IRREVOCABLE TRUST AGREEMENT

(Kentucky – Draft Template)

[// GUIDANCE: This template is prepared in compliance with the Kentucky Uniform Trust Code (UTC) and general federal tax principles but omits pinpoint statutory citations in accordance with the Citation Policy. Customize all bracketed text, attach asset schedules, and obtain specific tax, financial-planning, and legal advice before execution.]

TABLE OF CONTENTS

I. Document Header
II. Definitions
III. Creation of Trust & Funding
IV. Irrevocability; Modification & Termination
V. Dispositive Provisions
VI. Trustee Provisions
VII. Fiduciary Duties & Standards of Care
VIII. Representations & Warranties
IX. Covenants & Restrictions
X. Accounting, Information & Beneficiary Rights
XI. Default & Remedies
XII. Risk Allocation
XIII. Dispute Resolution
XIV. General Provisions
XV. Execution Block
Exhibit A – Schedule of Trust Assets
Exhibit B – Trustee Fee Schedule (Optional)

I. DOCUMENT HEADER

1.1 Title. IRREVOCABLE TRUST AGREEMENT (this “Agreement”).

1.2 Parties.
(a) Settlor/Grantor: [SETTLOR FULL LEGAL NAME], of [ADDRESS] (“Settlor”).
(b) Initial Trustee: [TRUSTEE FULL LEGAL NAME], of [ADDRESS] (“Trustee”).
(c) Beneficiaries: The persons identified in Section 2 (individually, a “Beneficiary,” collectively, the “Beneficiaries”).

1.3 Effective Date. This Agreement is made and entered into effective as of [EFFECTIVE DATE] (the “Effective Date”).

1.4 Name of Trust. The trust established herein shall be known as the [TRUST NAME] IRREVOCABLE TRUST (the “Trust”).

1.5 Governing Law & Forum. This Trust shall be governed by the laws of the Commonwealth of Kentucky without regard to conflict-of-laws principles. Exclusive jurisdiction for any proceeding concerning this Trust lies in the probate division of the [COUNTY] Circuit Court, Kentucky (“State Probate Court”).

II. DEFINITIONS

Unless otherwise indicated, capitalized terms have the meanings set forth below. References to Sections are to sections of this Agreement.

“Accounting Period” means each calendar year, or such shorter period ending on the Trust’s termination.
“Applicable Law” means the Kentucky UTC, the Internal Revenue Code, and relevant federal regulations.
“Asset(s)” means all property, tangible or intangible, real or personal, now or later constituting the Trust corpus.
“Distribution Date” means any date on which the Trustee makes or is required to make a distribution.
“Independent Trustee” means a Trustee who is not a “related or subordinate party” with respect to the Settlor within the meaning of the Internal Revenue Code.
“Qualified Beneficiary” has the meaning given under the Kentucky UTC.
“Trust Assets” has the meaning given in Section 12.3.
[Add additional defined terms as required.]

III. CREATION OF TRUST & FUNDING

3.1 Declaration of Trust. Settlor hereby irrevocably transfers, conveys, and assigns to Trustee the property described in Exhibit A and any additional property subsequently contributed (collectively, the “Trust Estate”), to be held, administered, and distributed in accordance with this Agreement.

3.2 Acceptance by Trustee. Trustee accepts the Trust Estate and agrees to administer it pursuant to the terms herein and Applicable Law.

3.3 Additional Contributions. Additional property may be delivered to the Trustee at any time by Settlor or any other person with Trustee’s consent; all such property shall become part of the Trust Estate and be subject to this Agreement.

IV. IRREVOCABILITY; MODIFICATION & TERMINATION

4.1 Irrevocable Nature. Upon execution, this Trust is irrevocable. Settlor expressly waives all rights to amend, revoke, or terminate this Trust, either in whole or in part, except as expressly permitted under Section 4.2.

4.2 Limited Modifications.
(a) Judicial or Non-Judicial Modification. The Trust may be modified in the manner authorized by Applicable Law to:
(i) correct scrivener’s errors;
(ii) achieve favorable tax treatment; or
(iii) comply with compulsory changes in Applicable Law.
(b) Any modification shall not confer upon Settlor any beneficial interest nor render the Trust revocable.

4.3 Termination.
(a) Scheduled Termination. The Trust shall terminate upon the earlier of (i) distribution of all Trust Assets in accordance with the dispositive provisions, or (ii) twenty-one (21) years after the death of the last surviving descendant of [REFERENCE PERSON] who was living on the Effective Date.
(b) Early Termination. The Trustee may petition the State Probate Court for early termination if continued administration becomes impracticable, uneconomical, or contrary to the Trust’s material purpose, provided all Qualified Beneficiaries consent or as otherwise ordered by the court.

V. DISPOSITIVE PROVISIONS

5.1 Income & Principal. During the Trust term, the Trustee shall distribute or accumulate income and principal as follows:

[// GUIDANCE: Draft dispositive tiers per client objectives. Sample below uses discretionary standards.]

(a) Primary Beneficiary Distributions. The Trustee may, in the Trustee’s sole and absolute discretion, distribute to or for the health, education, maintenance, and support (“HEMS Standard”) of [PRIMARY BENEFICIARY NAME] any portion of income and/or principal.

(b) Secondary Beneficiaries. Upon the death of the Primary Beneficiary, the remaining Trust Estate shall be held in further trust or distributed outright to [SECONDARY BENEFICIARIES] in the following shares: [PERCENTAGES].

(c) Alternate Takers. If no named Beneficiary survives the Primary Beneficiary, the Trust Estate shall pass to [CHARITABLE ORGANIZATION / HEIRS AT LAW].

(d) Spendthrift Provision. No Beneficiary may voluntarily or involuntarily transfer, assign, or anticipate any interest; nor shall such interest be subject to creditor claims, attachment, or legal process prior to actual receipt.

VI. TRUSTEE PROVISIONS

6.1 General Powers. Trustee shall have all powers granted to trustees under Applicable Law, including, without limitation, the power to:

(a) invest and reinvest Trust Assets under the prudent investor rule;
(b) retain, sell, exchange, or lease property;
(c) borrow money, encumber assets, and pledge assets for Trust purposes;
(d) employ custodians, investment managers, and professional advisors;
(e) make tax elections and filings;
(f) allocate receipts and disbursements between income and principal; and
(g) execute all instruments reasonably necessary to administer the Trust.

6.2 Successor Trustee.
(a) Resignation. Trustee may resign upon sixty (60) days’ written notice to the Qualified Beneficiaries and any Co-Trustee.
(b) Removal. A Trustee may be removed (i) by unanimous agreement of the Qualified Beneficiaries for cause, or (ii) by the State Probate Court upon petition for wrongdoing or incapacity.
(c) Appointment. Upon vacancy, [APPOINTOR NAME] shall appoint a successor; absent such appointment, the Qualified Beneficiaries may designate an Independent Trustee.

6.3 Trustee Compensation & Expenses. Trustee shall be reimbursed for reasonable expenses and shall receive compensation in accordance with Exhibit B or, if absent, pursuant to reasonable and customary fiduciary fee schedules.

VII. FIDUCIARY DUTIES & STANDARDS OF CARE

7.1 Duty of Loyalty; Impartiality. Trustee shall administer the Trust solely in the interests of the Beneficiaries, treating similarly-situated Beneficiaries impartially.

7.2 Prudent Investor Standard. Trustee shall invest Trust Assets with the care, skill, and caution under prevailing circumstances that a prudent investor would exercise.

7.3 Delegation. Trustee may delegate investment or administrative functions to qualified agents, provided Trustee exercises reasonable care in selecting, instructing, and monitoring such agents.

VIII. REPRESENTATIONS & WARRANTIES

8.1 Settlor Representations. Settlor represents and warrants that:
(a) Settlor has full legal capacity and authority to create this Trust and transfer the Trust Assets;
(b) Trust Assets are transferred free and clear of liens, claims, and encumbrances (except as disclosed on Exhibit A);
(c) Execution does not violate any court order, agreement, or Applicable Law binding upon Settlor.

8.2 Trustee Representations. Trustee represents and warrants that:
(a) Trustee is legally competent to serve as fiduciary and is not disqualified under Applicable Law;
(b) Trustee will administer the Trust in accordance with this Agreement and Applicable Law;
(c) Trustee will obtain and maintain any required bonding or insurance, if applicable.

8.3 Survival. The representations and warranties in this Section shall survive execution and remain in effect during the Trust’s administration.

IX. COVENANTS & RESTRICTIONS

9.1 Tax Reporting. Trustee shall file all federal, state, and local tax returns required of the Trust, furnishing K-1s or other statements to Beneficiaries as required.

9.2 Compliance. Trustee shall comply with Applicable Law, including requirements for providing statutory notices and accountings to Qualified Beneficiaries.

9.3 Notice of Legal Proceedings. Trustee shall promptly notify the Beneficiaries of any litigation or regulatory proceeding material to the Trust.

9.4 Prohibited Transactions. Trustee shall not engage in self-dealing, borrow Trust funds for personal use, or commingle Trust Assets with non-trust property.

X. ACCOUNTING, INFORMATION & BENEFICIARY RIGHTS

10.1 Annual Accounting. Within ninety (90) days after each Accounting Period, Trustee shall deliver to each Qualified Beneficiary a written statement of receipts, disbursements, investments, and the fair market value of the Trust Assets.

10.2 Interim Information. Upon reasonable request, a Qualified Beneficiary may inspect Trust records during normal business hours at Trustee’s place of business.

10.3 Waiver. A Beneficiary may waive the right to an accounting but may revoke such waiver prospectively by written notice to Trustee.

10.4 Confidentiality. Beneficiaries receiving information shall hold it in strict confidence and use it solely for purposes of monitoring the Trust.

XI. DEFAULT & REMEDIES

11.1 Events of Default. Each of the following constitutes a “Default”:
(a) Trustee’s material breach of fiduciary duty;
(b) Accountant’s or advisor’s willful misconduct materially injuring the Trust;
(c) Failure to provide required accountings within thirty (30) days after written demand;
(d) Insolvency, incapacity, or resignation of the Trustee without appointment of a successor.

11.2 Notice & Cure. Qualified Beneficiaries shall give Trustee written notice specifying the Default and a thirty (30) day cure period (or such longer period as reasonably necessary if cure is commenced within thirty (30) days and diligently pursued).

11.3 Remedies. If the Default is uncured, the Qualified Beneficiaries may:
(a) petition the State Probate Court for (i) removal or suspension of Trustee, (ii) surcharge, (iii) accounting, or (iv) injunctive relief to protect Trust Assets;
(b) pursue damages against the Trustee limited as provided in Section 12.3;
(c) seek any other relief available under Applicable Law.

11.4 Attorneys’ Fees & Costs. In any proceeding arising under this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees and costs, payable from the Trust Estate unless the court orders otherwise due to bad faith.

XII. RISK ALLOCATION

12.1 Trustee Indemnity. To the fullest extent permitted by Applicable Law, the Trust shall indemnify and hold harmless Trustee and its agents (“Indemnified Parties”) from any liability or expense incurred in the administration of the Trust, except to the extent such liability results from the Indemnified Party’s fraud, intentional misconduct, or gross negligence.

12.2 Insurance. Trustee may purchase fiduciary liability insurance with premiums payable from the Trust Estate.

12.3 Limitation of Liability. Any liability of the Trustee or Indemnified Parties in connection with this Agreement is limited solely to the Trust Assets; no personal assets of any Trustee shall be subject to execution.

12.4 Force Majeure. Trustee shall not be liable for failure to perform duties when such failure is caused by events beyond Trustee’s reasonable control, including natural disasters, war, terrorism, governmental actions, or pandemics.

XIII. DISPUTE RESOLUTION

13.1 Governing Law. This Agreement shall be construed in accordance with Kentucky law (“state_trust_law”).

13.2 Forum Selection. All proceedings shall be brought exclusively in the State Probate Court identified in Section 1.5.

13.3 Optional Arbitration. [OPTION 1 – SELECT IF DESIRED] Any dispute that the parties mutually agree to submit to arbitration shall be administered by [ARBITRATION ADMINISTRATOR] under its trust dispute rules. Judgment on the award may be entered by the State Probate Court.

13.4 Jury Waiver. To the extent a matter is triable, the parties acknowledge that probate matters in Kentucky are tried without a jury (“no_jury_probate”) and hereby waive any right to jury trial that might otherwise apply.

13.5 Injunctive Relief. Nothing in this Section shall limit a party’s right to seek temporary, preliminary, or permanent injunctive relief from the State Probate Court for the preservation of Trust Assets (“trust_enforcement”).

XIV. GENERAL PROVISIONS

14.1 Amendment & Waiver. Except as provided in Section 4.2, no amendment or waiver of any provision of this Agreement shall be effective unless in writing and executed by the Trustee and, where required, all Qualified Beneficiaries or the State Probate Court.

14.2 Assignment. No party may assign rights or delegate duties under this Agreement except as expressly provided (e.g., successor Trustees).

14.3 Successors & Assigns. This Agreement shall bind and benefit the parties and their permitted successors and assigns.

14.4 Severability. If any provision is held invalid, the remaining provisions shall remain effective, and the invalid provision shall be reformed to the minimum extent necessary to effectuate the Trust’s purpose.

14.5 Integration. This Agreement constitutes the entire agreement of the parties concerning the Trust and supersedes all prior understandings.

14.6 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which is deemed an original, and together constitute one instrument. Electronic or facsimile signatures have the same force and effect as manual signatures.

14.7 Headings. Headings are for convenience only and do not affect interpretation.

14.8 Construction. No provision shall be construed against a party on the basis that the party drafted the provision.

XV. EXECUTION BLOCK

IN WITNESS WHEREOF, the Settlor and Trustee have executed this IRREVOCABLE TRUST AGREEMENT as of the Effective Date.

[// GUIDANCE: If the Settlor and Trustee are the same individual, replace dual signature lines with a single attestation as both Settlor and Trustee to avoid confusion.]

NOTARY ACKNOWLEDGMENT

Commonwealth of Kentucky
County of [____]

Subscribed, sworn to, and acknowledged before me this ___ day of ____, 20__, by [SETTLOR NAME] and [TRUSTEE NAME].

Notary Public
My Commission Expires: _______

EXHIBIT A

SCHEDULE OF TRUST ASSETS
1. Cash: $[AMOUNT] deposited at [FINANCIAL INSTITUTION].
2. Brokerage Account No. [_] held at [BROKER].
3. Real Property: [LEGAL DESCRIPTION], subject to [ENCUMBRANCES].
4. Life Insurance Policy No. [_] with face amount $[__].
[Add or delete items as necessary.]

EXHIBIT B (Optional)

TRUSTEE FEE SCHEDULE
[Flat annual fee of $____ or percentage-based fees per published schedule.]

[// GUIDANCE:
1. Tax Elections – Insert grantor vs. nongrantor language based on planning objectives.
2. Generation-Skipping Transfer Tax – If GST considerations apply, add a Section allocating GST exemption.
3. Charitable Components – If charitable remainder or lead interests are involved, incorporate IRS model clauses to preserve deductions.
4. Special Needs Beneficiaries – For any beneficiary receiving means-tested benefits, use supplemental needs provisions.
5. Real Property – Kentucky real estate may require a separate deed of conveyance to the Trustee; attach executed deed before funding.
]