IRREVOCABLE TRUST AGREEMENT
(State of Michigan – Governed by the Michigan Trust Code, MCL 700.7101 et seq.)
TABLE OF CONTENTS
- Document Header
- Article I – Establishment of Trust
- Article II – Definitions
- Article III – Trust Property & Funding
- Article IV – Irrevocability & Amendment Restrictions
- Article V – Beneficiaries’ Interests & Rights
- Article VI – Distributions
- Article VII – Trustee Provisions
- Article VIII – Tax Matters
- Article IX – Indemnification; Limitation of Liability
- Article X – Default, Removal & Successor Trustees
- Article XI – Forum, Dispute Resolution & Injunctive Relief
- Article XII – General Provisions
- Execution Block
- Schedule A – Initial Trust Property
[// GUIDANCE: All bracketed items must be completed, deleted, or conformed before execution.]
DOCUMENT HEADER
This Irrevocable Trust Agreement (“Agreement”) is made and entered into on [EFFECTIVE DATE] (“Effective Date”) by and among:
- [GRANTOR NAME], of [GRANTOR ADDRESS] (“Grantor” or “Settlor”);
- [TRUSTEE NAME], of [TRUSTEE ADDRESS] (“Trustee”); and
- The persons identified in Schedule B (if any) and any other persons who become beneficiaries pursuant to the terms hereof (each a “Beneficiary,” collectively, “Beneficiaries”).
Recitals
A. Grantor desires to create an irrevocable trust for the benefit of the Beneficiaries, subject to and governed by the laws of the State of Michigan, including the Michigan Trust Code, MCL 700.7101 et seq.
B. Trustee is willing to accept the office of trustee and to hold and administer the Trust Estate in accordance with the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, Grantor hereby irrevocably transfers, conveys, and assigns to Trustee, IN TRUST, the property described in Schedule A and any additional property hereafter conveyed to the Trustee (collectively, the “Trust Estate”), to hold, manage, invest, reinvest, and distribute in accordance with the following terms:
ARTICLE I – ESTABLISHMENT OF TRUST
1.1 Creation. Grantor hereby establishes the “[TRUST NAME] Irrevocable Trust” (“Trust”).
1.2 Effective Date. The Trust shall become effective on the Effective Date upon execution of this Agreement and delivery of the initial Trust Estate to Trustee.
1.3 Governing Law. This Trust shall be construed, administered, and governed in all respects by the laws of the State of Michigan, without regard to its conflict-of-laws principles.
ARTICLE II – DEFINITIONS
For purposes of this Agreement, capitalized terms have the meanings set forth below. Terms defined in the Michigan Trust Code shall have the meaning ascribed therein unless expressly modified herein.
“Accounting Period” – The calendar year ending December 31 or such other period the Trustee selects consistent with applicable law.
“Affiliate” – Any entity that directly or indirectly controls, is controlled by, or is under common control with another entity.
“Beneficiary” – Any person or entity entitled to present or future beneficial interests in the Trust, whether income, principal, or remainder, including contingent interests.
“Code” – The Internal Revenue Code of 1986, as amended.
“Disability” or “Disabled” – A determination of incapacity within the meaning of MCL 700.7806(2) evidenced by written certification of two licensed physicians, or as otherwise adjudicated by a court of competent jurisdiction.
“Grantor” or “Settlor” – The individual identified in the Document Header who establishes this Trust.
“Trust Estate” – All property held from time to time by the Trustee under this Agreement, including additions, substitutions, and accumulations thereto.
“Trustee” – The individual or corporate fiduciary acting from time to time as trustee under this Agreement, including any Successor Trustee.
[// GUIDANCE: Add additional defined terms as necessary for specialized assets or tax elections.]
ARTICLE III – TRUST PROPERTY & FUNDING
3.1 Initial Funding. Simultaneously with the execution of this Agreement, Grantor has delivered and irrevocably assigned to Trustee the property described in Schedule A.
3.2 Additional Contributions. The Trustee may accept additional property from Grantor or any other person at any time, provided such property is acceptable to the Trustee and acknowledged in writing as an addition to the Trust Estate.
3.3 Title. Title to all Trust property shall be held in the name of “[TRUSTEE NAME], Trustee of the [TRUST NAME] Irrevocable Trust dated [EFFECTIVE DATE],” or in such nominee name as the Trustee lawfully may employ.
ARTICLE IV – IRREVOCABILITY & AMENDMENT RESTRICTIONS
4.1 Irrevocability. This Trust is irrevocable. Grantor expressly waives all rights and powers, whether alone or in conjunction with any other person, and regardless of when or where exercisable, to alter, amend, revoke, terminate, or otherwise modify this Trust or any of its provisions, except as expressly provided in Section 4.2.
4.2 Limited Administrative Amendments.
(a) The Trustee, with the written consent of all current Beneficiaries and, if required by MCL 700.7411(1), the approval of the Probate Court, may amend administrative provisions of this Agreement (e.g., procedures for notices, accounting methods) if the amendment does not adversely affect a Beneficiary’s economic interest.
(b) No amendment under this Section may expand rights of Grantor, reduce a Beneficiary’s vested interest, or render the Trust revocable.
4.3 Merger, Decanting & Modification. The Trustee may, without court approval, decant or merge the Trust with another trust pursuant to MCL 700.7820a, provided (i) the new trust maintains substantially identical dispositive provisions and (ii) such action does not impair any Beneficiary’s vested interest.
ARTICLE V – BENEFICIARIES’ INTERESTS & RIGHTS
5.1 Spendthrift Protection. To the maximum extent permitted by law, the interests of all Beneficiaries are subject to a spendthrift trust as defined in MCL 700.7502. No Beneficiary may voluntarily or involuntarily transfer, assign, pledge, or encumber such interests, and no creditor may reach such interests by attachment, garnishment, or other legal process.
5.2 Right to Information. Consistent with MCL 700.7814, the Trustee shall (a) keep the Qualified Beneficiaries reasonably informed of the Trust administration and (b) provide at least annually, and upon reasonable request, a report of Trust property, liabilities, receipts, disbursements, and distributions.
5.3 Disclaimer & Release. Any Beneficiary may disclaim all or part of any interest hereunder in compliance with MCL 700.2901 et seq.
5.4 Beneficiary Consent. Where Beneficiary consent is required, consent of a person authorized to represent and bind the Beneficiary under MCL 700.7303–7315 shall be sufficient.
ARTICLE VI – DISTRIBUTIONS
6.1 Distribution Standard. [SELECT ONE OR CUSTOMIZE]
(a) Discretionary Income and Principal: The Trustee may distribute to or for the benefit of any one or more Beneficiaries so much or all of the net income and principal as the Trustee, in the Trustee’s sole and absolute discretion, deems necessary or advisable for the Beneficiary’s health, education, maintenance, or support (“HEMS” standard).
(b) Mandatory Income: The Trustee shall distribute all net income at least annually to [PRIMARY BENEFICIARY].
6.2 Accumulations. Any undistributed income shall be added to principal and thereafter held, administered, and distributed as part of the Trust Estate.
6.3 Distribution Policies. The Trustee shall consider the Beneficiary’s other financial resources, tax brackets, and any public benefits eligibility before making distributions.
6.4 Termination & Final Distribution. Except as otherwise provided, the Trust shall terminate upon the earliest to occur of:
(a) The death of the last surviving Beneficiary; or
(b) [SPECIFY FIXED DATE OR EVENT].
Upon termination, the remaining Trust Estate shall be distributed outright and free of trust to [REMAINDER BENEFICIARIES], per stirpes, subject to Section 6.5.
6.5 “Pot Trust” Division (Optional). [// GUIDANCE: Insert provisions for division into separate trusts for each descendant, if desired.]
ARTICLE VII – TRUSTEE PROVISIONS
7.1 Acceptance & Standard of Care. The Trustee accepts the office of trustee and shall administer the Trust in good faith, in accordance with its terms and Michigan law, and with the care, skill, and caution of a prudent person dealing with the property of another, as required by MCL 700.7803.
7.2 General Powers. Subject to Sections 7.3 and 7.4, the Trustee shall have all powers granted by MCL 700.7812 and any other powers necessary or advisable to carry out the purposes of the Trust, including but not limited to:
(a) Investment and reinvestment of Trust assets;
(b) Leasing, sale, exchange, or other disposition of Trust property;
(c) Borrowing funds and encumbering Trust property;
(d) Employing professionals and delegating duties as permitted by law.
7.3 Prohibited Transactions. The Trustee shall not engage in self-dealing, conflicts of interest, or transactions expressly prohibited by MCL 700.7802 and 700.7803.
7.4 Delegation. Consistent with MCL 700.7807, the Trustee may delegate investment or other functions to qualified agents but shall exercise reasonable care, skill, and caution in selecting, instructing, and monitoring each agent.
7.5 Compensation & Reimbursement. The Trustee is entitled to reasonable compensation for services rendered and reimbursement for all proper expenses, payable from the Trust Estate. In determining reasonableness, the Trustee may consider the factors set forth in MCL 700.7208.
7.6 Bond. [SELECT ONE]
(a) Waived. No bond shall be required of the Trustee.
(b) Required. The Trustee shall furnish a fiduciary bond in the amount of $[AMOUNT] issued by a surety authorized to transact business in Michigan.
ARTICLE VIII – TAX MATTERS
8.1 Tax Identification. The Trustee shall obtain a separate taxpayer identification number for the Trust unless the Trust is treated as a grantor trust under Subpart E of Subchapter J of the Code and Grantor’s SSN may be used.
8.2 Tax Elections. The Trustee is authorized to make any and all tax elections (including, without limitation, the election under Code § 645 for trusts with estates, if applicable) that the Trustee deems advisable and in the best interest of the Beneficiaries.
8.3 Grantor Trust Provisions (If Applicable). If any portion of the Trust is treated as a grantor trust, (a) Grantor shall report all taxable income, deductions, and credits attributable thereto, and (b) the Trustee may, without reimbursement, use Trust property to pay any income taxes imposed on Grantor as a result of the Trust’s income.
8.4 Gift & Estate Tax. Grantor acknowledges that transfers to this Trust constitute completed gifts for federal gift-tax purposes and that property transferred to or retained in this Trust will be excluded from the Grantor’s taxable estate, subject to Code §§ 2036-2042.
[// GUIDANCE: Insert specific Crummey withdrawal or GST provisions if required.]
ARTICLE IX – INDEMNIFICATION; LIMITATION OF LIABILITY
9.1 Trustee Indemnity. To the fullest extent permitted by law, the Trustee and each Successor Trustee shall be indemnified and held harmless out of the Trust Estate from and against any and all claims, liabilities, losses, expenses, and damages (including reasonable attorneys’ fees) arising out of or in connection with the administration of the Trust, except to the extent such claims result from the Trustee’s willful misconduct or gross negligence.
9.2 Liability Limited to Trust Assets. No Trustee shall be personally liable for obligations arising from the Trust Estate or for acts or omissions undertaken in the Trustee’s fiduciary capacity, except as provided in Section 9.1. Claimants may look solely to the Trust Estate to satisfy any claim.
9.3 Reliance on Advice. The Trustee may rely conclusively upon, and shall be protected in acting upon, any advice of counsel or other experts selected in good faith.
ARTICLE X – DEFAULT, REMOVAL & SUCCESSOR TRUSTEES
10.1 Removal. The Grantor (if living and not Disabled) or, if Grantor is deceased or Disabled, a majority of the adult Qualified Beneficiaries may remove the Trustee, with or without cause, upon thirty (30) days’ written notice.
10.2 Resignation. The Trustee may resign by giving not less than thirty (30) days’ written notice to the Grantor (if living), all Qualified Beneficiaries, and any Co-Trustee.
10.3 Successor Trustee. Upon removal, resignation, death, or incapacity of the Trustee, [SUCCESSOR TRUSTEE NAME] shall serve. If the Successor Trustee is unwilling or unable to act, a Successor Trustee shall be appointed by majority vote of the Qualified Beneficiaries, or, failing such appointment within sixty (60) days, by the Probate Court.
10.4 Transfer of Assets. A resigning or removed Trustee shall promptly deliver all Trust property, records, and accounts to the Successor Trustee and shall execute such documents as reasonably necessary to vest title in the Successor Trustee.
10.5 Accounting & Release. Before final discharge, the outgoing Trustee shall provide a final accounting and obtain a written receipt and release from the Beneficiaries or court approval.
ARTICLE XI – FORUM, DISPUTE RESOLUTION & INJUNCTIVE RELIEF
11.1 Exclusive Forum. All matters relating to the validity, construction, and administration of this Trust shall be subject to the exclusive jurisdiction of the Probate Court for [COUNTY NAME] County, Michigan.
11.2 Optional Arbitration. Notwithstanding Section 11.1, any Beneficiary and the Trustee may mutually agree in writing to submit disputes to binding arbitration in [CITY], Michigan, administered under the Commercial Arbitration Rules of the American Arbitration Association. Such agreement shall not preclude the Probate Court’s jurisdiction to supervise the Trust or compel arbitration.
11.3 Injunctive Relief. The Trustee and any Beneficiary may seek temporary, preliminary, or permanent injunctive relief in the Probate Court to enforce the provisions of this Agreement or to prevent irreparable harm to the Trust Estate. The posting of bond shall be waived to the fullest extent permitted by law.
11.4 Costs & Attorneys’ Fees. The court or arbitrator may award costs, expenses, and reasonable attorneys’ fees to the prevailing party, payable from the Trust Estate or personally by a non-prevailing party whose conduct justifies such award.
ARTICLE XII – GENERAL PROVISIONS
12.1 Notices. Any notice required under this Agreement shall be in writing and deemed given (a) when delivered personally, (b) three (3) days after deposit in first-class U.S. Mail, postage prepaid, or (c) upon confirmed email or courier delivery, addressed to the recipient’s last known address.
12.2 Severability. If any provision is found unenforceable, it shall be severed, and the remaining provisions shall be given full force and effect consistent with the Grantor’s intent.
12.3 Headings. Headings are for convenience only and do not affect interpretation.
12.4 Integration. This Agreement constitutes the entire understanding among the parties with respect to the subject matter hereof and supersedes all prior agreements, whether oral or written.
12.5 Counterparts; Electronic Signatures. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original. Signatures delivered electronically or by PDF shall be deemed original signatures for all purposes.
12.6 Successors & Assigns. The terms of this Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, personal representatives, successors, and permitted assigns.
12.7 Waiver. No waiver of any provision shall be effective unless in writing; a waiver shall apply only to the specific instance and shall not be construed as a continuing waiver.
12.8 Rule Against Perpetuities. Notwithstanding any provision herein, the Trust shall terminate, if not sooner terminated, no later than twenty-one (21) years after the death of the last survivor of the class comprising the descendants of [NAME OF MEASURING LIFE] living on the Effective Date.
EXECUTION BLOCK
IN WITNESS WHEREOF, the parties hereto have executed this Irrevocable Trust Agreement as of the Effective Date.
| Grantor | Trustee |
|---|---|
| _________ | _________ |
| [GRANTOR NAME] | [TRUSTEE NAME] |
ACKNOWLEDGMENT
State of Michigan )
County of ____ ) ss.
On this ___ day of ____, 20__, before me, the undersigned notary public, personally appeared [GRANTOR 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.
Notary Public, State of Michigan
My Commission Expires: _
Acting in the County of _
[// GUIDANCE: Add witness signatures if required by local practice or if trust holds real property intended for out-of-state use.]
SCHEDULE A – INITIAL TRUST PROPERTY
- Cash: $[AMOUNT]
- [LIST SECURITIES – e.g., 1,000 shares of XYZ Corp. common stock]
- [DESCRIBE REAL ESTATE WITH LEGAL DESCRIPTION, IF APPLICABLE]
- [OTHER ASSETS]
[// GUIDANCE: Attach deeds, assignments, or transfer documents as separate exhibits.]