The only persons in whom ignorance of the law is not punished. -- Jeremy Bentham
Note: The trust is a "grantor trust" for income tax purposes, with all of the trust's income taxable to Bill and Hill Clinton. The trust itself isn't a taxable entity -- contributions are viewed as if they are gifts made directly to the Clintons for payment of their legal expenses for Federal income and gift tax purposes -- and is structured so that donors' gifts will be "gifts of a present interest" and will thereby qualify for the $10,000 per donee per year gift tax exclusion. For this reason, the structure of the trust provides that unused principal of the trust (if any) will be paid to the Clintons when the trust terminates. However, Bill and Hill have said they will donate this money to charity or to the Federal government, without claiming an additional income tax deduction.
PRESIDENTIAL LEGAL EXPENSE TRUST
THIS INDENTURE, made the 28th day of June, l994 between WILLIAM JEFFERSON CLINTON and HILLARY RODHAM CLINTON, both of the City of Washington, in the District of Columbia, and (herein called the "Grantors"), and JOHN BRADEMAS, MICHAEL H. CARDOZO, THEODORE M. HESBURGH, BARBARA JORDAN, NICHOLAS de B. KATZENBACH, RONALD OLSON, ELLIOT RICHARDSON, MICHAEL SOVERN, and JOHN WHITEHEAD (herein called the "Trustees").
WITNESSETH: That the Grantors hereby transfer and deliver unto the Trustees the property listed in Annex A hereto, the receipt of which is hereby acknowledged by the Trustees, to have and to hold unto the Trustees, their successors and assigns, in trust nevertheless, as follows:
FIRST: The Trustees are directed to hold, manage, invest and reinvest the same and any other property received from other natural persons on behalf of the Grantors under the terms of Article SECOND hereof. The Trusts shall collect the income thereof, and, until the termination of the trust as hereinafter provided, shall pay to the Grantors not less often than annually such amounts equal to the income taxes imposed upon the Grantors by reason of the inclusion of the income of the trust in the Grantors' returns, and shall accumulate and add to the principal of the trust the balance of the net income not so paid. The Trustees may rely upon the Grantors accountant for a determination of the amount of such taxes.
During the continuance of the trust, the Trustees shall from time to time pay to or for the benefit of either one or both of the Grantors from the principal of the trust (including the whole thereof), directly or by reimbursement of the Grantors, the personal legal fees and related expenses incurred after January 20, 1993 on behalf of either or both of the Grantors in the defense or conduct of any legal proceedings involving the Grantors (whether incurred before or after the date hereof).
Upon the termination of all legal proceedings referenced above to which
and one of the Grantors
SECOND: The trust estate hereunder may be increased from time to time by the addition of such property as may be added to it by the Grantors or by any other natural person who shall be a citizen of the United States (other than a Federal government employee) who may make a contribution directly to the Trustee on behalf of the Grantors; provided, however, that the Trustees shall not be empowered to accept a gift or gifts of property with an aggregate value of more than $1,000 from any eligible individual other than the Grantors in any calendar year.
The Trustees shall notify the Grantors quarterly in writing as to the receipt of property from eligible persons other than the Grantors, and shall provide the Grantors with the names and addresses of the persons making the contributions. Within thirty days of receipt of notice of any such contribution, the Grantors may disclaim any such contribution by written notice delivered to the Trustees. Promptly upon receipt of any such notice of disclaimer by the Grantors, the Trustees shall return such contribution to the person having made it. The right to disclaim contributions hereunder may be waived by the Grantors in writing to the Trustees with respect to specific contributions, and shall thereby be terminated.
The Trustees shall not less than semi-annually make available to the general public the identity of all persons who shall have contributed to the trust since the last such disclosure was made by the Trustees.
THIRD: Without limitation of the powers conferred upon the Trustees by statute or general rules of law, the Trustees are specifically authorized and empowered with respect to any property held by them:
(1) To employ such agents, attorneys, accountants, investment advisers, custodians, consultants and other persons as the Trustees may deem advisable in the administration of the trust, and to pay them such compensation as the Trustees may deem proper, notwithstanding that a Trustee may be affiliated with a firm which is retained by the Trustees;
(2) To raise funds and solicit donations to the trust from the general public to carry out the purposes of the trust, and to pay the reasonable expenses of any such fund raising campaigns, including without limitation the cost of direct mail campaigns;
(3) In general, to exercise all powers in the management of the trust which any individual could exercise in the management of similar property owned in his own right, upon such terms and conditions as the Trustees may deem best, and to execute and deliver all instruments and to do all acts which the Trustees may deem necessary or advisable to carry out the purposes of this Indenture.
The Trustees are specifically limited with respect to any property held by them to invest only in one or more of the following: (1) obligations of the United states; (2) bank deposits maintained at a depository institution or trust company organized under the laws of the United States or any one of the states thereof or the District of Columbia; and (3) mutual funds investing solely in short-term obligations (i.e., money market funds).
FOURTH: The Trustees are empowered to pay any taxes which may become payable from time to time with respect to the trust hereunder, or any transfer thereof or transaction affecting the same, under the laws of any jurisdiction which the Trustees are advised may validly tax the same.
FIFTH: The Trustees shall have no individual or collective liability for the expenses incurred by the Grantors or the trust. The Trustees shall be indemnified for and held harmless from and against any and all expenses, claims, demands, costs or charges, including but not limited to, costs and fees related to any legal action, incurred as a result of any matter, inaction or action, other than for fraud or conversion, pursuant to the terms of, or as a consequence of, this Indenture. The sole source of funds to be used for indemnification of the Trustees shall be the property of the trust and from such insurance policies, if any, as may be obtained by the Trustees on behalf of the trust.
SIXTH: (1) In the decisions and acts of the Trustees, the decision of a majority of the Trustees shall prevail. Any Trustee not participating in the action or concurring in the decision of a majority of the Trustees shall not be responsible or liable for any action taken or omitted to be taken by such majority. Any person dealing with a majority of the Trustees may rely upon the act of such majority and shall be under no obligation whatever to require the other Trustees then acting to join in such act.
(2) The Trustees may from time to time in their discretion delegate to such agents as they shall appoint or employ such ministerial acts related to the administration of the trust as they may see fit.
SEVENTH: (1) Any Trustee at any time acting hereunder may resign and be discharged from the trust hereunder by giving written notice of such resignation, duly acknowledged, to the Grantors.
(2) The Grantors shall have authority to remove any Trustee at any time acting hereunder, and to designate an individual or bank or trust company to serve as the successor to any Trustee who for any reason, including removal by the Grantors, shall cease to serve. The Grantors shall also have authority to appoint additional Trustees to serve hereunder, whether individuals, banks or trust companies. Any such removal or appointment shall be by written instrument, duly acknowledged, and may be revoked at any time before its taking effect by written instrument, duly acknowledged.
Upon qualifying as hereinafter provided, the successor or successors so designated shall become a Trustee or Trustees hereunder as though originally named herein.
(3) In case any Trustee at any time acting hereunder for any reason shall cease so to act, the retiring Trustee or her or his personal representative, as the case may be, upon the effective date of his, her or its resignation or upon her or his death shall turn over the assets of the trust estate held hereunder to the successor Trustee, and shall execute and deliver all instruments which may be necessary to best title in such successor Trustee.
(4) Upon a preceding Trustee's ceasing to act hereunder, any successor Trustee named herein or designated as hereinabove provided and then entitled to act hereunder shall qualify by delivering or mailing written acceptance of the trust, duly acknowledged, to the Grantors.
(5) Except as otherwise expressly provided herein, all estates, powers, trusts, duties and discretion herein created or conferred shall extend to any Trustee who at any time may be acting hereunder, whether or not named herein.
(6) No bond or other security shall be required of any Trustee hereunder in any jurisdiction.
EIGHTH: Any Trustee acting hereunder may render an account at any time of his, her or its proceedings to the Grantors or to the survivor, or if neither of them shall then be living, to the personal representative of the last to die of the Grantors. If approved in writing by the person to whom such account shall have been rendered as above provided, such account shall be final, binding and conclusive upon all persons who then or thereafter may have any interest in such trust estate. The Trustee also at any time may render a judicial account of his, her or its proceedings.
NINTH: The Trustees shall serve without compensation. The Trustees shall be entitled to reimbursement for any expenses that they may incur in the administration of the trust.
TENTH: The Grantors and a majority of the Trustees may, by written instrument, duly acknowledged, amend this Indenture from time to time in any respect; Provided, however, that the duties of the Trustees shall not be materially increased by any amendment hereto without the written agreement of all of the Trustees then acting.
ELEVENTH: This Indenture takes effect upon acceptance by the Trustees and in all respects shall be construed and regulated by the laws of the District of Columbia.
IN WITNESS WHEREOF, the parties hereto have duly executed this Indenture under seal as of the day and year first above written.
/s/WILLIAM JEFFERSON CLINTON, Grantor
/s/HILLARY RODHAM CLINTON, Grantor
JOHN BRADEMAS, Trustee
/s/MICHAEL H. CARDOZO, Trustee
THEODORE M. HESBURGH, Trustee
BARBARA JORDAN, Trustee
NICHOLAS de B. KATZENBACH, Trustee
RONALD OLSON, Trustee
ELLIOT RICHARDSON, Trustee
MICHAEL SOVERN, Trustee
JOHN WHITEHEAD, Trustee
ANNEX A$1,000 from William Jefferson Clinton
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