IRREVOCABLE TRUST AGREEMENT
(Montana Uniform Trust Code | State Probate Court Jurisdiction)
[// GUIDANCE: This template is drafted for Montana-situs irrevocable inter-vivos trusts. Practitioners should tailor dispositive terms, tax elections, and fiduciary appointments to the client’s estate plan and coordinate with any existing wills, powers of attorney, or pour-over provisions.]
TABLE OF CONTENTS
- Document Header
- Definitions
- Establishment of Trust & Funding
- Irrevocability
- Dispositive Provisions
- Reserved Powers & Special Provisions
- Administrative Provisions
- Trustee Powers & Duties
- Trustee Compensation & Reimbursement
- Trustee Indemnification; Limitation of Liability
- Tax Matters
- Accounts & Reports to Beneficiaries
- Beneficiary Rights & Enforcement
- Default & Remedies
- Risk Allocation
- Dispute Resolution
- General Provisions
- Execution Block
1. DOCUMENT HEADER
Irrevocable Trust Agreement (the “Agreement”) made effective as of [EFFECTIVE DATE] (the “Effective Date”) by and among:
(a) [GRANTOR NAME], an individual residing at [ADDRESS] (“Grantor”);
(b) [TRUSTEE NAME], whose principal address is [ADDRESS] (“Trustee”); and
(c) the persons identified herein as Beneficiaries (individually, “Beneficiary,” and collectively, “Beneficiaries”).
Recitals
A. Grantor desires to establish an irrevocable trust governed by the laws of the State of Montana for the benefit of the Beneficiaries identified herein.
B. Trustee is willing to hold, administer, and distribute the Trust Estate in accordance with the terms of this Agreement.
C. The parties intend that this Agreement constitute a valid, binding, and irrevocable trust under applicable Montana law.
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
2. DEFINITIONS
For purposes of this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not defined shall have the meanings given under applicable law.
“Accounting Period” – Each calendar year ending December 31, or such shorter period as may end on trust termination.
“Applicable Law” – The Montana Uniform Trust Code and other laws of the State of Montana governing trusts, as amended from time to time.
“Beneficiary” – Each person or entity entitled to current or future distributions under Article 5.
“Grantor” – The person identified in the Document Header who irrevocably transfers property to the Trust.
“Irrevocable” – Having no power in Grantor, whether alone or in conjunction with others, to alter, amend, revoke, or terminate the Trust except as expressly provided herein or under non-waivable provisions of Applicable Law.
“Trust” or “Trust Estate” – All property transferred to and accepted by the Trustee, together with all accumulations, additions, substitutions, and proceeds thereof, held subject to this Agreement.
“Trustee” – The person(s) or institution(s) serving in such capacity under this Agreement, including any successor or co-trustee.
3. ESTABLISHMENT OF TRUST & FUNDING
3.1 Creation. Grantor hereby delivers to Trustee the property described on Schedule A attached hereto, receipt of which Trustee acknowledges, to hold in trust under the terms of this Agreement.
3.2 Additional Contributions. Grantor or any third party may at any time, with Trustee’s consent, transfer additional property to the Trust; all such property shall become part of the Trust Estate and be held subject to this Agreement.
3.3 Separate Identity. The Trust shall have a separate taxpayer identification number unless treated as a grantor trust for federal income tax purposes pursuant to Article 10.
4. IRREVOCABILITY
4.1 Irrevocable Nature. This Trust is irrevocable. Except to the limited extent expressly permitted in Sections 4.2 and 6.2, Grantor shall have no right or power, whether alone or in conjunction with any person, to revoke, alter, or amend this Agreement.
4.2 Trust Modification Under Applicable Law. Trustee and Beneficiaries may petition the state probate court for judicial modification or termination only as permitted by non-waivable provisions of Applicable Law. Any modification shall not render the Trust revocable with respect to property already transferred.
4.3 Spendthrift Protection. Interests of Beneficiaries are subject to a spendthrift clause to the maximum extent permitted by Applicable Law. No Beneficiary may voluntarily or involuntarily transfer, assign, or anticipate any interest in the Trust Estate.
5. DISPOSITIVE PROVISIONS
5.1 Income Distribution Standard. During Grantor’s lifetime, Trustee shall distribute or accumulate net income for the benefit of [PRIMARY INCOME BENEFICIARY] in Trustee’s sole discretion, considering health, education, maintenance, and support.
5.2 Principal Distributions. Trustee may distribute principal to any Beneficiary for the purposes and in the manner described in Section 5.1, after considering the Beneficiary’s other resources.
5.3 Remainder. Upon the death of the [PRIMARY INCOME BENEFICIARY], the remaining Trust Estate shall be distributed outright, per stirpes, to [REMAINDER BENEFICIARIES], or if none, to Grantor’s heirs at law as determined under Applicable Law.
[// GUIDANCE: Insert more detailed dispositive schemes (e.g., staged distributions at specified ages, GST-exempt sub-trusts, or charitable remainder provisions) as required by the estate plan.]
6. RESERVED POWERS & SPECIAL PROVISIONS
6.1 Power to Substitute (IRC §675(4)). Grantor reserves a non-fiduciary power, exercisable in a writing delivered to Trustee, to reacquire any Trust asset by substituting other property of equivalent fair market value.
6.2 Decanting. Trustee may exercise all statutory decanting powers to distribute assets to a new trust for the benefit of one or more Beneficiaries, provided (i) the new trust is governed by Montana law, and (ii) no change is made to any Beneficiary’s vested interest without that Beneficiary’s written consent or court approval.
6.3 Special Trustee/Trust Protector. Grantor designates [TRUST PROTECTOR NAME] as Trust Protector with the limited powers set forth in Schedule B. Trust Protector powers are fiduciary unless expressly stated otherwise.
7. ADMINISTRATIVE PROVISIONS
7.1 Situs & Governing Law. The Trust shall be administered in the State of Montana, and Applicable Law shall govern all questions arising hereunder.
7.2 Records. Trustee shall maintain accurate books and records of all Trust transactions and hold such records for at least seven (7) years following final distribution.
7.3 Delegation. Trustee may delegate investment and administrative functions to qualified agents in accordance with prudent investor standards, provided Trustee exercises reasonable care in selecting and monitoring such agents.
7.4 Bond. No Trustee shall be required to furnish bond or other security unless ordered by a court of competent jurisdiction.
8. TRUSTEE POWERS & DUTIES
Subject to fiduciary standards, Trustee shall have the following powers, in addition to those granted by Applicable Law:
(a) Investment. Invest and reinvest Trust assets in any property Trustee deems advisable, including securities of any class, real estate, and interests in closely-held entities.
(b) Business Interests. Retain, operate, or liquidate any business interest contributed to the Trust.
(c) Real Property. Manage, improve, lease, or sell any real property held by the Trust.
(d) Lending. Make loans to Beneficiaries on terms Trustee deems appropriate, secured or unsecured.
(e) Allocation Between Principal & Income. Adjust receipts and disbursements to principal or income in Trustee’s discretion consistent with Applicable Law.
(f) Settlement. Compromise, arbitrate, or otherwise settle claims in favor of or against the Trust.
9. TRUSTEE COMPENSATION & REIMBURSEMENT
9.1 Compensation. Trustee shall be entitled to reasonable compensation in accordance with [FEE SCHEDULE OR INDUSTRY RATES].
9.2 Reimbursement. Trustee shall be reimbursed from the Trust Estate for all reasonable expenses incurred in the administration of the Trust.
10. TRUSTEE INDEMNIFICATION; LIMITATION OF LIABILITY
10.1 Indemnification. The Trust Estate shall indemnify and hold harmless Trustee from and against any and all claims, liabilities, and expenses, including reasonable attorney fees, arising out of Trustee’s administration of the Trust, except those arising from Trustee’s willful misconduct or gross negligence.
10.2 Liability Cap. Any liability of Trustee to the Beneficiaries under this Agreement shall be limited to the value of the Trust assets then under Trustee’s control, and no personal liability shall attach to Trustee beyond such assets.
11. TAX MATTERS
11.1 Grantor Trust Status. [SELECT ONE]
☐ Trust shall be treated as a grantor trust for federal income tax purposes pursuant to Internal Revenue Code §§671–679.
☐ Trust shall be treated as a non-grantor trust.
11.2 Tax Reimbursements. If grantor trust treatment applies, Trustee may, but is not required to, reimburse Grantor for income taxes payable by Grantor that are attributable to Trust income, subject to Applicable Law prohibiting any express or implied understanding requiring such reimbursement.
11.3 Tax Elections. Trustee may make any elections, including but not limited to QSST, ESBT, or partnership tax elections, deemed advisable to minimize overall tax liability of the Trust and its Beneficiaries.
[// GUIDANCE: Coordinate with Grantor’s CPA regarding Montana fiduciary income tax implications and potential state-level throwback rules.]
12. ACCOUNTS & REPORTS TO BENEFICIARIES
12.1 Annual Reports. Within ninety (90) days after the close of each Accounting Period, Trustee shall furnish Beneficiaries entitled to mandatory distributions with a written report of the Trust’s receipts, disbursements, and holdings.
12.2 Interim Statements. Upon reasonable request of any Beneficiary, Trustee shall provide current financial information, unless such disclosure is reasonably believed to be detrimental to the Trust or another Beneficiary.
12.3 Objection Period. Reports shall be deemed approved by the recipient Beneficiary unless written objection is delivered to Trustee within one hundred twenty (120) days of receipt.
13. BENEFICIARY RIGHTS & ENFORCEMENT
13.1 Right to Information. Beneficiaries have the rights to information and accountings as provided in Article 12 and Applicable Law.
13.2 Enforcement. Beneficiaries may petition the state probate court for instructions or to enforce Trustee’s duties. Trustee shall be entitled to reimbursement for costs incurred in any such proceeding unless found to have committed a breach of trust.
13.3 Early Termination Requests. Trustee may, but is not obligated to, consent to a Beneficiary’s request for early termination or distribution, subject to court approval and tax counsel review.
14. DEFAULT & REMEDIES
14.1 Events of Default. The following shall constitute a breach of trust:
(a) Willful misconduct or gross negligence by Trustee;
(b) Material violation of fiduciary duties causing substantial loss to the Trust;
(c) Persistent failure to render required reports.
14.2 Notice & Cure. Beneficiaries shall provide written notice describing the alleged breach. Trustee shall have thirty (30) days to cure the breach or to provide a written action plan.
14.3 Remedies. If the breach is not cured:
(a) Removal of Trustee and appointment of a successor by court order;
(b) Surcharge against Trustee, limited by Article 10.2;
(c) Injunctive relief to prevent further breaches.
15. RISK ALLOCATION
15.1 Indemnification. See Article 10.
15.2 Insurance. Trustee may, at Trust expense, purchase insurance insuring Trustee against liability with respect to the Trust Estate.
15.3 Force Majeure. Trustee shall not be liable for failure to act or delay in acting when such failure or delay is due to events beyond Trustee’s reasonable control, including acts of God, war, pandemic, or changes in Applicable Law that materially affect Trust administration.
16. DISPUTE RESOLUTION
16.1 Governing Law. This Agreement and all disputes arising hereunder shall be governed by and construed in accordance with the laws of the State of Montana, without regard to conflict-of-laws principles.
16.2 Forum Selection. Exclusive jurisdiction and venue shall lie in the [COUNTY] District Court, Probate Division, State of Montana (the “Probate Court”).
16.3 Optional Arbitration. [SELECT ONE]
☐ Any dispute that the Probate Court determines is subject to binding arbitration shall be resolved under the Commercial Arbitration Rules of the American Arbitration Association, with the seat of arbitration in [CITY, MT].
☐ The parties do not elect arbitration.
16.4 Injunctive Relief. Nothing herein shall limit the right of any party to seek provisional or injunctive relief in the Probate Court to preserve the Trust Estate or enforce fiduciary duties.
[// GUIDANCE: Jury trials are generally unavailable in probate matters; accordingly, no jury-trial waiver clause is included.]
17. GENERAL PROVISIONS
17.1 Amendment & Waiver. Except as provided in Section 4.2, this Agreement may not be amended or waived in whole or in part. Any attempt to amend in contravention of this Section shall be void.
17.2 Assignment. No party may assign rights or delegate duties under this Agreement except as expressly provided herein or required by Applicable Law.
17.3 Successors & Assigns. This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and permitted assigns.
17.4 Severability. If any provision is held invalid, the remaining provisions shall remain in full force, and the court is authorized to reform this Agreement to effectuate the parties’ intent.
17.5 Entire Agreement. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements or understandings.
17.6 Counterparts; Electronic Signatures. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original. Signatures delivered electronically (e.g., via PDF, DocuSign) shall be deemed originals for all purposes.
18. EXECUTION BLOCK
IN WITNESS WHEREOF, the parties have executed this Irrevocable Trust Agreement as of the Effective Date.
| GRANTOR | |
|---|---|
| Signature: ________ | Date: ____ |
| Name: [GRANTOR NAME] |
| TRUSTEE | |
|---|---|
| Signature: ________ | Date: ____ |
| Name: [TRUSTEE NAME] |
[// GUIDANCE: Insert additional signature lines for co-trustees, Trust Protector, or acknowledging Beneficiaries as desired.]
NOTARY ACKNOWLEDGMENT
State of Montana )
County of [COUNTY] )
On this _ day of _, 20__, before me, the undersigned Notary Public, personally appeared [NAME(S)], proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the foregoing instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) executed the instrument.
Witness my hand and official seal.
Signature: ____
Notary Public for the State of Montana
My commission expires: _______
SCHEDULE A
Description of Initial Trust Property
1. [ASSET DESCRIPTION] – Fair Market Value: $__
2. …
SCHEDULE B
Trust Protector Powers (if any)
1. Remove and replace Trustee (subject to court approval if a conflict exists).
2. Consent to or veto a proposed decanting.
3. Approve Trustee compensation amendments.
4. …
[// GUIDANCE: Final review checklist:
• Verify that irrevocability aligns with Grantor’s tax objectives.
• Confirm spendthrift language complies with Montana UTC.
• Append ancillary documents (e.g., Assignment of Interest, Certification of Trust) for funding and third-party notice purposes.
• Obtain tax identification number (or elect grantor trust treatment) promptly after execution.]