IRREVOCABLE TRUST AGREEMENT
(Tennessee Uniform Trust Code – Tenn. Code Ann. § 35-15-101 et seq.)
TABLE OF CONTENTS
- Document Header
- Definitions
- Operative Provisions
3.1 Creation, Name & Irrevocability
3.2 Trust Property & Schedule “A”
3.3 Beneficiaries & Distributive Provisions
3.4 Trustee Powers, Duties & Standards of Care - Representations & Warranties
- Covenants & Restrictions
- Default & Remedies
- Risk Allocation
- Dispute Resolution
- General Provisions
- Execution Block
- Schedules
1. DOCUMENT HEADER
This Irrevocable Trust Agreement (“Agreement”) is made and entered into as of [Effective Date] (“Effective Date”) by and between:
• [Settlor Name], a resident of the State of Tennessee (“Settlor”); and
• [Trustee Name], whose address is [Trustee Address] (“Trustee”).
The parties agree as follows:
Recitals
A. Settlor desires to create an irrevocable trust to hold, administer, and distribute certain property for the benefit of the Beneficiaries identified herein.
B. Trustee is willing to accept the trusteeship and hold the Trust Property pursuant to the terms of this Agreement and Tennessee law.
C. All transfers to the Trust are intended as completed gifts for federal gift-tax purposes and as completed transfers for Tennessee inheritance-tax purposes (if applicable).
2. DEFINITIONS
For ease of reference, the following capitalized terms are used throughout this Agreement:
“Accounting Period” – Each calendar year ending December 31, unless Trustee elects a different fiscal year.
“Agreement” – This Irrevocable Trust Agreement, including all amendments and Schedules.
“Beneficiaries” – Collectively, the individuals or entities identified in § 3.3.
“Code” – The Internal Revenue Code of 1986, as amended.
“Descendants” – Lineal descendants by blood or adoption, per stirpes.
“Disability” – A condition that renders an individual unable to manage property or financial affairs, as determined under Tenn. Code Ann. § 35-15-103(12).
“Trust” – The irrevocable trust created by this Agreement, known as “[Trust Name]”.
“Trust Property” – All property transferred to or acquired by the Trust, including reinvestments.
“UTC” – The Tennessee Uniform Trust Code, Tenn. Code Ann. § 35-15-101 et seq.
[// GUIDANCE: Add additional definitions as needed for specialized assets or bespoke provisions.]
3. OPERATIVE PROVISIONS
3.1 Creation, Name & Irrevocability
3.1.1 Creation. Settlor hereby transfers to Trustee the property described on Schedule “A,” receipt of which Trustee acknowledges, to hold in trust under the terms of this Agreement and applicable law.
3.1.2 Name. The trust shall be known as “[Trust Name]” and may transact under that name.
3.1.3 Irrevocability. This Trust is irrevocable. Settlor waives all powers to revoke, amend, or terminate the Trust, except:
(a) Limited powers expressly granted in § 3.1.4; and
(b) Any modification permitted under Tenn. Code Ann. §§ 35-15-411 through 416 (judicial/non-judicial modification) or successor provisions.
3.1.4 Reserved Powers. Settlor retains no beneficial interest. However, Settlor reserves a limited, non-fiduciary power of appointment exercisable by will solely to change the disposition of remaining Trust Property among Settlor’s Descendants.
3.1.5 Separate Trust Estate. Trust Property shall be kept separate from Trustee’s own assets and from any other trust.
3.2 Trust Property & Schedule “A”
3.2.1 Additions. Trustee may accept additional property from any person, provided such property is consistent with the Trust’s purposes and federal tax objectives.
3.2.2 Valuation. Trustee shall determine fair market value of non-cash assets in good faith each Accounting Period.
3.3 Beneficiaries & Distributive Provisions
3.3.1 Current Beneficiaries. The current Beneficiaries are:
(a) [Primary Beneficiary Name(s)] during their lifetime(s).
3.3.2 Distributions During Lifetimes.
(i) Mandatory Income. Trustee shall distribute all Net Income at least annually to the current Beneficiaries, per capita.
(ii) Discretionary Principal. Trustee may distribute principal for Beneficiaries’ health, education, maintenance, or support (“HEMS”).
3.3.3 Remainder Beneficiaries. Upon the death of the last surviving current Beneficiary, Trust Property shall be distributed to [Remainder Beneficiary Names or Class] outright, or to such further trusts as then appointed under § 3.1.4.
3.3.4 Spendthrift Protection. All Beneficial interests are subject to a spendthrift provision within the meaning of Tenn. Code Ann. § 35-15-502, prohibiting voluntary or involuntary alienation before distribution.
[// GUIDANCE: For multi-generational planning, insert generation-skipping transfer-tax provisions and allocation language.]
3.4 Trustee Powers, Duties & Standards of Care
3.4.1 Powers Incorporated. Trustee shall have all powers enumerated in Tenn. Code Ann. § 35-15-816, including the power to decant under § 35-15-816(27).
3.4.2 Investment Standard. Trustee shall invest prudently in accordance with the Tennessee Prudent Investor Act (Tenn. Code Ann. § 35-14-101 et seq.).
3.4.3 Accountings & Information. Trustee shall:
(a) Provide annual accountings to Qualified Beneficiaries in compliance with Tenn. Code Ann. § 35-15-813; and
(b) Furnish such additional information as reasonably requested.
3.4.4 Co-Trustees & Succession.
(i) Appointment. [Successor Trustee Name] is designated as first successor trustee. Additional successors may be appointed by instrument signed by a majority of current Beneficiaries.
(ii) Resignation. A Trustee may resign with 30 days’ notice to Settlor (if living) and Qualified Beneficiaries.
3.4.5 Compensation. Trustee shall be entitled to reasonable compensation as set forth on Schedule “B” or as otherwise agreed in writing.
4. REPRESENTATIONS & WARRANTIES
4.1 Settlor’s Representations. Settlor represents:
(a) Settlor has full legal capacity to create this Trust and to transfer the property described on Schedule “A”;
(b) Trust Property is free of liens, encumbrances, or adverse claims, except as disclosed on Schedule “A.”
4.2 Trustee’s Warranties. Trustee warrants:
(a) Trustee has reviewed and understands fiduciary duties under Tennessee law;
(b) Trustee is not prohibited from serving by any conflict of interest or legal incapacity;
(c) Trustee will administer the Trust in good faith and in accordance with this Agreement and the UTC.
4.3 Survival. All representations and warranties shall survive execution and continue for the duration of the Trust administration.
5. COVENANTS & RESTRICTIONS
5.1 Settlor’s Covenants. Settlor shall execute all documents necessary to perfect transfer of Trust Property.
5.2 Trustee’s Covenants. Trustee shall:
(a) Maintain adequate books and records;
(b) File all required federal and state tax returns;
(c) Maintain appropriate insurance on Trust assets where commercially reasonable.
5.3 Prohibited Transactions. Trustee shall not loan Trust funds to Settlor, Trustee, or any person disqualified under § 4946 of the Code.
6. DEFAULT & REMEDIES
6.1 Events of Default. The following constitute Events of Default:
(a) Trustee’s breach of fiduciary duty resulting in material financial harm;
(b) Failure to render required accountings within 60 days after written demand;
(c) Misappropriation or commingling of Trust assets.
6.2 Notice & Cure. Qualified Beneficiaries shall give written notice specifying the default. Trustee shall have 30 days to cure, unless such breach is incapable of cure.
6.3 Remedies. Upon an uncured Event of Default, Beneficiaries may:
(a) Petition the Chancery (probate) Court for removal under Tenn. Code Ann. § 35-15-706;
(b) Seek surcharge, injunctive relief, or other equitable remedies;
(c) Recover reasonable attorneys’ fees and costs from the Trust Estate.
7. RISK ALLOCATION
7.1 Trustee Indemnification.
(a) To the fullest extent permitted by Tenn. Code Ann. § 35-15-1009, Trustee shall be indemnified out of the Trust Property against any loss, liability, or expense incurred by reason of acting as Trustee, except for losses arising from Trustee’s willful misconduct or bad faith.
(b) No exculpation shall relieve Trustee of liability for reckless indifference to the purposes of the Trust or the interests of the Beneficiaries.
7.2 Limitation of Liability. Any liability of Trustee shall be limited to the Trust Property; Trustee shall have no personal liability beyond the assets then held in trust.
7.3 Force Majeure. Trustee shall not be liable for delays or failures caused by acts of God, war, pandemic, or other events beyond Trustee’s reasonable control.
8. DISPUTE RESOLUTION
8.1 Governing Law. This Agreement and the Trust shall be governed by and construed under the laws of the State of Tennessee, without regard to conflict-of-laws principles.
8.2 Forum Selection. The Chancery Court (Probate Division) of [County], Tennessee, shall have exclusive jurisdiction over all proceedings involving this Trust, except as otherwise provided in § 8.3.
8.3 Optional Arbitration.
(a) Election. By unanimous written agreement of all Qualified Beneficiaries and the Trustee, any dispute may be submitted to binding arbitration administered by the American Arbitration Association (AAA) under its Commercial Arbitration Rules.
(b) Injunctive Relief. Pending arbitration, the parties may seek temporary injunctive relief in the designated forum to preserve Trust assets.
[// GUIDANCE: Remove § 8.3 if arbitration is not desired; Tennessee law permits mandatory arbitration clauses in trusts only under limited circumstances.]
8.4 Jury Waiver. No jury trial is available in probate proceedings; therefore, any action filed shall be heard and decided by the court sitting without a jury.
9. GENERAL PROVISIONS
9.1 Amendments & Waivers. This Agreement may not be amended except as permitted under § 3.1.3 and applicable law. Any waiver must be in a written instrument signed by the waiving party.
9.2 Assignment. Beneficial interests may not be assigned, pledged, or otherwise transferred except as distributed per § 3.3.
9.3 Successors & Assigns. The rights and obligations of Trustee shall inure to any successor trustee appointed in accordance with § 3.4.4.
9.4 Severability. If any provision of this Agreement is invalid or unenforceable, the remaining provisions shall remain in full force, and a court of competent jurisdiction is authorized to reform the invalid provision to best effectuate the Settlor’s intent.
9.5 Entire Agreement. This document constitutes the entire agreement among the parties with respect to the Trust and supersedes all prior understandings.
9.6 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which shall be deemed an original. Signatures delivered electronically or by facsimile shall be binding.
10. EXECUTION BLOCK
IN WITNESS WHEREOF, Settlor and Trustee have executed this Irrevocable Trust Agreement as of the Effective Date.
Settlor
[Settlor Name], Settlor
Trustee
[Trustee Name], Trustee
STATE OF TENNESSEE )
COUNTY OF ___ )
Acknowledged before me on this ___ day of ____, 20__, by [Settlor Name] and [Trustee Name].
Notary Public
My Commission Expires: _______
[// GUIDANCE: Tennessee does not require notarization for the validity of an inter vivos trust, but notarization is recommended for evidentiary purposes and ease of recording real-property conveyances.]
11. SCHEDULES
Schedule “A” – Initial Trust Property
- Cash: $_ deposited to [Bank Name], Account No. _.
- Marketable Securities: __.
- Real Property: Legal description attached as Exhibit 1.
Schedule “B” – Trustee Compensation
• Annual Trustee fee equal to __% of Trust assets under management, payable quarterly in arrears.
• Hourly rate of $___ for extraordinary services with prior Beneficiary approval.
[// GUIDANCE: Attach additional schedules (e.g., Life Insurance Policies, Closely Held Business Interests) as needed.]
© [Year] – Drafted for professional use. Customize all bracketed items and review for client-specific tax and legal considerations before implementation.