Form 3-18

Terms of Trust and Agreement of Trustee

Notice: The beneficiary and certain persons interested in the welfare of the beneficiary may have remedies under section 114.008 or 142.005, Property Code.

This instrument establishes the terms of a trust created for the benefit of [name of minor or incapacitated person], [a minor/an incapacitated person], under the order of the [designa­tion] Court of [county] County, Texas, under the authority of section 142.005 of the Texas Property Code, as amended.

1.Trustee.      The trustee of the trust is [name of trustee], Trustee. On receipt of the funds constituting the corpus of this trust, Trustee’s duties will commence in accordance with the terms of this trust agreement. No bond or other security is required of Trustee or of any successor trustee.

2.Beneficiary.      The sole and only beneficiary of the trust is [name of minor or inca­pacitated person], Beneficiary.

3.Trust Estate.      The trust will be funded with the amount of $[amount] (plus any accrued interest), which was awarded to Beneficiary as a result of a settlement or final judg­ment in Cause No. [number], styled “[style of case],” in the [designation] Court of [county] County, Texas. This amount of money will constitute the initial principal of the trust that, together with all other properties hereafter acquired by the trust and all income therefrom, will constitute the trust estate of the trust.

4.Distributions from Trust.      Trustee will pay to or apply for the benefit of Benefi­ciary such amounts out of the net income and principal (if income is insufficient) of the trust as are reasonably necessary in the sole discretion of Trustee to provide for the health, educa­tion, support, or maintenance of Beneficiary. Any such income not so distributed will be added to the principal of the trust.

In making any discretionary payments to Beneficiary, Trustee will consider (a) the standard of living to which Beneficiary has been accustomed before the creation of the trust; (b) any increase in Beneficiary’s standard of living that should occur as a result of the size, anticipated income, and financial return of the trust and the feasibility of sustaining such an increased standard of living; (c) any known resources of Beneficiary; (d) the ability of any person who is legally obligated to support Beneficiary to do so; and (e) the ability of Benefi­ciary to earn funds for Beneficiary’s own support and maintenance except while obtaining an education.

Trustee may make any distribution required or permitted hereunder, without the inter­vention of any guardian or other legal representative, in any of the following ways in Trustee’s sole reasonable discretion: (a) to Beneficiary directly, (b) to the legal or natural guardian of Beneficiary, (c) to any person having custody of Beneficiary, or (d) by using the distribution directly for Beneficiary’s benefit.

5.Revocability.      This trust may not be revoked, altered, or amended by Beneficiary or any guardian or other legal representative of Beneficiary, but it will remain subject to amendment, modification, or revocation by the [designation] Court at any time before the ter­mination of the trust.

6.Spendthrift Provision.      Before the actual receipt of any distribution of any por­tion of the trust estate by Beneficiary, no property (whether income or principal) of the trust will be subject to anticipation or assignment by Beneficiary or to attachment by or interfer­ence or control of any creditor or assignee of Beneficiary or be taken or reached by any legal or equitable process in satisfaction of any debt or liability of Beneficiary. Any attempted transfer or encumbrance of any interest in the trust estate of the trust by Beneficiary before its actual distribution will be void. To the extent allowed by law, no distribution from the trust will be made to satisfy any obligation of Beneficiary if such obligation would otherwise be met from any federal or state assistance program if the trust had not been created.

7.Trustee’s Investment Authority.      Trustee will invest the trust estate in accordance with the standards now or hereafter set forth in title 9 of the Texas Property Code (Texas Trust Code) (or any subsequent applicable law), and Trustee may also invest all or any part of the trust estate in one or more common trust funds now or hereafter established by Trustee pursu­ant to sections 113.171 and 113.172 of the Texas Property Code.

8.Trustee’s Compensation and Expenses.      Trustee will be entitled to receive for Trustee’s services a fair and reasonable compensation determined in accordance with the then-customary and prevailing charges for similar services charged by corporate fiduciaries in [city, county] County, Texas, but Trustee’s compensation will not exceed the compensation provided by Trustee’s then-published fee schedule for such services. Trustee will also be reimbursed for all reasonable expenses incurred by Trustee in connection with the trust. The fees and expenses allowed hereunder have been approved by the [designation] Court at the inception of the trust, but the [designation] Court may review such fees and expenses at any time on the [designation] Court’s own motion or at the instance of Trustee or any other party interested in the welfare of Beneficiary, and on a hearing of the matter, the [designation] Court will take any action with respect to such fees and expenses as the [designation] Court may deem appropriate. Trustee expressly agrees to reimburse to the trust any fees previously paid to Trustee by the trust if the [designation] Court orders Trustee to do so.

9.Administrative Provisions.      In the administration of the trust, Trustee will be authorized and empowered—

(a)to exercise all powers granted by Texas Property Code section 142.005 as now or hereafter amended and to trustees of express trusts by the Texas Prop­erty Code or any corresponding statute, except in any instance in which the Texas Property Code or such other statutory provision may conflict with the express provisions of this trust agreement, in which case the provisions of this trust agreement will control.

(b)to adjust, arbitrate, compromise, abandon, sue on or defend, and otherwise deal with and settle all claims in favor of or against the trust. To engage and retain attorneys or accountants at any time that it may be reasonably neces­sary to provide for the prudent management and preservation of the trust.

(c)to continue to act as Trustee of the trust regardless of any change of name of Trustee and regardless of any reorganization, merger, or consolidation of Trustee.

10.Miscellaneous.      The trust will be held and administered under the following terms and conditions:

(a)Trustee will keep books of account respecting the trust and all transactions involving the trust and will furnish to Beneficiary, or to the person having the care and custody of Beneficiary if Beneficiary is then under a legal disability, statements at least quarterly showing receipts and disbursements of income and corpus of the trust and a list of assets held in the trust. Trustee will also furnish such statements to the [designation] Court on request.

(b)No person or entity dealing with Trustee will be obligated to see to the appli­cation of any money or property paid or delivered to Trustee, and no person or entity will be obligated to inquire into the expediency or propriety of any transaction on the authority of Trustee to enter into and consummate any transactions on terms Trustee deems reasonably appropriate.

(c)Trustee may not resign as trustee of the trust without receiving prior authority from the [designation] Court.

(d)The headings appearing in this instrument are for convenience only and do not purport to define or limit the scope or intent of the provisions to which they refer.

11.Inception of Trust.      This trust will become effective on (a) the effective date of the court order that authorizes its creation, (b) the transfer of the above-stated amount of money to Trustee, and (c) Trustee’s acceptance of the trust, which will be evidenced by the signature below of the appropriate officer of Trustee. This trust is created by operation of law as it is implemented herein by the [designation] Court, and to the extent permitted by law nei­ther Beneficiary nor the [designation] Court is the grantor of this trust.

SIGNED in multiple originals, any one of which will be deemed an original for all purposes on [date].

   
Trustee
[Name and title of representative]
[Name of entity]

SIGNED under oath before me on ______________________________.

   
Notary Public, State of Texas