Virginia Estate Planning Wills

Irrevocable Trust

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IRREVOCABLE TRUST AGREEMENT

(Commonwealth of Virginia)

Document Header
Definitions
Operative Provisions
Representations & Warranties
Covenants & Restrictions
Default & Remedies
Risk Allocation
Dispute Resolution
General Provisions
Execution Block

1. DOCUMENT HEADER

1.1 Title.
Irrevocable Trust Agreement (the “Agreement”) of [TRUST NAME].

1.2 Parties.
(a) Settlor: [SETTLOR LEGAL NAME], an individual residing at [ADDRESS] (“Settlor”).
(b) Trustee: [TRUSTEE LEGAL NAME], [individual / Virginia-chartered trust company] with a principal business address at [ADDRESS] (“Trustee”).
(c) Additional Fiduciaries (if any): [TRUST PROTECTOR / INVESTMENT ADVISOR / DISTRIBUTION ADVISOR], each as identified in Schedule A.

1.3 Recitals.
A. Settlor desires to create an irrevocable trust governed by the laws of the Commonwealth of Virginia to hold, manage, and distribute the Trust Estate for the benefit of the Beneficiaries named herein.
B. Trustee is willing to accept the trusteeship upon the terms set forth below.
C. Settlor hereby transfers the Initial Trust Property to Trustee, who accepts the same in trust.

1.4 Effective Date. This Agreement is effective as of [EFFECTIVE DATE] (“Effective Date”).

1.5 Governing Law. This Agreement and the administration of the Trust are governed by the Virginia Uniform Trust Code, Va. Code Ann. § 64.2-700 et seq., and other applicable laws of the Commonwealth of Virginia.

2. DEFINITIONS

For ease of reference, capitalized terms have the meanings set forth below and apply equally to the singular and plural.

“Accounting Period” – The calendar year unless otherwise elected by Trustee.

“Affiliate” – Any entity controlling, controlled by, or under common control with the referenced person.

“Agreement” – This Irrevocable Trust Agreement, including all exhibits, schedules, and amendments.

“Beneficiary” – Each person or entity listed in Schedule B and any other person or entity who becomes a beneficiary under the terms hereof, including Qualified Beneficiaries as defined in the Virginia Uniform Trust Code.

“Distribution Standard” – The standard set forth in Section 3.4 for discretionary distributions.

“Independent Trustee” – A Trustee who is not a “related or subordinate party” with respect to the Settlor within the meaning of I.R.C. § 672(c).

“Initial Trust Property” – The property listed in Schedule C conveyed to Trustee on the Effective Date.

“Internal Revenue Code” or “IRC” – The Internal Revenue Code of 1986, as amended.

“Qualified Beneficiary” – As defined in Va. Code Ann. § 64.2-701, or any successor statute.

“Trust” – The trust created by this Agreement, known as “[TRUST NAME]”.

“Trust Estate” – All property held from time to time by Trustee under this Agreement.

[// GUIDANCE: Add additional definitions specific to your client’s fact pattern—e.g., “GST Exempt Trust,” “Special Needs Beneficiary,” etc.]

3. OPERATIVE PROVISIONS

3.1 Creation and Irrevocability.

(a) Settlor hereby delivers the Initial Trust Property to Trustee to hold, administer, and distribute as herein provided.
(b) The Trust is irrevocable. Except as expressly permitted by Section 3.7 (Limited Modifications), Settlor retains no power—whether alone or in conjunction with any person—to revoke, amend, or terminate the Trust.

3.2 Addition of Property.

Additional property acceptable to Trustee may be added to the Trust by Settlor or any other person at any time by gift, transfer, devise, bequest, or beneficiary designation, provided that such property vests irrevocably in Trustee subject to this Agreement.

3.3 Trust Purpose.

The primary purposes of the Trust are:
1. To preserve and grow the Trust Estate;
2. To provide for the Beneficiaries in accordance with the Distribution Standard; and
3. To accomplish legitimate tax planning objectives consistent with Virginia and federal law.

3.4 Distribution Standard.

(a) Discretionary Distributions. During the lifetime of any Beneficiary, Trustee may distribute to or for the benefit of such Beneficiary so much of the net income and/or principal as Trustee, in its sole and absolute discretion, deems advisable for the Beneficiary’s health, education, maintenance, or support (“HEMS”).
(b) Mandatory Distributions. [OPTIONAL – insert mandatory income or unitrust distribution language.]
(c) Residual Distribution. Upon the termination event set forth in Section 3.8, Trustee shall distribute the remaining Trust Estate to the remainder Beneficiaries specified in Schedule B.

3.5 Spendthrift Provision.

To the maximum extent allowed by law (Va. Code Ann. § 64.2-742 et seq.), a Beneficiary’s interest shall not be subject to voluntary or involuntary transfer, alienation, assignment, pledge, or seizure by legal process.

3.6 Trustee Powers.

Trustee shall have all powers granted under Va. Code Ann. § 64.2-778 et seq. and the IRC, including but not limited to:
1. Investment authority (prudent investor standard);
2. Power to allocate receipts and expenditures between income and principal;
3. Power to borrow, encumber, or mortgage Trust assets;
4. Power to determine tax matters and make elections;
5. Power to value Trust assets and employ professional advisors.

[// GUIDANCE: Consider adding directed trust language if your client intends to separate investment authority.]

3.7 Limited Modifications.

(a) Nonjudicial Settlement. Trustee and all Qualified Beneficiaries may enter into a nonjudicial settlement agreement under Va. Code Ann. § 64.2-709 to resolve matters allowed by that statute.
(b) Decanting. Trustee may distribute all or any part of the Trust Estate in further trust in accordance with Va. Code Ann. § 64.2-779.5.
(c) Trust Protector. If a Trust Protector is appointed, such protector may exercise the powers enumerated in Schedule A, including the power to modify administrative provisions to maintain tax advantages or comply with changes in law.

3.8 Termination.

The Trust will terminate upon the earliest of:
1. The date specified in Schedule B;
2. The death of the last surviving Beneficiary; or
3. The expiration of the period allowed by the rule against perpetuities under Va. Code Ann. § 55.1-400.
Upon termination, Trustee shall distribute the remaining Trust Estate as provided in Section 3.4(c).

4. REPRESENTATIONS & WARRANTIES

4.1 Settlor.

(a) Capacity. Settlor represents that Settlor is of legal age and sound mind and is not acting under duress.
(b) Title. Settlor warrants good title to the Initial Trust Property free of liens other than those disclosed to Trustee.
(c) Tax & Legal Advice. Settlor has consulted independent tax and legal advisors regarding this Agreement.

4.2 Trustee.

(a) Authority. Trustee represents that it has full power and authority to serve and to perform its obligations hereunder.
(b) No Conflicts. Trustee knows of no conflict of interest that would materially impair its fiduciary duties.

4.3 Survival. All representations and warranties survive execution of this Agreement and any resignation or removal of Trustee.

5. COVENANTS & RESTRICTIONS

5.1 Trustee Covenants.

(a) Fiduciary Standard. Trustee shall administer the Trust in good faith, in accordance with its terms and Virginia law, and solely in the interests of the Beneficiaries.
(b) Reporting. Trustee shall furnish an annual accounting to each Qualified Beneficiary in compliance with Va. Code Ann. § 64.2-775, unless a Beneficiary waives such right in a signed writing.
(c) Tax Returns. Trustee shall timely file all required federal, state, and local tax returns for the Trust.

5.2 Settlor Restrictions.

Settlor shall not exercise any power that would (i) cause inclusion of Trust assets in Settlor’s estate under IRC §§ 2036–2038, (ii) cause the Trust to be treated as a grantor trust unless expressly intended, or (iii) otherwise jeopardize the tax status of the Trust.

5.3 Beneficiary Restrictions.

No Beneficiary shall compel distributions except as expressly provided. Beneficiaries shall not participate in Trustee investment decisions if such participation would cause adverse tax consequences.

6. DEFAULT & REMEDIES

6.1 Events of Default.

(a) Trustee’s gross negligence, willful misconduct, or material breach of fiduciary duty;
(b) Trustee’s failure to provide an accounting within 60 days after written request;
(c) Trustee insolvency or incapacity.

6.2 Notice & Cure.

Before removal, the party alleging default shall deliver written notice specifying the default. Trustee shall have 30 days to cure unless the default is non-curable.

6.3 Remedies.

(a) Removal & Replacement. Qualified Beneficiaries holding a majority in beneficial interest may remove a defaulting Trustee and appoint a Successor Trustee under Section 9.3.
(b) Surcharge. Trustee may be surcharged to the extent of damages caused by its breach, limited to the Trust Estate per Section 7.2.
(c) Injunctive Relief. The probate division of the Circuit Court of [COUNTY/CITY], Virginia, may issue injunctive relief to protect the Trust Estate.

7. RISK ALLOCATION

7.1 Indemnification of Trustee.

Trustee and its affiliates, officers, directors, employees, and agents are indemnified from the Trust Estate against any claim, liability, or expense (including reasonable attorneys’ fees) arising from administration of the Trust, except to the extent resulting from Trustee’s gross negligence or willful misconduct.

7.2 Limitation of Liability.

Trustee’s liability for any loss is limited to the value of the Trust Estate at the time of such loss. No personal liability shall attach to Trustee for obligations incurred in a fiduciary capacity.

7.3 Insurance.

Trustee may purchase and maintain, at Trust expense, fiduciary liability insurance covering itself and any Co-Trustee.

7.4 Force Majeure.

Trustee is excused from performance to the extent delayed or prevented by events beyond its reasonable control, including acts of God, war, or changes in applicable law.

8. DISPUTE RESOLUTION

8.1 Governing Law.

This Agreement shall be construed and enforced in accordance with the laws of the Commonwealth of Virginia, without regard to conflict-of-laws principles.

8.2 Forum Selection.

Exclusive venue for all proceedings relating to the Trust shall be the Circuit Court of [COUNTY/CITY], Virginia, sitting in probate jurisdiction.

8.3 Optional Arbitration.

If all parties to a dispute (including Trustee and all Qualified Beneficiaries) agree in writing, such dispute may be submitted to binding arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules in [CITY, VIRGINIA].
[// GUIDANCE: Delete or modify this clause if the client prefers court supervision.]

8.4 Jury Waiver.

Consistent with Virginia probate practice, no jury trial shall be available in any proceeding concerning trust administration.

8.5 Preservation of Injunctive Relief.

Nothing herein limits any party’s right to seek temporary, preliminary, or permanent injunctive relief in the designated court to prevent waste or dissipation of Trust assets.

9. GENERAL PROVISIONS

9.1 Amendments & Waivers.

Except as authorized under Section 3.7, this Agreement may not be amended or terminated. A waiver of any provision on one occasion shall not constitute a waiver on any other occasion.

9.2 Assignment.

No party may assign rights or delegate duties under this Agreement except as expressly permitted (e.g., Trustee delegation of investment functions under Va. Code Ann. § 64.2-782).

9.3 Successor Trustees.

(a) Resignation. Trustee may resign upon 30 days’ written notice to Settlor (if living) and all Qualified Beneficiaries.
(b) Appointment. A Successor Trustee shall be appointed by [APPOINTING PARTY]; if none, by majority vote of Qualified Beneficiaries; if none, by the court.
(c) Vesting of Title. All Trust property vests in the Successor Trustee without the need for further conveyance.

9.4 Severability.

If any provision is held invalid or unenforceable, the remaining provisions shall remain in full force and effect, and the invalid provision shall be reformed to the minimum extent necessary to achieve its intent.

9.5 Entire Agreement.

This Agreement constitutes the entire agreement regarding the Trust and supersedes all prior discussions and writings.

9.6 Counterparts; Electronic Signatures.

This Agreement may be executed in counterparts, each of which is deemed an original, and may be delivered by facsimile, PDF, or electronic signature under the Uniform Electronic Transactions Act (Va. Code Ann. § 59.1-479 et seq.).

10. EXECUTION BLOCK

IN WITNESS WHEREOF, Settlor and Trustee have executed this Irrevocable Trust Agreement as of the Effective Date.

10.1 Settlor

[SETTLOR LEGAL NAME], Settlor

State/Commonwealth of _ )
County/City of _ )

Acknowledged before me on ___ by ______.

Notary Public
My commission expires: _
Registration No.: _

10.2 Trustee

[TRUSTEE LEGAL NAME], Trustee
By: ____
Name: ____
Title: _______