IRREVOCABLE TRUST AGREEMENT

(Minnesota Law – Court-Ready Template)

[// GUIDANCE: Prior to execution, review all bracketed placeholders, optional language blocks, and guidance notes for conformity with client objectives, tax posture, and fiduciary preferences. Remove all guidance comments and unused optional language before finalizing.]

TABLE OF CONTENTS

1. Document Header
2. Definitions
3. Operative Provisions
4. Representations & Warranties
5. Covenants & Restrictions
6. Default & Remedies
7. Risk Allocation
8. Dispute Resolution
9. General Provisions
10. Execution Block
11. Schedules

1. DOCUMENT HEADER

1.1 Title and Parties

IRREVOCABLE TRUST AGREEMENT (this “Agreement”) dated as of [EFFECTIVE DATE] (the “Effective Date”), by and among:

a. [SETTLOR FULL LEGAL NAME], residing at [SETTLOR ADDRESS] (“Settlor”); and
b. [TRUSTEE FULL LEGAL NAME], a [INDIVIDUAL / MINNESOTA CORPORATION / NATIONAL BANKING ASSOCIATION] with principal office at [TRUSTEE ADDRESS] (“Trustee”).

1.2 Recitals

WHEREAS, Settlor desires to create an irrevocable trust for the exclusive benefit of the Beneficiaries identified herein;
WHEREAS, Trustee is willing to accept the trust and perform the duties herein; and
WHEREAS, Settlor intends this Agreement to be governed by and construed in accordance with the laws of the State of Minnesota, including the Minnesota Uniform Trust Code, Minn. Stat. ch. 501C (the “Minnesota UTC”).

NOW, THEREFORE, in consideration of the mutual covenants herein and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, Settlor hereby transfers, assigns, and delivers to Trustee the property listed on Schedule A (the “Trust Estate”), to have and to hold IN TRUST, under the following terms and conditions.

2. DEFINITIONS

The following terms shall have the meanings set forth below, which shall apply equally to the singular and plural forms. Capitalized terms used but not defined herein have the meanings ascribed elsewhere in the Agreement.

“Accounting Period” – Each calendar year ending December 31, or such shorter period ending on the termination of the Trust.
“Adjusted Gross Income” – The meaning set forth in I.R.C. § 62.
“Beneficiary” – Each person or entity identified on Schedule B, and any successor or additional beneficiary determined in accordance with Section 3.4.
“Code” – The Internal Revenue Code of 1986, as amended.
“Dispositive Provisions” – Sections 3.3 through 3.6 governing distributions from the Trust Estate.
“Investment Standard” – The standard of care under Minn. Stat. § 501C.0901 (Minnesota Prudent Investor Act).
“Irrevocability Rules” – The statutory limitations on modification or termination of irrevocable trusts under Minn. Stat. §§ 501C.0411–.0422.
“Trust” – The trust created by this Agreement and any additions or accretions thereto.
“Trust Estate” – The property described on Schedule A as it may later be augmented, diminished, or substituted.
“Trust Protector” – [OPTIONAL: INSERT NAME OR “None.”]

[// GUIDANCE: Add additional defined terms as required (e.g., “Grantor Trust”, “Qualified Subchapter-S Trust”, etc.).]

3. OPERATIVE PROVISIONS

3.1 Creation and Funding

3.1.1 Establishment. Settlor hereby irrevocably establishes the Trust and transfers the Trust Estate to Trustee.
3.1.2 Additional Contributions. Trustee may accept additional property from Settlor or any third party, provided such property is clearly identified as an addition to the Trust Estate.

3.2 Irrevocability

3.2.1 No Revocation. This Trust is irrevocable. Except as expressly permitted under the Irrevocability Rules or pursuant to judicial order, Settlor shall have no power to revoke, amend, or terminate this Trust.
3.2.2 Limited Modifications. Modification for administrative efficiency, tax qualification, or compliance with applicable law may be undertaken only in accordance with Minn. Stat. §§ 501C.0411–.0412 or successor provisions.

3.3 Distributions During Settlor’s Lifetime

a. Mandatory Distributions. [INSERT MANDATORY DISTRIBUTION MECHANISM OR “None.”]
b. Discretionary Distributions. Trustee may distribute to or for the benefit of any Beneficiary such amounts of income and/or principal as Trustee, in its sole discretion, deems advisable for the Beneficiary’s health, education, maintenance, or support (“HEMS Standard”).

3.4 Distributions Upon Settlor’s Death

Upon the Settlor’s death, Trustee shall:
i. Pay all expenses, debts, and taxes chargeable to the Trust; and
ii. Distribute the remaining Trust Estate in accordance with Schedule B.

3.5 Beneficiary Rights

a. Right to Information. Each Beneficiary shall be entitled to an annual accounting and reasonable information concerning trust administration, consistent with Minn. Stat. § 501C.0813.
b. Right to Remove Trustee. A majority in interest of the adult Beneficiaries may petition the appropriate Minnesota probate court for removal of Trustee for cause.

3.6 Termination

The Trust shall terminate upon the earlier of (i) complete distribution of the Trust Estate or (ii) expiration of 21 years after the death of the last surviving Beneficiary, unless otherwise permitted by law. Upon termination, Trustee shall distribute the remaining Trust Estate to the Beneficiaries in the proportions set forth on Schedule B.

4. REPRESENTATIONS & WARRANTIES

4.1 Settlor

a. Capacity. Settlor is of legal age and sound mind and has full legal capacity to create this Trust.
b. Ownership. Settlor owns the assets comprising the initial Trust Estate free and clear of liens except as disclosed on Schedule A.

4.2 Trustee

a. Authority. Trustee has full power and authority to accept the Trust and perform its duties hereunder.
b. No Conflict. Trustee’s acceptance of the Trust does not violate any agreement or court order to which Trustee is a party.

4.3 Survival

All representations and warranties survive the execution of this Agreement and remain in force until final termination of the Trust.

5. COVENANTS & RESTRICTIONS

5.1 Trustee Covenants

a. Fiduciary Standards. Trustee shall administer the Trust in good faith, in accordance with its terms and the Minnesota UTC, and in the interests of the Beneficiaries.
b. Investment. Trustee shall invest and manage the Trust Estate in accordance with the Investment Standard.
c. Accounting. Trustee shall keep accurate books and records and provide annual written statements to the Beneficiaries within 90 days after each Accounting Period.

5.2 Negative Covenants

a. Self-Dealing. Except as expressly authorized herein or by court order, Trustee shall not engage in transactions that constitute self-dealing or conflicts of interest.
b. Assignment Prohibited. No Beneficiary may assign, transfer, pledge, or encumber any interest in the Trust, voluntary or involuntary, prior to actual receipt (“Spendthrift Clause”).

6. DEFAULT & REMEDIES

6.1 Events of Default

The following constitute events of default:
i. Trustee’s material breach of fiduciary duty;
ii. Trustee’s failure to provide required accountings within 60 days following written notice;
iii. Trustee’s insolvency, resignation without qualified successor, or removal for cause.

6.2 Notice and Cure

Beneficiaries shall deliver written notice specifying the default. Trustee shall have 30 days to cure or, if cure is not reasonably possible within 30 days, to commence and diligently pursue cure.

6.3 Remedies

a. Removal & Replacement. Upon an uncured default, and after probate-court approval, Beneficiaries may remove Trustee and appoint a successor trustee.
b. Injunctive Relief. Beneficiaries may seek temporary, preliminary, or permanent injunctive relief to prevent dissipation or mismanagement of the Trust Estate.
c. Damages. Trustee shall be liable for damages proximately caused by its breach, subject to Section 7.2 (Liability Limitation).
d. Attorney Fees. The prevailing party in any action to enforce this Agreement shall be entitled to reasonable attorney fees and costs, recoverable from the Trust Estate, except in cases of Trustee’s willful misconduct, in which case such amounts shall be borne personally by Trustee.

7. RISK ALLOCATION

7.1 Indemnification

The Trust shall indemnify, defend, and hold harmless Trustee and its agents against any and all claims, liabilities, and expenses (including reasonable attorney fees) arising out of or in connection with the administration of the Trust, except to the extent such claims result from Trustee’s bad faith, willful misconduct, or gross negligence.

7.2 Limitation of Liability

Trustee’s liability shall be limited to the Trust Estate under its control, and Trustee shall have no personal liability for obligations arising from the Trust except for acts or omissions constituting bad faith, willful misconduct, or gross negligence.

7.3 Insurance

[OPTIONAL] Trustee shall maintain fiduciary liability insurance with minimum coverage of [$______] per claim, payable from Trust income.

7.4 Force Majeure

Trustee shall not be liable for any loss or delay caused by acts of God, war, epidemic, governmental action, or other events beyond Trustee’s reasonable control, provided Trustee acts prudently to mitigate such loss.

8. DISPUTE RESOLUTION

8.1 Governing Law

This Agreement and all disputes arising hereunder shall be governed by and construed in accordance with the laws of the State of Minnesota, without regard to its conflict-of-laws principles.

8.2 Forum Selection

Exclusive jurisdiction and venue shall lie in the probate division of the Minnesota District Court sitting in [COUNTY] County, Minnesota.

8.3 Arbitration (Optional)

[OPTION A – INCLUDE]
Any dispute not within the exclusive jurisdiction of the probate court shall be submitted to binding arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules. Judgment on the award may be entered by any court of competent jurisdiction.
[OPTION B – OMIT]

8.4 Jury Waiver

To the extent a dispute is triable outside probate proceedings and a jury trial is otherwise available, the parties knowingly and voluntarily waive the right to a jury trial.

8.5 Injunctive Relief

Nothing herein shall limit any party’s right to seek equitable relief, including temporary or permanent injunctions, in the designated forum to protect Trust assets or enforce fiduciary duties.

9. GENERAL PROVISIONS

9.1 Amendment and Waiver. This Agreement may not be amended except as provided in Section 3.2.2. No waiver shall be effective unless in writing and signed by the waiving party.

9.2 Assignment. Trustee may not delegate core discretionary functions without probate-court approval, except that ministerial functions may be delegated to professionals in accordance with Minn. Stat. § 501C.0807.

9.3 Successors & Assigns. This Agreement binds and benefits the parties and their lawful successors, assigns, and personal representatives.

9.4 Severability. If any provision is held invalid or unenforceable, the remaining provisions shall be construed to effectuate the parties’ intent.

9.5 Integration. This Agreement constitutes the entire understanding regarding the subject matter and supersedes all prior oral or written agreements.

9.6 Counterparts. This Agreement may be executed in counterparts, each of which is deemed an original, and all of which together constitute one instrument.

9.7 Electronic Signatures. Signatures delivered by facsimile, PDF, or secure electronic signature platform shall be deemed original.

10. EXECUTION BLOCK

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

NOTARIZATION

State of Minnesota  )
County of ______)

On this ___ day of ____, 20__, before me, a Notary Public, personally appeared [SETTLOR NAME] [and [TRUSTEE NAME]], known to me (or satisfactorily proven) to be the person(s) whose name(s) is/are subscribed to the foregoing instrument, and acknowledged that he/she/they executed the same for the purposes therein contained.

Notary Public
My Commission Expires: _______

[// GUIDANCE: Confirm notarization and witness requirements under Minn. Stat. §§ 358.50–.66 and local recording customs.]

11. SCHEDULES

• Schedule A – Description of Initial Trust Estate
• Schedule B – Beneficiaries and Dispositive Percentages
• Schedule C – Trustee Compensation & Fee Schedule

[// GUIDANCE:
1. Tax Considerations – Coordinate with tax counsel regarding grantor-trust status, gift-tax reporting (Form 709), GST tax allocations, QTIP/GST elections, and Minnesota estate tax considerations. Drafting assistance for Crummey notices, if applicable, should be added.
2. Beneficiary Notices – Minnesota UTC requires notices to qualified beneficiaries upon trustee acceptance and change in trustee compensation.
3. Funding – Verify asset titling (deeds, assignments, beneficiary designations) to avoid probate inclusion.
4. Trust Protector – Add powers (e.g., remove/replace trustee, modify for tax purposes) if desired.
5. Special Assets – Insert supplemental provisions for S-corporation stock, closely-held business interests, or real estate subject to environmental liabilities.]