IRREVOCABLE TRUST AGREEMENT

(Alabama Law Governed)

TABLE OF CONTENTS

I. Document Header
II. Definitions
III. Operative Provisions
IV. Representations & Warranties
V. Covenants & Restrictions
VI. Default & Remedies
VII. Risk Allocation
VIII. Dispute Resolution
IX. General Provisions
X. Execution Block

I. DOCUMENT HEADER

1.1 Parties.
This Irrevocable Trust Agreement (the “Agreement”) is made and entered into as of [EFFECTIVE DATE] (the “Effective Date”) by and among:

(a) [SETTLOR NAME], an individual residing at [ADDRESS] (“Settlor”);
(b) [INITIAL TRUSTEE NAME], whose address is [ADDRESS] (“Trustee”); and
(c) the persons identified in Schedule 1 attached hereto (each, a “Beneficiary,” and collectively, the “Beneficiaries”).

1.2 Recitals.
WHEREAS, Settlor desires to establish an irrevocable trust pursuant to the Alabama Uniform Trust Code, Ala. Code §§ 19-3B-101 et seq., for the benefit of the Beneficiaries;
WHEREAS, Settlor is transferring certain property described in Schedule 2 (the “Trust Property”) to Trustee in consideration of Trustee’s acceptance of the trusteeship created hereby; and
WHEREAS, Trustee is willing to hold, administer, and distribute the Trust Property pursuant to the terms of this Agreement and applicable law.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein, the parties agree as follows:

[// GUIDANCE: Add additional recitals if trust is funded by life insurance, business interests, or other special assets.]

II. DEFINITIONS

For purposes of this Agreement, the following terms have the meanings set forth below. Capitalized terms used but not defined have the meanings assigned by the Alabama Uniform Trust Code (the “AL UTC”).

“Accounting Period” – The calendar year unless Trustee elects a different fiscal year.

“Applicable Law” – The internal laws of the State of Alabama, including the AL UTC and the Alabama Principal and Income Act.

“Arbitration Election Notice” – A written notice by any Interested Party electing arbitration under Section VIII.3.

“Beneficiary” – Has the meaning set forth in Section 1.1 and includes any successor, minor, or incapacitated beneficiary acting through a legal representative.

“Distribution Standard” – The health, education, maintenance, and support (“HEMS”) standard, interpreted in Trustee’s sole and absolute discretion, unless expressly modified herein.

“Interested Party” – Settlor (solely for limited powers reserved herein), Trustee, any Beneficiary, and any court-appointed guardian ad litem for a Beneficiary.

“Trust” – The irrevocable trust created by this Agreement, known as “[TRUST NAME]” (the “Trust”).

“Trust Estate” – All Trust Property, together with all accretions, substitutions, and reinvestments.

“Trustee” – The person or entity acting as trustee hereunder from time to time.

III. OPERATIVE PROVISIONS

3.1 Creation and Funding.
(a) Settlor hereby irrevocably transfers, assigns, and delivers to Trustee the Trust Property to hold in trust.
(b) Additional contributions may be made by Settlor or any other person, subject to Trustee’s acceptance.

3.2 Irrevocability.
(a) Except as expressly provided in Section 3.3, this Trust is irrevocable. Settlor expressly waives all rights to alter, amend, revoke, or terminate the Trust. Ala. Code § 19-3B-602.
(b) Any attempted revocation or modification, other than as permitted herein, shall be void.

3.3 Limited Powers Reserved to Settlor.
Notwithstanding Section 3.2, Settlor retains only the following powers, none of which shall cause the Trust to be treated as revocable:
(i) The power to replace Trustee with an independent trustee;
(ii) A non-fiduciary power to direct the distribution of up to 5% or $5,000 of the Trust’s principal annually among the Beneficiaries (the “5×5 Power”);
(iii) The power to consent to Trust decanting pursuant to Ala. Code § 19-3B-816(23).

[// GUIDANCE: The above powers are drafted to avoid grantor-trust status under IRC §§ 671-679; consult tax counsel before alteration.]

3.4 Dispositive Provisions.
(a) During Settlor’s Lifetime. Trustee shall distribute so much of the net income and/or principal as Trustee deems necessary or advisable for the Beneficiaries’ HEMS, considering other resources known to Trustee.
(b) Upon Settlor’s Death. The Trust Estate shall be held, administered, and distributed in separate shares for the Beneficiaries as set forth in Schedule 3.
(c) Spendthrift. Each Beneficiary’s interest is subject to a spendthrift restriction under Ala. Code § 19-3B-502.

3.5 Trustee Powers.
Trustee shall have all powers granted under Ala. Code § 19-3B-815 and Ala. Code § 19-3B-816, including, without limitation, the powers to:
1. Invest and reinvest Trust assets pursuant to the Alabama Prudent Investor Act;
2. Lease, mortgage, or sell Trust real property;
3. Allocate receipts and disbursements between income and principal;
4. Employ professionals and delegate investment authority; and
5. Combine Trust assets with other assets for investment purposes.

3.6 Trustee Duties & Standards.
Trustee shall administer the Trust in good faith, in accordance with its terms and Applicable Law, and solely in the interests of the Beneficiaries. Ala. Code § 19-3B-801.

3.7 Accounting & Information Rights.
(a) Trustee shall provide an annual written accounting to each Qualified Beneficiary per Ala. Code § 19-3B-813.
(b) Waiver. Any Beneficiary may waive the right to an accounting by written instrument delivered to Trustee.

3.8 Tax Matters.
(a) Intention. The Trust is intended to be a non-grantor trust for federal income tax purposes.
(b) Tax Identification. Trustee shall obtain a taxpayer identification number for the Trust and shall cause the Trust to file all required tax returns.
(c) Taxes Paid from Trust Estate. Trustee may pay any tax attributable to the Trust Estate from the Trust Estate.

[// GUIDANCE: If the Trust will own life insurance, add “intentionally defective grantor trust” language as needed for estate-tax planning.]

IV. REPRESENTATIONS & WARRANTIES

4.1 Settlor Representations.
(a) Authority. Settlor has full legal capacity to create this Trust.
(b) Title. Settlor owns the Trust Property free of liens except as disclosed to Trustee.
(c) No Conflict. Execution of this Agreement does not violate any agreement binding on Settlor.

4.2 Trustee Representations.
(a) Authority. Trustee has full power and authority to act as trustee hereunder.
(b) Compliance. Trustee will administer the Trust in accordance with Applicable Law.

4.3 Survival.
All representations and warranties survive the execution of this Agreement and Trustee’s acceptance.

V. COVENANTS & RESTRICTIONS

5.1 Affirmative Covenants of Trustee.
(a) Prudence. Invest Trust assets with reasonable care, skill, and caution.
(b) Records. Maintain complete and accurate books and records.
(c) Tax Filings. Timely file all federal, state, and local tax returns for the Trust.

5.2 Negative Covenants of Trustee.
(a) Self-Dealing. Refrain from transactions that constitute self-dealing except as permitted under Ala. Code § 19-3B-802 and approved by an independent trustee.
(b) Borrowing. Not encumber Trust assets to secure Trustee’s personal obligations.

5.3 Notice & Cure.
If Trustee becomes aware of any breach of this Agreement, Trustee shall notify the Beneficiaries within 30 days and cure such breach within 60 days where reasonably practicable.

VI. DEFAULT & REMEDIES

6.1 Events of Default.
(a) Trustee’s willful misconduct, gross negligence, or material breach of fiduciary duty;
(b) Failure to provide required accountings within 90 days after written demand;
(c) Insolvency or incapacity of Trustee.

6.2 Remedies.
Upon an Event of Default, any Qualified Beneficiary may:
1. Petition the Probate Court of [COUNTY], Alabama, for removal and surcharge of Trustee;
2. Seek injunctive relief to compel compliance (see Section VIII.4);
3. Request appointment of a successor trustee pursuant to Section 6.3.

6.3 Successor Trustee Appointment.
(a) Designated Successor. [SUCCESSOR TRUSTEE NAME] is hereby designated as first successor trustee.
(b) Court Appointment. If no designated successor is willing and able, the Probate Court may appoint a successor trustee.

6.4 Attorneys’ Fees.
The Trust Estate shall bear reasonable attorneys’ fees and expenses incurred in enforcing this Agreement, except those attributable to Trustee’s breach, which shall be borne personally by Trustee.

VII. RISK ALLOCATION

7.1 Trustee Indemnification.
The Trust Estate shall indemnify and hold Trustee harmless from and against all claims, liabilities, and expenses, except to the extent arising from Trustee’s willful misconduct or gross negligence (“Excluded Acts”). Indemnification shall be limited solely to the Trust Estate (see Section 7.3).

7.2 Liability Limitation.
Except for Excluded Acts, Trustee’s liability shall not exceed the value of the Trust Estate. No personal liability shall attach to Trustee.

7.3 Liability Cap.
All claims against Trustee shall be satisfied solely out of the Trust assets; no Beneficiary shall seek recovery from Trustee’s personal assets.

7.4 Insurance.
Trustee may, at Trust expense, purchase fiduciary liability insurance providing coverage for acts or omissions in the performance of Trustee’s duties.

7.5 Force Majeure.
Trustee shall not be liable for failure to perform due to events beyond Trustee’s reasonable control, including but not limited to acts of God, war, terrorism, or changes in law rendering performance unlawful (“Force Majeure Event”). Upon occurrence, Trustee shall notify the Beneficiaries within 15 days.

VIII. DISPUTE RESOLUTION

8.1 Governing Law.
This Agreement and all disputes hereunder shall be governed by and construed in accordance with the internal laws of the State of Alabama.

8.2 Forum Selection.
Exclusive jurisdiction and venue for all judicial proceedings relating to the Trust shall lie in the Probate Court of [COUNTY], Alabama.

8.3 Optional Arbitration.
(a) Election. Any Interested Party may elect to submit any justiciable dispute to binding arbitration by delivering an Arbitration Election Notice.
(b) Rules. Arbitration shall be administered by the American Arbitration Association under its Commercial Arbitration Rules, sitting in [CITY], Alabama.
(c) Injunctive Relief. Section 8.4 survives any arbitration election.

[// GUIDANCE: Strike this clause entirely if arbitration is not desired.]

8.4 Injunctive Relief.
Notwithstanding any other provision, Trustee and Beneficiaries retain the right to seek temporary, preliminary, or permanent injunctive relief in the Probate Court to preserve Trust assets or enforce fiduciary duties.

8.5 Jury Waiver.
Consistent with probate practice in Alabama, the parties acknowledge that disputes concerning trust administration are customarily heard without a jury. This Agreement does not create or waive any right to a jury trial.

IX. GENERAL PROVISIONS

9.1 Amendments; Reformation.
This Agreement may not be amended except as provided in Section 3.3 or by court order under Ala. Code § 19-3B-411 (unanticipated circumstances) or § 19-3B-415 (inter vivos mistake).

9.2 Waiver.
No waiver of any provision shall constitute a continuing waiver unless expressly stated.

9.3 Assignment.
Beneficiaries may not assign, pledge, or encumber their interests, except as permitted under the spendthrift provision.

9.4 Successors & Assigns.
This Agreement is binding upon and inures to the benefit of the parties and their respective successors and assigns.

9.5 Severability.
If any provision is held invalid, the remainder shall be enforced to the fullest extent permitted by law.

9.6 Entire Agreement.
This instrument constitutes the entire agreement of the parties with respect to the Trust and supersedes all prior agreements or understandings.

9.7 Counterparts; Electronic Signatures.
This Agreement may be executed in counterparts, each of which shall be deemed an original. Signatures delivered electronically or by facsimile shall be deemed original signatures. Ala. Code § 8-1A-7.

X. EXECUTION BLOCK

IN WITNESS WHEREOF, the parties have executed this Irrevocable Trust Agreement as of the Effective Date.

ACKNOWLEDGMENT

State of Alabama )
County of [COUNTY])

On this _ day of _, 20__, before me, a Notary Public in and for said State, personally appeared [SETTLOR NAME] and [TRUSTEE NAME], known to me (or satisfactorily proven) to be the persons whose names are subscribed to the within instrument, and acknowledged that they executed the same for the purposes therein contained.

Seal

Notary Public
My Commission Expires: _____

[// GUIDANCE: Alabama does not require notarization for trust validity, but notarization facilitates recordation and evidentiary authenticity, especially where real property is involved.]

SCHEDULE 1 – BENEFICIARIES

[Insert table listing Beneficiaries, DOBs, and relationship to Settlor.]

SCHEDULE 2 – TRUST PROPERTY

[Detailed description of cash, securities, real estate, life insurance policies, etc.]

SCHEDULE 3 – POST-SETTLOR-DEATH DISTRIBUTION SCHEME

[Describe shares, ages for outright distributions, contingent provisions, remainder beneficiaries, charitable bequests, GST-tax considerations, etc.]

[// GUIDANCE: Prior to implementation, confirm (i) federal and Alabama transfer-tax implications, (ii) proper titling of assets to fund the Trust, (iii) beneficiary designations on life insurance/retirement accounts, and (iv) coordination with Settlor’s overall estate plan.]