IRREVOCABLE TRUST AGREEMENT

(North Carolina – Chapter 36C Compliant)

TABLE OF CONTENTS

I. Document Header
II. Definitions
III. Operative Provisions
 A. Creation, Funding & Irrevocability
 B. Trustee Appointment & Acceptance
 C. Trustee Powers & Duties
 D. Distributions & Beneficiary Rights
 E. Tax Matters
IV. Representations & Warranties
V. Covenants & Restrictions
VI. Default & Remedies
VII. Risk Allocation
VIII. Dispute Resolution
IX. General Provisions
X. Execution Block

[// GUIDANCE: This template is intentionally expansive. Delete provisions that are unnecessary for the client’s objectives and supplement as needed for specialized assets (e.g., closely-held stock, life insurance).]

I. DOCUMENT HEADER

IRREVOCABLE TRUST AGREEMENT (the “Agreement”) is made and entered into effective as of [EFFECTIVE DATE] (the “Effective Date”) by and among:

1. [SETTLOR NAME] (“Settlor”);
2. [TRUSTEE NAME], whose address is [TRUSTEE ADDRESS] (“Trustee”); and
3. The persons identified on Schedule A hereto as beneficiaries (individually, “Beneficiary,” and collectively, “Beneficiaries”).

Recitals

A. Settlor desires to create an irrevocable trust under the laws of the State of North Carolina (N.C. Gen. Stat. Chapter 36C, the “North Carolina Uniform Trust Code” or “NC-UTC”).
B. Trustee has agreed to hold, administer, and distribute the Trust Estate (as defined below) in accordance with the terms hereof.
C. The parties intend that this Agreement be irrevocable and operated so that (i) the Trust Estate is excluded from Settlor’s probate estate, (ii) applicable transfer-tax objectives are achieved, and (iii) creditor exposure is minimized, all subject to North Carolina law and federal tax regulations.

NOW, THEREFORE, in consideration of the mutual covenants herein, the parties agree as follows:

II. DEFINITIONS

Alphabetically defined terms used throughout this Agreement:

“Accounting Period” – Each fiscal year of the Trust or such shorter period as may be required under Article VI.

“Administrator” – The person(s) designated on Schedule B, with the limited powers set forth in Section VI.3.

“Code” – The Internal Revenue Code of 1986, as amended.

“NC-UTC” – The North Carolina Uniform Trust Code, N.C. Gen. Stat. § 36C-1-101 et seq.

“Primary Beneficiary(ies)” – The Beneficiary(ies) listed as “Primary” on Schedule A.

“Qualified Beneficiary” – Has the meaning assigned in NC-UTC § 36C-1-103(13).

“Trust” – The irrevocable trust created by this Agreement, styled “[TRUST NAME]” (the “Trust”).

“Trust Estate” – All property transferred to or otherwise held under the Trust, and all substitutions, accretions, and proceeds thereof.

“Trustee” – Includes any successor or co-trustee acting hereunder.

[// GUIDANCE: Add or delete definitions to align with your asset classes and drafting style.]

III. OPERATIVE PROVISIONS

A. Creation, Funding & Irrevocability

1. Establishment. Settlor hereby transfers the property described on Schedule C (the “Initial Corpus”) to Trustee, to hold in trust under the terms of this Agreement. Additional property may be transferred to the Trust by Settlor or any third party at any time.
2. Irrevocability. This Trust is irrevocable. Settlor expressly relinquishes all power, whether alone or in conjunction with any person, to alter, amend, revoke, or terminate the Trust, except as may be permitted under NC-UTC Article 4 (limited judicial or beneficiary-consent modifications).
3. Separate Property. All Trust property shall be the separate property of the Trust and shall not be deemed marital or community property of any Beneficiary.
4. Spendthrift Protection. The interest of any Beneficiary shall not be subject to voluntary or involuntary transfer, assignment, pledge, alienation, or attachment before distribution, consistent with NC-UTC § 36C-5-502.

B. Trustee Appointment & Acceptance

1. Initial Trustee. [TRUSTEE NAME] is appointed as the initial Trustee and accepts the trusteeship.
2. Successor Trustee. Upon a vacancy, the next-named successor in Schedule D shall serve. If none, a Qualified Beneficiary, with court approval if required, may appoint a successor.
3. Bond. No bond shall be required unless ordered by a court of competent jurisdiction.

C. Trustee Powers & Duties

1. Statutory Powers. Trustee shall possess all powers granted by NC-UTC Article 8, subject to any limitations herein.
2. Specific Powers. Without limiting the foregoing, Trustee may:
   a. Invest and reinvest the Trust Estate in any prudent investment;
   b. Retain non-income-producing assets;
   c. Borrow money, secure loans with Trust assets, and encumber property;
   d. Form or participate in entities;
   e. Employ professionals and delegate authority as permitted by NC-UTC § 36C-8-807.
3. Duty of Prudence. Trustee shall discharge duties in good faith and in accordance with the purposes of the Trust and the interests of the Beneficiaries.
4. Accounting. Trustee shall furnish an annual written accounting within 90 days after the close of each Accounting Period to each Qualified Beneficiary.

D. Distributions & Beneficiary Rights

1. Mandatory Distributions. [DESCRIBE, e.g., “Commencing on the first anniversary of the Effective Date, Trustee shall distribute all net income quarterly to the Primary Beneficiaries, per stirpes.”]
2. Discretionary Distributions. Trustee may distribute principal for a Beneficiary’s health, education, maintenance, or support (“HEMS Standard”).
3. Withdrawal Rights / Crummey Powers. [If applicable, specify withdrawal windows and notices.]
4. Beneficiary Information Rights. Each Qualified Beneficiary is entitled to:
   a. A copy of this Agreement;
   b. Annual accountings (Section III.C.4);
   c. Reasonable information to protect his or her interests, per NC-UTC § 36C-8-813.

E. Tax Matters

1. Federal Classification. It is intended that the Trust be treated as [SELECT: “a grantor trust under Code §§ 671–679” / “a non-grantor trust”].
2. Tax Identification. Trustee shall obtain an EIN unless the Trust is wholly-owned grantor trust.
3. Tax Payments. Trustee may pay any taxes attributable to the Trust Estate from Trust assets.
4. Elections. Trustee may make any tax elections (including QSST, ESBT, or electing small business trust status) deemed advisable.

[// GUIDANCE: Consult the client’s tax advisor to confirm grantor vs. non-grantor objectives, GST exemption allocations, and Crummey notice protocol.]

IV. REPRESENTATIONS & WARRANTIES

1. Settlor. Settlor represents that (a) Settlor is of legal age and sound mind, (b) the property transferred is free of encumbrances except as disclosed on Schedule C, and (c) Settlor has full right, power, and authority to transfer the property to the Trust.
2. Trustee. Trustee represents that (a) Trustee is not disqualified under any applicable law, (b) Trustee will faithfully administer the Trust, and (c) Trustee has reviewed and understands the fiduciary duties imposed by NC-UTC Article 8.
3. Reliance. Any third party dealing with Trustee may rely upon this Section IV without duty of further inquiry.

V. COVENANTS & RESTRICTIONS

1. Affirmative Covenants. Trustee shall:
   a. Maintain accurate Trust records;
   b. File all required tax returns;
   c. Administer the Trust exclusively for the benefit of the Beneficiaries.
2. Negative Covenants. Trustee shall not:
   a. Engage in self-dealing except as permitted under NC-UTC § 36C-8-802(b);
   b. Commingle Trust assets with personal or other assets;
   c. Make speculative investments inconsistent with the prudent investor rule.
3. Settlor Covenant. Settlor shall execute any additional instruments reasonably requested to perfect title in Trustee.

VI. DEFAULT & REMEDIES

1. Events of Default. The following constitute defaults:
   a. Trustee’s breach of fiduciary duty;
   b. Failure to provide an accounting within 120 days after written demand;
   c. Conviction of Trustee of a felony involving dishonesty.
2. Notice & Cure. Qualified Beneficiaries shall give written notice specifying the default. Trustee shall have 30 days to cure unless the default is incapable of cure.
3. Remedies. Upon uncured default, Qualified Beneficiaries may:
   a. Petition the Clerk of Superior Court of [COUNTY], North Carolina, for removal of Trustee and appointment of a successor;
   b. Seek surcharge, restitution, or equitable relief;
   c. Recover reasonable attorneys’ fees and expenses.

VII. RISK ALLOCATION

1. Trustee Indemnification. Trustee (and agents) shall be indemnified, to the fullest extent permitted by law, from the Trust Estate for any claim or liability arising out of administration of the Trust, except for acts of gross negligence, willful misconduct, or bad faith.
2. Liability Cap. Any liability of Trustee to the Trust or Beneficiaries shall be limited to the total value of the Trust Estate at the time the liability is determined.
3. Insurance. Trustee may purchase fiduciary liability insurance at Trust expense.
4. Force Majeure. Trustee shall not be liable for delay or failure to act due to events beyond reasonable control, including market disruptions, natural disasters, or government actions.

VIII. DISPUTE RESOLUTION

1. Governing Law. This Agreement and the Trust shall be governed by and construed in accordance with the laws of the State of North Carolina, without regard to conflict-of-laws principles.
2. Forum Selection. Exclusive jurisdiction shall lie in the probate division of the North Carolina General Court of Justice, Superior Court Division, [COUNTY] County (the “Probate Court”), except as the parties may otherwise agree in Section VIII.3.
3. Optional Arbitration. Any party may elect binding arbitration under the North Carolina Revised Uniform Arbitration Act (N.C. Gen. Stat. § 1-569.1 et seq.) by providing written notice to all parties. The election shall be effective unless objected to by a Qualified Beneficiary within 30 days; absent objection, arbitration shall proceed before a single arbitrator experienced in trust matters.
4. Jury Waiver. To the extent any matter is triable to a jury, the parties waive trial by jury; provided, however, that most trust matters are equitable and non-jury in the Probate Court.
5. Injunctive Relief. The Probate Court (or arbitrator) may issue temporary, preliminary, and permanent injunctive relief to enforce or preserve Trust assets.

IX. GENERAL PROVISIONS

1. Amendments. This Agreement may be amended only (a) as permitted under NC-UTC § 36C-4-411 or § 36C-4-412, or (b) by judicial order; otherwise, it is irrevocable.
2. Waiver. No waiver of a breach shall be deemed a waiver of any subsequent breach.
3. Assignment. Neither this Agreement nor any Beneficiary’s interest may be assigned, voluntarily or involuntarily, except as expressly permitted herein.
4. Severability. Any invalid provision shall be severed and the remainder enforced to the fullest extent permitted by law.
5. Merger. This Agreement constitutes the entire trust instrument and supersedes all prior understandings.
6. Successors & Assigns. The provisions hereof bind and inure to the benefit of all successors-in-interest.
7. Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which is deemed an original, and may be signed electronically in compliance with N.C. Gen. Stat. § 66-58.1 et seq.

X. EXECUTION BLOCK

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

[ADD SECOND TRUSTEE SIGNATURE LINE IF APPLICABLE]

STATE OF NORTH CAROLINA
COUNTY OF [COUNTY]

The foregoing instrument was acknowledged before me this ___ day of ____, 20__, by [SETTLOR NAME].

Notary Public
My commission expires: _____

(Repeat acknowledgment block for Trustee.)

SCHEDULE A – BENEFICIARIES

SCHEDULE B – ADMINISTRATOR

[Name, Address, Limited Powers]

SCHEDULE C – INITIAL CORPUS

[List cash amounts, securities, real property legal descriptions, insurance policies, etc.]

SCHEDULE D – SUCCESSOR TRUSTEE ORDER

1. [FIRST SUCCESSOR]
2. [SECOND SUCCESSOR]

[// GUIDANCE:
1. Attach Crummey notice form if annual withdrawal rights are granted.
2. For life-insurance funded trusts, add Section on insurance management and Schedule of policies.
3. Review state income tax nexus rules if a non-resident trustee or beneficiaries are contemplated.]