IRREVOCABLE TRUST AGREEMENT

(New Jersey Governed Trust)

[// GUIDANCE: This template is drafted for use by New Jersey counsel. Customize all bracketed fields, confirm tax objectives with the client’s tax advisor, and review against the most current version of the New Jersey Uniform Trust Code and any applicable federal or state tax regulations before execution.]

TABLE OF CONTENTS

1. Definitions
2. Establishment of Trust; Identification of Parties
3. Irrevocability
4. Trust Property and Funding
5. Beneficiaries and Beneficial Interests
6. Distributions
7. Trustee Provisions
   7.1 Appointment and Acceptance
   7.2 Powers of Trustee
   7.3 Duties of Trustee
   7.4 Trustee Compensation and Reimbursement
   7.5 Trustee Liability; Indemnification; Liability Cap
8. Tax Matters
9. Spendthrift and Creditor Protection
10. Administrative Provisions
11. Default and Remedies
12. Risk Allocation
13. Dispute Resolution
14. General Provisions
15. Execution

1. DEFINITIONS

For purposes of this Agreement, capitalized terms have the meanings set forth below. Terms defined in the singular include the plural and vice-versa as the context requires.

“Agreement” means this Irrevocable Trust Agreement, together with all Exhibits and duly-executed amendments.

“Beneficiary” means each individual or entity identified in Section 5.1, together with any successor or additional beneficiaries determined in accordance with this Agreement.

“Code” means the Internal Revenue Code of 1986, as amended, and the Treasury Regulations issued thereunder.

“Distributing Fiduciary” means the Trustee then serving with authority to make distributions.

“Governing Law” has the meaning given in Section 13.1.

“Irrevocability Date” means the Effective Date set forth in Section 2.3.

“Trust” means the irrevocable trust created by this Agreement.

“Trust Estate” means all property, tangible or intangible, real or personal, and any earnings, accretions, substitutions, and reinvestments thereof, held at any time under this Agreement.

“Trustee” means the trustee(s) identified in Section 7.1 and any successor trustee(s) appointed under this Agreement.

[// GUIDANCE: Add additional defined terms as needed to reflect specific drafting choices.]

2. ESTABLISHMENT OF TRUST; IDENTIFICATION OF PARTIES

2.1 Settlor. [NAME OF SETTLOR], residing at [ADDRESS] (“Settlor”), is of legal age and sound mind and desires to create an irrevocable trust under New Jersey law.

2.2 Trustee. [NAME OF INITIAL TRUSTEE], [corporate form, if applicable], with its principal place of business at [ADDRESS] (“Trustee”), accepts the trusteeship on the terms set forth herein.

2.3 Effective Date. This Agreement is effective on [EFFECTIVE DATE] (the “Effective Date”).

2.4 Name of Trust. The trust shall be known as the “[NAME OF TRUST]” (the “Trust”).

2.5 Consideration. In consideration of the covenants herein, and for other good and valuable consideration, Settlor hereby transfers, assigns, and delivers to Trustee the property described in Exhibit A, receipt of which Trustee acknowledges, to hold in trust according to this Agreement.

3. IRREVOCABILITY

3.1 Absolute Irrevocability. Upon execution, this Trust is irrevocable. Settlor expressly waives all powers, rights, and interests—whether under N.J. statutory or common law—to alter, amend, revoke, or terminate the Trust, except as expressly permitted in Section 14.1.

3.2 Limited Judicial Modification. Nothing in this Section prohibits a court of competent jurisdiction from modifying or terminating the Trust in a manner and to the extent permitted under the New Jersey Uniform Trust Code upon petition by the Trustee or all beneficiaries.

3.3 Settlor’s Creditors. After the Irrevocability Date, no portion of the Trust Estate shall be subject to the claims of Settlor’s creditors.

4. TRUST PROPERTY AND FUNDING

4.1 Initial Funding. The property described in Exhibit A constitutes the initial Trust corpus.

4.2 Additional Contributions. With Trustee’s written consent, any person, including Settlor, may make additional irrevocable contributions to the Trust. Such property shall thereafter form part of the Trust Estate and be governed by this Agreement.

4.3 Separate Share Accounting. Trustee may maintain separate accounting records for contributions attributable to each Beneficiary when advisable for tax or equitable administration purposes.

5. BENEFICIARIES AND BENEFICIAL INTERESTS

5.1 Primary Beneficiary(ies). The following are designated as primary Beneficiaries:
(a) [NAME], [relationship to Settlor], born [DOB];
(b) [NAME], [relationship to Settlor], born [DOB].

5.2 Contingent Beneficiaries. If no primary Beneficiary is living, the Trust Estate shall be distributed to [CONTINGENT BENEFICIARY DESCRIPTION].

5.3 Beneficiary Rights.
(a) Information and Accounting. Consistent with New Jersey law, each Beneficiary is entitled to a reasonably current report of the Trust’s administration upon written request.
(b) Enforcement. A Beneficiary has standing in the Chancery Division, Probate Part, of the New Jersey Superior Court to enforce the Trust.
(c) Disclaimer. Any Beneficiary may disclaim all or part of an interest in compliance with applicable law.

6. DISTRIBUTIONS

6.1 Distribution Standard. The Trustee may distribute net income and principal to or for the benefit of any Beneficiary for [HEALTH, EDUCATION, MAINTENANCE, AND SUPPORT (“HEMS”) / OTHER STANDARD] in the Trustee’s sole and absolute discretion.

6.2 Mandatory Distributions. [OPTIONAL—Insert mandatory distribution ages or milestones.]

6.3 Power of Appointment. [OPTIONAL—Grant Beneficiary a limited power of appointment, exercisable by will, limited to descendants.]

6.4 Spendthrift Protection. All distributions are subject to Section 9.

[// GUIDANCE: Consider GST tax implications if the Trust is intended to be GST-exempt.]

7. TRUSTEE PROVISIONS

7.1 Appointment and Acceptance

(a) Initial Trustee. [NAME OF INITIAL TRUSTEE] is appointed as Trustee and hereby accepts the office.
(b) Successor Trustee. If the office becomes vacant, [DESIGNATE SUCCESSOR TRUSTEE OR MECHANISM].

7.2 Powers of Trustee

The Trustee shall have all powers conferred by applicable law and those enumerated below, each to be exercised in a fiduciary capacity and in the Trustee’s discretion:
1. Invest and reinvest Trust assets, with no restrictions to “legal list” investments;
2. Retain non-income-producing property;
3. Employ agents, advisors, and custodians;
4. Settle or compromise claims;
5. Borrow, pledge, or encumber Trust assets;
6. Divide or distribute assets in cash or in kind, at fair market values determined by the Trustee;
7. Make tax elections and allocations;
8. Execute instruments as may be necessary;
9. Any additional powers permitted under New Jersey law.

7.3 Duties of Trustee

1. Duty of Loyalty;
2. Duty to Act with Reasonable Skill, Care, and Prudence;
3. Duty to Keep Adequate Records;
4. Duty to Furnish Information to Beneficiaries per Section 5.3(a).

7.4 Trustee Compensation and Reimbursement

(a) Compensation. The Trustee shall be compensated as set forth in Exhibit B or, if none, pursuant to its published schedule in effect at the time services are rendered.
(b) Reimbursement. The Trustee is entitled to reimbursement from the Trust Estate for reasonable costs and expenses, including professional fees.

7.5 Trustee Liability; Indemnification; Liability Cap

(a) Standard of Care. The Trustee shall not be liable for any act or omission except for willful misconduct or gross negligence.
(b) Indemnification. The Trust Estate shall indemnify and hold harmless the Trustee from and against any loss, liability, or expense, including reasonable attorneys’ fees, incurred in the administration of the Trust, provided such loss is not attributable to the Trustee’s willful misconduct or gross negligence (“Trustee Indemnity”).
(c) Liability Cap. Any liability of the Trustee to the Trust or to any Beneficiary shall be limited to the value of the Trust assets under the Trustee’s control at the time the liability is determined (“Liability Cap”). No personal assets of the Trustee shall be subject to collection.

8. TAX MATTERS

8.1 Tax Status. The Trust is intended to qualify as a [GRANTOR / NON-GRANTOR] trust for federal income tax purposes. Nothing herein shall be construed to conflict with that intent.

8.2 Tax Identification Number. Trustee shall obtain and use an employer identification number (EIN) for the Trust unless the Trust is wholly taxable to Settlor as a grantor trust.

8.3 Tax Elections. Trustee may make any elections permitted under the Code or other tax law to carry out the purposes of the Trust, including making or refraining from making a Code § 645 election, Code § 754 election, or any state-law equivalent.

8.4 Payment of Taxes. The Trustee may pay from the Trust Estate any income, transfer, inheritance, or other taxes attributable to the Trust.

[// GUIDANCE: Coordinate closely with the client’s CPA or tax counsel. State inheritance or estate tax could apply depending on Beneficiary class.]

9. SPENDTHRIFT AND CREDITOR PROTECTION

9.1 Non-Alienation. No Beneficiary may anticipate, assign, pledge, or encumber any interest in the Trust prior to actual receipt, and such interest shall not be reachable by a Beneficiary’s creditors or be subject to legal process, to the maximum extent permitted by law.

9.2 Exceptions. This Section does not restrict enforcement of a child-support order, spousal support order, or judgment for restitution, to the extent such enforcement is not prohibited by applicable law.

10. ADMINISTRATIVE PROVISIONS

10.1 Records and Accounts. Trustee shall maintain accurate books and records, which shall be available to any Beneficiary upon reasonable notice.

10.2 Notices. All notices required or permitted under this Agreement must be in writing and deemed given when delivered personally, by certified mail (return receipt requested), or by nationally-recognized overnight courier to the last known address of the recipient.

10.3 Valuation. In the absence of negligence, the Trustee’s determination of the fair market value of Trust assets is conclusive.

10.4 Reliance on Advice. Trustee may rely on professional advice (legal, accounting, investment) and shall not be liable for any act or omission taken in good-faith reliance on such advice.

10.5 Non-Merger. Legal and equitable titles shall not merge in the Trustee.

11. DEFAULT AND REMEDIES

11.1 Events of Default. For purposes of this Agreement, “Default” means:
(a) Trustee’s willful misconduct or gross negligence;
(b) Trustee’s material breach of fiduciary duty;
(c) Trustee’s insolvency or incapacity.

11.2 Notice and Cure. A Beneficiary must provide written notice of Default to the Trustee, specifying facts and requested cure. Trustee shall have thirty (30) days to cure, unless impossible.

11.3 Remedies. Upon an uncured Default, a Beneficiary may:
1. Petition the New Jersey Superior Court, Chancery Division, Probate Part, for removal of the Trustee and appointment of a successor;
2. Seek injunctive relief for Trust enforcement;
3. Seek monetary damages, subject to Section 7.5(c).

11.4 Attorneys’ Fees. In any judicial proceeding arising from a Default, the prevailing party is entitled to reasonable attorneys’ fees and costs payable from the Trust Estate or, in the case of Trustee misconduct, personally by the Trustee.

12. RISK ALLOCATION

12.1 Indemnification. See Section 7.5(b) (Trustee Indemnity).

12.2 Insurance. Trustee may obtain fiduciary liability insurance and pay premiums from the Trust Estate.

12.3 Force Majeure. Trustee is not liable for delay or failure to perform caused by events beyond its reasonable control, including natural disasters, acts of war, or changes in law.

13. DISPUTE RESOLUTION

13.1 Governing Law. This Agreement and the Trust are governed by the laws of the State of New Jersey (the “Governing Law”), without regard to conflict-of-laws principles.

13.2 Forum Selection. Exclusive jurisdiction and venue for any judicial proceeding relating to this Trust shall lie in the Probate Part of the Chancery Division of the Superior Court of New Jersey located in [COUNTY], unless such court lacks subject-matter jurisdiction.

13.3 Arbitration (Optional). [OPTIONAL—If elected by Settlor in writing prior to any dispute: Any dispute, claim, or controversy arising out of or relating to this Agreement or the Trust (“Dispute”) shall be resolved by binding arbitration administered by the American Arbitration Association (“AAA”) under its Commercial Arbitration Rules then in effect. Judgment on the award may be entered in any court of competent jurisdiction. A request for injunctive or provisional relief necessary to protect the Trust Estate may still be filed in the court identified in Section 13.2.]

13.4 Jury Waiver. To the extent any Dispute is not required to be heard in the Probate Part and would otherwise be triable to a jury, the parties knowingly and voluntarily waive trial by jury to the fullest extent permitted by law.

13.5 Injunctive Relief. Nothing herein limits a Beneficiary’s or Trustee’s right to seek specific performance or injunctive relief to enforce the terms of the Trust.

14. GENERAL PROVISIONS

14.1 Amendment. Except as provided in Section 3.2 (judicial modification), this Agreement may not be amended. Any court-approved amendment shall be in writing, executed with the same formality as this Agreement, and attached hereto.

14.2 Severability. If any provision of this Agreement is held invalid or unenforceable, the remaining provisions shall be given effect to the maximum extent possible, and the invalid provision reformed to achieve its intended purpose.

14.3 Assignment. A Beneficiary’s interest is not assignable except as expressly permitted herein.

14.4 Successors and Assigns. This Agreement binds and benefits the parties and their respective heirs, successors, and permitted assigns.

14.5 Entire Agreement. This Agreement constitutes the entire understanding of the parties with respect to the Trust and supersedes all prior agreements, oral or written, concerning the subject matter.

14.6 Counterparts; Electronic Signatures. This Agreement may be executed in any number of counterparts, each deemed an original, together constituting one instrument. Signatures delivered by electronic transmission (e.g., PDF) or in electronic signature format (e.g., DocuSign) are binding.

15. EXECUTION

IN WITNESS WHEREOF, the Settlor and Trustee have executed this Irrevocable Trust Agreement as of the Effective Date.

SETTLOR

[NAME OF SETTLOR]

TRUSTEE

[NAME AND TITLE]
[Entity Name, if applicable]

[// GUIDANCE: Add acknowledgment blocks for additional Trustees as needed.]

STATE OF NEW JERSEY )

COUNTY OF ____ ) ss.:

On the _ day of _, 20__, before me, the undersigned Notary Public, personally appeared ________, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) who executed the foregoing instrument and acknowledged it to be [his/her/their] act and deed.

Notary Public
My Commission Expires: ____

[// GUIDANCE: New Jersey generally requires acknowledgment for recordable instruments; notarization here is recommended to facilitate probate court acceptance.]

EXHIBIT A – Schedule of Trust Property

[List cash amounts, securities, real property (with legal description), life insurance policy assignments, etc.]

EXHIBIT B – Trustee Compensation Schedule

[Attach published fee schedule or negotiated terms.]

EXHIBIT C – Designation of Successor Trustee

[Optional form for Settlor to designate a successor trustee prior to death.]

[// GUIDANCE: Insert any additional exhibits, such as certification of trust for third-party institutions, as practice dictates.]

THIS TEMPLATE IS PROVIDED FOR PROFESSIONAL USE ONLY AND DOES NOT CONSTITUTE LEGAL ADVICE. CONSULT QUALIFIED COUNSEL BEFORE IMPLEMENTATION.