Trust Declaration, Stocks
A Trust is a legal document containing a formal agreement between parties in which one party grants or vests the ownership rights (title) to one or more trustees for the purposes of conservation, protection, or preservation on behalf of the first party or beneficiary of the trust. This instrument normally and usually states: The reasons and purposes as to why the trust was established and the actions that will terminate the trust, a detailed record of what assets are placed and present in the trust, the authority and boundaries of the said trustees, the reporting requirements of the trustees, and other provisions associated to the trust. It may also state the compensation that the trustees will be receiving, if there are any.
A Declaration of a trust is an act in which a statement is made by a person who owns a piece of property (title holder). He declares that the property he has a title on is only being held for the benefit of another person. The declared property is then put in a trust which states the person who benefits from the property with a trustee overseeing the asset. In this case, the assets are stocks. The declaration states who the trust benefits, it states the person who has the power to amend or revoke the trust (in the case that it can be amended), the person serving as a trustee to the said trust, the abilities that the trustee possesses, and all the information regarding what happens in the event of the beneficiary wanting to receive distributions on the assets stated in the trust: stocks.
Trust Declaration, Stocks
Trust Declaration, Stocks
This Trust Declaration made as of ____________ (Date), by and between ___________ (“Trustee”) and ________________________ (“Beneficiary”).
Whereas the Trustee is the registered owner of ___________ shares (“Shares”) of the corporation (“Corporation”); and the Shares are to be held by the Trustee as trustee and nominee for the Beneficiary;
Therefore this Declaration of Trust witnesses as follows:
I. The Trustee hereby declares that he or she holds the Shares and all dividends and interest accrued or to be accrued upon the same upon trust for the Beneficiary and agrees to transfer the Shares as directed by the Beneficiary or otherwise deal with the Shares and the dividends and interest payable in respect of the same in such manner as the Beneficiary shall from time to time direct.
2. The Trustee covenants and agrees that he or she shall at all times, exercise all voting rights in connection with the Shares and otherwise deal with the Shares as nominee for the Beneficiary only and in accordance with the instructions of the Beneficiary.
3. The Trustee shall enter into, execute and deliver as nominee for the Beneficiary only, all such documents, instruments and other agreements as may from time to time be requested by the Beneficiary in connection with the Shares.
4. The Trustee shall, at the request and expense of the Beneficiary, account to the Beneficiary for all sums received with respect to the Shares.
5. The Trustee shall promptly transmit to the Beneficiary all notices, claims, demands or other communications which the Trustee receives relating to the Shares, including notices of shareholder meetings.
6. The Beneficiary hereby releases the Trustee from any and all liability that the Trustee may incur in respect of any action taken by the Trustee either pursuant to the authorization or direction of the Beneficiary or pursuant to the terms of this Declaration of Trust. The Beneficiary shall indemnify and hold the Trustee harmless from all liabilities of any kind and character that may arise out of any act or omission by the Trustee pursuant to the terms of this Declaration of Trust.
7. This Declaration of Trust shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, successors and assigns.
8. Notices.
Any notice required by this Agreement or given in connection with it, shall be in writing and shall be given to the appropriate party by personal delivery or a recognized over night delivery service such as FedEx.
If to the Trustee: _____________________________________________________.
If to the Beneficiary: ___________________________________________________.
9. No Waiver.
The waiver or failure of either party to exercise in any respect any right provided in this agreement shall not be deemed a waiver of any other right or remedy to which the party may be entitled.
10. Entirety of Agreement.
The terms and conditions set forth herein constitute the entire agreement between the parties and supersede any communications or previous agreements with respect to the subject matter of this Agreement. There are no written or oral understandings directly or indirectly related to this Agreement that are not set forth herein. No change can be made to this Agreement other than in writing and signed by both parties.
11. Governing Law.
This Agreement shall be construed and enforced according to the laws of the State of ____________________ and any dispute under this Agreement must be brought in this venue and no other.
12. Headings in this Agreement
The headings in this Agreement are for convenience only, confirm no rights or obligations in either party, and do not alter any terms of this Agreement.
13. Severability.
If any term of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, then this Agreement, including all of the remaining terms, will remain in full force and effect as if such invalid or unenforceable term had never been included.
In Witness whereof, the parties have executed this Agreement as of the date first written above.
_________________________ _______________________
Trustee Beneficiary_________________________ _______________________
Witness One Witness Two, Preferably a
Notary
_________________________
Witness Three
_________________
Date
Trust Declaration, Stocks
Review ListThe review list is provided to inform you about the document in question and assist you in its preparation. Trust Declarations give you protection from the attachment of assets held personally in your name. They are useful both for this legal purpose and the financial one that it makes it all the tougher for an opposing attorney to pierce the trust veil, so to speak, if that is possible. Therefore, an opposing attorney is more apt to stop pursuit of you if your assets are held in trust and therefore harder, if not impossible, to attach with a judgment. Hence comes the term “Judgment Proof.” Sweet music to the ears of those of us who are not lawyers.
You should also obtain a resignation of trustee document, provided in the trust area as well, and have it signed should you have a falling out with your trustee at a later date. An ounce of prevention here can save the proverbial pound of cure. More than a few people, including myself, have been saved by this cautionary move. As the famous Mr. Dooley once said, “Trust everyone, but cut the cards.” Amen.
1. Make sure you have two witnesses and a third to be absolutely safe in the trust area. You should have the agreement notarized, to be on the safe side.
2. Make multiple copies and keep one with the specific transaction, another in your general financial agreements, and a third in your safe.
Frequently Asked Questions
What is a trust declaration for stocks?
A trust declaration for stocks is a legal document in which a trustee declares that they hold shares of a corporation as trustee and nominee for a beneficiary. The trustee agrees to manage the shares and any dividends or interest according to the beneficiary's directions. This arrangement separates legal ownership from beneficial ownership.
Who are the parties involved in a trust declaration for stocks?
The parties are the trustee, who is the registered owner of the shares, and the beneficiary, for whom the shares are held. The trustee acts as nominee and must follow the beneficiary's instructions regarding the shares. The corporation whose shares are held is also referenced but is not a party to the trust declaration.
What are the trustee's duties under a trust declaration for stocks?
The trustee must hold the shares and any accrued dividends or interest in trust for the beneficiary. They must transfer the shares or deal with them and the dividends as the beneficiary directs. Additionally, the trustee must exercise all voting rights and otherwise act as nominee only in accordance with the beneficiary's instructions.
How does the trustee exercise voting rights for the shares?
The trustee covenants to exercise all voting rights connected to the shares at all times as nominee for the beneficiary only. This means the trustee must vote in accordance with the beneficiary's instructions. The trustee cannot vote independently or in their own interest.
What happens to dividends and interest from the shares?
The trustee holds all dividends and interest accrued or to be accrued on the shares upon trust for the beneficiary. The trustee must deal with these payments as the beneficiary directs. The beneficiary is entitled to the economic benefits of the shares.
Can the beneficiary direct the trustee to transfer the shares?
Yes, the trustee agrees to transfer the shares as directed by the beneficiary. The trustee must also otherwise deal with the shares and any dividends or interest in the manner the beneficiary specifies from time to time. This ensures the beneficiary retains control over the shares.
What documents must the trustee execute as nominee?
The trustee shall enter into, execute, and deliver all such documents and instruments as nominee for the beneficiary only. This is done in accordance with the beneficiary's instructions. The trustee acts solely on the beneficiary's behalf in these matters.
Is the trustee the registered owner of the shares?
Yes, the trust declaration states that the trustee is the registered owner of the shares of the corporation. However, the shares are held by the trustee as trustee and nominee for the beneficiary. This means the trustee holds legal title while the beneficiary holds beneficial ownership.
What is the purpose of a trust declaration for stocks?
The purpose is to formally establish that the trustee holds the shares and related dividends and interest in trust for the beneficiary. It outlines the trustee's obligations to act as nominee and follow the beneficiary's directions. This provides a clear legal framework for the nominee relationship.
How does the trustee deal with the shares on an ongoing basis?
The trustee must at all times deal with the shares as nominee for the beneficiary only and in accordance with the beneficiary's instructions. This includes exercising voting rights and handling any dividends or interest. The trustee has no discretion to act contrary to the beneficiary's directions.
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