The following template is provided for professional use by licensed attorneys. It is not legal advice and must be reviewed, customized, and approved by counsel admitted in the State of New York before execution.
IRREVOCABLE TRUST AGREEMENT
(New York Law – EPTL-Governed)
TABLE OF CONTENTS
I. Document Header
II. Definitions
III. Creation of Trust & Operative Provisions
IV. Representations & Warranties
V. Covenants & Restrictions
VI. Defaults & Remedies
VII. Risk Allocation
VIII. Dispute Resolution
IX. General Provisions
X. Execution Block
I. DOCUMENT HEADER
A. Title and Parties
This Irrevocable Trust Agreement (“Agreement”) is entered into as of [EFFECTIVE DATE] (the “Effective Date”) by and among:
1. [SETTLOR NAME], residing at [SETTLOR ADDRESS] (“Settlor”);
2. [TRUSTEE NAME], having a principal address at [TRUSTEE ADDRESS] (“Trustee”); and
3. The persons identified in Schedule A attached hereto (each, a “Beneficiary”; collectively, the “Beneficiaries”).
B. Recitals
WHEREAS, Settlor desires to create an irrevocable trust under the laws of the State of New York for the benefit of the Beneficiaries; and
WHEREAS, Trustee is willing to accept the trusteeship and to administer the trust in accordance with the terms herein;
NOW, THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree as follows.
[// GUIDANCE: Customize recital language to reflect specific estate-planning objectives, e.g., wealth transfer, asset protection, charitable purposes.]
II. DEFINITIONS
For purposes of this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not defined have the meanings ascribed elsewhere in this Agreement.
“Accounting Period” means each calendar year ending December 31, or such other period as the Trustee may reasonably select.
“Agreement” has the meaning set forth in Section I.
“Applicable Law” means the New York Estates, Powers & Trusts Law (“EPTL”), the Surrogate’s Court Procedure Act (“SCPA”), the Internal Revenue Code (“IRC”), and other federal or state statutes or regulations governing this Trust.
“Beneficiary” or “Beneficiaries” has the meaning set forth in Section I.A.
“Change of Trustee” means any resignation, removal, or succession of the Trustee pursuant to Section VI.
“Code” means the Internal Revenue Code of 1986, as amended.
“Decanting Statute” means EPTL § 10-6.6 or any successor provision.
“Dispositive Provisions” means the distribution provisions contained in Section III.D.
“Event of Default” has the meaning set forth in Section VI.A.
“Irrevocable” means incapable of unilateral amendment or revocation by the Settlor, except as permitted under EPTL § 7-1.9 with the written consent of all Beneficiaries.
“Trust” means the irrevocable trust created under this Agreement.
“Trust Assets” means all property transferred to or acquired by the Trust, including both principal and undistributed income.
“Trustee” has the meaning set forth in Section I.A.
III. CREATION OF TRUST & OPERATIVE PROVISIONS
A. Declaration of Trust
1. Settlor hereby irrevocably transfers, assigns, and delivers to Trustee the property described in Schedule B (the “Initial Corpus”) to hold in trust, together with all additions thereto, as Trust Assets subject to this Agreement.
2. The Trust shall be known as the “[SETTLOR NAME] Irrevocable Trust dated [EFFECTIVE DATE]” (the “Trust”).
B. Irrevocability
1. The Trust is irrevocable. Settlor expressly relinquishes any and all rights to alter, amend, revoke, or terminate the Trust, except as may be permitted under EPTL § 7-1.9 with unanimous Beneficiary consent.
2. Any attempted revocation or amendment not in strict compliance with Applicable Law shall be null and void ab initio.
C. Purpose
The primary purposes of the Trust are (i) to provide for the health, education, maintenance, and support (“HEMS”) of the Beneficiaries, (ii) to facilitate efficient inter-generational transfer of wealth, and (iii) to achieve estate and gift-tax efficiencies consistent with IRC §§ 2503(b), 2601, and related provisions.
D. Dispositive Provisions
1. Income Distributions
a. During Settlor’s lifetime, Trustee shall distribute, at least annually, all net Trust income to or for the benefit of the Beneficiaries in such shares and proportions as Trustee, in Trustee’s sole discretion, deems advisable for their HEMS.
2. Principal Distributions
a. Trustee may distribute principal for any Beneficiary’s HEMS, considering all resources reasonably available to such Beneficiary.
3. Final Distribution
a. Upon the termination of the Trust pursuant to Section III.E, Trustee shall distribute the remaining Trust Assets outright, per stirpes, to the then-living Beneficiaries listed in Schedule A.
b. If no Beneficiary survives, Trust Assets shall be distributed to [CHARITABLE REMAINDER BENEFICIARY] as a qualified charitable distribution under IRC § 170.
E. Termination
The Trust shall terminate on the earlier of (i) the twenty-first (21st) anniversary of the death of the last surviving Beneficiary who was alive on the Effective Date, or (ii) total depletion of the Trust Assets.
F. Additional Contributions
Settlor or any third party may make additional, irrevocable contributions to the Trust at any time, subject to Trustee’s acceptance.
G. Trustee Powers
Subject to Applicable Law, Trustee shall possess all powers set forth in EPTL § 11-1.1, including but not limited to:
1. Investment Powers – to invest and reinvest Trust Assets in any property Trustee deems prudent;
2. Distribution Powers – to make distributions in cash or in kind, pro rata or non-pro rata;
3. Decanting – to exercise Trustee’s authority under the Decanting Statute;
4. Tax Elections – to make any elections under the Code that Trustee deems advisable.
IV. REPRESENTATIONS & WARRANTIES
A. Settlor represents and warrants that:
1. Settlor is at least eighteen (18) years of age and has capacity to execute this Agreement;
2. The Initial Corpus is owned free and clear of liens and encumbrances;
3. Transfers contemplated herein will not render Settlor insolvent.
B. Trustee represents and warrants that:
1. Trustee has full power and authority to act and to execute this Agreement;
2. Trustee is not disqualified under Applicable Law from serving as fiduciary;
3. Trustee will administer the Trust in good faith and in accordance with this Agreement.
C. Survival
All representations and warranties shall survive the execution of this Agreement and any Change of Trustee.
V. COVENANTS & RESTRICTIONS
A. Trustee Covenants
1. Standard of Care – Trustee shall exercise the judgment and care of a prudent person managing another’s property.
2. Recordkeeping – Trustee shall maintain complete and accurate books of account.
3. Accountings – Trustee shall provide annual written accountings within ninety (90) days after each Accounting Period.
B. Negative Covenants
Trustee shall not:
1. Engage in self-dealing except as permitted by court order or Beneficiary consent;
2. Borrow or loan Trust Assets to the Settlor or Beneficiaries;
3. Commingle Trust Assets with Trustee’s personal assets.
C. Notice & Cure
Upon learning of any breach, Trustee shall notify Beneficiaries within fifteen (15) days and shall have thirty (30) days to cure before an Event of Default is deemed to occur.
VI. DEFAULTS & REMEDIES
A. Events of Default
1. Trustee’s gross negligence, willful misconduct, or material breach of fiduciary duty;
2. Trustee’s failure to render required accountings within sixty (60) days of Beneficiary demand;
3. Trustee’s insolvency, conviction of a felony, or incapacity.
B. Remedies
1. Removal – Any Beneficiary may petition the Surrogate’s Court of [COUNTY] (“Probate Court”) for removal of Trustee.
2. Surcharge – Trustee shall be liable to restore any losses to the Trust resulting from a breach of fiduciary duty.
3. Injunctive Relief – Beneficiaries may seek equitable relief to restrain Trustee’s wrongful acts without posting bond, to the extent permitted by law.
C. Attorneys’ Fees
In any proceeding arising under this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees and costs, payable from the Trust unless the court directs otherwise.
VII. RISK ALLOCATION
A. Indemnification of Trustee
1. To the fullest extent permitted by law, Trustee shall be indemnified and held harmless out of the Trust Assets against any liability, expense, or loss incurred by reason of any act or omission within the scope of Trustee’s authority, except for acts involving fraud, bad faith, or willful misconduct.
B. Limitation of Liability
Trustee’s personal liability shall at all times be limited to the Trust Assets; no personal assets of Trustee shall be subject to claims arising out of this Agreement, except as otherwise provided by Applicable Law.
C. Insurance
Trustee is authorized, but not required, to purchase fiduciary liability insurance payable from Trust Assets.
D. Force Majeure
No party shall be liable for delay or failure in performance caused by events beyond reasonable control, including but not limited to natural disasters, war, or changes in Applicable Law.
VIII. DISPUTE RESOLUTION
A. Governing Law
This Agreement and any dispute arising hereunder shall be governed by and construed in accordance with the laws of the State of New York, without regard to its conflict-of-law principles.
B. Forum Selection
Exclusive jurisdiction and venue for all proceedings concerning the Trust shall lie in the Surrogate’s Court of [COUNTY], State of New York.
C. Optional Arbitration
[OPTION 1 – INSERT if all parties elect]
Any dispute that the parties agree in writing to submit to arbitration shall be resolved under the Commercial Arbitration Rules of the American Arbitration Association. Judgment upon any award may be entered in the Surrogate’s Court.
[// GUIDANCE: Delete or retain based on client preference; Surrogate’s Court retains supervisory authority over trusts.]
D. Jury Waiver
To the extent any matter is triable by jury, the parties knowingly and voluntarily waive trial by jury.
[// GUIDANCE: Surrogate’s Court proceedings are typically bench trials; clause included for completeness.]
E. Injunctive Relief
Nothing in this Section shall limit the right of any party to seek provisional or injunctive relief from the Surrogate’s Court to protect Trust Assets pending resolution of the dispute.
IX. GENERAL PROVISIONS
A. Amendment & Waiver
1. This Agreement may not be amended or revoked except as permitted under Section III.B and Applicable Law.
2. No waiver of any provision shall be effective unless in writing and signed by the waiving party.
B. Assignment
No interest in the Trust may be voluntarily or involuntarily assigned, pledged, or encumbered by any Beneficiary, except as expressly permitted herein.
C. Spendthrift Protection
All Beneficiary interests are subject to a spendthrift clause under EPTL § 7-1.5, prohibiting voluntary or involuntary transfer of such interests.
D. Successors & Assigns
This Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, executors, administrators, successors, and permitted assigns.
E. Severability
If any provision is held invalid, the remaining provisions shall remain in full force, and the court is authorized to reform the invalid provision to the minimum extent necessary.
F. Entire Agreement
This document constitutes the entire agreement among the parties concerning the subject matter and supersedes all prior agreements or understandings.
G. Counterparts; Electronic Signatures
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original. Signatures transmitted by facsimile, PDF, or secure electronic signature platform shall be deemed original and binding.
X. EXECUTION BLOCK
IN WITNESS WHEREOF, the parties hereto have executed this Irrevocable Trust Agreement as of the Effective Date.
SETTLOR
[SETTLOR NAME]
TRUSTEE
[TRUSTEE NAME], Trustee
Date: ___
ACKNOWLEDGMENT
State of New York )
County of ____ ) ss.:
On the _ day of _, 20__, before me, the undersigned, a Notary Public in and for said state, personally appeared [SETTLOR NAME] and [TRUSTEE NAME], personally known to me or proved to me on the basis of satisfactory evidence to be the individuals whose names are subscribed to the within instrument, and acknowledged that they executed the same in their capacities, and that by their signatures on the instrument the individuals executed the instrument.
Notary Public
My Commission Expires: ____
[// GUIDANCE: Some New York counties also require two witnesses for certain estate-planning documents. Confirm local practice.]
SCHEDULE A – BENEFICIARIES
- [BENEFICIARY 1 NAME], Date of Birth: //____
- [BENEFICIARY 2 NAME], Date of Birth: //____
(attach additional pages as necessary)
SCHEDULE B – INITIAL CORPUS
Description of property and approximate fair-market value.
[// GUIDANCE: Provide appraisal or contemporaneous valuation to support gift-tax reporting.]
End of Template