An irrevocable trust is a type of trust that cannot be changed after the agreement has
been signed. A common use for an irrevocable trust is to provide asset protection for
the trustor and the trustor's family. By placing assets into an irrevocable trust, the trustor
is giving up complete control over and access to the trust assets, therefore, the trust
assets cannot be reached by a creditor of the trustor. However, the trustor's family can
be the beneficiaries of the irrevocable trust, thereby still providing the family with
financial support, but outside of the reach of creditors.
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Irrevocable Trust Agreement with all Income to be paid to Beneficiary, with
Discretionary Distributions of Principal Subject to Ascertainable Standard
This Trust Agreement is made on the (date), between (Name of Trustor),
presently residing at (street address, city, state, zip code), hereinafter called Trustor,
and (Name of Trustee), a banking corporation organized and existing under the laws of
______________, with its principal office located at (street address, city, state, zip
code), referred to herein as Trustee.
For and in consideration of the mutual covenants contained in this Agreement,
and other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
1. Purpose
Trustor transfers to Trustee all property listed in Schedule A, which is attached
and incorporated by reference, for the uses and purposes specified in this Agreement.
Trustee shall hold, manage, invest, and reinvest the property transferred and distribute
income and principal to (name of beneficiary), of (street address, city, state, zip code),
(whose Social Security number is __________), according to the terms and conditions
of the Trust or separate trusts established by this Agreement.
2. No Powers Reserved by Trustor
This Trust is irrevocable and can not be amended and all property transferred to
this Trust must be held and distributed according to its terms. Additional property may
be added to this Trust at any time by any person, which property shall be held by
Trustee under the terms of this Trust as the terms apply at the time of addition, subject
to future acceptance by Trustee.
3. Dispositive Provisions
A. Trustee shall pay the net income to or for the benefit of (name of
beneficiary).
B. If, in the opinion of Trustee, (name of beneficiary) is in need of additional
funds to provide adequately for his/her health, education, and/or support in
reasonable comfort, Trustee shall pay to or for the benefit of (name of
beneficiary) such amounts from the principal of the Trust from time to time as it
shall determine in its discretion to be necessary or appropriate for such
purposes.
C. On the death of (name of beneficiary), Trustee shall pay the then
remaining principal and undistributed income to or among such person or
persons or to the Estate of (name of beneficiary) in such amounts or proportions
and in such manner, including outright or in trust, as (name of beneficiary) shall
appoint in his/her last will if such beneficiary makes specific reference to the
exercise of this power.
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D. On the death of (name of beneficiary), if or to the extent distribution is not
made pursuant to the exercise of the power of appointment granted in the
previous paragraph, Trustee shall distribute the balance of principal and
undistributed income to the surviving issue of (name of beneficiary), such issue
to take by right of representation.
E. If, by the previous paragraph, any distribution is required to be made to a
minor, the interest so required to be distributed shall be indefeasibly vested in the
minor, but Trustee may retain the amount payable until the minor attains his or
her majority or dies, whichever first occurs. Trustee may pay so much of the
income and principal to or for the benefit of the minor as in Trustee's sole
discretion is necessary to provide for his or her health, education, and/or support
in reasonable comfort. Any income not distributed may be added to the principal
of such interest and invested as a part of the same. When the minor attains his or
her majority or dies, whichever first occurs, the then remaining principal and
undistributed income shall be paid to him or her, if living, or to his or her estate, if
deceased.
F. If, or to the extent, the above provisions do not provide for the distribution
of the trust estate, or any part of the trust estate, such interest shall be distributed
free of trust on the termination of all prior estates or interests to the intestate
heirs of (name of beneficiary), as then determined by the laws of (name of state)
as then in effect.
4. Spendthrift and Administrative Provisions
A. Trustee is not to recognize any transfer, mortgage, pledge, hypothecation,
assignment, or order of a beneficiary which anticipates the payment of any part
of the income or principal. The income and principal of the trust estate shall not
be subject to attachment, garnishment, creditor's bill, or execution to satisfy any
debt, obligation, or tort of any beneficiary nor shall any part of the trust estate
pass to a trustee or receiver in any bankruptcy or insolvency proceeding initiated
by or against any beneficiary.
B. Required distributions of income to a beneficiary shall be made in
convenient installments which must be at least as frequent as quarterly. In
Trustee's sole discretion, distributions of income or principal to any beneficiary
may be:
1. Paid directly to the beneficiary;
2. Deposited in any bank to the credit of the beneficiary in an account
carried in the beneficiary's name either alone or jointly with others;
3. Expended for the benefit of the beneficiary; or
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4. Paid to someone who has undertaken the responsibility, legally or
voluntarily, for the support and maintenance of the beneficiary.
After making any payment or distribution, Trustee shall be fully discharged
of liability with respect to and further accountability for such payment or
distribution.
C. If the market value of the aggregate assets in the principal account totals
less than (e.g., $25,000), this Trust may be terminated in the sole discretion of
Trustee and distributed to the income beneficiary or beneficiaries in proportion to
their income interests; or, if the interests are indefinite, then to the income
beneficiaries in such equitable proportions as Trustee shall determine.
D. Trustee is directed to regard the income beneficiary or beneficiaries at any
given time as having primary rights under this Agreement and Trustee is directed
to consider only the welfare of income beneficiaries in the exercise of
discretionary powers and to disregard the interests of any successor
beneficiaries. Any discretionary right to use principal shall include the right to
exhaust principal for such purpose. No beneficiary shall have any right to compel
Trustee to make any discretionary payment or expenditure or to question the
propriety of any discretionary payment or expenditure made by Trustee. Any
discretionary determination made by Trustee shall be final as to all beneficiaries.
E. On the death of a beneficiary entitled to income payments, any accrued or
undistributed income shall continue to be treated as income and shall be held
and accounted for, or distributed, in the same manner as if the income had been
received and accrued after the beneficiary's death.
F. Trustee's discretion to distribute principal to or for the benefit of a
beneficiary shall include authority to pay the expenses of last illness, funeral, and
burial expenses of that beneficiary after death; provided that any calculations of
successor interests shall be made as if any such payments had been made from
principal prior to the death of the beneficiary.
G. Whenever any portion of trust property is valued for death tax purposes, or
becomes subject to death taxes because of the death of any beneficiary, Trustee
is directed to pay the equitable portion of the taxes attributable to the Trust
property including interest and penalties on it. Trustee may rely on calculations
made by the legal representative responsible for the payment of the taxes and
shall have no duty or obligation to inquire as to the correctness of any amounts
certified by the legal representative as the shares attributable to the Trust. The
payment of such amounts to the legal representative or to the taxing
governmental units shall be a complete discharge to Trustee with respect to such
payments. Any debt securities issued by the United States Government held as
part of the Trust Estate at the time of the death of any beneficiary which are
redeemable at par in payment of federal estate tax for that beneficiary's estate
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shall be applied by Trustee in the payment of such tax even if the amount so paid
exceeds the Trust's equitable portion of it. If Trustee deems it to be appropriate,
additional amounts of death taxes plus interest and penalties becoming due on
the death of a beneficiary may be paid from the Trust Estate. Any amounts paid
by Trustee under direction or discretion must be paid out of property subject to
the tax paid and may not be paid out of property excluded from death tax or
property used as a deduction in calculating the death tax to be paid.
H. If any trust created by this Agreement is still in existence twenty-one (21)
years after the death of and descendants who are living on the date of this Trust,
all shares shall immediately vest in the persons then entitled to the income and in
proportion to their income interests, or, if such interests are indefinite, then to the
income beneficiaries in such equitable proportions as Trustee shall determine.
5. Powers and Duties of Trustee
A. With respect to this Trust and any sub-trusts created by this Agreement
and the property of the same, Trustee shall have all powers given it by law and
all powers which may be exercised by individuals owning similar property in their
own right. Without restricting the generality of the foregoing, the following powers
are set forth, by way of illustration of the extent of powers granted and not by way
of limitation, to be exercised from time to time by Trustee in its discretion:
1. To receive additions to any trusts established under this Agreement
from any source, and to administer such additions according to the terms
of this Agreement;
2. To retain indefinitely without liability for loss any property or interest
in property received in kind by Trustee as an addition to the Trust Estate
regardless of the degree of risk, the effect on diversification, or the
unproductively of the asset;
3. To sell, exchange, lease, grant options to purchase, and execute
contracts concerning trust property for such considerations and on such
conditions and payment terms as Trustee may determine without regard to
the termination date of any trust;
4. To invest and reinvest trust funds from time to time in bonds, notes,
debentures, corporate stock of any class, trust interests including common
trust funds and investment trust shares, real estate, or any other kinds of
real and personal property or business interests without being limited by
any statute or rule of law concerning proper investments for Trustee; to
assign undivided interests in investments to any separate trusts or shares
established by this agreement;
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5. To hold securities in bearer form and to hold any property in its
name as Trustee or in the name of a nominee without indication of any
fiduciary relationship;
6. To participate in the management of business enterprises as
stockholder, partner, or principal; to participate in any organization or
reorganization of a business enterprise committing, transferring, or
redeeming trust assets or funds for such purposes; to vote stock by proxy
or otherwise; to deposit or transfer securities to protective or voting
committees or similar bodies;