REVOCABLE LIVING TRUST AGREEMENT
(Vermont – Revocable Inter Vivos Trust)
TABLE OF CONTENTS
- DOCUMENT HEADER.................................................................2
- DEFINITIONS....................................................................3
- TRUST CREATION & FUNDING........................................................5
- REVOCATION & AMENDMENT..........................................................7
- ADMINISTRATION DURING SETTLOR’S LIFETIME........................................8
- ADMINISTRATION UPON SETTLOR’S INCAPACITY........................................9
- ADMINISTRATION UPON SETTLOR’S DEATH............................................10
- TRUSTEES.......................................................................13
- TRUSTEE POWERS & DUTIES........................................................15
- TRUSTEE COMPENSATION; INDEMNIFICATION; LIABILITY CAP..........................18
- ACCOUNTING, RECORDS & TAX MATTERS............................................19
- RISK ALLOCATION & REMEDIES....................................................20
- DISPUTE RESOLUTION............................................................21
- GENERAL PROVISIONS............................................................23
- EXECUTION BLOCK...............................................................25
Schedule A – Assignment & Schedule of Trust Assets
Schedule B – Successor Trustee Acceptance
1. DOCUMENT HEADER
This REVOCABLE LIVING TRUST AGREEMENT (the “Agreement”) is made and entered into as of [EFFECTIVE DATE] (the “Effective Date”) by and between [FULL LEGAL NAME OF SETTLOR], residing at [SETTLOR ADDRESS] (“Settlor”), and [FULL LEGAL NAME OF INITIAL TRUSTEE], residing at [TRUSTEE ADDRESS] (together with all successor and additional trustees, the “Trustee”).
1.1 Recitals
A. Settlor desires to create a revocable living trust under the laws of the State of Vermont for estate planning, asset management, incapacity planning, and dispositive purposes.
B. Trustee is willing to accept the duties herein imposed and to hold the Trust Estate for the uses and purposes set forth below.
C. Settlor is transferring certain property to the Trustee, as more fully described on Schedule A, to constitute the initial Trust Estate, and anticipates transferring additional property from time to time.
1.2 Declaration and Consideration
In consideration of the mutual covenants herein and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, Settlor and Trustee agree as follows.
2. DEFINITIONS
Unless the context clearly requires otherwise, the following terms shall have the meanings set forth below and shall apply equally to the singular and plural forms. Cross-references in parentheses indicate principal locations where the term is used.
“Accountant” – The independent certified public accountant selected pursuant to Section 11.1.
“Agreement” – This Revocable Living Trust Agreement, as the same may be amended from time to time.
“Beneficiary” – Any person or entity entitled to distributions under Articles 5, 6, or 7.
“Descendants” – Lineal descendants of the Settlor, by blood or legal adoption, per stirpes.
“Disability” or “Disabled” – Settlor’s inability to manage property and financial affairs, as evidenced by (i) written certification by two licensed physicians, or (ii) a court order of incapacity. (See § 6.1.)
“Directed Trustee” – A Trustee whose duties are limited by valid direction of an Investment Adviser or Trust Protector.
“Distribution Standard” – Health, education, maintenance, and support (“HEMS”) in reasonable comfort, consistent with the Settlor’s accustomed standard of living.
“Fiduciary” – Any Trustee, Investment Adviser, or Trust Protector acting hereunder.
“Grantor Trust” – A trust treated as owned by Settlor for federal and Vermont income tax purposes under I.R.C. §§ 671–679.
“Investment Adviser” – Any person appointed under Section 8.7 with authority to direct investments.
“Permitted Spendthrift Provision” – A provision restricting voluntary or involuntary alienation of a Beneficiary’s interest, consistent with 14A V.S.A. § 502.
“Trust” or “Trust Estate” – All property, tangible or intangible, real or personal, transferred to or acquired by the Trustee, together with all reinvestments, proceeds, and accumulations.
“Vermont UTC” – The Vermont Trust Code, 14A V.S.A. §§ 101 et seq.
[// GUIDANCE: Insert additional defined terms unique to the client’s dispositive plan—e.g., “Special Needs Beneficiary,” “Charitable Organization,” etc.]
3. TRUST CREATION & FUNDING
3.1 Creation
Pursuant to 14A V.S.A. § 401, Settlor hereby creates a revocable inter vivos trust named “[SETTLOR NAME] Revocable Trust dated [EFFECTIVE DATE]” (the “Trust”).
3.2 Transfer of Property
(a) Initial Funding – Concurrently with execution, Settlor delivers to Trustee the property described in Schedule A to constitute the initial corpus.
(b) Subsequent Funding – Settlor or any third party may transfer additional assets to the Trust at any time by assignment, deed, beneficiary designation, or other valid conveyance.
(c) Title to Assets – Trustee shall take title to Trust property in fiduciary capacity, reflecting the Trust’s full legal name.
[// GUIDANCE: For real property, prepare and record a warranty or quitclaim deed into the Trust, referencing this Agreement and indexing under the Settlor’s name.]
3.3 Pour-Over Provisions
Settlor intends to provide in Settlor’s Last Will and Testament that any residuary estate not otherwise disposed of shall be poured over to this Trust pursuant to 14A V.S.A. § 401(c).
4. REVOCATION & AMENDMENT
4.1 Settlor’s Reserved Powers
In accordance with 14A V.S.A. § 602(a), the Trust is revocable. Settlor reserves the unconditional right, during Settlor’s lifetime and while not Disabled, to:
1. Revoke the Trust, in whole or in part;
2. Amend or restate any provision;
3. Withdraw assets; and
4. Direct Trustee with respect to any Trust matter.
4.2 Manner of Revocation or Amendment
Any revocation or amendment shall be (i) in a writing signed by Settlor and delivered to Trustee, or (ii) by any other method expressly provided herein. Oral directions are ineffective.
4.3 Effect of Partial Revocation
Property removed by revocation shall revest in Settlor and is excluded from the Trust Estate for all purposes.
5. ADMINISTRATION DURING SETTLOR’S LIFETIME
5.1 Distributions
During Settlor’s lifetime and while not Disabled, Trustee shall distribute to or for Settlor’s benefit so much of the Trust income and principal as Settlor from time to time requests. Absent request, Trustee may, in Trustee’s discretion, distribute as necessary to satisfy the Distribution Standard.
5.2 Income Accumulation
Income not distributed shall be added to principal.
6. ADMINISTRATION UPON SETTLOR’S INCAPACITY
6.1 Determination of Disability
Disability is established upon receipt of either (a) concurrent written certifications by two licensed physicians, or (b) a Vermont Probate Division order.
6.2 Discretionary Distributions
While Settlor is Disabled, Trustee shall apply or distribute income and principal for Settlor’s benefit consistent with the Distribution Standard, considering other resources available to Settlor.
6.3 Reinstatement of Capacity
Settlor’s written declaration, accompanied by one physician certification of capacity, terminates Disability status.
7. ADMINISTRATION UPON SETTLOR’S DEATH
7.1 Expenses & Taxes
(a) Payment of Debts – Trustee may pay Settlor’s legally enforceable debts, funeral, and administration expenses.
(b) Taxes – Trustee may pay federal and state estate, inheritance, and income taxes attributable to Settlor’s estate or the Trust.
[// GUIDANCE: Coordinate tax clauses with a contemporaneous Will to avoid double funding of liabilities.]
7.2 Specific Gifts
Upon Settlor’s death, Trustee shall distribute the following outright, free of trust:
1. [DESCRIPTION OF SPECIFIC GIFT] to [BENEFICIARY NAME];
2. [Add additional specific gifts as needed].
7.3 Residual Disposition
The remaining Trust Estate (“Residuary Trust Estate”) shall be held, administered, or distributed as follows:
Option A – Outright Distribution
• 100 % to [BENEFICIARY], or if deceased, to that Beneficiary’s Descendants per stirpes.
Option B – Continuing Trusts
• Establish sub-trusts for each child of Settlor, terminating at age [AGE] or later, with discretionary distributions under the Distribution Standard.
[// GUIDANCE: Delete unused options and tailor dispositive scheme.]
7.4 Spendthrift Protection
Each Beneficiary’s interest is subject to a spendthrift restriction permitted under 14A V.S.A. § 502, and shall not be subject to voluntary or involuntary alienation until actually received.
7.5 Rule Against Perpetuities Savings Clause
Notwithstanding any contrary provision, every trust created hereunder shall terminate, if not sooner, no later than twenty-one (21) years after the death of the last surviving Descendant of Settlor who was living on the Effective Date.
8. TRUSTEES
8.1 Initial Trustee
Settlor appoints [INITIAL TRUSTEE] as sole Trustee.
8.2 Successor Trustee
Upon the death, resignation, removal, or incapacity of the then-acting Trustee, the following persons, in the order listed, shall serve:
1. [NAME OF FIRST SUCCESSOR];
2. [NAME OF SECOND SUCCESSOR];
3. [CORPORATE FIDUCIARY].
[// GUIDANCE: For corporate fiduciaries, confirm charter authority to act in Vermont and fee schedules.]
8.3 Acceptance of Office
A Successor Trustee shall accept office by executing a written acceptance in the form of Schedule B and delivering it to the Settlor (if living) or the then-acting Trustee or Beneficiaries.
8.4 Resignation
A Trustee may resign by giving thirty (30) days’ written notice to Settlor (if living) and all Qualified Beneficiaries per 14A V.S.A. § 705.
8.5 Removal
The Settlor (while not Disabled) or a majority of Qualified Beneficiaries may remove a Trustee, with or without cause, by written notice and the appointment of a Successor Trustee.
8.6 Trustee Vacancy
If a vacancy occurs and no Successor Trustee is designated or willing to serve, a majority of Qualified Beneficiaries may appoint a Successor Trustee, or any interested party may petition the Vermont Probate Division.
8.7 Delegation & Directed Trusts
The Trustee may delegate investment or distribution decisions to an Investment Adviser or Trust Protector pursuant to a written delegation consistent with 14A V.S.A. § 807.
9. TRUSTEE POWERS & DUTIES
9.1 Fiduciary Standard
Each Trustee shall administer the Trust in good faith, in accordance with its terms, and in the interests of the Beneficiaries, exercising reasonable care, skill, and caution (14A V.S.A. § 801).
9.2 Enumerated Powers
Subject to the foregoing duty and any limitations herein, Trustee shall have, in addition to powers granted by law, all powers customarily exercised by fiduciaries, including but not limited to:
a. Invest and reinvest Trust assets pursuant to the prudent investor rule (14A V.S.A. § 902);
b. Buy, sell, option, lease, or exchange real or personal property;
c. Borrow money and encumber Trust property;
d. Participate in reorganizations, vote securities, employ custodians;
e. Commence or defend litigation, including alternative dispute resolution;
f. Employ and compensate professionals;
g. Allocate receipts and disbursements between income and principal per Title 14A, Chapter 11;
h. Make tax elections and form pass-through entities;
i. Distribute in cash or in kind, pro rata or non-pro rata, at values determined by Trustee in good faith.
9.3 Co-Trustee Actions
Unless otherwise provided, actions of a majority of Co-Trustees constitute the action of all. A dissenting Trustee shall not be liable for actions taken by the majority if the dissent is expressed in writing.
10. TRUSTEE COMPENSATION; INDEMNIFICATION; LIABILITY CAP
10.1 Compensation
Individual Trustees may receive reasonable compensation commensurate with services rendered. Corporate fiduciaries shall be compensated under their published fee schedules as in effect from time to time.
10.2 Expenses
Trustee shall be reimbursed from the Trust Estate for all reasonable expenses incurred in administration.
10.3 Indemnification
To the fullest extent permitted by law and except for acts or omissions arising from bad faith, willful misconduct, or gross negligence, the Trust shall indemnify and hold harmless each Fiduciary against claims, liabilities, and expenses (including attorney fees) arising from the administration of the Trust (“Trustee Indemnity”).
10.4 Limitation of Liability
No Fiduciary shall be personally liable for any obligation of the Trust. All claims against a Fiduciary in such capacity are limited to the Trust Estate (“Liability Cap”) and may not be satisfied out of non-trust assets.
11. ACCOUNTING, RECORDS & TAX MATTERS
11.1 Records
Trustee shall keep accurate and complete books of account. A periodic statement shall be provided at least annually to the Settlor (while living) and all Qualified Beneficiaries.
11.2 Right to Accounting
An accounting shall be provided upon written request of any Qualified Beneficiary not more frequently than once every twelve (12) months.
11.3 Tax Returns
Trustee shall file all required federal, Vermont, and other tax returns. During Settlor’s lifetime, the Trust shall be a Grantor Trust (I.R.C. § 671 et seq.) with income taxable to Settlor. After Settlor’s death the Trust shall not be a Grantor Trust unless otherwise provided.
12. RISK ALLOCATION & REMEDIES
12.1 Injunctive Relief
Nothing herein shall limit the right of any party to seek temporary, preliminary, or permanent injunctive relief or specific performance from the Vermont Probate Division or other court of competent jurisdiction to enforce the terms of this Trust.
12.2 Attorney Fees
In any proceeding arising under or related to this Trust, the court may award reasonable attorney fees and costs in its discretion, chargeable to the Trust Estate or any party as justice requires.
13. DISPUTE RESOLUTION
13.1 Governing Law
This Trust shall be governed by and construed in accordance with the laws of the State of Vermont (“state_trust_law”), without regard to conflict-of-law principles.
13.2 Forum Selection
Exclusive venue for any judicial proceeding shall be the Vermont Superior Court, Probate Division of [COUNTY] (“state_probate_court”).
13.3 Optional Arbitration
The parties may elect to submit any controversy or claim arising under this Trust to binding arbitration administered by the American Arbitration Association in Burlington, Vermont, under its Commercial Arbitration Rules, and judgment on the award rendered may be entered in any court having jurisdiction. [Strike or retain per client preference.]
13.4 Jury Trial Waiver
Matters within the exclusive jurisdiction of the Probate Division are tried without a jury (“no_jury_probate”).
14. GENERAL PROVISIONS
14.1 Notices
All notices shall be in writing and deemed given upon (i) personal delivery, (ii) deposit with a nationally recognized overnight courier, or (iii) certified U.S. Mail, return receipt requested, addressed as follows:
Settlor: [ADDRESS]
Trustee: [ADDRESS]
Beneficiary: [ADDRESS]
Any party may change its address by written notice.
14.2 Amendments & Waivers
Except as otherwise provided, this Agreement may be amended only by a writing signed by Settlor (while the Trust is revocable) and delivered to Trustee. No waiver shall be effective unless in writing and shall apply only to the specific instance.
14.3 Assignment
No Beneficiary may assign, pledge, or otherwise transfer any interest in the Trust, except as expressly permitted herein.
14.4 Severability
If any provision is invalid or unenforceable, the remaining provisions shall remain in full force, and the invalid provision shall be modified to the minimum extent necessary to render it valid.
14.5 Entire Agreement
This Agreement constitutes the entire understanding with respect to the subject matter and supersedes all prior agreements.
14.6 Counterparts; Electronic Signatures
This Agreement may be executed in one or more counterparts (including electronic or facsimile signatures), each of which shall be deemed an original and all of which together shall constitute one instrument.
15. EXECUTION BLOCK
IN WITNESS WHEREOF, Settlor and Trustee have executed this Agreement as of the Effective Date.
| Settlor | Trustee |
|---|---|
| _______ | _______ |
| [SETTLOR NAME] | [TRUSTEE NAME] |
STATE OF VERMONT
COUNTY OF ______
On this _ day of _, 20__, before me, the undersigned Notary Public, personally appeared [SETTLOR NAME] and [TRUSTEE NAME], known to me or satisfactorily proven to be the persons 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 – Assignment & Schedule of Trust Assets
Pursuant to Section 3.2, Settlor hereby assigns, transfers, and delivers to Trustee the following property to constitute the initial Trust Estate:
- Cash: $[AMOUNT] deposited to “[TRUST NAME]” checking account at [BANK].
- Securities: [Number] shares of [COMPANY] common stock held at [BROKERAGE], Account No. [XXXX].
- Real Property: Residence located at [ADDRESS], more particularly described in the deed recorded at Book ___, Page ___ of the [COUNTY] Land Records.
- Personal Property: Household furnishings, jewelry, and collectibles described in Attachment A-1.
[// GUIDANCE: Attach separate assignment forms for tangible personal property and IP; execute and deliver deeds for real property; file beneficiary designations for life insurance/retirement accounts.]
Settlor: ____ Date: ____
Trustee: ____ Date: ____
Schedule B – Successor Trustee Acceptance
The undersigned hereby accepts appointment as Successor Trustee under the Revocable Living Trust Agreement dated [EFFECTIVE DATE], agrees to be bound by its terms, and swears or affirms that the undersigned is eligible and capable of serving.
[NAME], Successor Trustee
Date: ____