Professional Template – Arkansas Irrevocable Trust Agreement
IMPORTANT NOTICE: This template is provided for informational purposes only and does not constitute legal advice. Use only under the guidance of a qualified Arkansas-licensed attorney who can tailor the document to specific facts, goals, and current law. No attorney–client relationship is formed by your use of this material.
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IRREVOCABLE TRUST AGREEMENT
(Arkansas – Uniform Trust Code Jurisdiction)
Table of Contents
- Document Header
- Definitions
- Creation of Trust; Transfer of Property
- Irrevocability & Spendthrift Provision
- Identification of Beneficiaries
- Trustee Powers & Duties
- Tax Matters
- Beneficiary Rights & Information
- Distributions
- Investment & Management Standards
- Indemnification; Limitation of Liability
- Default & Remedies
- Risk Allocation
- Dispute Resolution
- General Provisions
- Execution & Acknowledgment
1. DOCUMENT HEADER
1.1 Title
Irrevocable Trust Agreement (the “Agreement”)
1.2 Parties
a. “Settlor”: [SETTLOR LEGAL NAME], an individual residing at [ADDRESS].
b. “Trustee”: [TRUSTEE LEGAL NAME], whose address for notice is [ADDRESS].
• Successor Trustee(s): [NAME] ⇒ [NAME] (in order of succession).
c. “Trust” name: THE [SETTLOR SURNAME] IRREVOCABLE TRUST dated [EFFECTIVE DATE].
1.3 Recitals
WHEREAS, Settlor desires to create an irrevocable trust under Arkansas law for the benefit of the Beneficiaries identified herein and to transfer to the Trust the property described in Schedule A; and
WHEREAS, Trustee is willing to accept the trust and administer it pursuant to the terms set forth below;
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Settlor and Trustee agree as follows:
1.4 Governing Law & Jurisdiction
This Trust shall be governed by and construed in accordance with the Arkansas Uniform Trust Code, Ark. Code Ann. §§ 28-73-101 et seq. (“AR UTC”), and other applicable Arkansas law. Exclusive venue for any judicial proceeding concerning the Trust shall lie in the probate division of the circuit court of [COUNTY], Arkansas.
[// GUIDANCE: Insert county of situs; Arkansas probate courts have concurrent jurisdiction under AR UTC § 203.]
2. DEFINITIONS
“Accounting Period” – Each calendar year ending December 31, unless Trustee selects a different period consistent with federal tax law.
“Beneficiaries” – Collectively, the persons identified in Section 5.
“Code” – The Internal Revenue Code of 1986, as amended.
“Dispositive Event” – Any event triggering mandatory distributions under Section 9.4.
“Independent Trustee” – A Trustee who is not a “related or subordinate party” within the meaning of Code § 672(c).
“Notice” – Written notice delivered per Section 15.6.
“Trust Estate” – All property, tangible or intangible, now or hereafter transferred to or acquired by the Trust, including proceeds and income.
[// GUIDANCE: Add additional defined terms as needed for sophisticated structures.]
3. CREATION OF TRUST; TRANSFER OF PROPERTY
3.1 Creation. Settlor hereby establishes the Trust effective [EFFECTIVE DATE] (the “Effective Date”).
3.2 Funding. Concurrently, Settlor transfers, assigns, and delivers to Trustee the property described in Schedule A, to be held in trust upon the terms herein. Additional property may be contributed only with Trustee’s written consent.
3.3 Acceptance. Trustee accepts the Trust and agrees to hold and administer the Trust Estate for the benefit of the Beneficiaries pursuant to this Agreement.
4. IRREVOCABILITY & SPENDTHRIFT PROVISION
4.1 Irrevocability. This Trust is irrevocable. Settlor expressly waives all rights and powers, whether alone or in conjunction with others, to alter, amend, revoke, or terminate the Trust, except as permitted by AR UTC § 411(a) (judicial modification/termination upon consent of all beneficiaries and the court).
4.2 Spendthrift Clause. The interests of Beneficiaries are held subject to a spendthrift trust as defined in AR UTC § 501. Accordingly, no Beneficiary may voluntarily or involuntarily transfer, assign, anticipate, or encumber any interest in the Trust Estate, nor shall such interests be subject to the claims of creditors until distributed.
5. IDENTIFICATION OF BENEFICIARIES
5.1 Primary Beneficiaries.
a. [NAME] (DOB [DATE]) – relationship to Settlor: [RELATION].
b. [NAME] – etc.
5.2 Contingent Beneficiaries. If no Primary Beneficiary survives the Settlor, the Trust Estate shall pass to [CONTINGENT BENEFICIARIES / CHARITY] in equal shares, per stirpes, unless otherwise provided herein.
5.3 Qualified Beneficiary Definition. For purposes of AR UTC notice requirements, “qualified beneficiaries” are those described in § 103(14) as of the relevant determination date.
6. TRUSTEE POWERS & DUTIES
6.1 Standard of Care. Trustee shall administer the Trust in good faith, in accordance with its terms and Arkansas law, and with the prudence required by AR UTC § 804 and the Prudent Investor Rule, AR UTC § 901.
6.2 Enumerated Powers. Subject to fiduciary duties, Trustee may exercise all powers granted under AR UTC § 815, including, without limitation:
a. Invest and reinvest Trust assets;
b. Sell, exchange, or lease property;
c. Borrow and pledge assets;
d. Employ professionals and delegate authority per AR UTC § 807;
e. Make tax elections and allocations;
f. Maintain or defend litigation;
g. Distribute income or principal as provided in Section 9.
6.3 Duties.
a. Loyalty, impartiality, prudent administration.
b. Record-keeping and proper segregation of assets.
c. Annual accountings per Section 8.2.
d. Tax reporting (see Section 7).
6.4 Removal & Resignation.
a. Removal by unanimous written consent of all qualified beneficiaries with court approval (§ 706).
b. Resignation upon 30-days’ written Notice and court approval unless waived by all qualified beneficiaries (§ 705).
c. Successor Trustee acceptance must be in writing.
7. TAX MATTERS
7.1 Grantor vs. Non-Grantor Status. [SELECT one]
• Grantor Trust under Code §§ 671-679 (income taxed to Settlor).
• Non-Grantor Trust (separate taxpayer).
7.2 Gift & Estate Tax. The initial transfer is intended as a completed gift for federal gift-tax purposes. Settlor acknowledges potential utilization of applicable exclusion amounts. Arkansas currently imposes no state-level estate or inheritance tax.
7.3 Tax Identification. Trustee shall obtain an EIN for the Trust unless treated as a grantor trust disregarded for income-tax purposes.
7.4 Tax Elections. Trustee may make elections under Code §§ 643(e), 645, 754, or comparable provisions to minimize tax liability, in its sole discretion after consulting tax counsel.
[// GUIDANCE: Insert accountant’s name if pre-arranged; specify GST exemption allocation where relevant.]
8. BENEFICIARY RIGHTS & INFORMATION
8.1 Mandatory Notices. Trustee shall provide written Notice of Trust existence, Trustee identity, and right to request a copy of the Trust instrument to each qualified beneficiary within 60 days after (i) acceptance of trusteeship, and (ii) Trust becoming irrevocable, as required by AR UTC § 813(c).
8.2 Accountings. Trustee shall deliver an annual accounting to each qualified beneficiary within 60 days after the end of each Accounting Period, containing the information specified in AR UTC § 813(a).
8.3 Right to Petition. Beneficiaries may petition the court for release of information, removal of Trustee, or other relief under AR UTC §§ 201, 813, 1001.
9. DISTRIBUTIONS
9.1 Income Distributions. Trustee shall distribute net income at least annually to the Primary Beneficiaries, per stirpes, unless Trustee, in a fiduciary capacity, determines that accumulation better serves the Beneficiaries’ interests.
9.2 Principal Distributions (Health–Education–Maintenance–Support). Trustee may, in its sole discretion, distribute principal for any Beneficiary’s health, education (including postgraduate), maintenance, or support (“HEMS Standard”).
9.3 Discretionary Supplement. Trustee may consider a Beneficiary’s resources outside the Trust but is not obligated to equalize benefits among Beneficiaries.
9.4 Mandatory Termination Distributions. Upon the earlier of (i) the youngest Primary Beneficiary attaining age [AGE] or (ii) [DATE/EVENT], Trustee shall distribute the remaining Trust Estate outright and free of trust to the then-living Beneficiaries per stirpes, and the Trust shall terminate.
10. INVESTMENT & MANAGEMENT STANDARDS
10.1 Diversification. Trustee shall diversify investments unless it reasonably determines that, because of special circumstances, diversification is not in the best interests of the Beneficiaries (AR UTC § 902).
10.2 Concentrated Positions. Trustee is authorized to retain any asset contributed by Settlor, including closely-held business interests, even if such retention results in under-diversification.
10.3 Delegation. Trustee may delegate investment functions to a qualified investment agent consistent with AR UTC § 807.
10.4 Environmental Matters. Trustee may investigate, remediate, or abandon property with environmental liability concerns without personal liability.
11. INDEMNIFICATION; LIMITATION OF LIABILITY
11.1 Trustee Indemnity. The Trust Estate shall indemnify and hold Trustee harmless from any claim, liability, or expense (including reasonable attorneys’ fees) incurred in the good-faith administration of the Trust, except for acts or omissions arising from Trustee’s bad faith, intentional wrongdoing, or reckless indifference.
11.2 Liability Cap. Any liability of Trustee to the Trust or its Beneficiaries shall be limited exclusively to the Trust Estate; no personal assets of Trustee shall be subject to satisfaction of such liability, except to the extent arising from bad faith, intentional misconduct, or reckless indifference.
11.3 Exculpation. To the maximum extent permitted by AR UTC § 1008, no Trustee shall be liable for any loss or depreciation in value of Trust assets absent a breach of fiduciary duty.
12. DEFAULT & REMEDIES
12.1 Events of Default.
a. Material breach of fiduciary duty.
b. Self-dealing not permitted under Section 6.2.
c. Failure to provide required notices or accountings after written demand and a 30-day cure period.
12.2 Remedies.
a. Removal and replacement of Trustee.
b. Surcharge against Trustee’s interest in the Trust Estate (if any).
c. Injunctive relief compelling performance or preventing breach.
d. Attorney’s fees and costs recoverable from Trustee personally upon judicial finding of bad faith.
13. RISK ALLOCATION
13.1 Insurance. Trustee may purchase liability insurance covering potential claims arising from administration of the Trust and pay premiums from the Trust Estate.
13.2 Force Majeure. Trustee shall not be liable for failure to comply with obligations when prevented by acts of God, war, terrorism, pandemic, governmental order, or similar events beyond Trustee’s reasonable control.
14. DISPUTE RESOLUTION
14.1 Governing Law. Arkansas law governs all issues of validity, construction, and administration.
14.2 Forum Selection. Exclusive jurisdiction is vested in the [COUNTY] County Circuit Court, Probate Division.
14.3 Optional Arbitration.
a. Election. Any dispute may, upon unanimous written election of all parties to the dispute, be resolved by binding arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules.
b. Situs & Rules. Little Rock, Arkansas; three arbitrators, each a licensed Arkansas attorney with ≥10 years’ trust litigation experience.
c. Injunctive Relief. The court specified in Section 14.2 retains jurisdiction to issue temporary, preliminary, or permanent equitable relief to enforce Trust provisions.
14.4 Jury Waiver. Pursuant to Arkansas Constitution Article 2 § 7, matters of probate are tried without a jury; the parties waive any jury trial to the extent one might otherwise be available.
15. GENERAL PROVISIONS
15.1 Amendment & Waiver. Except as provided in Section 4.1, this Trust may be amended or modified only by order of a court of competent jurisdiction or as otherwise permitted by AR UTC § 411.
15.2 Assignment. No party may assign rights or delegate duties under this Agreement except as expressly provided herein.
15.3 Successors & Assigns. This Agreement binds and benefits the parties and their respective heirs, executors, administrators, successors, and permitted assigns.
15.4 Severability. If any provision is invalid or unenforceable, the remaining provisions shall remain in full force, and the court shall reform the invalid provision to the minimum extent required to effectuate the Settlor’s intent.
15.5 Entire Agreement. This instrument constitutes the entire agreement of the parties regarding the subject matter and supersedes all prior discussions or writings.
15.6 Notices. All Notices shall be in writing and deemed given upon (i) personal delivery, (ii) certified U.S. mail, return receipt requested, or (iii) nationally recognized overnight courier, addressed to the party’s address stated in Section 1.2 or as later designated by Notice.
15.7 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each constituting an original, and delivered by facsimile, PDF, or electronic signature with the same force and effect as an original wet-ink signature.
16. EXECUTION & ACKNOWLEDGMENT
IN WITNESS WHEREOF, the Settlor and Trustee have executed this Irrevocable Trust Agreement as of the Effective Date.
| Settlor | Date |
|---|---|
| _______ | ____ |
| Trustee | Date |
|---|---|
| _______ | ____ |
[If Co-Trustees, duplicate signature blocks.]
STATE OF ARKANSAS )
COUNTY OF [__] )
On this _ day of _, 20__, before me, the undersigned Notary Public, personally appeared ________, proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to this instrument, and acknowledged that he/she/they executed the same for the purposes stated.
Notary Public
My Commission Expires: __
Commission No.: _____
Schedule A – Initial Trust Property
- Cash: $[AMOUNT] deposited to [BANK] Account #[NUMBER].
- [DESCRIPTION OF STOCK/LLC INTERESTS].
- [LIFE INSURANCE POLICY #, INSURED, CARRIER].
[// GUIDANCE: Attach deed or assignment for real property or closely-held interests; file insurance beneficiary change forms naming Trustee.]
END OF TEMPLATE