DIY Legal Forms

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Irrevocable Discretionary Trust

(With Crummey Powers)

I, [name], of [city, county, state] make this Trust Agreement dated ---------, 20-- with [name] ("my Trustee").

Article I

CREATION AND DISPOSITION OF TRUST

1. Creation of Trust. I have transferred to my Trustee the assets listed on the attached Schedule. My Trustee shall hold all assets received in trust under the terms of this Agreement. The Beneficiary of the trust is [name].

2. Trust Until Age ----------. Until the Beneficiary reaches age ----------, and subject to the provisions of Article Ill, my Trustee may pay to or for the benefit of the Beneficiary as much of the net income or principal of the trust as my Trustee may deem necessary for the Beneficiary's support, health, and education. My Trustee may pay principal while income is accumulated, and shall annually add any undistributed income to principal.

3. Termination. When the Beneficiary reaches age --, my Trustee shall distribute the principal and any undistributed income to the Beneficiary.

4. Limited Power of Appointment. If the Beneficiary dies before reaching age --, my Trustee shall distribute the principal and any undistributed income as the Beneficiary may appoint by specific reference to this power in the Beneficiary's will. The Beneficiary may appoint to or among any of the Beneficiary's spouse and descendants and any of my descendants, and the Beneficiary may appoint outright or in further lawful trust. My Trustee shall distribute the unappointed principal and income of the trust to the Beneficiary's then living descendants, per stirpes, or, if there are none, to my then living descendants, per stirpes. If at the Beneficiary's death there is no living beneficiary designated to receive the trust assets, my Trustee shall distribute the trust assets to [name of charitable organization].

Article II

INTERESTS VESTING IN CERTAIN BENEFICIARIES

1. Vested Interests Retained in Trust. Whenever any interest in the trust vests in a beneficiary under age twenty-one, my Trustee may hold the interest in trust. My Trustee may pay to or for the benefit of the beneficiary as much of the net income or principal of the trust as my Trustee may deem necessary for the beneficiary's support, health, and education. When the beneficiary reaches age twenty-one, my Trustee shall distribute the trust assets to the beneficiary. If the beneficiary dies before reaching that age, my Trustee shall distribute the trust assets to the beneficiary's estate.

2. Distribution to Custodian. While any beneficiary is a minor, my Trustee may distribute any interest vesting in the beneficiary to a custodian under the [state] Uniform Gifts to Minors Act.

3. Vesting Not Postponed. The provision of this Article shall not postpone vesting of any interest in the beneficiary.

Article III

RIGHT TO WITHDRAW TRUST ASSETS

1. Withdrawal Right. Whenever a donation is made to the trust under Article I by me (including my initial donation creating the trust) or any other person other than by will, and the donor does not otherwise advise my Trustee in writing, the Beneficiary shall have the right to withdraw assets from the principal of the trust (including the donated assets) having an aggregate value equal to the value of the donated assets.

2. Notice. My Trustee shall promptly give written notice of each donation to the Beneficiary. If the Beneficiary is a minor or under legal disability, the notice shall be given to the Beneficiary's legal guardian, but if there is none, to a parent or other adult person responsible for the Beneficiary other than the donor.

3. Exercise of Withdrawal, Lapse. The Beneficiary may exercise the withdrawal right by a written instrument delivered to my Trustee. The legal guardian, parent, or other adult person who receives notice of any donation on behalf of the Beneficiary may exercise that right on behalf of the Beneficiary in the same manner. To the extent the withdrawal right is not exercised within thirty days after receipt of notice of the donation, the withdrawal right shall lapse.

4. Tax Objectives. I intend by this Article to create a noncumulative right of withdrawal that will qualify a donation to the trust as a transfer of a present interest for purposes of the gift tax annual exclusion. I further intend that the lapse of any right of withdrawal will not be treated as a completed taxable gift for federal gift tax purposes.

Article IV

FIDUCIARIES

1. Resignation of Trustee. My Trustee may resign as Trustee by written notice delivered to each adult beneficiary and to an adult responsible for each minor beneficiary then authorized to receive income of the trust. The resignation shall be effective upon appointment of a successor Trustee.

2. Successor Trustee. If my Trustee resigns or ceases to serve, [name] shall have the right to become successor Trustee or to designate any individual other than myself or any bank or trust company having trust powers as successor Trustee. The appointment shall be effective upon written acceptance of fiduciary duties by the successor Trustee delivered to each adult beneficiary and an adult person responsible for each minor beneficiary then authorized to receive income of the trust.

3. Actions of Predecessor. No successor Trustee shall be responsible for or required to inquire into the actions of my Trustee occurring before the successor's appointment.

4. Compensation. Any Trustee shall be entitled to receive reasonable compensation for his fiduciary services.

5. Fiduciary Powers. In addition to the powers granted by law, I grant my Trustee the powers set forth in the following subparagraphs. However, my Trustee shall not exercise any power specifically prohibited under this Article or any other power that would cause the trust assets to be taxable in my estate or cause trust income to be taxable to me.

a. My Trustee may sell, exchange, lease, or encumber any trust assets upon such terms as my Trustee may deem appropriate.

b. My Trustee may borrow money, grant security interests, and execute mortgages, deeds of trust, and other instruments creating security interests upon such items as my Trustee may deem appropriate.

c. My Trustee may compromise and adjust any claims against or on behalf of any trust upon such terms as my Trustee may deem appropriate.

d. My Trustee may make distributions to beneficiaries in cash or in kind.

6. Restrictions on Use of Trust Assets. My Trustee shall have no power to enable me, my Trustee, or any other person to purchase, exchange, deal with, or dispose of any trust assets for less than adequate consideration or to borrow any trust assets without adequate interest and security. No person other than my Trustee shall have any power, directly or indirectly, to vote any trust securities, to control any trust investments, or to reacquire or exchange any trust assets by substitution of other property. No trust income or principal shall be used for my benefit, to satisfy my legal obligations, or to pay insurance premiums for policies insuring my life or the life of my spouse.

7. Termination of Small Trusts. If at any time the size of any trust under this Agreement is so small that, in the opinion of my Trustee who is not the income beneficiary of the trust, the trust is uneconomical to administer, my Trustee may terminate the trust and distribute the assets to the person then authorized to receive trust income.

8. Fiduciary Restrictions. The powers and discretion granted to my Trustee are exercisable only in a fiduciary capacity and may not be used to enlarge or shift any beneficial interest except as an incidental consequence of the discharge of fiduciary duties.

9. Restrictions on Individual Trustees. No individual serving as my Trustee shall have a voice in any discretionary decision to distribute income or principal of any trust in order to discharge a legal obligation of the individual or for the individual's pecuniary benefit unless necessary for the individual's support, health, or education.

Article V

MISCELLANEOUS PROVISIONS

1. Irrevocable Trust. This Agreement and any trust under this Agreement shall be irrevocable. I reserve no power to alter, amend, revoke, or terminate this Agreement, in whole or in part.

2. Additional Contributions. I reserve for myself and any other person, with the consent of my Trustee, the right to transfer additional assets to my Trustee. Except to the extent the donor may otherwise direct, my Trustee shall add the assets equally to the separate trusts then in existence.

3. Spendthrift Provisions. To the extent permitted by law, the principal and income of any trust shall not be liable for the debts of any beneficiary or subject to alienation or anticipation by a beneficiary, except as otherwise provided.

4. Adoption. Persons related by or through adoption shall take under this Agreement as if related by or through birth.

5. Situs, Multiple Counterparts. This Agreement is made or delivered in [state] and shall be governed by its laws. This Agreement is signed in more than one counterpart, each of which is an original.

WITNESS my signature and seal:

. . . . . . . [Seal]

[name], Grantor

The terms of the Trust Agreement are accepted.

. . . . . . . [Seal]

[name], Trustee

[Acknowledgment]

This Section for Notary:

Acknowledgment

State of _________

County of ________ [County]

On [Date] before me, [Name of Notary], notary, personally appeared [Name of Person(s) Involved], personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

Witness my hand and official seal.

Signature ________
Notary

My commission expires: _____

(Seal)