrument was acknowledged before me on __________________________ by [name], Beneficiary.
Notary Public, State of Texas