IRREVOCABLE TRUST AGREEMENT
(Ohio – Governed by the Ohio Trust Code, Ohio Rev. Code Ann. Chapter 5801 et seq.)
TABLE OF CONTENTS
- Document Header
- Definitions
- Operative Provisions
3.1 Creation; Name; Purpose
3.2 Irrevocability
3.3 Funding & Additional Contributions
3.4 Beneficial Interests & Distribution Standards
3.5 Spendthrift Protection
3.6 Trustee Powers & Duties
3.7 Notices, Accountings & Reports
3.8 Tax Matters
3.9 Termination & Final Distribution - Representations & Warranties
- Covenants & Restrictions
- Default & Remedies
- Risk Allocation
- Dispute Resolution
- General Provisions
- Execution Block
[// GUIDANCE: Delete the Table of Contents for shorter agreements or auto-generate page numbers during final formatting]
1. DOCUMENT HEADER
This IRREVOCABLE TRUST AGREEMENT (“Agreement”) is made and entered into on [EFFECTIVE DATE] (“Effective Date”) by and between:
- [SETTLOR NAME], an individual residing at [ADDRESS] (“Settlor”); and
- [TRUSTEE NAME], whose principal address is [ADDRESS] (“Trustee”).
Collectively, Settlor and Trustee are sometimes referred to herein as the “Parties.”
Recitals
A. Settlor desires to create an irrevocable trust under the laws of the State of Ohio for the benefit of the Beneficiaries identified herein.
B. Trustee is willing to accept the trusteeship and to hold the Trust Estate upon the terms set forth herein.
C. The Trust is intended to qualify as an irrevocable trust under applicable Ohio law and to achieve certain federal and state tax objectives.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Settlor hereby irrevocably transfers, assigns, conveys, and delivers to Trustee the property described on Schedule A (the “Initial Corpus”) to hold in trust as follows:
2. DEFINITIONS
For purposes of this Agreement, the following terms shall have the meanings set forth below. Defined terms appear in bold and are used consistently throughout.
“Accounting Period” – Each calendar year ending December 31 unless the Trustee selects a different fiscal year in accordance with applicable law.
“Agreement” – This Irrevocable Trust Agreement, including all Schedules and Exhibits, as may be amended in accordance with Section 9.1.
“Beneficiaries” – Collectively, [PRIMARY BENEFICIARY NAME] and any other persons or entities identified in Section 3.4.
“Code” – The Internal Revenue Code of 1986, as amended.
“County Probate Court” – The Probate Division of the Court of Common Pleas of [COUNTY], Ohio (or any successor court).
“Distribution Standard” – The ascertainable standards of HEMS (health, education, maintenance, and support) unless otherwise specified in Section 3.4.
“Trust” – The irrevocable trust created under this Agreement, known as the “[TRUST NAME]”.
“Trust Estate” – All property transferred to and held by the Trustee, together with all reinvestments and accretions, subject to the terms of this Agreement.
“Trustee” – The person or entity serving as trustee from time to time, including any successor or co-trustee appointed pursuant to Section 3.6.8.
[// GUIDANCE: Add or delete defined terms to match client goals. Alphabetize after final edits.]
3. OPERATIVE PROVISIONS
3.1 Creation; Name; Purpose
3.1.1 Creation. Settlor hereby establishes the Trust pursuant to the Ohio Trust Code, Ohio Rev. Code Ann. Chap. 5801 et seq.
3.1.2 Name. The Trust shall be known as the “[TRUST NAME]” and may transact under that name.
3.1.3 Purpose. The Trust is established to (i) provide for the Beneficiaries’ long-term welfare, (ii) effectuate gift and estate tax planning objectives, and (iii) preserve and grow the Trust Estate.
3.2 Irrevocability
3.2.1 No Revocation. This Trust is irrevocable. Settlor forever waives and releases any right to alter, amend, revoke, or terminate the Trust, except as expressly permitted under Section 3.2.2.
3.2.2 Permitted Modifications. Notwithstanding Section 3.2.1, judicial or non-judicial modification, reformation, or decanting is permitted only to the limited extent authorized by the Ohio Trust Code, provided that such action (a) preserves the Trust’s essential purposes, and (b) does not grant Settlor any prohibited beneficial interest.
[// GUIDANCE: Ohio authorizes modification under stringent conditions; counsel should evaluate ORC §§ 5804.11–.12 before relying on this flexibility.]
3.3 Funding & Additional Contributions
3.3.1 Initial Corpus. The property listed on Schedule A is hereby delivered to Trustee and shall constitute the Initial Corpus.
3.3.2 Additional Contributions. Trustee may accept additional property from any source, provided such property does not cause adverse tax consequences inconsistent with Section 3.8.
3.4 Beneficial Interests & Distribution Standards
3.4.1 Primary Beneficiary. [PRIMARY BENEFICIARY NAME] shall be the primary Beneficiary.
3.4.2 Secondary & Remainder Beneficiaries. The secondary Beneficiaries shall be [SECONDARY BENEFICIARY NAMES OR CLASS]. Upon termination under Section 3.9, the remaining Trust Estate shall vest outright in the remainder Beneficiaries in the shares specified in Schedule B.
3.4.3 Discretionary Distributions. Trustee may distribute income and principal to or for the benefit of the Beneficiaries in Trustee’s sole and absolute discretion, guided by the Distribution Standard.
3.4.4 Mandatory Distributions. None, unless specifically added in Schedule C.
3.5 Spendthrift Protection
3.5.1 Anti-Alienation. To the maximum extent permitted by Ohio law, no Beneficiary shall have the power to assign, encumber, or transfer his or her interest, and such interest shall be exempt from the claims of creditors until actually distributed.
3.5.2 Exceptions. Court-ordered support obligations and other exceptions mandated by law shall apply.
3.6 Trustee Powers & Duties
3.6.1 General Powers. Trustee shall have all powers granted to trustees under the Ohio Trust Code and applicable common law, including without limitation the powers enumerated in Schedule D.
3.6.2 Investment Authority. Trustee shall invest and reinvest the Trust Estate with the care, skill, and caution of a prudent investor, taking into account the objectives of the Trust and Ohio’s Uniform Prudent Investor Act.
3.6.3 Delegation. Trustee may delegate investment and administrative functions pursuant to a written agreement that satisfies statutory standards.
3.6.4 Multiple Trustees. If more than one Trustee serves, decisions shall be made by majority unless otherwise provided in Schedule E.
3.6.5 Resignation. Trustee may resign by giving sixty (60) days’ written notice to Settlor (if living) and the adult Beneficiaries.
3.6.6 Removal. A majority of adult Beneficiaries may remove a Trustee for cause upon thirty (30) days’ written notice, subject to court approval if required.
3.6.7 Successor Trustees. The order of succession is set forth in Schedule F.
3.6.8 Co-Trustees. Co-Trustees shall act jointly unless an emergency requires unilateral action to protect the Trust Estate.
3.7 Notices, Accountings & Reports
3.7.1 Annual Accountings. Within ninety (90) days after the close of each Accounting Period, Trustee shall deliver to each qualified Beneficiary an annual accounting containing the information required by Ohio Rev. Code Ann. § 5808.13.
3.7.2 Interim Reports. Trustee shall provide reasonable interim reports upon written request.
3.7.3 Method of Notice. Notices shall be in writing and delivered by (i) certified U.S. mail, return receipt requested, (ii) nationally recognized overnight courier, or (iii) secure electronic transmission with acknowledgment of receipt.
3.8 Tax Matters
3.8.1 Grantor vs. Non-Grantor Status. The Parties intend that the Trust [IS/IS NOT] treated as a “grantor trust” under §§ 671–679 of the Code.
3.8.2 Gift & Estate Tax. Contributions are intended as completed gifts for federal gift-tax purposes. The Trust assets shall be excluded from Settlor’s gross estate except as otherwise provided in the Code.
3.8.3 Tax Identification. Trustee shall obtain an EIN for the Trust unless grantor-trust treatment applies.
3.8.4 Tax Returns & Elections. Trustee shall timely prepare and file all fiduciary income-tax returns and make such elections as Trustee deems advisable.
3.8.5 Tax Reimbursement. If the Trust is a grantor trust, Trustee may reimburse Settlor for income taxes attributable to Trust income.
[// GUIDANCE: Have tax counsel verify grantor-trust status and draft discretionary reimbursement powers consistent with IRS Rev. Rul. 2004-64.]
3.9 Termination & Final Distribution
3.9.1 Mandatory Termination. The Trust shall terminate upon the first to occur of:
(a) the death of the last living Beneficiary listed on Schedule B;
(b) the date on which the Trust Estate is reduced below [$MINIMUM VALUE] and Trustee determines continued administration is uneconomical; or
(c) the expiration of twenty-one (21) years after the death of the last survivor of the descendants of Settlor living on the Effective Date.
3.9.2 Distribution on Termination. Upon termination, Trustee shall distribute the remaining Trust Estate outright to the remainder Beneficiaries described in Section 3.4.2, free of trust.
3.9.3 Early Termination. Trustee may petition the County Probate Court for early termination if continuation no longer serves any material purpose.
4. REPRESENTATIONS & WARRANTIES
4.1 Settlor’s Representations. Settlor represents that:
(a) Settlor has full legal capacity to create this Trust and transfer the property listed on Schedule A;
(b) The funds transferred constitute Settlor’s separate property, free of any lien or adverse claim; and
(c) Establishing this Trust will not violate any court order, prenuptial agreement, or contractual obligation.
4.2 Trustee’s Representations. Trustee represents that:
(a) Trustee is legally competent and not disqualified under Ohio law from serving;
(b) Trustee has reviewed this Agreement and understands the fiduciary duties imposed by law; and
(c) Trustee has obtained all approvals, licenses, and bonds (if any) required to act as trustee.
4.3 Survival. The representations and warranties in this Section survive the execution of this Agreement.
5. COVENANTS & RESTRICTIONS
5.1 Affirmative Covenants of Trustee. Trustee covenants to:
(a) Administer the Trust Estate in good faith and in accordance with the terms of this Agreement and the Ohio Trust Code;
(b) Maintain accurate books and records;
(c) Secure adequate insurance covering Trust assets where prudent; and
(d) Preserve confidentiality of Trust matters except as required by law.
5.2 Negative Covenants of Trustee. Except as expressly permitted herein, Trustee shall not:
(a) Engage in self-dealing or transactions that constitute a conflict of interest;
(b) Borrow from or lend Trust assets to itself or its affiliates; or
(c) Delegate discretionary distribution authority to any Beneficiary.
5.3 Notice & Cure. In the event of a breach of covenant, Trustee shall have thirty (30) days after written notice from a Beneficiary to cure the breach before any beneficiary may seek judicial relief.
6. DEFAULT & REMEDIES
6.1 Events of Default. The following constitute Events of Default:
(a) Knowing or reckless breach of fiduciary duty;
(b) Failure to provide required accountings within the period prescribed in Section 3.7.1;
(c) Misappropriation of Trust assets; or
(d) Insolvency or bankruptcy of Trustee that materially impairs performance.
6.2 Remedies. Upon an Event of Default and failure to cure, any Beneficiary may:
(a) Petition the County Probate Court for removal of the Trustee;
(b) Seek surcharge, restitution, or other monetary damages to be satisfied from Trustee’s personal assets (subject to Section 7.2);
(c) Request injunctive relief to prevent further harm; and
(d) Recover reasonable attorney fees and costs as provided in Section 6.3.
6.3 Attorney Fees & Costs. The prevailing party in any proceeding arising from an Event of Default shall be entitled to recover reasonable attorney fees and costs from (i) the Trust Estate, or (ii) the personal assets of the defaulting Trustee, as the court deems equitable.
7. RISK ALLOCATION
7.1 Indemnification of Trustee
7.1.1 Scope. To the fullest extent permitted by law, the Trust Estate shall indemnify and hold the Trustee harmless from and against any and all claims, liabilities, and expenses (including reasonable attorney fees) arising out of or in connection with the administration of the Trust, except to the extent such claims result from Trustee’s fraud, intentional misconduct, or gross negligence.
7.1.2 Procedure. Trustee shall promptly notify the Beneficiaries of any claim requiring indemnification and shall allow the Beneficiaries reasonable participation in the defense.
7.2 Limitation of Liability
7.2.1 Cap. Trustee’s liability for monetary damages shall be limited to the lesser of (a) the value of the Trust Estate at the time of judgment, or (b) the amount of loss actually sustained, exclusive of exemplary or punitive damages.
7.2.2 No Waiver of Mandatory Liability. Nothing herein shall exculpate Trustee from liability for breach of trust committed in bad faith or with reckless indifference to the purposes of the Trust or the interests of the Beneficiaries.
7.3 Insurance
Trustee may obtain fiduciary liability insurance, premiums payable from the Trust Estate, to insure against potential claims not otherwise covered by indemnification.
7.4 Force Majeure
Trustee shall not be liable for delays or failures in performance due to events beyond Trustee’s reasonable control, including but not limited to natural disasters, war, terrorism, pandemics, or changes in law that materially impair performance.
8. DISPUTE RESOLUTION
8.1 Governing Law. This Agreement and the Trust shall be governed by, and construed in accordance with, the laws of the State of Ohio, without regard to its conflict-of-laws principles.
8.2 Forum Selection. Exclusive jurisdiction and venue for all proceedings concerning this Trust shall lie in the Probate Division of the Court of Common Pleas of [COUNTY], Ohio.
8.3 Optional Arbitration.
(a) Election. The Parties and any Beneficiary may mutually agree in writing to submit any dispute to binding arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules.
(b) Preservation of Probate Authority. Notwithstanding arbitration, the County Probate Court retains concurrent jurisdiction to the extent required by the Ohio Trust Code.
(c) Consolidation. Related claims shall be consolidated into a single arbitration where practicable.
8.4 Jury Waiver. To the extent a matter is permitted to be tried by a jury, the Parties knowingly waive the right to a jury trial; provided, however, that jury trials are generally unavailable in Ohio probate proceedings.
8.5 Injunctive Relief. Nothing in this Section shall limit the right of any Party or Beneficiary to seek temporary, preliminary, or permanent injunctive relief from the County Probate Court to enforce the terms of this Trust.
9. GENERAL PROVISIONS
9.1 Amendments & Waivers. Except as permitted under Section 3.2.2, this Agreement may be amended only by (i) court order, or (ii) a written instrument executed by Trustee and all Beneficiaries, and approved by the County Probate Court if required. No waiver shall be effective unless in writing and signed by the waiving party.
9.2 Assignment. No party may assign, delegate, or otherwise transfer any rights or obligations under this Agreement except as expressly provided herein or mandated by law.
9.3 Successors & Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns.
9.4 Severability. If any provision is held invalid or unenforceable, such provision shall be reformed to reflect the Parties’ intent to the maximum extent lawful, and the remaining provisions shall continue in full force and effect.
9.5 Integration. This Agreement, together with all Schedules and Exhibits, constitutes the entire agreement of the Parties with respect to the subject matter and supersedes all prior understandings.
9.6 Counterparts; Electronic Signatures. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original. Delivery of an executed counterpart by electronic means (e.g., PDF) shall be effective, and electronic signatures shall be binding to the fullest extent permitted by law.
9.7 Headings. Section headings are for convenience only and shall not affect interpretation.
10. EXECUTION BLOCK
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the Effective Date.
| SETTLOR | |
|---|---|
| Signature: ________ | Date: _______ |
| Printed Name: [SETTLOR NAME] |
| TRUSTEE | |
|---|---|
| Signature: ________ | Date: _______ |
| Printed Name: [TRUSTEE NAME] |
NOTARY ACKNOWLEDGMENT
State of Ohio
County of [COUNTY]
On this ___ day of ____, 20__, before me, the undersigned Notary Public, personally appeared [SETTLOR NAME] and [TRUSTEE NAME], proved to me on the basis of satisfactory evidence to be the individuals whose names are subscribed to this instrument, and acknowledged that they executed the same for the purposes therein contained.
Notary Public
My Commission Expires: _______
[// GUIDANCE: Some Ohio counties require one or two disinterested witnesses in addition to notarization—verify local probate practice.]
SCHEDULES & EXHIBITS
• Schedule A – Initial Corpus Description
• Schedule B – Remainder Beneficiaries & Shares
• Schedule C – Mandatory Distribution Provisions (if any)
• Schedule D – Enumerated Trustee Powers
• Schedule E – Co-Trustee Decision-Making Rules (if any)
• Schedule F – Trustee Succession Plan
[// GUIDANCE: Populate the schedules before execution. Ensure all cross-references update accordingly.]