Clause Library

Purpose. This appendix collects model provisions for the instruments discussed in the treatise: trust deeds, protector provisions, operating agreements and engagement terms. Each provision is followed by drafting notes that state its purpose, the authority on which it depends, its limits, and the paragraphs of the treatise where the point is developed. The provisions are original to the treatise. They are written to illustrate the drafting points in the text and are not taken from the forms of any firm or trust company.

What a clause can and cannot do. A clause can state the settlor's intentions, allocate powers, set conditions on their exercise and give the trustee a basis in the instrument for refusing a demand. It cannot change the timing of a transfer, cure insolvency, or alter the law a U.S. court will apply to a resident settlor. Courts have held settlors in contempt where the settlor wrote the duress clause and then relied on it (see supra chs. 39, 55). The drafting notes therefore identify, for each clause, the creditor class against which it adds protection and the circumstances in which it can be turned against the settlor.

Governing law. Every provision must be conformed to the law that will govern the instrument. A provision valid under the International Trusts Act 1984 of the Cook Islands may be ineffective or harmful under a domestic statute, and the reverse. The drafting notes state the principal statutory hooks: for Delaware, the list of permitted retained interests and powers in 12 Del. C. § 3570(11)(b) (see supra ch. 27); for Wyoming, Wyo. Stat. Ann. § 4-10-510 (see supra ch. 26); for Nevada, Nev. Rev. Stat. § 166.040 (see supra ch. 28); and for the offshore jurisdictions, the provisions examined in chapters 22 to 24.

Conventions. Bracketed words are choices or blanks. "Trustee" means the trustee or trustees for the time being. "Protector" means the protector for the time being, if any. "Settlor" includes any person who adds property to the trust. "Event of Duress" is defined in ¶ E30.01. Section numbers in the clauses are illustrative.

The clauses.