IRREVOCABLE TRUST AGREEMENT
[South Dakota Irrevocable Trust]
Table of Contents
I. Document Header
II. Definitions
III. Operative Provisions
IV. Representations & Warranties
V. Covenants & Restrictions
VI. Default & Remedies
VII. Risk Allocation
VIII. Dispute Resolution
IX. General Provisions
X. Execution Block
[// GUIDANCE: This template assumes South Dakota law (SDCL Title 55) governs. Customize bracketed items, distribution mechanics, and tax elections. Confirm with tax counsel before funding.]
I. DOCUMENT HEADER
This Irrevocable Trust Agreement (the “Agreement”) is made as of [EFFECTIVE DATE] (the “Effective Date”) by and between:
- Grantor/Settlor: [GRANTOR FULL LEGAL NAME], residing at [ADDRESS] (“Grantor”); and
- Trustee: [TRUSTEE FULL LEGAL NAME], with principal mailing address at [ADDRESS] (“Trustee”).
Recitals
A. Grantor desires to create an irrevocable trust under the laws of the State of South Dakota to hold and administer the Trust Estate for the benefit of the Beneficiaries defined herein.
B. Trustee is willing to serve pursuant to the terms set forth below.
C. Grantor has transferred, contemporaneously with execution, property described in Schedule A (the “Initial Trust Property”) to the Trustee, receipt of which the Trustee acknowledges.
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the parties agree as follows:
II. DEFINITIONS
Unless the context otherwise requires, capitalized terms have the meanings set forth below.
“Accounting Period” – Each calendar year ending December 31, or such shorter period ending on the termination of the Trust.
“Agreement” – This Irrevocable Trust Agreement, including all Schedules and any duly-executed amendments.
“Beneficiary” or “Beneficiaries” – Each individual or entity designated in Section 3.2, together with any person who becomes entitled to receive distributions hereunder.
“Business Day” – Any day other than Saturday, Sunday, or a legal holiday in South Dakota.
“Grantor” – The person identified in the Document Header who establishes and funds the Trust.
“Irrevocable” – The Trust shall be incapable of amendment, alteration, or revocation except as expressly provided in Section 3.4(b).
“Trust” – The irrevocable trust created by this Agreement, known as “[NAME OF TRUST].”
“Trust Estate” – All property, tangible and intangible, transferred to or acquired by the Trust, and all reinvestments, proceeds, and accretions.
“Trust Protector” – [OPTIONAL; INSERT NAME] appointed under Section 5.4, possessing only the powers expressly granted herein.
“Trustee” – The individual or entity identified in the Document Header, and any successor appointed in accordance with this Agreement.
[// GUIDANCE: Add/omit definitions to match final drafting.]
III. OPERATIVE PROVISIONS
3.1 Creation and Funding
a. Grantor hereby delivers the Initial Trust Property to Trustee, to be held, administered, and distributed as part of the Trust Estate.
b. Additional property may be contributed by Grantor or any third party with Trustee’s consent, provided all such contributions shall be subject to this Agreement.
3.2 Beneficiaries
The Beneficiaries are:
1. Primary Beneficiary(ies): [NAME(S) & RELATION(S)].
2. Secondary/Contingent Beneficiary(ies): [NAME(S)].
3.3 Purpose
The Trust is created to (i) manage and protect assets for the Beneficiaries, (ii) provide discretionary distributions consistent with prudent fiduciary practice, and (iii) optimize applicable federal and South Dakota tax advantages.
3.4 Irrevocability and Limited Amendments
a. Irrevocability. The Trust is irrevocable. Grantor expressly waives all rights, whether statutory or equitable, to alter, amend, revoke, or terminate this Trust.
b. Administrative Amendment. Notwithstanding subsection (a), the Trustee, with written consent of the Trust Protector (if any), may execute amendments limited to: (i) correcting scrivener’s errors; (ii) conforming the Agreement to mandatory changes in law; or (iii) facilitating tax compliance, provided no such amendment affects any beneficial interest or violates South Dakota public policy.
3.5 Spendthrift; Creditor Protection
Except as otherwise required by law, no Beneficiary may voluntarily or involuntarily assign, encumber, or alienate any interest in the Trust Estate. The interests of Beneficiaries shall be protected under applicable South Dakota spendthrift provisions.
3.6 Distributions
a. Discretionary Distributions. During the lifetime of any Primary Beneficiary, the Trustee may, in the Trustee’s sole and absolute discretion, distribute income and/or principal for such Beneficiary’s health, education, maintenance, and support (“HEMS Standard”).
b. Mandatory Termination Distribution. Upon the earlier of [TERMINATION EVENT] or the expiration of 360 years from the Effective Date (permitted under SDCL Title 55), the Trustee shall distribute the remaining Trust Estate to the then-living Beneficiaries, per stirpes.
3.7 Trustee Powers
Subject to fiduciary duties under South Dakota law, the Trustee shall have all powers enumerated in SDCL ch. 55-4, including, without limitation, power to:
1. Retain, invest, and reinvest Trust assets;
2. Borrow, lend, and encumber Trust property;
3. Employ and compensate professionals;
4. Determine income and principal;
5. Execute documents and perform all acts reasonable or necessary to administer the Trust.
[// GUIDANCE: Insert any desired limitations or directed trustee language.]
3.8 Accounting & Reports
Trustee shall provide annual written accountings to the adult Beneficiaries and Grantor’s personal representative (if any) within 90 days after each Accounting Period.
IV. REPRESENTATIONS & WARRANTIES
4.1 Grantor’s Representations
a. Authority. Grantor has full legal capacity to establish this Trust and transfer property thereto.
b. No Liens. The Initial Trust Property is conveyed to the Trust free and clear of liens, claims, and encumbrances.
c. Tax Advice. Grantor acknowledges receipt of independent tax advice regarding gift, estate, and generation-skipping transfer (“GST”) tax consequences.
4.2 Trustee’s Representations
a. Authority & Qualification. Trustee is duly qualified and willing to serve in accordance with South Dakota law.
b. Fiduciary Duty. Trustee shall discharge duties in good faith, in accordance with the terms of this Agreement and SDCL Title 55.
Survival. All representations and warranties shall survive execution and continue for the duration of the Trust.
V. COVENANTS & RESTRICTIONS
5.1 Grantor Covenants
a. Non-Interference. Grantor shall not interfere with Trustee’s independent administration.
b. Further Assurances. Grantor shall execute all additional instruments reasonably requested to vest title to assets in Trustee.
5.2 Trustee Covenants
a. Prudent Administration. Trustee shall administer the Trust with reasonable care, skill, and caution.
b. Tax Compliance. Trustee shall timely file all required federal and state fiduciary income tax returns and remit taxes from the Trust Estate.
5.3 Notification & Cure
The party alleging breach shall provide written notice specifying the nature of the breach. The breaching party shall have 30 days to cure, unless the breach is incapable of cure or constitutes willful misconduct.
5.4 Trust Protector (Optional)
[TRUST PROTECTOR NAME] may, without fiduciary duty, (i) remove and appoint Trustees, (ii) approve administrative amendments under Section 3.4(b), and (iii) resolve ambiguity. The Trust Protector is not liable except for intentional misconduct.
VI. DEFAULT & REMEDIES
6.1 Events of Default
a. Trustee fraud, willful misconduct, or gross negligence;
b. Trustee insolvency;
c. Failure to provide required accountings after notice and opportunity to cure.
6.2 Remedies
a. Removal & Replacement. Upon default, a majority of adult Beneficiaries or the Trust Protector may remove the Trustee and appoint a successor.
b. Injunctive Relief. Any interested party may seek specific performance or injunctive relief in the designated probate court to protect Trust assets.
c. Damages. Trustee shall be liable for losses resulting from breach, limited per Section 7.3.
d. Attorneys’ Fees. The prevailing party is entitled to reasonable attorneys’ fees and costs.
VII. RISK ALLOCATION
7.1 Indemnification of Trustee
The Trust Estate shall indemnify and hold the Trustee harmless from any claim, loss, or liability arising from the proper administration of the Trust, except to the extent caused by the Trustee’s fraud, willful misconduct, or gross negligence.
7.2 Insurance
Trustee may purchase fiduciary liability insurance, the premiums of which shall be paid from the Trust Estate.
7.3 Limitation of Liability
Any liability of Trustee in connection with this Trust shall be limited to the value of the Trust Estate; no personal assets of the Trustee shall be subject to satisfaction of such liability.
7.4 Force Majeure
Trustee shall not be liable for delay or failure in performance due to acts of God, war, pandemic, or other events beyond the Trustee’s reasonable control.
VIII. DISPUTE RESOLUTION
8.1 Governing Law
This Agreement and all disputes hereunder shall be governed by and construed in accordance with the laws of the State of South Dakota, without giving effect to conflict-of-laws principles.
8.2 Forum Selection
Exclusive jurisdiction and venue shall lie in the [INSERT COUNTY] County Probate Division of the South Dakota Circuit Court.
8.3 Optional Arbitration
If all adult, competent Beneficiaries and the Trustee so agree in writing after a dispute arises, such dispute may be submitted to binding arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules.
8.4 Jury Waiver
To the extent a jury trial could otherwise be available in probate proceedings, the parties knowingly waive the right to a jury trial.
8.5 Injunctive Relief
Nothing in this Article shall preclude a party from seeking temporary, preliminary, or permanent injunctive relief in the designated probate court to enforce the terms of this Trust.
IX. GENERAL PROVISIONS
9.1 Amendments
Except as permitted under Section 3.4(b), this Agreement may not be amended.
9.2 Assignment
No party may assign rights or delegate duties under this Agreement except as expressly provided herein.
9.3 Successors & Assigns
All provisions herein shall bind and inure to the benefit of the parties hereto and their respective successors and permitted assigns.
9.4 Severability
If any provision is held unenforceable, the remaining provisions shall remain in full force, and the court may reform the unenforceable provision to reflect the parties’ original intent.
9.5 Entire Agreement
This instrument constitutes the entire agreement of the parties with respect to the subject matter and supersedes all prior agreements or understandings.
9.6 Counterparts; Electronic Signatures
This Agreement may be executed in counterparts, each of which is deemed an original, and all of which together constitute one instrument. Electronic signatures shall be deemed originals to the fullest extent permitted by law.
X. EXECUTION BLOCK
IN WITNESS WHEREOF, the parties have executed this Irrevocable Trust Agreement as of the Effective Date.
Grantor
[GRANTOR NAME]
Trustee
[TRUSTEE NAME], Trustee
[// South Dakota Notarial Acknowledgment]
State of South Dakota )
County of [____] )
This instrument was acknowledged before me on [DATE] by [GRANTOR NAME] and [TRUSTEE NAME].
Notary Public
My Commission Expires: ______
Schedule A – Initial Trust Property
- Cash: $[AMOUNT]
- Securities: [DESCRIPTION]
- Other: [DESCRIPTION]
[// GUIDANCE: Attach additional schedules (e.g., distribution plan, tax elections) as needed. Verify SDCL citation accuracy if you choose to add pinpoint statutory references.]