IRREVOCABLE TRUST AGREEMENT
(Utah – Governed by Utah Uniform Trust Code)
TABLE OF CONTENTS
- Document Header
- Definitions
- Operative Provisions
- Representations & Warranties
- Covenants & Restrictions
- Default & Remedies
- Risk Allocation
- Dispute Resolution
- General Provisions
- Execution Block
1. DOCUMENT HEADER
IRREVOCABLE TRUST AGREEMENT (this “Agreement”) is made and entered into effective as of [EFFECTIVE DATE] (the “Effective Date”) by and among:
- [NAME OF SETTLOR], an individual residing at [ADDRESS] (“Settlor”);
- [NAME OF TRUSTEE], whose principal address is [ADDRESS] (“Trustee”); and
- [NAME OF TRUST], an irrevocable trust created pursuant hereto (the “Trust”).
Recitals
A. Settlor desires to establish an irrevocable trust under the Utah Uniform Trust Code, Utah Code Ann. § 75-7-101 et seq., for the benefit of the persons listed herein.
B. Trustee is willing to accept the trust property and to hold and administer it strictly in accordance with this Agreement.
C. Settlor intends this Trust to be irrevocable, and no party shall have power to amend, revoke, or terminate the Trust except as expressly provided herein or permitted under Utah law.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein, the parties agree as follows:
2. DEFINITIONS
For purposes of this Agreement, capitalized terms have the meanings set forth below. Defined terms appear alphabetically and apply throughout the document.
“Accounting Period” – Each calendar year ending December 31, unless the Trustee selects another fiscal year in writing.
“Beneficiary(ies)” – Collectively, the persons or entities identified in Schedule A as primary or contingent beneficiaries.
“Code” – The Internal Revenue Code of 1986, as amended.
“Dispositive Provisions” – Sections 3.2 through 3.6 governing distributions of income and principal.
“Fiduciary Duty” – Duties imposed upon the Trustee under Utah Code Ann. § 75-7-801 et seq. and this Agreement.
“Income” – As determined under the Utah Uniform Principal and Income Act, Utah Code Ann. § 22-3-101 et seq.
“Irrevocability Rules” – Statutory limits on amendment or revocation under Utah Code Ann. § 75-7-602.
“Trust Estate” – All property transferred to the Trust under Section 3.1, together with all reinvestments and accretions.
[// GUIDANCE: Insert additional defined terms (e.g., “Unitrust Amount,” “Spendthrift Provision”) to suit client objectives.]
3. OPERATIVE PROVISIONS
3.1 Funding of Trust
a. Concurrently with execution hereof, Settlor hereby irrevocably transfers and assigns to Trustee the property described in Schedule B (the “Initial Trust Corpus”).
b. Additional contributions may be made by Settlor or any third party with Trustee’s consent, and such property shall thereupon become part of the Trust Estate.
3.2 Irrevocability
a. Settlor hereby waives all rights to alter, amend, revoke, or terminate this Trust, except as may be required to comply with IRC § 2056 or § 2503, or as otherwise permitted under Utah Code Ann. § 75-7-411 (judicial modification upon unanticipated circumstances).
b. Any attempted revocation or amendment in contravention of this Section shall be null and void ab initio.
3.3 Dispositive Provisions
a. Income Distributions. During Settlor’s lifetime, Trustee shall distribute all (or [PERCENTAGE]%) of net Income at least annually to the Beneficiaries listed in Schedule A-1 in the proportions specified therein.
b. Principal Distributions. Trustee may distribute principal for a Beneficiary’s health, education, maintenance, or support (“HEMS Standard”) in Trustee’s sole but fiduciary discretion.
c. Mandatory Termination. Upon the death of Settlor, the Trust shall divide into separate shares for each then-living Beneficiary per stirpes, subject to the continuing terms herein.
[// GUIDANCE: Modify to incorporate generation-skipping transfer (GST) tax planning if applicable.]
3.4 Spendthrift Protection
No interest of any Beneficiary shall be subject to voluntary or involuntary transfer, assignment, or encumbrance prior to actual receipt, consistent with Utah Code Ann. § 75-7-502.
3.5 Trustee Powers
Subject to Fiduciary Duty, Trustee shall have all powers granted under Utah Code Ann. § 75-7-814, including but not limited to:
i. Invest and reinvest Trust Estate without restriction to “legal list” investments;
ii. Acquire, dispose of, or encumber real or personal property;
iii. Employ and compensate agents, advisors, and custodians;
iv. Make tax elections, including elections under Subchapter J of the Code;
v. Allocate receipts and disbursements between Income and principal.
3.6 Tax Treatment
a. Intentionally Defective Grantor Trust (Optional). [SELECT “Yes” or “No”. If “Yes,” include IRC §§ 671-679 power language.]
b. Estate & Gift Tax. Settlor acknowledges that transfers to the Trust are completed gifts for federal gift-tax purposes and that the Trust assets are excluded from Settlor’s gross estate, subject to retained powers, if any.
c. Utah State Tax. The Trust shall comply with Utah Income Tax Act, Utah Code Ann. § 59-10-201 et seq.
4. REPRESENTATIONS & WARRANTIES
4.1 Settlor
a. Authority. Settlor is of legal age and sound mind and has full authority to transfer the property described herein.
b. No Encumbrances. Assets transferred are free of liens, assignments, and adverse claims.
4.2 Trustee
a. Qualification. Trustee is eligible and willing to serve under Utah Code Ann. § 75-7-703.
b. No Conflicts. Trustee’s service will not violate any contractual or fiduciary obligations.
Representations survive execution and inure to the benefit of Beneficiaries.
5. COVENANTS & RESTRICTIONS
5.1 Trustee Covenants
a. Duty of Loyalty; Impartiality among Beneficiaries.
b. Prudence. Invest as a prudent investor pursuant to Utah Code Ann. § 75-7-902.
c. Recordkeeping. Maintain accurate books and provide annual Accountings within 60 days after each Accounting Period.
5.2 Settlor Restrictions
Settlor shall not exercise any power that would cause inclusion of Trust assets in Settlor’s estate under IRC §§ 2036-2038, unless expressly provided.
6. DEFAULT & REMEDIES
6.1 Events of Default
a. Trustee’s breach of Fiduciary Duty;
b. Insolvency or incapacity of Trustee;
c. Failure to provide required Accountings after 30-day written notice.
6.2 Remedies
a. Removal & Replacement. A Majority in Interest of the Beneficiaries may petition the [COUNTY] Probate Court for removal and appointment of a Successor Trustee.
b. Surcharge. Trustee shall be personally liable for losses resulting from breach, limited as set forth in Section 7.2.
c. Specific Performance & Injunctive Relief. Beneficiaries may seek equitable relief to compel compliance. Attorney fees shall be awarded to prevailing parties.
7. RISK ALLOCATION
7.1 Indemnification of Trustee
Except for willful misconduct or gross negligence, Trustee shall be indemnified from, and out of, the Trust Estate against all liabilities, claims, and expenses incurred in good-faith administration.
7.2 Limitation of Liability
Trustee’s liability shall not exceed the lesser of:
a. The value of the Trust Estate at the time of judgment; or
b. Insurance proceeds available under any fiduciary liability policy.
No personal liability shall attach to Trustee beyond Trust assets (“Liability Cap”).
7.3 Insurance
Trustee may procure fiduciary liability insurance payable from the Trust Estate.
7.4 Force Majeure
Trustee shall not be liable for failure to act during events beyond reasonable control, including natural disasters, war, or changes in tax law materially affecting administration.
8. DISPUTE RESOLUTION
8.1 Governing Law
This Agreement and all obligations hereunder shall be governed by the laws of the State of Utah, without regard to conflict-of-laws principles.
8.2 Forum Selection
Exclusive jurisdiction and venue shall lie in the Probate Division of the [COUNTY] District Court, State of Utah.
8.3 Arbitration (Optional)
[OPTION 1 – OMIT]
[OPTION 2 – INSERT] Any dispute not subject to exclusive probate jurisdiction shall be resolved by confidential, binding arbitration administered by the American Arbitration Association in Salt Lake City, Utah, under its Commercial Rules. Judgment on the award may be entered in any court of competent jurisdiction.
8.4 Jury Waiver
To the extent a matter is tried outside probate, the parties knowingly waive any right to a jury trial.
8.5 Injunctive Relief
Nothing herein limits a party’s right to seek provisional remedies or injunctive relief for Trust enforcement in a court of competent jurisdiction.
9. GENERAL PROVISIONS
9.1 Amendment & Waiver
This Trust is irrevocable; however, administrative provisions may be reformed by court order under Utah Code Ann. § 75-7-411. No waiver of any provision shall be effective unless in writing.
9.2 Assignment
Interests herein are non-assignable except as expressly permitted.
9.3 Successors & Assigns
Provisions bind and benefit all successors, assigns, and legal representatives.
9.4 Severability
If any provision is unenforceable, remaining provisions shall be given maximum effect.
9.5 Entire Agreement
This Agreement, together with all Schedules, constitutes the entire understanding of the parties.
9.6 Counterparts; Electronic Signatures
Executed in one or more counterparts, each deemed an original; signatures delivered electronically shall be effective.
10. EXECUTION BLOCK
IN WITNESS WHEREOF, the undersigned have executed this Irrevocable Trust Agreement as of the Effective Date.
SETTLOR
[NAME OF SETTLOR]
TRUSTEE
[NAME OF TRUSTEE], Trustee
[// GUIDANCE: Insert additional signature lines for Co-Trustees, if any.]
NOTARIZATION
State of Utah )
County of ____ )
On this ___ day of ____, 20__, before me, the undersigned Notary Public, personally appeared [NAME OF SETTLOR] and [NAME OF TRUSTEE], known to me or satisfactorily proven to be the individuals whose names are subscribed to the foregoing instrument, and acknowledged that they executed the same for the purposes therein contained.
Notary Public
My Commission Expires: ____
SCHEDULE A – BENEFICIARIES
- Primary Beneficiaries
a. [NAME], [RELATIONSHIP], [PERCENTAGE OR SHARE] - Contingent Beneficiaries
a. [NAME], [RELATIONSHIP], [PERCENTAGE OR SHARE]
SCHEDULE B – INITIAL TRUST CORPUS
• [DESCRIPTION OF ASSET] – [FAIR MARKET VALUE]
• [CASH] – $[AMOUNT]
[// GUIDANCE: Attach additional schedules (e.g., distribution plan, tax ID election) as needed.]
[// GUIDANCE: Review Utah Code updates, client tax objectives, and integrate custom dispositive provisions prior to finalization.]