Requirements for a Irrevocable Family Trust Agreement

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An irrevocable trust is an arrangement whereby a grantor relinquishes legal ownership of property and places it under the administration of a trustee, who administers it for the benefit of the trust beneficiaries. A family trust is a trust in which the beneficiaries are all relatives of the grantor. A grantor creates a trust deed by drafting a deed of trust and signing it. A deed of trust does not require the agreement of trust beneficiaries.


In most states, a trust is presumed to be revocable unless the trust deed specifically states that it is irrevocable. Since the assets of a revocable trust can be reached by your creditors, it is important to state that the trust is irrevocable. To the extent possible, you should title all trust assets in the name of the trust — by opening a bank account in the name of the trust, for example — and list the trust's initial assets and dates of transfer in the trust deed.


The beneficiaries (family members in the case of a family trust) should be listed by name in the trust deed. It is acceptable to name yourself as a beneficiary. Assets may be distributed to beneficiaries in lump sum, through regular periodic payments, or at the discretion of the trustee. When planning distributions, take into account the fact that creditors of a beneficiary may not reach trust assets until they are actually distributed to the debtor beneficiary.

The Trustee

The trust deed should appoint a trustee and an alternate trustee, after you obtain their consent to the appointments. A trustee may be an individual or a company, such as a bank or a trust company. The disadvantage of using an individual as a trustee is that if the trust is set to endure for many years, the trustee will have to be changed when the original trustee dies. Companies, by contrast, may exist beyond the lifetime of any individual. The trust deed should tell the trustee how to distribute trust assets, and define the trustee's discretionary authority, if any. It is acceptable to name yourself as trustee.

Read More: How to Change a Trustee Revocable Living Trust


Your creditors may attempt to reach trust assets by claiming that your transfer of assets to the trust was a fraudulent attempt to avoid your debts. Consequently, you should transfer assets to the trust in a manner that raises no doubt about the legitimacy of the transfer. A transfer of assets may be deemed fraudulent (and reversible by court order) if you were insolvent at the time of the transfer, if you became insolvent because of the transfer, or if you anticipated immediate creditor collection action at the time you made the transfer.