IRREVOCABLE TRUST AGREEMENT
(Oregon – Draft Template)
[// GUIDANCE: This template is drafted under Oregon’s Uniform Trust Code, ORS 130.005 et seq. Insert or remove bracketed language as appropriate. Verify all tax elections with qualified tax counsel before execution.]
TABLE OF CONTENTS
- Document Header
- Definitions
- Creation of Trust & Transfer of Property
- Irrevocability; Spendthrift; Purpose
- Trust Administration
- Distributions
- Trustee Powers & Duties
- Representations & Warranties
- Covenants & Restrictions
- Event of Default; Remedies
- Risk Allocation
- Dispute Resolution
- General Provisions
- Execution Block
1. DOCUMENT HEADER
IRREVOCABLE TRUST AGREEMENT (the “Agreement”) is made and entered into effective as of [EFFECTIVE DATE] (the “Effective Date”) by and between:
• [SETTLOR NAME], an individual residing at [ADDRESS] (“Settlor”); and
• [TRUSTEE NAME], [individual / Oregon corporation / Oregon limited liability company], with its principal address at [ADDRESS] (“Trustee”).
(Each, a “Party,” and collectively, the “Parties.”)
Recitals
A. Settlor desires to create an irrevocable trust under Oregon law to hold and administer the Trust Estate (defined below) for the benefit of the Beneficiaries (defined below).
B. Trustee is willing to accept the trusteeship pursuant to the terms of this Agreement.
C. The Parties intend that this Agreement be governed by the Oregon Uniform Trust Code, ORS 130.005 et seq.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein, the Parties agree as follows:
2. DEFINITIONS
For purposes of this Agreement, capitalized terms have the meanings set forth below; terms used in the singular include the plural and vice-versa.
“Accounting Period” means each calendar year ending December 31, unless otherwise selected by Trustee.
“Agreement” has the meaning provided in the Document Header.
“Beneficiary” or “Beneficiaries” means each person or entity identified on Schedule A, and any successor or additional beneficiaries permitted under this Agreement.
“Internal Revenue Code” or “IRC” means the Internal Revenue Code of 1986, as amended, and corresponding regulations.
“Permitted Distributee” means any Beneficiary then eligible to receive a distribution pursuant to Article 6.
“Qualified Trustee” means a Trustee meeting the requirements of ORS 130.615 and Treas. Reg. § 301.7701-7.
“Trust” means the irrevocable trust created by this Agreement.
“Trust Estate” means all property transferred to, and accepted by, Trustee under this Agreement, together with all additions, accretions, and substitutions thereto.
“Trustee” includes any successor or co-trustee acting hereunder.
3. CREATION OF TRUST & TRANSFER OF PROPERTY
3.1 Establishment. Settlor hereby irrevocably establishes the [INSERT NAME] IRREVOCABLE TRUST (the “Trust”) pursuant to ORS 130.150.
3.2 Funding. Concurrently with execution, Settlor transfers and conveys to Trustee the property described on Schedule B, receipt of which Trustee hereby acknowledges. Additional property may be transferred to the Trust only if accepted in writing by Trustee.
3.3 Title. Legal title to the Trust Estate shall vest in Trustee and its successors in trust, to be held, managed, and distributed exclusively under this Agreement.
4. IRREVOCABILITY; SPENDTHRIFT; PURPOSE
4.1 Irrevocability. This Trust is irrevocable. Settlor waives all power, directly or indirectly, to alter, amend, revoke, or terminate the Trust, except as expressly provided in Section 4.3.
4.2 Spendthrift Protection. Pursuant to ORS 130.325, the interests of any Beneficiary are held subject to a spendthrift provision. No Beneficiary may voluntarily or involuntarily alienate, assign, or encumber any interest in the Trust prior to actual receipt.
4.3 Limited Power to Correct Scrivener’s Error. Solely to correct a manifest scrivener’s error or to comply with mandatory tax requirements, Trustee may petition the Oregon Circuit Court (Probate Department) for reformation under ORS 130.220.
4.4 Trust Purpose. The Trust’s primary purpose is to:
a. Provide for the Beneficiaries as set forth herein; and
b. Achieve valid estate and income tax objectives in accordance with applicable law.
5. TRUST ADMINISTRATION
5.1 Situs & Governing Law. The Trust shall be administered in Oregon, and questions concerning validity, construction, and administration shall be determined under Oregon law.
5.2 Accounting & Reports. Within 60 days after the close of each Accounting Period and at termination, Trustee shall provide the reports required by ORS 130.710(3) to each Qualified Beneficiary.
5.3 Recordkeeping. Trustee shall maintain complete and accurate books and records for not less than seven (7) years or such longer period as required by law.
6. DISTRIBUTIONS
6.1 Discretionary Distributions. During the lifetime of [PRIMARY BENEFICIARY], Trustee may, in its sole discretion, distribute to or for the benefit of such Beneficiary so much of the net income and principal as Trustee deems advisable for health, education, maintenance, or support (“HEMS Standard”).
6.2 Successor Beneficiaries. Upon the death of [PRIMARY BENEFICIARY], the remaining Trust Estate shall be distributed [in equal shares to the issue of Settlor per stirpes / to the named contingent beneficiaries].
6.3 Accumulated Income. Any undistributed income shall be added to principal.
6.4 Tax Reimbursement (Optional). [OPTIONAL] Trustee may, but is not required to, reimburse Settlor for any income taxes paid solely because the Trust is treated as a grantor trust under IRC § 671.
[// GUIDANCE: Omit Section 6.4 if the Trust is intended to be a completed-gift, non-grantor trust.]
7. TRUSTEE POWERS & DUTIES
7.1 General Powers. Subject to fiduciary duties under ORS 130.650-.670, Trustee shall have all powers granted to trustees under ORS 130.720, including, without limitation, to invest, reinvest, sell, exchange, and otherwise manage the Trust Estate.
7.2 Delegation. Trustee may delegate investment or ministerial functions in accordance with ORS 130.727, provided Trustee exercises reasonable care in selecting and monitoring agents.
7.3 Duty of Impartiality. Trustee shall act impartially in investing and managing the Trust Estate, taking into account the interests of all Beneficiaries.
7.4 Bond. [OPTIONAL] Trustee [shall / shall not] be required to furnish bond.
7.5 Resignation. Trustee may resign upon 30 days’ written notice to Settlor (if living) and all Qualified Beneficiaries, or as otherwise ordered by the court.
7.6 Removal & Successor Trustee.
a. Removal. A Trustee may be removed (i) by unanimous written consent of all Qualified Beneficiaries, or (ii) by the Oregon Circuit Court upon petition under ORS 130.625.
b. Successor Appointment. If a vacancy occurs, [DESIGNATED SUCCESSOR TRUSTEE] shall serve. If none is willing or able, a successor shall be appointed pursuant to ORS 130.610.
7.7 Co-Trustees. If more than one Trustee serves, decisions shall be made by majority vote unless otherwise provided herein.
8. REPRESENTATIONS & WARRANTIES
8.1 Settlor Representations. Settlor represents and warrants that:
a. Settlor has full legal capacity and authority to execute and deliver this Agreement and to transfer the property described on Schedule B;
b. As of the Effective Date, the property transferred is free of liens and encumbrances, except as disclosed in Schedule C; and
c. Execution of this Agreement does not violate any court order or contract binding on Settlor.
8.2 Trustee Representations. Trustee represents and warrants that:
a. Trustee has full authority to serve and has obtained all requisite corporate or other approvals;
b. Trustee possesses the experience and competence to administer the Trust Estate; and
c. Trustee is not disqualified under ORS 130.610.
8.3 Survival. The representations and warranties in this Article 8 survive execution and shall not be deemed merged upon any transfer or conveyance.
9. COVENANTS & RESTRICTIONS
9.1 Compliance with Law. Trustee covenants to administer the Trust in accordance with applicable federal and Oregon law.
9.2 Tax Filings. Trustee shall timely prepare and file all required federal, state, and local tax returns for the Trust.
9.3 Notice Obligations. Trustee shall notify the Beneficiaries of significant events affecting the Trust, including any change of Trustee, as required by ORS 130.710.
9.4 Investment Policy Statement. Within 90 days of acceptance, Trustee shall adopt a written investment policy consistent with ORS 130.755 (Prudent Investor Rule).
9.5 Prohibited Acts. Trustee shall not:
a. Engage in self-dealing except as permitted under ORS 130.730 and disclosed to Qualified Beneficiaries;
b. Make loans to Settlor or Beneficiaries except on commercially reasonable terms;
c. Commingle Trust assets with non-Trust assets.
10. EVENT OF DEFAULT; REMEDIES
10.1 Events of Default. The following constitute a default by Trustee:
a. Willful misconduct or gross negligence;
b. Persistent failure to render required accounts;
c. Breach of fiduciary duty resulting in material loss;
d. Insolvency or dissolution of a corporate Trustee.
10.2 Notice & Cure. A Qualified Beneficiary may give written notice specifying the default. Trustee shall have 30 days to cure, unless the default is incapable of cure or continuing would cause irreparable harm.
10.3 Remedies. If the default is not cured within the cure period, the Beneficiaries (acting by majority in interest) may:
a. Petition the probate court for removal under ORS 130.625;
b. Seek surcharge or other monetary damages limited to the Trust Estate;
c. Obtain injunctive relief to prevent further breach.
10.4 Attorneys’ Fees. The prevailing party in any proceeding to enforce this Agreement shall be entitled to recover reasonable attorneys’ fees and costs, payable from the Trust Estate unless the court orders otherwise.
11. RISK ALLOCATION
11.1 Indemnification of Trustee. Trustee and its agents shall be indemnified and held harmless from and against any claim, liability, or expense (including reasonable attorneys’ fees) arising out of administration of the Trust, except to the extent caused by Trustee’s willful misconduct or gross negligence. Indemnification shall be satisfied solely from the Trust Estate.
11.2 Limitation of Liability. To the fullest extent permitted by ORS 130.800, Trustee’s liability to any person for breach of trust is limited to the value of the Trust Estate.
11.3 Insurance. Trustee may purchase fiduciary liability insurance, the premiums of which shall be paid from the Trust Estate.
11.4 Force Majeure. Trustee shall not be liable for failure to perform caused by acts of God, war, terrorism, or other events beyond Trustee’s reasonable control, provided Trustee acts diligently to resume performance.
12. DISPUTE RESOLUTION
12.1 Governing Law. This Agreement and all disputes arising hereunder shall be governed by and construed in accordance with the laws of the State of Oregon (without regard to conflict-of-law principles).
12.2 Forum Selection. Exclusive jurisdiction and venue shall lie in the Probate Department of the Circuit Court of the State of Oregon in [COUNTY] County.
12.3 Jury Waiver. The Parties acknowledge that probate proceedings in Oregon are tried without a jury. Accordingly, any claim shall be determined by the court sitting without a jury.
12.4 Optional Arbitration. [SELECT ONE]
a. ☐ Arbitration Elected. Any dispute that may lawfully be arbitrated shall be submitted to binding arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules, with hearings in [CITY, OREGON]. Judgment on the award may be entered in the Circuit Court.
b. ☐ Arbitration Not Elected. Section 12.4 does not apply.
12.5 Injunctive Relief. Notwithstanding Section 12.4, the court shall retain power to issue temporary, preliminary, or permanent injunctive relief to enforce the terms of this Agreement and protect the Trust Estate.
13. GENERAL PROVISIONS
13.1 Amendment & Waiver. Except as permitted under Section 4.3, no amendment or waiver shall be effective unless in writing and signed by the Trustee and all Qualified Beneficiaries, and approved by the court if required by ORS 130.195-.205.
13.2 Assignment. No Party may assign rights or delegate duties under this Agreement except as expressly provided herein or by operation of law.
13.3 Successors & Assigns. This Agreement binds and inures to the benefit of the Parties and their respective heirs, personal representatives, successors, and permitted assigns.
13.4 Severability. If any provision is held invalid or unenforceable, the remaining provisions shall remain in full force, and the court is authorized to modify the invalid provision to the minimum extent necessary to render it enforceable.
13.5 Entire Agreement. This Agreement, together with all Schedules, constitutes the entire understanding of the Parties with respect to the subject matter and supersedes all prior agreements.
13.6 Counterparts; Electronic Signatures. This Agreement may be executed in multiple counterparts, each of which is deemed an original, and all of which together constitute one instrument. Signatures delivered by electronic means shall be deemed original and binding.
14. EXECUTION BLOCK
IN WITNESS WHEREOF, the Parties have executed this Irrevocable Trust Agreement as of the Effective Date.
SETTLOR:
[SETTLOR NAME]
STATE OF _ )
: ss.
COUNTY OF _____ )
Subscribed and sworn before me on ___, 20, by [SETTLOR NAME].
Notary Public for _
My Commission Expires: _
TRUSTEE:
[TRUSTEE NAME]
Title (if entity): ______
STATE OF _ )
: ss.
COUNTY OF _____ )
Acknowledged before me on ___, 20, by [TRUSTEE REPRESENTATIVE NAME] as [TITLE] of [TRUSTEE NAME].
Notary Public for _
My Commission Expires: _
SCHEDULE A – Beneficiaries
[Insert list of primary and contingent beneficiaries with identifying information.]
SCHEDULE B – Initial Trust Property
[Itemize cash, securities, real property, insurance policies, etc., with appropriate descriptions.]
SCHEDULE C – Liens & Encumbrances (if any)
[Describe any liens or encumbrances affecting transferred assets.]
[// GUIDANCE: After execution, file any certifications required under ORS 130.855 if real property is transferred, and record any deed in the county where the property is located. Provide copy of Agreement or memorandum of trust to financial institutions as needed.]