[TRUST NAME]
Irrevocable Trust Agreement
(Governed by the New Mexico Uniform Trust Code, NMSA 1978, §§ 46A-1-101 et seq.)
Effective Date: [EFFECTIVE DATE]
TABLE OF CONTENTS
- Document Header
- Definitions
- Operative Provisions
3.1 Creation & Funding
3.2 Irrevocability
3.3 Purpose
3.4 Beneficiaries & Interests - Representations & Warranties
- Covenants & Restrictions
- Default & Remedies
- Risk Allocation
- Dispute Resolution
- General Provisions
- Execution Block
- Exhibits & Schedules
[// GUIDANCE: Update page numbers after finalizing.]
1. DOCUMENT HEADER
This Irrevocable Trust Agreement (“Agreement”) is made and entered into as of [EFFECTIVE DATE] (the “Effective Date”) by and among:
• [SETTLOR NAME], an individual with domicile at [SETTLOR ADDRESS] (“Settlor”); and
• [TRUSTEE NAME], whose address is [TRUSTEE ADDRESS] (together with any Successor Trustee, the “Trustee”).
The Settlor hereby irrevocably assigns, transfers, and delivers to the Trustee the property described in Exhibit A (the “Initial Trust Property”) to hold, manage, and distribute as provided herein, thereby establishing the [TRUST NAME] (the “Trust”).
2. DEFINITIONS
Unless the context clearly requires otherwise, capitalized terms have the meanings set forth below. Terms defined in one Section are incorporated by reference throughout.
“Accounting Period” – The calendar year ending December 31, unless otherwise elected by the Trustee for federal tax purposes.
“Beneficiaries” – Collectively, [PRIMARY BENEFICIARY(IES)] and any Additional Beneficiaries designated per Section 3.4.
“Distributable Income” – Fiduciary accounting income as determined under NMSA 1978, § 46A-8-801 et seq. and applicable regulations.
“NMUTC” – The New Mexico Uniform Trust Code, NMSA 1978, §§ 46A-1-101 et seq.
“Trust Assets” – All property held from time to time by the Trustee, including the Initial Trust Property and any additions.
“Trust Estate” – Same as Trust Assets.
“Trustee Compensation” – Compensation determined in accordance with Section 4.4.
[Add additional defined terms as needed.]
3. OPERATIVE PROVISIONS
3.1 Creation & Funding
a. The Trust is hereby created as a valid and enforceable trust under the NMUTC.
b. The Settlor has delivered the Initial Trust Property described in Exhibit A, receipt of which the Trustee acknowledges.
c. Additional property may be transferred to the Trust at any time by the Settlor, the Beneficiaries, or third parties with Trustee approval.
3.2 Irrevocability
a. This Trust is irrevocable. The Settlor expressly waives all rights to amend, revoke, or terminate the Trust, except as permitted under NMUTC § 46A-4-411 and Section 3.2(c) herein.
b. No power of appointment, reversionary interest, or reserved control shall be implied from any provision unless expressly stated.
c. Limited Court Modification. A court of competent jurisdiction may modify administrative provisions consistent with the Trust purposes if continuation under existing terms would defeat or substantially impair those purposes.
[// GUIDANCE: Court modification language tracks NMUTC irreversibility principles while preserving flexibility for unforeseen changes.]
3.3 Purpose
The primary purposes of the Trust are to (i) hold, manage, and protect assets for the Beneficiaries; (ii) provide for tax-efficient long-term wealth transfer; and (iii) shield Trust Assets from creditor claims to the maximum extent allowed by law.
3.4 Beneficiaries & Interests
a. Primary Beneficiary(ies): [PRIMARY BENEFICIARY(IES)].
b. Secondary/Contingent Beneficiaries: [CONTINGENT BENEFICIARIES].
c. Spendthrift Protection. Each Beneficiary’s interest shall be held subject to a spendthrift provision under NMUTC § 46A-5-502, prohibiting voluntary or involuntary transfer before actual distribution.
4. REPRESENTATIONS & WARRANTIES
4.1 Settlor
a. Has full legal capacity and good title to all property transferred to the Trust.
b. Understands the legal and tax consequences of creating an irrevocable trust.
c. Has received or waived independent legal and tax advice.
4.2 Trustee
a. Is qualified to serve as trustee under NMUTC § 46A-7-701.
b. Accepts the trusteeship and acknowledges fiduciary duties of loyalty and prudent administration.
c. Will maintain bond or insurance if required by law or Section 7.3.
4.3 Survival
All representations and warranties survive execution and remain in effect for the duration of the Trust.
5. COVENANTS & RESTRICTIONS
5.1 Trustee Affirmative Covenants
a. Administer the Trust in good faith, in accordance with its terms and the NMUTC.
b. Keep complete and accurate books in accordance with generally accepted fiduciary accounting principles.
c. Provide annual statements to each Beneficiary within 90 days after each Accounting Period.
5.2 Negative Covenants
a. The Trustee shall not commingle Trust Assets with personal assets.
b. The Trustee shall not engage in self-dealing, except as expressly authorized in Section 5.3.
5.3 Permitted Transactions With Trustee Interest
Transactions in which the Trustee has an interest are permissible only if (i) fully disclosed in writing to all qualified Beneficiaries, and (ii) approved by an independent fiduciary or court order.
6. DEFAULT & REMEDIES
6.1 Events of Default
a. Breach of fiduciary duty or gross negligence by the Trustee.
b. Material violation of this Agreement not cured within 30 days of written notice.
c. Trustee insolvency, incapacity, or conviction of a felony involving dishonesty.
6.2 Remedies
a. Removal and replacement of Trustee per Section 6.3.
b. Surcharge against the Trustee’s fiduciary bond or personal assets, limited to the Trust’s actual damages.
c. Injunctive relief to prevent dissipation or improper transfer of Trust Assets.
6.3 Removal & Appointment of Successor Trustee
Qualified Beneficiaries holding a majority beneficial interest may, upon written notice, remove a defaulting Trustee and appoint [SUCCESSOR TRUSTEE], subject to court approval if required.
6.4 Attorneys’ Fees & Costs
Reasonable attorneys’ fees and court costs incurred in enforcing Trust provisions shall be chargeable against the Trust Estate, except those resulting from Trustee misconduct, which shall be the personal obligation of the Trustee.
7. RISK ALLOCATION
7.1 Indemnification of Trustee
The Trustee and its agents are indemnified from the Trust Estate against any claim, liability, or expense arising from lawful administration of the Trust, except for willful misconduct or gross negligence.
7.2 Limitation of Liability
The Trustee’s liability is limited to Trust Assets; no personal liability attaches for acts performed in fiduciary capacity, except as provided by NMUTC § 46A-10-1003.
7.3 Insurance
The Trustee may procure fiduciary liability insurance, the premiums of which shall be paid from the Trust Estate.
7.4 Force Majeure
The Trustee is excused from performance to the extent prevented by events beyond reasonable control, including natural disasters, war, terrorism, or changes in applicable law.
8. DISPUTE RESOLUTION
8.1 Governing Law
This Agreement is governed by the laws of the State of New Mexico, without regard to conflict-of-laws principles.
8.2 Forum Selection
Exclusive jurisdiction and venue lie in the state probate division of the [COUNTY] District Court, New Mexico.
8.3 Arbitration (Optional)
[OPTION A – INSERT if arbitration desired]
Any dispute not resolved informally within 30 days shall be submitted to binding arbitration administered by the American Arbitration Association under its Commercial Rules. Judgment may be entered in any court of competent jurisdiction.
[OPTION B – DELETE if not used.]
8.4 Jury Waiver
Trust disputes are adjudicated in probate; accordingly, no party shall demand a jury trial.
8.5 Injunctive Relief
Nothing herein shall limit the right of any party to seek provisional or injunctive relief from the probate court to protect the Trust Estate.
9. GENERAL PROVISIONS
9.1 Amendment & Waiver
No amendment or waiver is effective unless (i) permitted by NMUTC § 46A-4-411 and (ii) executed in writing by the Trustee and all qualified Beneficiaries or ordered by a court of competent jurisdiction.
9.2 Assignment
Interests of Beneficiaries are non-assignable except after distribution. Trustee may not delegate core fiduciary functions without prior written consent of all qualified Beneficiaries or court approval.
9.3 Successors & Assigns
All provisions bind and inure to the benefit of the parties and their lawful successors and assigns.
9.4 Severability
If any provision is held unenforceable, the remainder shall be given full force, and the offending provision reformed to the minimum extent necessary to achieve the intended purpose.
9.5 Entire Agreement
This document and its Exhibits constitute the entire agreement, superseding all prior understandings.
9.6 Counterparts; Electronic Signatures
This Agreement may be executed in multiple counterparts, each deemed an original. Electronic signatures are binding to the fullest extent permitted by the Uniform Electronic Transactions Act, NMSA 1978, §§ 14-16-1 et seq.
10. EXECUTION BLOCK
IN WITNESS WHEREOF, the parties have executed this Irrevocable Trust Agreement as of the Effective Date.
Settlor
[SETTLOR NAME], Settlor
Trustee
[TRUSTEE NAME], Trustee
Acknowledgment (New Mexico)
State of New Mexico )
County of ____ ) ss.
On this ___ day of ____, 20__, before me, the undersigned Notary Public, personally appeared [SETTLOR NAME] and [TRUSTEE NAME], known to me or satisfactorily proven to be the persons whose names are subscribed to the foregoing instrument, and acknowledged that they executed the same for the purposes therein contained.
Notary Public
My Commission Expires: ____
[// GUIDANCE: Add additional witness lines if your title insurer, financial institution, or local rules require.]
11. EXHIBITS & SCHEDULES
• Exhibit A – Description of Initial Trust Property
• Exhibit B – Schedule of Trustee Compensation
• Exhibit C – Beneficiary Contact Information
• [Additional exhibits as needed]
[// GUIDANCE:
1. TAX NOTE – Irrevocable trusts are separate taxable entities under IRC Subchapter J. Confirm EIN issuance and file Form 1041 annually. New Mexico conforms largely to federal taxable income but requires Form Fid-1 for resident trusts.
2. GENERATION-SKIPPING TRANSFER (GST) – If GST exclusion allocation is desired, file timely Form 709.
3. INSURANCE – Consider naming the Trust as owner and beneficiary of life insurance policies to avoid estate inclusion.
4. FUNDING – Title real property conveys via recorded deed; personal property via assignment.
5. REVIEW – Always confirm latest NMUTC amendments and local probate court rules.]