Bill Text: IL HB2526 | 2017-2018 | 100th General Assembly | Introduced


Bill Title: Creates the Illinois Trust Code. Provides that the Code applies to express trusts, charitable or noncharitable, and trusts created pursuant to a statute, judgment, or decree that requires the trust to be administered in the manner of an express trust. Defines terms. Adds provisions governing: judicial proceedings; representation; creation, validity, modification, and termination of trusts; creditor's claims; spendthrift and discretionary trusts; revocable trusts; the office of trustee; duties and powers of the trustee; the Illinois Uniform Prudent Investor Act; life insurance; affiliated investments; liability of trustees and rights of persons dealing with trustee; total return trusts; trust decanting; the Uniform Powers of Appointment Act; perpetuities; and application of the Code to existing trusts. Repeals a Section of the Probate Act of 1975 concerning testamentary powers of appointment. Repeals the Trusts and Trustees Act, the Trusts and Dissolutions of Marriage Act, the Statute Concerning Perpetuities, the Perpetuities Vesting Act, the Trust Accumulation Act, the Power of Appointment Exercise Act, and the Termination of Powers Act. Makes corresponding changes in the Public Use Trust Act, the Township Code, the Corporate Fiduciary Act, the Community-Integrated Living Arrangements Licensure and Certification Act, the Title Insurance Act, the Illinois Funeral or Burial Funds Act, the Mental Health and Developmental Disabilities Code, the Illinois Marriage and Dissolution of Marriage Act, the Probate Act of 1975, the Illinois Power of Attorney Act, the Common Trust Fund Act, the Religious Corporation Act, and the Illinois Pre-Need Cemetery Sales Act. Effective January 1, 2018.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2017-03-31 - House Committee Amendment No. 1 Rule 19(a) / Re-referred to Rules Committee [HB2526 Detail]

Download: Illinois-2017-HB2526-Introduced.html


100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB2526

Introduced , by Rep. Ann M. Williams

SYNOPSIS AS INTRODUCED:
See Index

Creates the Illinois Trust Code. Provides that the Code applies to express trusts, charitable or noncharitable, and trusts created pursuant to a statute, judgment, or decree that requires the trust to be administered in the manner of an express trust. Defines terms. Adds provisions governing: judicial proceedings; representation; creation, validity, modification, and termination of trusts; creditor's claims; spendthrift and discretionary trusts; revocable trusts; the office of trustee; duties and powers of the trustee; the Illinois Uniform Prudent Investor Act; life insurance; affiliated investments; liability of trustees and rights of persons dealing with trustee; total return trusts; trust decanting; the Uniform Powers of Appointment Act; perpetuities; and application of the Code to existing trusts. Repeals a Section of the Probate Act of 1975 concerning testamentary powers of appointment. Repeals the Trusts and Trustees Act, the Trusts and Dissolutions of Marriage Act, the Statute Concerning Perpetuities, the Perpetuities Vesting Act, the Trust Accumulation Act, the Power of Appointment Exercise Act, and the Termination of Powers Act. Makes corresponding changes in the Public Use Trust Act, the Township Code, the Corporate Fiduciary Act, the Community-Integrated Living Arrangements Licensure and Certification Act, the Title Insurance Act, the Illinois Funeral or Burial Funds Act, the Mental Health and Developmental Disabilities Code, the Illinois Marriage and Dissolution of Marriage Act, the Probate Act of 1975, the Illinois Power of Attorney Act, the Common Trust Fund Act, the Religious Corporation Act, and the Illinois Pre-Need Cemetery Sales Act. Effective January 1, 2018.
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FISCAL NOTE ACT MAY APPLY

A BILL FOR

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1 AN ACT concerning civil law.
2 Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4
Article 1. General provisions and definitions.
5 Section 101. Short title. This Act may be cited as the
6Illinois Trust Code.
7 Section 102. Scope. Except as otherwise provided, this Code
8applies to express trusts, charitable or noncharitable, and
9trusts created pursuant to a statute, judgment, or decree that
10requires the trust to be administered in the manner of an
11express trust. The provisions of this Code do not apply to any:
12 (1) land trust;
13 (2) voting trust;
14 (3) security instrument such as a trust deed or
15 mortgage;
16 (4) liquidation trust;
17 (5) escrow;
18 (6) instrument under which a nominee, custodian for
19 property, or paying or receiving agent is appointed;
20 (7) trust created by a deposit arrangement in a banking
21 or savings institution, commonly known as a "Totten trust"
22 unless in the trust instrument any of the provisions of

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1 this Code are made applicable by specific reference; or
2 (8) Grain Indemnity Trust Account or any other trust
3 created under the Grain Code.
4 Section 103. Definitions. In this Code:
5 (1) "Action", with respect to an act of a trustee, includes
6a failure to act.
7 (2) "Ascertainable standard" means a standard relating to
8an individual's health, education, support, or maintenance
9within the meaning of Section 2041(b)(1)(A) or 2514(c)(1) of
10the Internal Revenue Code and any applicable regulations.
11 (3) "Beneficiary" means a person that:
12 (A) has a present or future beneficial interest in a
13 trust, vested or contingent, assuming nonexercise of
14 powers of appointment;
15 (B) in a capacity other than that of trustee, holds a
16 power of appointment over trust property; or
17 (C) is an identified charitable organization that will
18 or may receive distributions under the terms of the trust.
19 (4) "Charitable interest" means an interest in a trust
20that:
21 (A) is held by an identified charitable organization
22 and makes the organization a qualified beneficiary;
23 (B) benefits only charitable organizations and, if the
24 interest were held by an identified charitable
25 organization, would make the organization a qualified

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1 beneficiary; or
2 (C) is held solely for charitable purposes and, if the
3 interest were held by an identified charitable
4 organization, would make the organization a qualified
5 beneficiary.
6 (5) "Charitable organization" means:
7 (A) a person, other than an individual, organized and
8 operated exclusively for charitable purposes; or
9 (B) a government or governmental subdivision, agency,
10 or instrumentality, to the extent it holds funds
11 exclusively for a charitable purpose.
12 (6) "Charitable purpose" means the relief of poverty, the
13advancement of education or religion, the promotion of health,
14municipal or other governmental purpose, or another purpose the
15achievement of which is beneficial to the community.
16 (7) "Charitable trust" means a trust, or portion of a
17trust, created for a charitable purpose.
18 (8) "Community property" means all personal property,
19wherever situated, that was acquired as or became, and
20remained, community property under the laws of another
21jurisdiction, and all real property situated in another
22jurisdiction that is community property under the laws of that
23jurisdiction.
24 (9) "Current beneficiary" means a beneficiary that on the
25date the beneficiary's qualification is determined is a
26distributee or permissible distributee of trust income or

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1principal. The term "current beneficiary" includes the holder
2of a presently exercisable general power of appointment but
3does not include a person who is a beneficiary only because the
4person holds any other power of appointment.
5 (10) "Directing party" means any investment trust advisor,
6distribution trust advisor, or trust protector.
7 (11) "Donor", with reference to a power of appointment,
8means a person that creates a power of appointment.
9 (12) "Environmental law" means a federal, state, or local
10law, rule, regulation, or ordinance relating to protection of
11the environment.
12 (13) "General power of appointment" means a power of
13appointment exercisable in favor of a powerholder, the
14powerholder's estate, a creditor of the powerholder, or a
15creditor of the powerholder's estate.
16 (14) "Guardian of the estate" means a person appointed by a
17court to administer the estate of a minor or adult individual.
18 (15) "Guardian of the person" means a person appointed by a
19court to make decisions regarding the support, care, education,
20health, and welfare of a minor or adult individual.
21 (16) "Incapacitated" or "incapacity" means the inability
22of an individual to manage property or business affairs because
23the individual is a minor, adjudicated incompetent, has an
24impairment in the ability to receive and evaluate information
25or make or communicate decisions even with the use of
26technological assistance; or is at a location that is unknown

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1and not reasonably ascertainable. Without limiting the ways in
2which incapacity may be established, an individual is
3incapacitated if:
4 (i) a plenary guardian has been appointed for the
5 individual under subsection (c) of Section 11a-12 of the
6 Probate Act of 1975;
7 (ii) a limited guardian has been appointed for the
8 individual under subsection (b) of Section 11a-12 of the
9 Probate Act of 1975 and the court has found that the
10 individual lacks testamentary capacity; or
11 (iii) the individual was examined by a licensed
12 physician who determined that the individual was
13 incapacitated and the physician made a signed written
14 record of the physician's determination within 90 days
15 after the examination and no licensed physician
16 subsequently made a signed written record of the
17 physician's determination that the individual was not
18 incapacitated within 90 days after examining the
19 individual.
20 (17) "Internal Revenue Code" means the Internal Revenue
21Code of 1986 as amended from time to time and includes
22corresponding provisions of any subsequent federal tax law.
23 (18) "Interested persons" means: (A) the trustee; and (B)
24all beneficiaries, or their respective representatives
25determined after giving effect to the provisions of Article 3,
26whose consent or joinder would be required in order to achieve

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1a binding settlement were the settlement to be approved by the
2court. "Interested persons" includes a trust advisor,
3investment advisor, distribution advisor, trust protector, or
4other holder, or committee of holders, of fiduciary or
5nonfiduciary powers, if the person then holds powers material
6to a particular question or dispute to be resolved or affected
7by a nonjudicial settlement in accordance with Section 111 or
8by a judicial proceeding.
9 (19) "Interests of the beneficiaries" means the beneficial
10interests provided in the trust instrument.
11 (20) "Jurisdiction", with respect to a geographic area,
12includes a State or country.
13 (21) "Legal capacity" means that the person is not
14incapacitated.
15 (22) "Nongeneral power of appointment" means a power of
16appointment that is not a general power of appointment.
17 (23) "Person" means an individual, estate, business or
18nonprofit entity, public corporation, government or
19governmental subdivision, agency, or instrumentality, or other
20legal entity.
21 (24) "Power of appointment" means a power that enables a
22powerholder acting in a nonfiduciary capacity to designate a
23recipient of an ownership interest in or another power of
24appointment over the appointive property. The term "power of
25appointment" does not include a power of attorney.
26 (25) "Power of withdrawal" means a presently exercisable

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1general power of appointment other than a power:
2 (A) exercisable by the powerholder as trustee that is
3 limited by an ascertainable standard; or
4 (B) exercisable by another person only upon consent of
5 the trustee or a person holding an adverse interest.
6 (26) "Powerholder" means a person in which a donor creates
7a power of appointment.
8 (27) "Presently exercisable power of appointment" means a
9power of appointment exercisable by the powerholder at the
10relevant time. The term "presently exercisable power of
11appointment":
12 (A) includes a power of appointment exercisable only
13 after the occurrence of a specified event, the satisfaction
14 of an ascertainable standard, or the passage of a specified
15 time only after:
16 (i) the occurrence of the specified event;
17 (ii) the satisfaction of the ascertainable
18 standard; or
19 (iii) the passage of the specified time; and
20 (B) does not include a power exercisable only at the
21 powerholder's death.
22 (28) "Presumptive remainder beneficiary" means a
23beneficiary of a trust, as of the date of determination and
24assuming nonexercise of all powers of appointment, who either:
25(A) would be eligible to receive a distribution of income or
26principal if the trust terminated on that date; or (B) would be

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1eligible to receive a distribution of income or principal if
2the interests of all beneficiaries currently eligible to
3receive income or principal from the trust ended on that date
4without causing the trust to terminate.
5 (29) "Property" means anything that may be the subject of
6ownership, whether real or personal, legal or equitable, or any
7interest therein.
8 (30) "Qualified beneficiary" means a beneficiary who, on
9the date the beneficiary's qualification is determined and
10assuming nonexercise of powers of appointment:
11 (A) is a distributee or permissible distributee of
12 trust income or principal;
13 (B) would be a distributee or permissible distributee
14 of trust income or principal if the interests of the
15 distributees described in subparagraph (A) terminated on
16 that date without causing the trust to terminate; or
17 (C) would be a distributee or permissible distributee
18 of trust income or principal if the trust terminated on
19 that date.
20 (31) "Revocable", as applied to a trust, means revocable by
21the settlor without the consent of the trustee or a person
22holding an adverse interest. A revocable trust is deemed
23revocable during the settlor's lifetime.
24 (32) "Settlor", except as otherwise provided in Sections
25113 and 1225, means a person, including a testator, who
26creates, or contributes property to, a trust. If more than one

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1person creates or contributes property to a trust, each person
2is a settlor of the portion of the trust property attributable
3to that person's contribution except to the extent another
4person has the power to revoke or withdraw that portion.
5 (33) "Sign" means, with present intent to authenticate or
6adopt a record:
7 (A) to execute or adopt a tangible symbol; or
8 (B) to attach to or logically associate with the record
9 an electronic symbol, sound, or process.
10 (34) "Spendthrift provision" means a term of a trust that
11restrains both voluntary and involuntary transfer of a
12beneficiary's interest.
13 (35) "State" means a State of the United States, the
14District of Columbia, Puerto Rico, the United States Virgin
15Islands, or any territory or insular possession subject to the
16jurisdiction of the United States. The term "state" includes an
17Indian tribe or band recognized by federal law or formally
18acknowledged by a state.
19 (36) "Terms of the trust" means the manifestation of the
20settlor's intent regarding a trust's provisions as expressed in
21the trust instrument, as may be established by other evidence
22that would be admissible in a judicial proceeding, or as may be
23established by court order or nonjudicial settlement
24agreement.
25 (37) "Trust" means a trust created by will, deed,
26agreement, declaration, or other written instrument.

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1 (38) "Trust accounting" means one or more written
2communications from the trustee with respect to the accounting
3year that describe: (A) the trust property, liabilities,
4receipts, and disbursements, including the amount of the
5trustee's compensation; (B) the value of the trust assets on
6hand at the close of the accounting period, to the extent
7feasible; and (C) all other material facts related to the
8trustee's administration of the trust.
9 (39) "Trust instrument" means the written instrument
10stating the terms of a trust, including any amendment, any
11court order or nonjudicial settlement agreement establishing,
12construing, or modifying the terms of the trust in accordance
13with Section 111, Sections 410 through 416, or other applicable
14law, and any additional trust instrument under Article 12.
15 (40) "Trustee" includes an original, additional, and
16successor trustee, and a cotrustee.
17 (41) "Unascertainable beneficiary" means a beneficiary
18whose identity is uncertain or not reasonably ascertainable.
19 Section 104. Knowledge.
20 (a) Except as provided in subsection (b), a person has
21knowledge of a fact if the person:
22 (1) has actual knowledge of it;
23 (2) has received a notice or notification of it; or
24 (3) from all the facts and circumstances known to the
25 person at the time in question, has reason to know it.

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1 (b) An organization that conducts activities through
2employees has notice or knowledge of a fact involving a trust
3only from the time the information was received by an employee
4having responsibility to act for the trust, or would have been
5brought to the employee's attention if the organization had
6exercised reasonable diligence. An organization exercises
7reasonable diligence if it maintains reasonable routines for
8communicating significant information to the employee having
9responsibility to act for the trust and there is reasonable
10compliance with the routines. Reasonable diligence does not
11require an employee of the organization to communicate
12information unless the communication is part of the
13individual's regular duties or the individual knows a matter
14involving the trust would be materially affected by the
15information.
16 Section 105. Default and mandatory rules.
17 (a) The trust instrument may specify the rights, powers,
18duties, limitations, and immunities applicable to the trustee,
19beneficiary, and others and those provisions, if not otherwise
20contrary to law, shall control, except to the extent
21specifically provided otherwise in this Section. The
22provisions of this Code apply to the trust to the extent that
23they are not inconsistent with specific provisions of the trust
24instrument.
25 (b) Specific terms of the trust instrument prevail over any

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1provision of this Code except:
2 (1) the requirements for creating a trust;
3 (2) the duty of a trustee to act in good faith;
4 (3) the requirement that a trust have a purpose that is
5 lawful and not contrary to public policy;
6 (4) the rules governing designated representatives as
7 provided in Section 307;
8 (5) the 21-year limitation contained in subsection (a)
9 of Section 409;
10 (6) the power of the court to modify or terminate a
11 trust under Sections 411 through 417;
12 (7) the effect of a spendthrift provision and the
13 rights of certain creditors and assignees to reach a trust
14 as provided in Article 5;
15 (8) the requirement under subsection (e) of Section 602
16 that an agent under a power of attorney must have express
17 authorization in the agency to exercise a settlor's powers
18 with respect to a revocable trust;
19 (9) the power of the court under subsection (b) of
20 Section 708 to adjust a trustee's compensation specified in
21 the trust instrument that is unreasonably low or high;
22 (10) for trusts becoming irrevocable after the
23 effective date of this Code, the trustee's duty under
24 paragraph (b)(1) of Section 813.1 to provide information to
25 the qualified beneficiaries;
26 (11) for trusts becoming irrevocable after the

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1 effective date of this Code, the trustee's duty under
2 paragraph (b)(2) of Section 813.1 to provide accountings to
3 the current beneficiaries of the trust;
4 (12) for trusts becoming irrevocable after the
5 effective date of this Code, the trustee's duty under
6 paragraph (b)(4) of Section 813.1 to provide accountings to
7 beneficiaries receiving a distribution of the residue of
8 the trust upon a trust's termination;
9 (13) the effect of an exculpatory term under Section
10 1008;
11 (14) the rights under Sections 1010 through 1013 of a
12 person other than a trustee or beneficiary; and
13 (15) the power of the court to take such action and
14 exercise such jurisdiction as may be necessary in the
15 interests of equity.
16 Section 106. Common law of trusts; principles of equity.
17The common law of trusts and principles of equity supplement
18this Code, except to the extent modified by this Code or
19another statute of this State.
20 Section 107. Governing law.
21 (a) The meaning and effect of a trust instrument are
22determined by:
23 (1) the law of the jurisdiction designated in the trust
24 instrument; or

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1 (2) in the absence of a designation in the trust
2 instrument, the law of the jurisdiction having the most
3 significant relationship to the matter at issue.
4 (b) Except as otherwise expressly provided by the trust
5instrument or by court order, the laws of this State govern the
6administration of a trust while the trust is administered in
7this State.
8 Section 108. Principal place of administration.
9 (a) Without precluding other means for establishing a
10sufficient connection with the designated jurisdiction, the
11provisions of a trust instrument designating the principal
12place of administration are valid and controlling if:
13 (1) a trustee's principal place of business is located
14 in or a trustee is a resident of the designated
15 jurisdiction; or
16 (2) all or part of the administration occurs in the
17 designated jurisdiction.
18 (b) The trustee, as the trustee reasonably determines is
19appropriate, may transfer the trust's principal place of
20administration to another state or to a jurisdiction outside of
21the United States. Language in a trust instrument that the
22trust shall be governed by the laws of a particular state shall
23not be deemed to expressly prohibit a transfer of the principal
24place of administration.
25 (c) Notwithstanding any other provision of this Code, the

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1trustee has no duty to inform beneficiaries, or any other
2interested party, about the availability of this Section and
3further has no duty to review the trust instrument to determine
4whether any action should be taken under this Section unless
5requested to do so in writing by a beneficiary then entitled to
6receive reports and information related to the administration
7of the trust.
8 (d) In connection with a transfer of the trust's principal
9place of administration, the trustee may transfer some or all
10of the trust property to a successor trustee designated in the
11trust instrument or appointed pursuant to Section 704.
12 Section 109. Methods and waiver of notice.
13 (a) Notice to a person under this Code or the sending of a
14document to a person under this Code must be accomplished in a
15manner reasonably suitable under the circumstances and likely
16to result in receipt of the notice or document. Permissible
17methods of notice or for sending a document include first-class
18mail, personal delivery, delivery to the person's last known
19place of residence or place of business, or a properly directed
20electronic message.
21 (b) Notice otherwise required under this Code or a document
22otherwise required to be sent under this Code need not be
23provided to a person whose identity or location is unknown to
24and not reasonably ascertainable by the trustee.
25 (c) Notice under this Code or the sending of a document

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1under this Code may be waived by the person to be notified or
2sent the document.
3 (d) Notice of a judicial proceeding must be given as
4provided in the applicable rules of civil procedure.
5 (e) Subject to subsection (d), receipt by a beneficiary or
6other person of a trustee's notice, account, or other report is
7presumed if the trustee has reasonable procedures in place
8requiring the mailing or delivery of the notice, account, or
9report to the beneficiary or other person. This presumption
10applies to the mailing or delivery of a notice, account, or
11other report, including any communication required in writing,
12by electronic means or the provision of access to the
13information by electronic means so long as the beneficiary or
14other person has agreed to receive the information by
15electronic delivery or access.
16 Section 110. Others treated as qualified beneficiaries.
17 (a) A person appointed to enforce a trust created for the
18care of an animal or another noncharitable purpose as provided
19in Section 408 or 409 has the rights of a qualified beneficiary
20under this Code.
21 (b) The Attorney General's Charitable Trust Bureau has the
22rights of a qualified beneficiary with respect to a charitable
23trust having its principal place of administration in this
24State.

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1 Section 111. Nonjudicial settlement agreements.
2 (a) Interested persons, or their respective
3representatives determined after giving effect to the
4provisions of Article 3, may enter into a binding nonjudicial
5settlement agreement with respect to any matter involving a
6trust as provided in this Section.
7 (b) The following matters may be resolved by a nonjudicial
8settlement agreement:
9 (1) Validity, interpretation, or construction of the
10 terms of the trust instrument.
11 (2) Approval of a trustee's report or accounting.
12 (3) Exercise or nonexercise of any power by a trustee.
13 (4) The grant to a trustee of any necessary or
14 desirable administrative power if the grant does not
15 conflict with a clear material purpose of the trust.
16 (5) Questions relating to property or an interest in
17 property held by the trust if the resolution does not
18 conflict with a clear material purpose of the trust.
19 (6) Removal, appointment, or removal and appointment
20 of a trustee, trust advisor, investment advisor,
21 distribution advisor, trust protector, or other holder, or
22 committee of holders, of fiduciary or nonfiduciary powers,
23 including without limitation designation of a plan of
24 succession or procedure to determine successors to any such
25 office.
26 (7) Determination of a trustee's or other fiduciary's

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1 compensation.
2 (8) Transfer of a trust's principal place of
3 administration, including, without limitation, to change
4 the law governing administration of the trust.
5 (9) Liability or indemnification of a trustee for an
6 action relating to the trust.
7 (10) Resolution of bona fide disputes related to trust
8 administration, investment, distribution, or other
9 matters.
10 (11) Modification of the terms of the trust instrument
11 pertaining to the administration of the trust.
12 (12) Determining whether the aggregate interests of
13 each beneficiary in severed trusts are substantially
14 equivalent to the beneficiary's interests in the trusts
15 before severance.
16 (13) Termination of the trust, except that court
17 approval of the termination must be obtained in accordance
18 with subsection (d) of this Section, and the court must
19 find that continuance of the trust is not necessary to
20 achieve any clear material purpose of the trust. The court
21 shall consider spendthrift provisions as a factor in making
22 a decision under this subsection, but a spendthrift
23 provision is not necessarily a material purpose of a trust,
24 and the court is not precluded from modifying or
25 terminating a trust because the trust instrument contains
26 spendthrift provisions. Upon termination, the court shall

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1 order the distribution of the trust property as agreed by
2 the parties to the agreement, or if the parties cannot
3 agree, then as the court determines is equitable and
4 consistent with the purposes of the trust.
5 (c) If a trust contains a charitable interest, the parties
6to any proposed nonjudicial settlement agreement affecting the
7trust shall deliver to the Attorney General's Charitable Trust
8Bureau written notice of the proposed agreement at least 60
9days prior to its effective date. The Bureau is not required to
10take action, but if it objects in a writing delivered to one or
11more of the parties prior to the proposed effective date, the
12agreement shall not take effect unless the parties obtain court
13approval.
14 (d) Any beneficiary or other interested person may request
15the court to approve any part or all of a nonjudicial
16settlement agreement, including, without limitation, whether
17any representation is adequate and without material conflict of
18interest, if the petition for approval is filed within 60 days
19after the effective date of the agreement.
20 (e) An agreement entered into in accordance with this
21Section, or a judicial proceeding pursued in accordance with
22this Section, is final and binding on the trustee, on all
23beneficiaries of the trust, both current and future, and on all
24other interested persons as if ordered by a court with
25competent jurisdiction over the trust, the trust property, and
26all parties in interest.

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1 (f) In the trustee's sole discretion, the trustee may, but
2is not required to, obtain and rely upon an opinion of counsel
3on any matter relevant to this Section, including, without
4limitation:
5 (1) if required by this Section, that the agreement
6 proposed to be made in accordance with this Section does
7 not conflict with a clear material purpose of the trust;
8 (2) in the case of a trust termination, that
9 continuance of the trust is not necessary to achieve any
10 clear material purpose of the trust;
11 (3) that there is no material conflict of interest
12 between a representative and the person represented with
13 respect to the particular question or dispute; and
14 (4) that the representative and the person represented
15 have substantially similar interests with respect to the
16 particular question or dispute.
17 (g) This Section shall be construed as pertaining to the
18administration of a trust and shall be available to any trust
19that is administered in this State or that is governed by
20Illinois law with respect to the meaning and effect of its
21terms, except to the extent the trust instrument expressly
22prohibits the use of this Section by specific reference to this
23Section or a prior corresponding law. A provision in the trust
24instrument in the form: "Neither the provisions of Section 111
25of the Illinois Trust Code nor any corresponding provision of
26future law may be used in the administration of this trust", or

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1a similar provision demonstrating that intent, is sufficient to
2preclude the use of this Section.
3 Section 112. Rules of construction. The rules of
4construction that apply in this State to the interpretation of
5wills and the disposition of property by will also apply as
6appropriate to the interpretation of the trust instrument and
7the disposition of the trust property. This Code shall be
8liberally construed and the rule that statutes in derogation of
9the common law shall be strictly construed does not apply.
10 Section 113. Insurable interest of trustee.
11 (a) A trustee of a trust has an insurable interest in the
12life of an individual insured under a life insurance policy
13that is owned by the trustee of the trust acting in a fiduciary
14capacity or that designates the trust itself as the owner if,
15on the date the policy is issued:
16 (1) the insured is:
17 (A) a settlor or beneficiary of the trust; or
18 (B) an individual in whom a settlor of the trust
19 has, or would have had if living at the time the policy
20 was issued, an insurable interest; and
21 (2) the trustee determines the life insurance
22 proceeds:
23 (A) are for the benefit of one or more trust
24 beneficiaries that have an insurable interest in the

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1 life of the insured; or
2 (B) will carry out a purpose of the trust.
3 (b) If a trustee of a trust would have an insurable
4interest in the life of an individual insured as described in
5this Section, then the insurable interest includes the joint
6lives of such an individual and his or her spouse.
7 (c) Nothing in this Section limits or affects any provision
8of the Viatical Settlements Act of 2009.
9 Section 114. Gift to a deceased beneficiary under an inter
10vivos trust.
11 (a) If a gift of a present or future interest is to a
12descendant of the settlor who dies before or after the settlor,
13the descendants of the deceased beneficiary living when the
14gift is to take effect in possession or enjoyment take per
15stirpes the gift so bequeathed.
16 (b) If a gift of a present or future interest is to a class
17and any member of the class dies before or after the settlor,
18the members of the class living when the gift is to take effect
19in possession or enjoyment take the share or shares that the
20deceased member would have taken if he or she were then living,
21except that, if the deceased member of the class is a
22descendant of the settlor, the descendants of the deceased
23member then living shall take per stirpes the share or shares
24that the deceased member would have taken if he or she were
25then living.

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1 (c) Except as provided in subsections (a) and (b), if the
2gift is not to a descendant of the settlor or is not to a class
3as provided in subsections (a) and (b) and if the beneficiary
4dies either before or after the settlor and before the gift is
5to take effect in possession or enjoyment, then the gift shall
6lapse. If the gift lapses by reason of the death of the
7beneficiary before the gift is to take effect in possession or
8enjoyment, then the gift so given shall be included in and pass
9as part of the residue of the trust under the trust. If the
10gift is or becomes part of the residue, the gift so bequeathed
11shall pass to and be taken by the beneficiaries remaining, if
12any, of the residue in proportions and upon trusts
13corresponding to their respective interests in the residue of
14the trust. The provisions of subsections (a) and (b) do not
15apply to a future interest that is or becomes indefeasibly
16vested at the settlor's death or at any time thereafter before
17it takes effect in possession or enjoyment. The provisions of
18this Section apply on and after January 1, 2005 for any gifts
19to a deceased beneficiary under an inter vivos trust if the
20deceased beneficiary dies after January 1, 2005 and before the
21gift is to take effect in possession or enjoyment.
22
Article 2. Judicial proceedings.
23 Section 201. Role of court in administration of trusts.
24 (a) The court may adjudicate any matter arising in the

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1administration of a trust to the extent its jurisdiction is
2invoked by an interested person or as provided by law.
3 (b) A trust is not subject to continuing judicial
4supervision unless ordered by the court.
5 (c) A judicial proceeding involving a trust may relate to
6any matter involving the trust's administration, including a
7request for instructions.
8 Section 202. Jurisdiction over trustee and beneficiary.
9 (a) By accepting the trusteeship of a trust having its
10principal place of administration in this State or by moving
11the principal place of administration to this State, the
12trustee is subject to the jurisdiction of the courts of this
13State regarding any matter involving the trust.
14 (b) With respect to their interests in the trust, the
15beneficiaries of a trust having its principal place of
16administration in this State are subject to the jurisdiction of
17the courts of this State regarding any matter involving the
18trust. By accepting a distribution from such a trust, the
19recipient personally submits to the jurisdiction of the courts
20of this State regarding any matter involving the trust.
21 (c) Service of process upon any person who is subject to
22the jurisdiction of the courts of this State, as provided in
23this Section, may be made by personally serving the summons
24upon the defendant outside this State, as provided in the Code
25of Civil Procedure, with the same force and effect as though

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1summons had been personally served within this State.
2 (d) This Section does not preclude other methods of
3obtaining jurisdiction over a trustee, beneficiary, or other
4person receiving property from the trust.
5 Section 203. (Reserved).
6 Section 204. Venue.
7 (a) Except as otherwise provided in subsection (b), venue
8for a judicial proceeding involving a trust is in the county of
9this State in which the trust's principal place of
10administration is or will be located and, if the trust is
11created by will and the estate is not yet closed, in the county
12in which the decedent's estate is being administered.
13 (b) If a trust has no trustee, venue for a judicial
14proceeding for the appointment of a trustee is proper in a
15county of this State in which a beneficiary resides, in a
16county in which any real or tangible trust property is located,
17and if the trust is created by will, in the county in which the
18decedent's estate was or is being administered.
19
Article 3. Representation.
20 Section 301. Representation: basic effect.
21 (a) Except as provided in Section 602 and subsection (c):
22 (1) Notice, information, accountings, or reports given

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1 to a person who may represent and bind another person under
2 this Article have the same effect as if given directly to
3 the person represented.
4 (2) Actions, including, but not limited to, the
5 execution of an agreement, taken by a person who may
6 represent and bind another person under this Article are
7 binding on the person represented to the same extent as if
8 the actions had been taken by the person represented.
9 (b) Except as otherwise provided in Section 602, a person
10under this Article who represents a settlor who is
11incapacitated may, on the settlor's behalf: (i) receive notice,
12information, accountings, or reports; (ii) give a binding
13consent; or (iii) enter a binding agreement.
14 (c) A settlor may not represent and bind a beneficiary
15under this Article with respect to a nonjudicial settlement
16agreement under Section 111, the termination or modification of
17a trust under subsection (a) of Section 411, or an exercise of
18the decanting power under Article 12.
19 (d) If pursuant to this Article a person may be represented
20by 2 or more representatives, then the representative who has
21legal capacity, in the following order of priority, shall
22represent and bind the person:
23 (1) a representative or guardian ad litem appointed by
24 a court under Section 305;
25 (2) the holder of a power of appointment under Section
26 302;

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1 (3) a designated representative under Section 307;
2 (4) a court-appointed guardian of the estate, or, if
3 none, a court-appointed guardian of the person under
4 subsection (b) of Section 303;
5 (5) an agent under a power of attorney for property
6 under subsection (c) of Section 303;
7 (6) a parent of a person under subsection (d) of
8 Section 303;
9 (7) another person having a substantially similar
10 interest with respect to the particular question or dispute
11 under subsection (a) of Section 304; and
12 (8) a representative under this Article for a person
13 who has a substantially similar interest to a person who
14 has a representative under subsection (b) of Section 304.
15 (e) A trustee is not liable for giving notice, information,
16accountings, or reports to a person who is represented by
17another person under this Article, and nothing in this Article
18prohibits the trustee from giving notice, information,
19accountings, or reports to the person represented.
20 Section 302. Representation by holders of certain powers.
21 (a) The holder of a testamentary or a presently exercisable
22power of appointment that is: (1) a general power of
23appointment; or (2) exercisable in favor of all persons other
24than the powerholder, the powerholder's estate, a creditor of
25the powerholder, or a creditor of the powerholder's estate, may

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1represent and bind all persons, including permissible
2appointees and takers in default, whose interests may be
3eliminated by the exercise or nonexercise of the power.
4 (b) To the extent there is no conflict of interest between
5a holder and the persons represented with respect to the
6particular question or dispute, the holder of a testamentary or
7presently exercisable power of appointment, other than a power
8described in subsection (a), may represent and bind all
9persons, including permissible appointees and takers in
10default, whose interests may be eliminated by the exercise or
11nonexercise of the power.
12 Section 303. Representation by others.
13 (a) If all qualified beneficiaries of a trust either have
14legal capacity or have representatives under this Article who
15have legal capacity, an action taken by all qualified
16beneficiaries, in each case either by the beneficiary or by the
17beneficiary's representative, shall represent and bind all
18other beneficiaries who have a successor, contingent, future,
19or other interest in the trust.
20 (b) If a person is represented by a court-appointed
21guardian of the estate or, if none, guardian of the person,
22then the guardian may represent and bind the person.
23 (c) If an individual is incapacitated, an agent under a
24power of attorney for property who has authority to act with
25respect to the particular question or dispute and who does not

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1have a material conflict of interest with respect to the
2particular question or dispute may represent and bind the
3principal. An agent is deemed to have authority under this
4subsection if the power of attorney grants the agent the power
5to settle claims and to exercise powers with respect to trusts
6and estates, even if the powers do not include powers to make a
7will, to revoke or amend a trust, or to require the trustee to
8pay income or principal.
9 (d) If a person is incapacitated, a parent of the person
10may represent and bind the person if there is no material
11conflict of interest between the represented person and either
12of the person's parents with respect to the particular question
13or dispute. If a disagreement arises between parents who
14otherwise qualify to represent a child in accordance with this
15subsection and who are seeking to represent the same child, the
16parent who is a lineal descendant of the settlor of the trust
17that is the subject of the representation is entitled to
18represent the child; or if none, the parent who is a
19beneficiary of the trust is entitled to represent the child.
20 Section 304. Representation by person having substantially
21identical interest.
22 (a) To the extent there is no material conflict of interest
23between the representative and the represented beneficiary
24with respect to the particular question or dispute, a
25beneficiary who is incapacitated, unborn, or unascertainable

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1may, for all purposes, be represented by and bound by another
2beneficiary having a substantially similar interest with
3respect to the particular question or dispute.
4 (b) A guardian, agent, or parent who is the representative
5for a beneficiary under subsection (b), (c), or (d) of Section
6303 may, for all purposes, represent and bind any other
7beneficiary who is incapacitated, unborn, or unascertainable
8and who has an interest, with respect to the particular
9question or dispute, that is substantially similar to the
10interest of the beneficiary represented by the representative,
11but only to the extent that there is no material conflict of
12interest between the beneficiary represented by the
13representative and the other beneficiary with respect to the
14particular question or dispute.
15 Section 305. Appointment of representative.
16 (a) If the court determines that representation of an
17incapacitated, unborn, or unascertainable beneficiary might
18otherwise be inadequate, the court may appoint a representative
19for any nonjudicial matter to receive any notice, information,
20accounting, or report on behalf of the beneficiary and to
21represent and bind the beneficiary, or may appoint a guardian
22ad litem in any judicial proceeding to represent the interests
23of, bind, and approve any order or agreement on behalf of the
24beneficiary.
25 (b) A representative may act on behalf of the individual

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1represented with respect to any matter arising under this Code,
2regardless of whether a judicial proceeding concerning the
3trust or estate is pending.
4 (c) If not precluded by a conflict of interest with respect
5to the particular question or dispute, a representative or
6guardian ad litem may be appointed to represent several persons
7or interests.
8 (d) In giving any consent or agreement, a representative or
9guardian ad litem may consider general family benefit accruing
10to the living members of the family of the person represented.
11 Section 306. Representation of charity. If a trust contains
12a charitable interest, the Attorney General's Charitable Trust
13Bureau may, in accordance with this Section, represent, bind,
14and act on behalf of the charitable interest with respect to
15any particular question or dispute, including without
16limitation representing the charitable interest in a
17nonjudicial settlement agreement under Section 111, in an
18agreement to convert a trust to a total return trust under
19Article 11, or in a distribution in further trust under Article
2012. A charitable organization that is specifically named as
21beneficiary of a trust or otherwise has a beneficial interest
22in a trust may act for itself. Notwithstanding any other
23provision, nothing in this Section shall be construed to limit
24or affect the Attorney General's authority to file an action or
25take other steps as he or she deems advisable at any time to

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1enforce or protect the general public interest as to a trust
2that provides a beneficial interest or expectancy for one or
3more charitable organizations or charitable purposes whether
4or not a specific charitable organization is named in the
5trust. This Section shall be construed as declarative of
6existing law and not as a new enactment.
7 Section 307. Designated representative.
8 (a) If specifically nominated in the trust instrument, one
9or more individuals with legal capacity may be designated to
10represent and bind an individual who is a qualified
11beneficiary. The trust instrument may also authorize any person
12or persons, other than a trustee of the trust, to designate one
13or more individuals with legal capacity to represent and bind
14an individual who is a qualified beneficiary. Any person so
15nominated or designated is referred to in this Section as a
16"designated representative".
17 (b) Notwithstanding subsection (a):
18 (1) A designated representative may not represent and
19 bind a current beneficiary who is age 30 or older and is
20 not incapacitated.
21 (2) A designated representative may not represent and
22 bind a qualified beneficiary while the designated
23 representative is serving as a trustee.
24 (3) Subject to paragraphs (1) and (2) of this
25 subsection (b), a designated representative may not

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1 represent and bind a qualified beneficiary if the
2 designated representative is also a qualified beneficiary
3 of the trust, unless:
4 (A) the designated representative was specifically
5 nominated in the trust instrument; or
6 (B) the designated representative is the qualified
7 beneficiary's spouse or a grandparent or descendant of
8 a grandparent of the qualified beneficiary or of the
9 qualified beneficiary's spouse.
10 (c) Each designated representative is a fiduciary of the
11trust subject to the standards applicable to a trustee of a
12trust under applicable law.
13 (d) In no event may a designated representative be relieved
14or exonerated from the duty to act, or withhold from acting, in
15good faith and as the designated representative reasonably
16believes is in the best interest of the represented qualified
17beneficiary.
18
Article 4. Creation, validity, modification, and termination
19
of trust.
20 Section 401. Methods of creating trust. A trust may be
21created by:
22 (1) transfer of property to another person as trustee
23 during the settlor's lifetime or by will or other
24 disposition taking effect upon the settlor's death;

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1 (2) declaration by the owner of property that the owner
2 holds identifiable property as trustee; or
3 (3) exercise of a power of appointment in favor of a
4 trustee.
5 Section 402. Requirements for creation.
6 (a) A trust is created only if:
7 (1) the settlor has capacity to create a trust;
8 (2) the settlor indicates an intention to create the
9 trust;
10 (3) the trust has a definite beneficiary or is:
11 (A) a charitable trust;
12 (B) a trust for the care of an animal, as provided
13 in Section 408; or
14 (C) a trust for a noncharitable purpose, as
15 provided in Section 409;
16 (4) the trustee has duties to perform; and
17 (5) the same person is not the sole trustee and sole
18 beneficiary.
19 (b) A beneficiary is definite if the beneficiary can be
20ascertained now or in the future, subject to any applicable
21rule against perpetuities.
22 (c) A power in a trustee to select a beneficiary from an
23indefinite class is valid. If the power is not exercised within
24a reasonable time, the power fails and the property subject to
25the power passes to the persons who would have taken the

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1property had the power not been conferred.
2 Section 403. Trusts created in other jurisdictions. A trust
3not created by will is validly created if its creation complies
4with the law of the jurisdiction in which the trust instrument
5was executed, or the law of the jurisdiction in which, at the
6time of creation:
7 (1) the settlor was domiciled, had a place of abode, or
8 was a national;
9 (2) a trustee was domiciled or had a place of business;
10 or
11 (3) any trust property was located.
12 Section 404. Trust purposes. A trust may be created only to
13the extent its purposes are lawful and not contrary to public
14policy.
15 Section 405. Charitable purposes; enforcement.
16 (a) A charitable trust may be created for any charitable
17purpose.
18 (b) If the terms of a charitable trust do not indicate a
19particular charitable purpose or beneficiary and do not
20delegate to the trustee or others willing to exercise the
21authority to select one or more charitable purposes or
22beneficiaries, then the court may select one or more charitable
23purposes or beneficiaries. The selection must be consistent

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1with the settlor's intention to the extent it can be
2ascertained.
3 (c) The settlor of a charitable trust, among others, may
4maintain a proceeding to enforce the trust.
5 Section 406. Creation of trust induced by fraud, duress, or
6undue influence. If the creation, amendment, or restatement of
7a trust is procured by fraud, duress, mistake, or undue
8influence, the trust or any part so procured is void. The
9remainder of the trust not procured by such means is valid if
10the remainder is not invalid for other reasons. If the
11revocation of a trust, or any part of the trust, is procured by
12fraud, duress, mistake, or undue influence, the revocation is
13void.
14 Section 407. Evidence of oral trust. Except as required by
15a statute other than this Code, a trust need not be evidenced
16by a trust instrument, but the creation of an oral trust and
17its terms may be established only by clear and convincing
18evidence.
19 Section 408. Trusts for domestic or pet animals.
20 (a) A trust for the care of one or more designated domestic
21or pet animals is valid. The trust terminates when no living
22animal is covered by the trust. A trust instrument shall be
23liberally construed to bring the transfer within this Section,

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1to presume against a merely precatory or honorary nature of its
2disposition, and to carry out the general intent of the
3transferor. Extrinsic evidence is admissible in determining
4the transferor's intent.
5 (b) A trust for the care of one or more designated domestic
6or pet animals is subject to the following provisions:
7 (1) Except as expressly provided otherwise in the
8 instrument creating the trust, no portion of the principal
9 or income of the trust may be converted to the use of the
10 trustee or to a use other than for the trust's purposes or
11 for the benefit of a covered animal.
12 (2) Upon termination, the trustee shall transfer the
13 unexpended trust property in the following order:
14 (A) as directed in the trust instrument;
15 (B) to the settlor, if then living;
16 (C) if there is no direction in the trust
17 instrument and if the trust was created in a
18 non-residuary clause in the transferor's will, then
19 under the residuary clause in the transferor's will;
20 (D) to the transferor's heirs under Section 2-1 of
21 the Probate Act of 1975.
22 (3) The intended use of the principal or income may be
23 enforced by an individual designated for that purpose in
24 the trust instrument or, if none, by an individual
25 appointed by a court having jurisdiction of the matter and
26 parties, upon petition to it by an individual.

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1 (4) Except as ordered by the court or required by the
2 trust instrument, no filing, report, registration,
3 periodic accounting, separate maintenance of funds,
4 appointment, or fee is required by reason of the existence
5 of the fiduciary relationship of the trustee.
6 (5) The court may reduce the amount of the property
7 transferred if it determines that the amount substantially
8 exceeds the amount required for the intended use. The
9 amount of the reduction, if any, passes as unexpended trust
10 property under paragraph (2).
11 (6) If a trustee is not designated or no designated
12 trustee is willing and able to serve, the court shall name
13 a trustee. The court may order the transfer of the property
14 to another trustee if the transfer is necessary to ensure
15 that the intended use is carried out, and if a successor
16 trustee is not designated in the trust instrument or if no
17 designated successor trustee agrees to serve and is able to
18 serve. The court may also make other orders and
19 determinations as are advisable to carry out the intent of
20 the transferor and the purpose of this Section.
21 (7) The trust is exempt from the operation of the
22 common law rule against perpetuities.
23 Section 409. Noncharitable trust without ascertainable
24beneficiary.
25 (a) Except as otherwise provided in Section 408 or by

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1another statute, a trust may be created for a noncharitable
2purpose without a definite or definitely ascertainable
3beneficiary or for a noncharitable but otherwise valid purpose
4to be selected by the trustee.
5 (b) The trust may not be enforced for more than 21 years.
6If the trust is still in existence after 21 years, the trust
7shall terminate. The unexpended trust property shall be
8distributed in the following order:
9 (1) as directed in the trust instrument;
10 (2) to the settlor, if then living;
11 (3) if the trust was created in a non-residuary clause
12 in the settlor's will, then pursuant to the residuary
13 clause in the settlor's will;
14 (4) to the transferor's heirs under Section 2-1 of the
15 Probate Act of 1975.
16 (c) A trust authorized by this Section may be enforced by a
17person appointed in the trust instrument or, if no person is so
18appointed, by a person appointed by the court.
19 (d) Property of a trust authorized by this Section may be
20applied only to its intended use, except to the extent the
21court determines that the value of the trust property exceeds
22the amount required for the intended use. Property not required
23for the intended use must be distributed as provided in
24subsection (b) of this Section.
25 Section 410. Modification or termination of trust;

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1proceedings for approval or disapproval.
2 (a) In addition to the methods of termination prescribed by
3Sections 411 through 414, a trust terminates to the extent the
4trust is revoked or expires pursuant to the trust instrument,
5no purpose of the trust remains to be achieved, or the purposes
6of the trust have become unlawful, contrary to public policy,
7or impossible to achieve.
8 (b) A proceeding to approve or disapprove a proposed
9modification or termination under Sections 411 through 416, or
10trust combination or division under Section 417, may be
11commenced by a trustee or beneficiary. The settlor of a
12charitable trust may maintain a proceeding to modify the trust
13under Section 413.
14 Section 411. Modification or termination of noncharitable
15irrevocable trust by consent.
16 (a) A noncharitable irrevocable trust may be terminated
17upon consent of all of the beneficiaries if the court concludes
18that continuance of the trust is not necessary to achieve any
19material purpose of the trust.
20 (b) A noncharitable irrevocable trust may be modified upon
21consent of all of the beneficiaries if the court concludes that
22modification is not inconsistent with any material purpose of
23the trust.
24 (c) The court shall consider spendthrift provisions as a
25factor in making a decision under this Section, but the court

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1is not precluded from modifying or terminating a trust because
2the trust contains spendthrift provisions.
3 (d) Upon termination of a trust under subsection (a), the
4trustee shall distribute the trust property as agreed by the
5beneficiaries.
6 (e) If not all of the beneficiaries consent to a proposed
7modification or termination of the trust under subsection (a)
8or (b), the modification or termination may be approved by the
9court if the court is satisfied that:
10 (1) if all of the beneficiaries had consented, the
11 trust could have been modified or terminated under this
12 Section; and
13 (2) a beneficiary who does not consent is treated
14 equitably and consistent with the purposes of the trust.
15 Section 412. Modification or termination because of
16unanticipated circumstances or inability to administer trust
17effectively.
18 (a) The court may modify the administrative or dispositive
19terms of a trust or terminate the trust if, because of
20circumstances not anticipated by the settlor, modification or
21termination will further the purposes of the trust. To the
22extent practicable, the modification must be made in accordance
23with the settlor's probable intention.
24 (b) The court may modify the administrative terms of a
25trust if continuation of the trust on its existing terms would

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1be impracticable or wasteful or impair the trust's
2administration.
3 (c) Upon termination of a trust under this Section, the
4court shall order the distribution of the trust property as
5agreed by the beneficiaries, or if the beneficiaries cannot
6agree, then as the court determines is equitable and consistent
7with the purposes of the trust.
8 Section 413. Cy pres.
9 (a) Except as otherwise provided in subsection (b), if a
10particular charitable purpose becomes unlawful, impracticable,
11impossible to achieve, or wasteful:
12 (1) the trust does not fail, in whole or in part;
13 (2) the trust property does not revert to the settlor
14 or the settlor's successors in interest; and
15 (3) the court may apply cy pres to modify or terminate
16 the trust by directing that the trust property be applied
17 or distributed, in whole or in part, in a manner consistent
18 with the settlor's charitable purposes.
19 (b) A provision in the terms of a charitable trust that
20would result in distribution of the trust property to a
21noncharitable beneficiary prevails over the power of the court
22under subsection (a) to apply cy pres to modify or terminate
23the trust only if, when the provision takes effect:
24 (1) the trust property is to revert to the settlor and
25 the settlor is still living; or

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1 (2) fewer than 21 years have elapsed since the date of
2 the trust's creation.
3 Section 414. Modification or termination of uneconomic
4trust.
5 (a) After notice to the qualified beneficiaries, the
6trustee of a trust consisting of trust property having a total
7value less than $100,000 may terminate the trust if the trustee
8concludes that the costs of continuing the trust will
9substantially impair accomplishment of the purpose of the
10trust.
11 (b) The court may modify or terminate a trust or remove the
12trustee and appoint a different trustee if it determines that
13the value of the trust property is insufficient to justify the
14cost of administration.
15 (c) Upon termination of a trust under this Section, the
16trustee shall distribute the trust property to the current
17beneficiaries in the proportions to which they are entitled to
18mandatory current distributions, or if their interests are
19indefinite, to the current beneficiaries per stirpes if they
20have a common ancestor, or if not, then in equal shares. The
21trustee shall give notice to the current beneficiaries at least
2230 days prior to the effective date of the termination.
23 (d) This Section does not apply to an easement for
24conservation or preservation.
25 (e) If a particular trustee is a current beneficiary of the

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1trust or is legally obligated to a current beneficiary, then
2that particular trustee may not participate as a trustee in the
3exercise of this termination power; provided, however, that if
4the trust has one or more cotrustees who are not so
5disqualified from participating, the cotrustee or cotrustees
6may exercise this power.
7 (f) This Section does not apply to the extent that it would
8cause a trust otherwise qualifying for a federal or state tax
9benefit or other benefit not to qualify, nor does it apply to
10trusts for domestic or pet animals.
11 Section 415. Reformation to correct mistakes. The court may
12reform the terms of a trust, even if unambiguous, to conform
13the terms to the settlor's intention if it is proved by clear
14and convincing evidence what the settlor's intention was and
15that the terms of the trust instrument were affected by a
16mistake of fact or law, whether in expression or inducement.
17 Section 416. Modification to achieve settlor's tax
18objectives. To achieve the settlor's tax objectives, the court
19may modify the terms of a trust in a manner that is not
20contrary to the settlor's probable intention. The court may
21provide that the modification has retroactive effect.
22 Section 417. Combination and division of trusts.
23 (a) Subject to subsections (b), (c), and (d) of this

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1Section, after notice to the qualified beneficiaries, a trustee
2may:
3 (1) consolidate 2 or more trusts having substantially
4 similar terms into a single trust;
5 (2) sever any trust estate on a fractional basis into 2
6 or more separate trusts; and
7 (3) segregate by allocation to a separate account or
8 trust a specific amount or specific property.
9 (b) No consolidation, severance, or segregation may be made
10if the result impairs the rights of any beneficiary or
11adversely affects achievement of the material purposes of the
12subject trust or trusts.
13 (c) A severance or consolidation may be made for any reason
14including to reflect a partial disclaimer, to reflect
15differences in perpetuities periods, to reflect or result in
16differences in federal or state tax attributes, to satisfy any
17federal tax requirement or election, or to reduce potential
18generation-skipping transfer tax liability, and shall be made
19in a manner consistent with the rules governing disclaimers,
20federal tax attributes, requirements or elections, or any
21applicable federal or state tax rules or regulations.
22 (d) A separate account or trust created by severance or
23segregation:
24 (1) shall be treated as a separate trust for all
25 purposes on and after the effective date of the severance
26 or segregation; and

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1 (2) shall be held on terms and conditions that are
2 substantially equivalent to the terms of the trust from
3 which it was severed or segregated so that the aggregate
4 interests of each beneficiary in the several trusts are
5 substantially equivalent to the beneficiary's interests in
6 the trust before severance, except that any terms of the
7 trust before severance that would affect the perpetuities
8 period or qualification of the trust for any federal or
9 state tax deduction, exclusion, election, exemption, or
10 other special federal or state tax status must remain
11 identical in each of the separate trusts created.
12 (e) Income earned on a severed or segregated amount or
13property after severance or segregation occurs shall pass to
14the designated taker of the amount or property.
15 (f) In managing, investing, administering, and
16distributing the trust property of any separate account or
17trust and in making applicable federal or state tax elections,
18the trustee may consider the differences in federal or state
19tax attributes and all other factors the trustee believes
20pertinent and may make disproportionate distributions from the
21separate accounts or trusts.
22
Article 5. Creditor's claims; spendthrift and discretionary
23
trusts.
24 Section 501. Rights of beneficiary's creditor or assignee.

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1Except as provided in Section 504, to the extent a
2beneficiary's interest is not subject to a spendthrift
3provision, the court may authorize a creditor or assignee of
4the beneficiary to reach the beneficiary's interest by
5attachment of present or future distributions to or for the
6benefit of the beneficiary or other means. The court may limit
7the award to such relief as is appropriate under the
8circumstances.
9 Section 502. Spendthrift provision.
10 (a) A spendthrift provision is valid only if it prohibits
11both voluntary and involuntary transfer of a beneficiary's
12interest.
13 (b) A term of a trust providing that the interest of a
14beneficiary is held subject to a "spendthrift trust", or words
15of similar import, is sufficient to restrain both voluntary and
16involuntary transfer of the beneficiary's interest.
17 (c) A beneficiary may not transfer an interest in a trust
18in violation of a valid spendthrift provision and, except as
19otherwise provided in this Article, a creditor or assignee of
20the beneficiary may not reach the interest or a distribution by
21the trustee before its receipt by the beneficiary.
22 (d) A valid spendthrift provision does not prevent the
23appointment of interests through the exercise of a power of
24appointment.

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1 Section 503. Exceptions to spendthrift provision.
2 (a) In this Section, "child" includes any person for whom
3an order or judgment for child support has been entered in this
4or another state.
5 (b) A spendthrift provision is unenforceable against:
6 (1) a beneficiary's child, spouse, or former spouse who
7 has a judgment or court order against the beneficiary for
8 child support obligations owed by the beneficiary as
9 provided in the Income Withholding for Support Act, the
10 Non-Support Punishment Act, the Illinois Parentage Act of
11 2015, the Illinois Marriage and Dissolution of Marriage
12 Act, and similar provisions of other Acts that provide for
13 the support of a child;
14 (2) a judgment creditor who has provided services for
15 the protection of a beneficiary's interest in the trust;
16 and
17 (3) a claim of this State or the United States to the
18 extent a statute of this State or federal law so provides.
19 (c) Except as otherwise provided in this subsection and in
20Section 504, a claimant against which a spendthrift provision
21cannot be enforced may obtain from a court an order attaching
22present or future distributions to or for the benefit of the
23beneficiary. The court may limit the award to such relief as is
24appropriate under the circumstances. Notwithstanding this
25subsection, the remedies provided in this subsection apply to a
26claim for unpaid child support obligations by a beneficiary's

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1child, spouse, former spouse, judgment creditor, or claim
2described in subsection (b) only as a last resort upon an
3initial showing that traditional methods of enforcing the claim
4are insufficient.
5 Section 504. Discretionary distributions; effect of
6standard.
7 (a) As used in this Section, "discretionary distribution"
8means a distribution that is subject to the trustee's
9discretion regardless of whether the discretion is expressed in
10the form of a standard of distribution and regardless of
11whether the trustee has abused the discretion.
12 (b) Regardless of whether a trust contains a spendthrift
13provision, and regardless of whether the beneficiary is acting
14as trustee, if a trustee may make discretionary distributions
15to or for the benefit of a beneficiary, a creditor of the
16beneficiary, including a creditor described in subsection (b)
17of Section 503, may not:
18 (1) compel a distribution that is subject to the
19 trustee's discretion; or
20 (2) obtain from a court an order attaching present or
21 future distributions to or for the benefit of the
22 beneficiary, except as provided in Section 2-1403 of the
23 Code of Civil Procedure.
24 (c) If the trustee's discretion to make distributions for
25the trustee's own benefit is limited by an ascertainable

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1standard, a creditor may not reach or compel distribution of
2the beneficial interest except to the extent the interest would
3be subject to the creditor's claim were the beneficiary not
4acting as trustee.
5 (d) This Section does not limit the right of a beneficiary
6to maintain a judicial proceeding against a trustee for an
7abuse of discretion or failure to comply with a standard for
8distribution.
9 Section 505. Creditor's claim against settlor.
10 (a) Whether or not the terms of a trust contain a
11spendthrift provision, the following rules apply:
12 (1) During the lifetime of the settlor, the property of
13 a revocable trust is subject to claims of the settlor's
14 creditors to the extent the property would not otherwise be
15 exempt by law if owned directly by the settlor.
16 (2) With respect to an irrevocable trust, a creditor or
17 assignee of the settlor may reach the maximum amount that
18 can be distributed to or for the settlor's benefit. If a
19 trust has more than one settlor, the amount the creditor or
20 assignee of a particular settlor may reach may not exceed
21 the settlor's interest in the portion of the trust
22 attributable to that settlor's contribution.
23 (3) Notwithstanding the provisions of paragraph (2),
24 the assets of an irrevocable trust may not be subject to
25 the claims of an existing or subsequent creditor or

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1 assignee of the settlor, in whole or in part, solely
2 because of the existence of a discretionary power granted
3 to the trustee by the terms of the trust instrument, or any
4 other provision of law, to pay directly to the taxing
5 authorities or to reimburse the settlor for any tax on
6 trust income or principal that is payable by the settlor
7 under the law imposing the tax.
8 (4) Paragraph (2) does not apply to the assets of an
9 irrevocable trust established for the benefit of a person
10 with a disability that meets the requirements of 42 U.S.C.
11 1396p(d)(4) or similar federal law governing the transfer
12 to such a trust.
13 (5) After the death of a settlor, and subject to the
14 settlor's right to direct the source from which liabilities
15 will be paid, the property of a trust that was revocable at
16 the settlor's death is subject to claims of the settlor's
17 creditors, costs of administration of the settlor's
18 estate, the expenses of the settlor's funeral and disposal
19 of remains, and statutory allowances to a surviving spouse
20 and children to the extent the settlor's probate estate is
21 inadequate to satisfy those claims, costs, expenses, and
22 allowances. Distributees of the trust take property
23 distributed after payment of such claims; subject to the
24 following conditions:
25 (A) sums recovered by the personal representative
26 of the settlor's estate must be administered as part of

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1 the decedent's probate estate, and the liability
2 created by this subsection does not apply to any assets
3 to the extent that the assets are otherwise exempt
4 under the laws of this State or under federal law;
5 (B) with respect to claims, expenses, and taxes in
6 connection with the settlement of the settlor's
7 estate, any claim of a creditor that would be barred
8 against the personal representative of a settlor's
9 estate or the estate of the settlor is barred against
10 the trust property of a trust that was revocable at the
11 settlor's death, the trustee of the revocable trust,
12 and the beneficiaries of the trust; and
13 (C) Sections 18-10 and 18-13 of the Probate Act of
14 1975, detailing the classification and priority of
15 payment of claims, expenses, and taxes from the probate
16 estate of a decedent, or comparable provisions of the
17 law of the deceased settlor's domicile at death if not
18 Illinois, apply to a revocable trust to the extent the
19 assets of the settlor's probate estate are inadequate
20 and the personal representative or creditor or taxing
21 authority of the settlor's estate has perfected its
22 right to collect from the settlor's revocable trust.
23 (6) After the death of a settlor, a trustee of a trust
24 that was revocable at the settlor's death is released from
25 liability under this Section for any assets distributed to
26 the trust's beneficiaries in accordance with the governing

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1 trust instrument if:
2 (A) the trustee made the distribution 6 months or
3 later after the settlor's death; and
4 (B) the trustee did not receive a written notice
5 from the decedent's personal representative asserting
6 that the decedent's probate estate is or may be
7 insufficient to pay allowed claims or, if the trustee
8 received such a notice, the notice was withdrawn by the
9 personal representative or revoked by the court before
10 the distribution.
11 (b) For purposes of this Section:
12 (1) during the period the power may be exercised, the
13 holder of a power of withdrawal is treated in the same
14 manner as the settlor of a revocable trust to the extent of
15 the property subject to the power; and
16 (2) upon the lapse, release, or waiver of the power,
17 the holder is treated as the settlor of the trust only to
18 the extent the value of the property affected by the lapse,
19 release, or waiver exceeds the greater of the amount
20 specified in Section 2041(b)(2) or 2514(e) of the Internal
21 Revenue Code.
22 Section 506. Overdue distribution.
23 (a) In this Section, "mandatory distribution" means a
24distribution of income or principal that the trustee is
25required to make to a beneficiary under the trust instrument,

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1including a distribution upon termination of the trust. The
2term does not include a distribution subject to the exercise of
3the trustee's discretion even if (1) the discretion is
4expressed in the form of a standard of distribution, or (2) the
5terms of the trust instrument authorizing a distribution couple
6language of discretion with language of direction.
7 (b) Whether or not a trust contains a spendthrift
8provision, a creditor or assignee of a beneficiary may reach a
9mandatory distribution of income or principal, including a
10distribution upon termination of the trust, if the trustee has
11not made the distribution to the beneficiary within a
12reasonable time after the designated distribution date.
13 Section 507. Personal obligations of trustee. Trust
14property is not subject to personal obligations of the trustee,
15even if the trustee becomes insolvent or bankrupt.
16 Section 508. Lapse of power to withdraw. A beneficiary of a
17trust may not be considered to be a settlor or to have made a
18transfer to the trust merely because of a lapse, release, or
19waiver of his or her power of withdrawal to the extent that the
20value of the affected property does not exceed the greatest of
21the amounts specified in Sections 2041(b)(2), 2514(e), and
222503(b) of the Internal Revenue Code.
23 Section 509. Trust for disabled beneficiary.

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1 (a) In this Section, "discretionary trust" means a trust in
2which the trustee has discretionary power to determine
3distributions to be made under the trust.
4 (b) A discretionary trust for the benefit of an individual
5who is incapacitated other than by reason of being a minor or
6an individual whose location is uncertain, or who otherwise has
7a disability that substantially impairs the individual's
8ability to provide for his or her own care or custody and
9constitutes a substantial disability, is not be liable to pay
10or reimburse this State or any public agency for financial aid
11or services to the individual except to the extent the trust
12was created by the individual or trust property has been
13distributed directly to or is otherwise under the control of
14the individual, except that this exception does not apply to a
15trust created with the individual with a disability's own
16property or property within his or her control if the trust
17complies with Medicaid reimbursement requirements of federal
18law. Notwithstanding any other provisions, a trust created with
19the individual with a disability's own property or property
20within his or her control is liable, after the reimbursement of
21Medicaid expenditures, to this State for reimbursement of any
22other service charges outstanding at the death of the
23individual with a disability. Property, goods, and services
24purchased or owned by a trust for and used or consumed by a
25beneficiary with a disability shall not be considered trust
26property distributed to or under the control of the

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1beneficiary.
2
Article 6. Revocable trusts.
3 Section 601. Capacity of settlor of revocable trust. The
4capacity required of the settlor to create, amend, revoke in
5whole or in part, or add property to a revocable trust is the
6same as that required to make a will.
7 Section 602. Revocation or amendment of revocable trust.
8 (a) The settlor may revoke a trust only if the trust
9instrument expressly provides that the trust is revocable or
10that the settlor has an unrestricted power of amendment. The
11settlor may amend a trust only if the trust expressly provides
12that the trust is revocable or amendable by the settlor.
13 (b) If a revocable trust has more than one settlor:
14 (1) to the extent the trust consists of community
15 property, the trust may be revoked by either spouse acting
16 alone but may be amended only by joint action of both
17 spouses;
18 (2) to the extent the trust consists of property other
19 than community property, each settlor may revoke or amend
20 the trust only with regard to the portion of the trust
21 property attributable to that settlor's contribution; and
22 (3) upon the revocation or amendment of the trust by
23 fewer than all of the settlors, the trustee shall promptly

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1 notify the other settlors of the revocation or amendment.
2 (c) The settlor may revoke or amend a revocable trust
3instrument:
4 (1) by substantially complying with a method provided
5 in the trust instrument; or
6 (2) if the trust instrument does not provide a method
7 or the method provided in the terms is not expressly made
8 exclusive, by a later instrument in writing other than a
9 will, signed by the settlor and specifically referring to
10 the trust.
11 (d) Upon revocation of a revocable trust, the trustee shall
12deliver the trust property to the settlor or as the settlor
13directs.
14 (e) A settlor's powers with respect to revocation,
15amendment, or distribution of trust property may not be
16exercised by an agent under a power of attorney unless
17expressly authorized by the power and not prohibited by the
18trust instrument.
19 (f) A guardian of the estate of the settlor, if any, or a
20guardian of the person of the settlor may not exercise a
21settlor's powers with respect to revocation, amendment, or
22distribution of trust property unless ordered by the court
23supervising the guardianship.
24 (g) A trustee who does not know that a trust has been
25revoked or amended is not liable for distributions made and
26other actions taken or not taken on the assumption that the

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1trust had not been amended or revoked.
2 Section 603. Settlor's powers; powers of withdrawal.
3 (a) While a trust is revocable, and the settlor personally
4has capacity to revoke the trust, rights of the beneficiaries
5are subject to the control of, and the duties of the trustee
6are owed exclusively to, the settlor.
7 (b) While a trust is revocable but the settlor does not
8personally have the capacity to revoke the trust, the duties of
9the trustee are owed only to the settlor and current
10beneficiaries. If the settlor is a beneficiary, the settlor's
11interests as a beneficiary take priority over the interests of
12all other beneficiaries.
13 (c) Except as provided in subsection (d), only the settlor,
14a representative of the settlor under Article 3 during the
15settlor's lifetime if the settlor is incapacitated, and the
16representative of the settlor's estate after the settlor's
17death have standing to contest, challenge, or bring any
18proceeding in any court regarding any action of the trustee of
19a revocable trust taken or not taken while the trust is
20revocable.
21 (d) An individual who is or was a current beneficiary
22during the settlor's lifetime, a representative of such an
23individual under Article 3 or the representative of such
24individual's estate after the individual's death, has standing
25to contest, challenge, or bring any proceeding in any court

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1regarding any action of the trustee of a revocable trust while
2the trust is revocable but the settlor does not personally have
3capacity to revoke the trust, but only to the extent the action
4of the trustee affects the interest of the individual as a
5current beneficiary of the trust during the lifetime of the
6settlor while the settlor does not personally have the capacity
7to revoke the trust.
8 (e) The holder of a non-lapsing power of withdrawal, during
9the period the power may be exercised, has the rights of a
10settlor of a revocable trust to the extent of the property
11subject to the power.
12 Section 604. Limitation on action contesting validity of
13revocable trust; distribution of trust property.
14 (a) A person may commence a judicial proceeding to contest
15the validity of a trust that was revocable at the settlor's
16death only within the earlier of:
17 (1) 2 years after the settlor's death; or
18 (2)(A) in the case of a trust to which a legacy is
19 provided by the settlor's will that is admitted to probate,
20 the time to contest the validity of the settlor's will as
21 provided in the Probate Act of 1975; or
22 (B) in the case of a trust other than a trust described
23 in subdivision (A), 6 months after the trustee sent the
24 person a copy of the trust instrument and a notice
25 informing the person of the trust's existence, of the

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1 trustee's name and address, and of the 6 month period
2 allowed for commencing a proceeding.
3 (b) Nine months after the death of the settlor of a trust
4that was revocable at the settlor's death, the trustee may
5proceed to distribute the trust property in accordance with the
6trust instrument. The trustee is not subject to liability for
7doing so unless:
8 (1) the trustee knows of a pending judicial proceeding
9 contesting the validity of the trust; or
10 (2) a potential contestant has notified the trustee of
11 a possible judicial proceeding to contest the trust and a
12 judicial proceeding is commenced within 60 days after the
13 contestant sent the notification.
14 (c) A beneficiary of a trust that was revocable at the
15settlor's death that is determined to have been invalid is
16liable to return any distribution received and all income and
17appreciation associated with the distribution from the date of
18receipt until the date of return of the distribution.
19 Section 605. Revocation of provisions in revocable trust by
20divorce or annulment
21 (a) As used in this Section:
22 (1) "Judicial termination of marriage" includes, but
23 is not limited to, divorce, dissolution, annulment or
24 declaration of invalidity of marriage.
25 (2) "Provision pertaining to the settlor's former

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1 spouse" includes, but is not limited to, every present or
2 future gift or interest or power of appointment given to
3 the settlor's former spouse or right of the settlor's
4 former spouse to serve in a fiduciary capacity.
5 (3) "Trust" means a trust created by a nontestamentary
6 instrument executed after January 1, 1982.
7 (4) Notwithstanding the definition of "revocable" in
8 Section 103, a provision is revocable by the settlor if the
9 settlor has the power at the time of the entry of the
10 judgment or judicial termination of marriage of the settlor
11 to revoke, modify, or amend the provision, either alone or
12 in conjunction with any other person or persons.
13 (b) Unless the trust instrument or the judgment of judicial
14termination of marriage expressly provides otherwise, judicial
15termination of marriage of the settlor of a trust revokes every
16provision that is revocable by the settlor pertaining to the
17settlor's former spouse in a trust instrument or amendment
18executed by the settlor before the entry of the judgment of
19judicial termination of marriage of the settlor and any such
20trust shall be administered and construed as if the settlor's
21former spouse had died upon entry of the judgment of judicial
22termination of marriage.
23 (c) A trustee who has no actual knowledge of a judgment of
24judicial termination of marriage of the settlor is not liable
25for any action taken or omitted in good faith on the assumption
26that the settlor is married. The preceding sentence is intended

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1to affect only the liability of the trustee and shall not
2affect the disposition of beneficial interests in any trust.
3 (d) Notwithstanding Section 102, the provisions of this
4Section may be made applicable by specific reference in the
5trust instrument to this Section in any (1) land trust; (2)
6voting trust; (3) security instrument such as a trust deed or
7mortgage; (4) liquidation trust; (5) escrow; (6) instrument
8under which a nominee, custodian for property or paying or
9receiving agent is appointed; or (7) trust created by a deposit
10arrangement in a bank or savings institution, commonly known as
11"Totten Trust".
12 (e) If provisions of a trust are revoked solely by this
13Section, they are revived by the settlor's remarriage to the
14former spouse.
15
Article 7. Office of trustee.
16 Section 701. Accepting or declining trusteeship.
17 (a) Except as otherwise provided in subsection (c), a
18person designated as trustee accepts the trusteeship:
19 (1) by substantially complying with a method of
20 acceptance provided in the trust instrument; or
21 (2) if the trust instrument does not provide a method
22 or the method provided in the trust instrument is not
23 expressly made exclusive, by accepting delivery of the
24 trust property, exercising powers or performing duties as

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1 trustee, or otherwise indicating acceptance of the
2 trusteeship.
3 (b) A person designated as trustee who has not yet accepted
4the trusteeship may decline the trusteeship. A designated
5trustee who does not accept the trusteeship within 120 days
6after receiving notice of the designation is deemed to have
7declined the trusteeship.
8 (c) A person designated as trustee, without accepting the
9trusteeship, may, but need not:
10 (1) act to preserve the trust property if, within 120
11 days after receiving notice of the designation, the person
12 sends a declination of the trusteeship to the settlor or,
13 if the settlor is deceased or incapacitated, to the
14 qualified beneficiaries; and
15 (2) inspect or investigate trust property to determine
16 potential liability under environmental or other law or for
17 any other purpose.
18 (d) A person acting under subsection (c) is not liable for
19actions taken in good faith.
20 Section 702. Trustee's bond. A trustee is not required to
21give bond to secure performance of the trustee's duties unless
22bond is required by the trust instrument and the court has not
23dispensed with the requirement.
24 Section 703. Cotrustees.

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1 (a) Cotrustees who are unable to reach a unanimous decision
2may act by majority decision after prior written notice to, or
3written waiver of notice by, each other cotrustee.
4 (b) If a vacancy occurs in a cotrusteeship, subsection (b)
5of Section 704 applies.
6 (c) A cotrustee must participate in the performance of a
7trustee's function unless the cotrustee is unavailable to
8perform the function because of absence, illness,
9disqualification under other law, or other temporary
10incapacity or the cotrustee has properly delegated the
11performance of the function to another trustee.
12 (d) If a cotrustee is unavailable to perform duties because
13of absence, illness, disqualification under other law, or other
14temporary incapacity, and prompt action is necessary to achieve
15the purposes of the trust or to avoid injury to the trust
16property, the remaining cotrustee or a majority of the
17remaining cotrustees may act for the trust.
18 (e) A trustee may delegate to a cotrustee for any period of
19time any or all of the trustee's rights, powers, and duties.
20Unless a delegation was irrevocable, a trustee may revoke a
21delegation previously made.
22 (f) Except as otherwise provided in subsection (g), a
23trustee who is not qualified to participate in an action or who
24does not join in an action of another trustee is not liable for
25the action.
26 (g) Each trustee who is not an excluded fiduciary under

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1Section 808 shall exercise reasonable care to:
2 (1) prevent a cotrustee from committing a serious
3 breach of trust; and
4 (2) compel a cotrustee to redress a serious breach of
5 trust.
6 (h) A dissenting trustee who joins in an action at the
7direction of the majority of the trustees and who notified any
8cotrustee of the dissent at or before the time of the action is
9not liable for the action unless the action is a serious breach
10of trust.
11 Section 704. Vacancy in trusteeship; appointment of
12successor.
13 (a) A vacancy in a trusteeship occurs if:
14 (1) a person designated as trustee declines the
15 trusteeship;
16 (2) a person designated as trustee cannot be identified
17 or does not exist;
18 (3) a trustee resigns;
19 (4) a trustee is disqualified or removed;
20 (5) a trustee dies;
21 (6) a guardian is appointed for an individual serving
22 as trustee; or
23 (7) an individual serving as trustee becomes
24 incapacitated.
25 (b) If one or more cotrustees remain in office, a vacancy

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1in a trusteeship need not be filled and the remaining
2cotrustees or trustee may act for the trust. A vacancy in a
3trusteeship must be filled if the trust has no remaining
4trustee, or if the existing vacancy impairs the administration
5of the trust as determined by the remaining trustees.
6 (c) A vacancy in a trusteeship of a trust that is required
7to be filled must be filled in the following order of priority:
8 (1) by a person designated in accordance with the trust
9 instrument to act as successor trustee;
10 (2) by a person appointed by a majority of the
11 beneficiaries who are distributees or permissible
12 distributees of trust income; or
13 (3) by a person appointed by the court.
14 (d) If a trust contains a charitable interest, then the
15appointment of a successor trustee provided under paragraph (2)
16of subsection (c) of this Section shall not take effect until
1730 days after written notice is delivered to the Attorney
18General's Charitable Trust Bureau. The Attorney General's
19Charitable Trust Bureau may waive this notice requirement.
20 Section 705. Resignation of trustee.
21 (a) A trustee may resign:
22 (1) upon notice to the settlor, if living, to the
23 beneficiaries who are distributees or permissible
24 distributees of trust income, and all cotrustees; or
25 (2) with the approval of the court.

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1 (b) In approving a resignation, the court may issue orders
2and impose conditions reasonably necessary for the protection
3of the trust property.
4 (c) Any liability of a resigning trustee or of any sureties
5on the trustee's bond for acts or omissions of the trustee is
6not discharged or affected by the trustee's resignation.
7 Section 706. Removal of trustee.
8 (a) A settlor, a cotrustee, or a qualified beneficiary may
9request the court to remove a trustee, or a trustee may be
10removed by the court on its own initiative.
11 (b) The court may remove a trustee if:
12 (1) the trustee has committed a serious breach of
13 trust;
14 (2) lack of cooperation among cotrustees substantially
15 impairs the administration of the trust;
16 (3) because of unfitness, unwillingness, or persistent
17 failure of the trustee to administer the trust effectively,
18 the court determines that removal of the trustee best
19 serves the purposes of the trust and the interests of the
20 beneficiaries; or
21 (4) there has been a substantial change of
22 circumstances or removal is requested by all of the
23 qualified beneficiaries, the court finds that removal of
24 the trustee best serves the interests of all of the
25 beneficiaries and is not inconsistent with any material

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1 purpose of the trust, and a suitable cotrustee or successor
2 trustee is available.
3 (c) Pending a final decision on a request to remove a
4trustee, or in lieu of or in addition to removing a trustee,
5the court may order such appropriate relief under subsection
6(b) of Section 1001 as may be necessary to protect the trust
7property or the interests of the beneficiaries.
8 Section 707. Delivery of property by former trustee.
9 (a) Unless a cotrustee remains in office or the court
10otherwise orders, and until the trust property is delivered to
11a successor trustee or other person entitled to it, a trustee
12who has resigned or been removed has the duties of a trustee
13and the powers necessary to protect the trust property.
14 (b) A trustee who has resigned or been removed shall
15proceed expeditiously to deliver the trust property within the
16trustee's possession to the cotrustee, successor trustee, or
17other person entitled to it.
18 Section 708. Compensation of trustee.
19 (a) If the trust instrument does not specify the trustee's
20compensation, a trustee is entitled to compensation that is
21reasonable under the circumstances.
22 (b) If the trust instrument specifies the trustee's
23compensation, the trustee is entitled to be compensated as
24specified, but the court may allow more or less compensation

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1if:
2 (1) the duties of the trustee are substantially
3 different from those contemplated when the trust was
4 created; or
5 (2) the compensation specified by the trust instrument
6 would be unreasonably low or high.
7 Section 709. Reimbursement of expenses.
8 (a) A trustee is entitled to be reimbursed out of the trust
9property, with interest as appropriate, for:
10 (1) expenses that were properly incurred in the
11 administration and protection of the trust; and
12 (2) to the extent necessary to prevent unjust
13 enrichment of the trust, expenses that were not properly
14 incurred in the administration of the trust.
15 (b) An advance by the trustee of money for the protection
16of the trust gives rise to a right to reimbursement with
17reasonable interest.
18
Article 8. Duties and powers of trustee.
19 Section 801. Duty to administer trust. Upon acceptance of a
20trusteeship, the trustee shall administer the trust in good
21faith, in accordance with its purposes and the terms of the
22trust instrument, and in accordance with this Code.

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1 Section 802. Duty of loyalty.
2 (a) Subject to the rights of persons dealing with or
3assisting the trustee as provided in Section 1012, a sale,
4encumbrance, or other transaction involving the investment or
5management of trust property entered into by the trustee for
6the trustee's own personal account or that is otherwise
7affected by a conflict between the trustee's fiduciary and
8personal interests is voidable by a beneficiary affected by the
9transaction unless:
10 (1) the transaction was authorized by the trust
11 instrument or applicable law;
12 (2) the transaction was approved by the court or by
13 nonjudicial settlement agreement in accordance with
14 Section 111;
15 (3) the beneficiary did not commence a judicial
16 proceeding within the time allowed by Section 1005;
17 (4) the beneficiary consented to the trustee's
18 conduct, ratified the transaction, or released the trustee
19 in compliance with Section 1009; or
20 (5) the transaction involves a contract entered into or
21 claim acquired by the trustee before the person became or
22 contemplated becoming trustee.
23 (b) A sale, encumbrance, or other transaction involving the
24investment or management of trust property is presumed to be
25affected by a conflict between personal and fiduciary interests
26if it is entered into by the trustee with:

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1 (1) the trustee's spouse;
2 (2) the trustee's descendants, siblings, parents, or
3 their spouses; or
4 (3) a corporation or other person or enterprise in
5 which the trustee, or a person that owns a significant
6 interest in the trustee, has an interest that might affect
7 the trustee's best judgment, except as otherwise
8 authorized by law.
9 (c) A transaction between a trustee and a beneficiary that
10does not concern trust property, that occurs during the
11existence of the trust and from which the trustee obtains an
12advantage, is voidable by the beneficiary unless the trustee
13establishes that the transaction was fair to the beneficiary.
14 (d) A transaction not concerning trust property in which
15the trustee engages in the trustee's individual capacity
16involves a conflict between personal and fiduciary interests if
17the transaction concerns an opportunity properly belonging to
18the trust.
19 (e) An investment by a trustee in securities of an
20investment company or investment trust to which the trustee, or
21its affiliate, provides services in a capacity other than as
22trustee is not presumed to be affected by a conflict between
23personal and fiduciary interests if the investment otherwise
24complies with the prudent investor rule. In addition to its
25compensation for acting as trustee, the trustee may be
26compensated by the investment company or investment trust for

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1providing those services out of fees charged to the trust so
2long as the total compensation paid by the trust as trustee's
3fees and mutual fund or other investment fees is reasonable.
4 (f) In voting shares of stock or in exercising powers of
5control over similar interests in other forms of enterprise,
6the trustee shall act in the best interests of the
7beneficiaries.
8 (g) This Section does not preclude the following
9transactions, if fair to the beneficiaries:
10 (1) an agreement between a trustee and a beneficiary
11 relating to the appointment or compensation of the trustee;
12 (2) payment of reasonable compensation to the trustee;
13 (3) a transaction between a trust and another trust,
14 decedent's estate, or guardianship of which the trustee is
15 a fiduciary or in which a beneficiary has an interest;
16 (4) the entry of an agreement for a bank or other
17 deposit account, safe deposit box, custodian, agency, or
18 depository arrangement for all or any part of the trust
19 property, including an agreement for services provided by a
20 bank operated by or affiliated with the trustee, and the
21 payment of reasonable compensation for those services,
22 including compensation to the bank operated by or
23 affiliated with the trustee, except that nothing in this
24 paragraph shall be construed as removing any depository
25 arrangements from the requirements of the prudent investor
26 rule; or

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1 (5) an advance by the trustee of money for the
2 protection of the trust.
3 (h) The court may appoint a special fiduciary to make a
4decision with respect to any proposed transaction that might
5violate this Section if entered into by the trustee.
6 Section 803. Impartiality.
7 (a) If a trust has 2 or more beneficiaries, the trustee
8shall act impartially in investing, managing, and distributing
9the trust property giving due regard to the beneficiaries
10respective interests. The trustee must treat the beneficiaries
11equitably in light of the purposes and terms of the trust,
12including any manifestation of an intention to favor one or
13more beneficiaries.
14 (b) In a judicial proceeding a trustee may, but need not,
15present the trustee's opinions and reasons:
16 (1) for supporting or opposing any part or all of the
17 court findings, orders, or instructions sought by any party
18 to the proceeding, including without limitation whether
19 any proposed action or inaction would enable the trustee to
20 better carry out the purposes of the trust; and
21 (2) about any other matters relevant to the proceeding.
22 (c) A trustee's actions in accordance with subsection (b)
23shall not be deemed improper or inconsistent with the trustee's
24duty of impartiality unless the court finds from all of the
25evidence that the trustee acted in bad faith.

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1 Section 804. Prudent administration. A trustee shall
2administer the trust as a prudent person would, by considering
3the purposes, terms, distribution requirements, and other
4circumstances of the trust. In satisfying this standard, the
5trustee shall exercise reasonable care, skill, and caution.
6 Section 805. Costs of administration. In administering a
7trust, the trustee may incur only costs that are reasonable in
8relation to the trust property and the purposes of the trust.
9 Section 806. (Reserved).
10 Section 807. Delegation by trustee.
11 (a) Except as provided in subsection (b), the trustee has a
12duty not to delegate to others the performance of any acts
13involving the exercise of judgment and discretion.
14 (b) A trustee may delegate duties and powers that a prudent
15trustee of comparable skills could properly delegate under the
16circumstances. The trustee shall exercise reasonable care,
17skill, and caution in:
18 (1) selecting an agent;
19 (2) establishing the scope and terms of the delegation,
20 consistent with the purposes of the trust and the trust
21 instrument; and
22 (3) periodically reviewing the agent's actions in

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1 order to monitor the agent's performance and compliance
2 with the terms of the delegation.
3 (c) In performing a delegated function, an agent owes a
4duty to the trust to exercise reasonable care to comply with
5the terms of the delegation.
6 (d) A trustee who complies with subsection (b) is not
7liable to the beneficiaries or to the trust for an action of
8the agent to whom the function was delegated.
9 (e) By accepting a delegation of powers or duties from the
10trustee of a trust that is subject to the law of this State, an
11agent submits to the jurisdiction of the courts of this State.
12 Section 808. Directed trusts.
13 (a) In this Section:
14 (1) "Distribution trust advisor" means any one or more
15 persons given authority by the trust instrument to direct,
16 consent to, veto, or otherwise exercise all or any portion
17 of the distribution powers and discretions of the trust,
18 including, but not limited to, authority to make
19 discretionary distribution of income or principal.
20 (2) "Excluded fiduciary" means any fiduciary that by
21 the trust instrument is directed to act in accordance with
22 the exercise of specified powers by a directing party, in
23 which case the specified powers are deemed granted not to
24 the fiduciary but to the directing party and the fiduciary
25 is deemed excluded from exercising the specified powers. If

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1 a trust instrument provides that a fiduciary as to one or
2 more specified matters is to act, omit action, or make
3 decisions only with the consent of a directing party, then
4 the fiduciary is an excluded fiduciary with respect to the
5 matters. Notwithstanding any provision of this Section, a
6 person does not fail to qualify as an excluded fiduciary
7 solely by reason of having effectuated, participated in, or
8 consented to a transaction, including, but not limited to,
9 any transaction described in Section 111 or 411 or Article
10 12 of this Code invoking the provisions of this Section
11 with respect to any new or existing trust.
12 (3) "Fiduciary" means any person expressly given one or
13 more fiduciary duties by the trust instrument, including,
14 but not limited to, a trustee.
15 (4) "Investment trust advisor" means any one or more
16 persons given authority by the trust instrument to direct,
17 consent to, veto, or otherwise exercise all or any portion
18 of the investment powers of the trust.
19 (5) "Power" means authority to take or withhold an
20 action or decision, including, but not limited to, an
21 expressly specified power, the implied power necessary to
22 exercise a specified power, and authority inherent in a
23 general grant of discretion.
24 (6) "Trust protector" means any one or more persons
25 given any one or more of the powers specified in subsection
26 (d), regardless of whether the power is designated with the

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1 title of trust protector by the trust instrument.
2 (b) An investment trust advisor may be designated in the
3trust instrument of a trust. The powers of an investment trust
4advisor may be exercised or not exercised in the sole and
5absolute discretion of the investment trust advisor, and are
6binding on all other persons, including, but not limited to,
7each beneficiary, fiduciary, excluded fiduciary, and any other
8party having an interest in the trust. The trust instrument may
9use the title "investment trust advisor" or any similar name or
10description demonstrating the intent to provide for the office
11and function of an investment trust advisor. Unless the terms
12of the trust instrument provide otherwise, the investment trust
13advisor has the authority to:
14 (1) direct the trustee with respect to the retention,
15 purchase, transfer, assignment, sale, or encumbrance of
16 trust property and the investment and reinvestment of
17 principal and income of the trust;
18 (2) direct the trustee with respect to all management,
19 control, and voting powers related directly or indirectly
20 to trust assets, including, but not limited to, voting
21 proxies for securities held in trust;
22 (3) select and determine reasonable compensation of
23 one or more advisors, managers, consultants, or
24 counselors, including the trustee, and to delegate to them
25 any of the powers of the investment trust advisor in
26 accordance with Section 807; and

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1 (4) determine the frequency and methodology for
2 valuing any asset for which there is no readily available
3 market value.
4 (c) A distribution trust advisor may be designated in the
5trust instrument of a trust. The powers of a distribution trust
6advisor may be exercised or not exercised in the sole and
7absolute discretion of the distribution trust advisor, and are
8binding on all other persons, including, but not limited to,
9each beneficiary, fiduciary, excluded fiduciary, and any other
10party having an interest in the trust. The trust instrument may
11use the title "distribution trust advisor" or any similar name
12or description demonstrating the intent to provide for the
13office and function of a distribution trust advisor. Unless the
14terms of the trust instrument provide otherwise, the
15distribution trust advisor has authority to direct the trustee
16with regard to all decisions relating directly or indirectly to
17discretionary distributions to or for one or more
18beneficiaries.
19 (d) A trust protector may be designated in the trust
20instrument of a trust. The powers of a trust protector may be
21exercised or not exercised in the sole and absolute discretion
22of the trust protector, and are binding on all other persons,
23including, but not limited to, each beneficiary, investment
24trust advisor, distribution trust advisor, fiduciary, excluded
25fiduciary, and any other party having an interest in the trust.
26The trust instrument may use the title "trust protector" or any

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1similar name or description demonstrating the intent to provide
2for the office and function of a trust protector. The powers
3granted to a trust protector by the trust instrument may
4include but are not limited to authority to do any one or more
5of the following:
6 (1) modify or amend the trust instrument to achieve
7 favorable tax status or respond to changes in the Internal
8 Revenue Code, federal laws, state law, or the rulings and
9 regulations under such laws;
10 (2) increase, decrease, or modify the interests of any
11 beneficiary or beneficiaries of the trust;
12 (3) modify the terms of any power of appointment
13 granted by the trust; provided, however, such modification
14 or amendment may not grant a beneficial interest to any
15 individual, class of individuals, or other parties not
16 specifically provided for under the trust instrument;
17 (4) remove, appoint, or remove and appoint, a trustee,
18 investment trust advisor, distribution trust advisor,
19 another directing party, investment committee member, or
20 distribution committee member, including designation of a
21 plan of succession for future holders of any such office;
22 (5) terminate the trust, including determination of
23 how the trustee shall distribute the trust property to be
24 consistent with the purposes of the trust;
25 (6) change the situs of the trust, the governing law of
26 the trust, or both;

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1 (7) appoint one or more successor trust protectors,
2 including designation of a plan of succession for future
3 trust protectors;
4 (8) interpret terms of the trust instrument at the
5 request of the trustee;
6 (9) advise the trustee on matters concerning a
7 beneficiary; or
8 (10) amend or modify the trust instrument to take
9 advantage of laws governing restraints on alienation,
10 distribution of trust property, or to improve the
11 administration of the trust.
12If a trust contains a charitable interest a trust protector
13must give notice to the Attorney General's Charitable Trust
14Bureau at least 60 days before taking any of the actions
15authorized under paragraph (2), (3), (4), (5), or (6) of this
16subsection. The Attorney General's Charitable Trust Bureau may
17waive this notice requirement.
18 (e) A directing party is a fiduciary of the trust subject
19to the same duties and standards applicable to a trustee of a
20trust as provided by applicable law unless the trust instrument
21provides otherwise, but the trust instrument may not, however,
22relieve or exonerate a directing party from the duty to act or
23withhold acting as the directing party in good faith reasonably
24believes is in the best interests of the trust.
25 (f) The excluded fiduciary shall act in accordance with the
26trust instrument and comply with the directing party's exercise

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1of the powers granted to the directing party by the trust
2instrument. Unless otherwise provided in the trust instrument,
3an excluded fiduciary has no duty to monitor, review, inquire,
4investigate, recommend, evaluate, or warn with respect to a
5directing party's exercise or failure to exercise any power
6granted to the directing party by the trust instrument,
7including, but not limited to, any power related to the
8acquisition, disposition, retention, management, or valuation
9of any asset or investment. Except as otherwise provided in
10this Section or the trust instrument, an excluded fiduciary is
11not liable, either individually or as a fiduciary, for any
12action, inaction, consent, or failure to consent by a directing
13party, including, but not limited to, any of the following:
14 (1) if a trust instrument provides that an excluded
15 fiduciary is to follow the direction of a directing party,
16 and such excluded fiduciary acts in accordance with such a
17 direction, then except in cases of willful misconduct on
18 the part of the excluded fiduciary in complying with the
19 direction of the directing party, the excluded fiduciary is
20 not liable for any loss resulting directly or indirectly
21 from following any such direction, including but not
22 limited to compliance regarding the valuation of assets for
23 which there is no readily available market value;
24 (2) if a trust instrument provides that an excluded
25 fiduciary is to act or omit to act only with the consent of
26 a directing party, then except in cases of willful

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1 misconduct on the part of the excluded fiduciary, the
2 excluded fiduciary is not liable for any loss resulting
3 directly or indirectly from any act taken or omitted as a
4 result of such directing party's failure to provide such
5 consent after having been asked to do so by the excluded
6 fiduciary; or
7 (3) if a trust instrument provides that, or for any
8 other reason, an excluded fiduciary is required to assume
9 the role or responsibilities of a directing party, or if
10 the excluded fiduciary appoints a directing party or
11 successor to a directing party other than in a nonjudicial
12 settlement agreement under Section 111 or in a second trust
13 under Article 12, then the excluded fiduciary shall also
14 assume the same fiduciary and other duties and standards
15 that applied to such directing party.
16 (g) By accepting an appointment to serve as a directing
17party of a trust that is subject to the laws of this State, the
18directing party submits to the jurisdiction of the courts of
19this State even if investment advisory agreements or other
20related agreements provide otherwise, and the directing party
21may be made a party to any action or proceeding if issues
22relate to a decision or action of the directing party.
23 (h) Each directing party shall keep the excluded fiduciary
24and any other directing party reasonably informed regarding the
25administration of the trust with respect to any specific duty
26or function being performed by the directing party to the

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1extent that the duty or function would normally be performed by
2the excluded fiduciary or to the extent that providing such
3information to the excluded fiduciary or other directing party
4is reasonably necessary for the excluded fiduciary or other
5directing party to perform its duties, and the directing party
6shall provide such information as reasonably requested by the
7excluded fiduciary or other directing party. Neither the
8performance nor the failure to perform of a directing party's
9duty to inform as provided in this subsection affects
10whatsoever the limitation on the liability of the excluded
11fiduciary as provided in this Section.
12 (i) Other required notices.
13 (1) A directing party shall:
14 (A) within 90 days after becoming a directing
15 party, notify each qualified beneficiary of the
16 acceptance and of the directing party's name, address,
17 and telephone number, except that the notice
18 requirement of this subdivision (A) does not apply with
19 respect to a succession of a business entity by merger
20 or consolidation with another business entity or by
21 transfer between holding company affiliates if there
22 is no change in the contact information for the
23 directing party, in which case the successor entity has
24 discretion to determine what timing and manner of
25 notice is appropriate;
26 (B) notify each qualified beneficiary in advance

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1 of any change in the rate of or the method of
2 determining the directing party's compensation; and
3 (C) notify each qualified beneficiary of the
4 directing party's resignation.
5 (2) In the event of the incapacity, death,
6 disqualification, or removal of any directing party, a
7 directing party who continues acting as directing party
8 following such an event shall notify each qualified
9 beneficiary of the incapacity, death, disqualification, or
10 removal of any other directing party within 90 days after
11 the event.
12 (j) An excluded fiduciary may, but is not required to,
13obtain and rely upon an opinion of counsel on any matter
14relevant to this Section.
15 (k) On and after January 1, 2013, this Section applies to:
16 (1) all existing and future trusts that appoint or
17 provide for a directing party, including, but not limited
18 to, a party granted power or authority effectively
19 comparable in substance to that of a directing party as
20 provided in this Section; or
21 (2) any existing or future trust that:
22 (A) is modified in accordance with applicable law
23 or the terms of the trust instrument to appoint or
24 provide for a directing party; or
25 (B) is modified to appoint or provide for a
26 directing party, including, but not limited to, a party

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1 granted power or authority effectively comparable in
2 substance to that of a directing party, in accordance
3 with: (i) a court order; (ii) a nonjudicial settlement
4 agreement made in accordance with Section 111; or (iii)
5 an exercise of decanting power under Article 12,
6 regardless of whether the order, agreement, or second
7 trust instrument specifies that this Section governs
8 the responsibilities, actions, and liabilities of a
9 person designated as a directing party or excluded
10 fiduciary.
11 Section 809. Control and protection of trust property. A
12trustee shall take reasonable steps to take control of and
13protect the trust property. If a corporation is acting as
14cotrustee with one or more individuals, the corporate trustee
15shall have custody of the trust estate unless all the trustees
16otherwise agree.
17 Section 810. Recordkeeping and identification of trust
18property.
19 (a) A trustee shall keep adequate records of the
20administration of the trust.
21 (b) A trustee shall keep trust property separate from the
22trustee's own property.
23 (c) Except as otherwise provided in subsection (d), a
24trustee not subject to federal or state banking regulation

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1shall cause the trust property to be designated so that the
2interest of the trust, to the extent feasible, appears in
3records maintained by a party other than a trustee or
4beneficiary to whom the trustee has delivered the property.
5 (d) If the trustee maintains records clearly indicating the
6respective interests, a trustee may invest as a whole the
7property of 2 or more separate trusts.
8 Section 811. Enforcement and defense of claims. A trustee
9shall take reasonable steps to enforce claims of the trust and
10to defend claims against the trust. It may be reasonable for a
11trustee not to enforce a claim, not to defend an action, to
12settle an action, or to suffer a default, depending upon the
13likelihood of recovery and the cost of suit and enforcement.
14 Section 812. Powers and duties of successor; liability for
15acts of predecessor; approval of accounts.
16 (a) A successor trustee shall have all the rights, powers,
17and duties that are granted to or imposed on the predecessor
18trustee.
19 (b) A successor trustee is under no duty to inquire into
20the acts or doings of a predecessor trustee, and is not liable
21for any act or failure to act of a predecessor trustee.
22 (c) With the approval of a majority in interest of the
23beneficiaries then entitled to receive or eligible to have the
24benefit of the income from the trust, a successor trustee may

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1accept the account rendered by, and the property received from,
2the predecessor trustee as a full and complete discharge of the
3predecessor trustee without incurring any liability.
4 Section 813.1. Duty to inform and account; trusts
5irrevocable and trustees accepting appointment after effective
6date of Code.
7 (a) The provisions of this Section are prospective only and
8do not apply to any trust that was irrevocable prior to the
9effective date of this Code, or to a trustee who accepts a
10trusteeship before the effective date of this Code. Subject to
11Section 105, this Section supplants any common law duty of a
12trustee to inform and account to trust beneficiaries. This
13Section does not apply to trusts that became irrevocable prior
14to the effective date of this Code.
15 (b) General principles.
16 (1) The trustee shall notify each qualified
17 beneficiary:
18 (A) of the trust's existence;
19 (B) of the beneficiary's right to request a
20 complete copy of the trust instrument; and
21 (C) whether the beneficiary has a right to receive
22 or request accountings.
23 The notice required by this paragraph (1) must be
24 given: (i) within 90 days of the trust becoming irrevocable
25 or if no trustee is then acting within 90 days of the

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1 trustee's acceptance of the trusteeship; (ii) within 90
2 days of the trustee acquiring knowledge that a qualified
3 beneficiary has a representative under Article 3 who did
4 not previously receive notice; (iii) within 90 days of the
5 trustee acquiring knowledge that a qualified beneficiary
6 who previously had a representative under Article 3 no
7 longer has a representative under Article 3; and (iv)
8 within 90 days of the trustee acquiring knowledge that
9 there is a new qualified beneficiary.
10 (2) A trustee shall send at least annually a trust
11 accounting to all current beneficiaries.
12 (3) A trustee shall send at least annually a trust
13 accounting to all presumptive remainder beneficiaries.
14 (4) Upon termination of a trust, a trustee shall send a
15 trust accounting to the beneficiaries entitled to receive a
16 distribution of the residue of the trust.
17 (5) Notwithstanding any other provision, a trustee in
18 its discretion may provide notice, information, trust
19 accountings, or reports to any beneficiary of the trust
20 regardless of whether the communication is otherwise
21 required to be provided.
22 (6) Upon the reasonable request of a qualified
23 beneficiary, the trustee shall promptly furnish to the
24 qualified beneficiary a complete copy of the trust
25 instrument.
26 (7) Notwithstanding any other provision, a trustee is

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1 deemed to have fully and completely discharged the
2 trustee's duties to inform and account to all
3 beneficiaries, under this Section, at common law, or
4 otherwise, if the trustee provides at least annually and on
5 termination of the trust a trust accounting required by
6 paragraph (2), (3), or (4) to each beneficiary entitled to
7 a trust accounting.
8 (8) For each asset or class of assets described in a
9 trust accounting for which there is no readily available
10 market value, the trustee, in the trustee's discretion, may
11 determine whether to estimate the value or use a nominal
12 carrying value for such an asset, how to estimate the value
13 of such an asset, and whether and how often to engage a
14 professional appraiser to value such an asset.
15 (c) Upon a vacancy in a trusteeship, unless a cotrustee
16remains in office, the trust accounting required by subsection
17(b) of this Section must be sent to the beneficiaries entitled
18to the accounting by the former trustee. A personal
19representative, guardian of the estate, or guardian of the
20person may send the trust accounting to the beneficiaries
21entitled to the accounting on behalf of a deceased or
22incapacitated trustee.
23 (d) Other required notices.
24 (1) A trustee shall:
25 (A) within 90 days after accepting a trusteeship,
26 notify each qualified beneficiary of the acceptance

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1 and of the trustee's name, address, and telephone
2 number, except that the notice requirement of this
3 subdivision (A) does not apply with respect to a
4 succession of a corporate trustee by merger or
5 consolidation with another corporate fiduciary or by
6 transfer between holding company affiliates if there
7 is no change in the contact information for the
8 trustee, in which case the successor trustee has
9 discretion to determine what timing and manner of
10 notice is appropriate;
11 (B) notify each qualified beneficiary in advance
12 of any change in the rate of or the method of
13 determining the trustee's compensation; and
14 (C) notify each qualified beneficiary of the
15 trustee's resignation.
16 (2) In the event of the incapacity, death,
17 disqualification, or removal of any trustee, a trustee who
18 continues acting as trustee following such an event shall
19 notify each qualified beneficiary of the incapacity,
20 death, disqualification, or removal of any other trustee
21 within 90 days after the event.
22 (3) A trustee shall notify each qualified beneficiary
23 of any change in the address, telephone number, or other
24 contact information for the trustee no later than 90 days
25 after the change goes into effect.
26 (e) Each request for information under this Section must be

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1with respect to a single trust that is sufficiently identified
2to enable the trustee to locate the trust's records. A trustee
3may charge a reasonable fee for providing information under
4this Section to:
5 (1) a nonqualified beneficiary;
6 (2) a qualified beneficiary for providing information
7 that was previously provided to the qualified beneficiary
8 or a representative under Article 3 for the qualified
9 beneficiary; or
10 (3) a representative under Article 3 for a qualified
11 beneficiary for information that was previously provided
12 to the qualified beneficiary or a representative under
13 Article 3 for the qualified beneficiary.
14 (f) If a trustee is bound by any confidentiality
15restrictions regarding a trust asset, then, prior to receiving
16the information, a beneficiary eligible under this Section to
17receive any information about that asset must agree to be bound
18by the same confidentiality restrictions. The trustee has no
19duty or obligation to disclose to any beneficiary any
20information that is otherwise prohibited to be disclosed by
21applicable law.
22 (g) A qualified beneficiary may waive the right to receive
23information otherwise required to be furnished under this
24Section, such as a trust accounting, by an instrument in
25writing delivered to the trustee. A qualified beneficiary may
26at any time, by an instrument in writing delivered to the

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1trustee, withdraw a waiver previously given with respect to
2future trust accountings.
3 (h) Receipt of information, notices, or a trust accounting
4by a beneficiary is presumed if the trustee has procedures in
5place requiring the mailing or delivery of information,
6notices, or trust accountings to the beneficiary. This
7presumption applies to the mailing or delivery of information,
8notices, or trust accountings by electronic means or the
9provision of access to an account by electronic means for so
10long as the beneficiary has agreed to receive electronic
11delivery or access.
12 (i) A trustee may request approval of the trustee's current
13or final trust accounting in a judicial proceeding at the
14trustee's election, with all reasonable and necessary costs of
15the proceeding payable by the trust and allocated between
16income and principal in accordance with the Principal and
17Income Act.
18 (j) Notwithstanding any other provision, the provisions of
19this Section are not intended to and do not impose on any
20trustee a duty to inform any beneficiary in advance of
21transactions relating to the trust property.
22 Section 813.2. Duty to inform and account; trusts
23irrevocable and trustees accepting appointment prior to the
24effective date of Code.
25 (a) This Section applies to all trusts that were

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1irrevocable prior to the effective date of this Code and to a
2trustee who accepts a trusteeship before the effective date of
3this Code.
4 (b) Every trustee at least annually shall furnish to the
5beneficiaries then entitled to receive or receiving the income
6from the trust estate, or, if none, then to those beneficiaries
7eligible to have the benefit of the income from the trust
8estate, a current account showing the receipts, disbursements,
9and inventory of the trust estate.
10 (c) Every trustee shall on termination of the trust furnish
11to the beneficiaries then entitled to distribution of the trust
12estate a final account for the period from the date of the last
13current account to the date of distribution showing the
14inventory of the trust estate, the receipts, disbursements and
15distributions and shall make available to the beneficiaries
16copies of prior accounts not previously furnished.
17 (d) If a beneficiary is incapacitated, the account shall be
18provided to the representative of the estate of the
19beneficiary. If no representative for the estate of a
20beneficiary under legal disability has been appointed, the
21account shall be provided to a spouse, parent, adult child, or
22guardian of the person of the beneficiary.
23 (e) For each asset or class of assets described in a trust
24accounting for which there is no readily available market
25value, the trustee, in the trustee's discretion, may determine
26whether to estimate the value or use a nominal carrying value

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1for such an asset, how to estimate the value of such an asset,
2and whether and how often to engage a professional appraiser to
3value such an asset.
4 Section 814. Discretionary powers; tax savings.
5 (a) Notwithstanding the breadth of discretion granted to a
6trustee or other fiduciary in the trust instrument, including
7the use of such terms as "absolute", "sole", or "uncontrolled",
8such fiduciary shall exercise a discretionary power in good
9faith and in accordance with the terms and purposes of the
10trust instrument.
11 (b) Subject to subsection (e), and unless the trust
12instrument expressly indicates that a rule in this subsection
13does not apply:
14 (1) a person other than a settlor who is a beneficiary
15 and a trustee or other fiduciary of a trust that confers on
16 that fiduciary a power to make discretionary distributions
17 to or for that fiduciary's personal benefit may exercise
18 the power only in accordance with an ascertainable
19 standard; and
20 (2) a trustee or other fiduciary may not exercise a
21 power to make discretionary distributions to satisfy a
22 legal obligation of support that such fiduciary personally
23 owes another person.
24 (c) Subject to subsections (d) and (e), if a beneficiary of
25a trust, in an individual, trustee, or other capacity, removes

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1a fiduciary and appoints a successor fiduciary who would be
2related or subordinate to that beneficiary within the meaning
3of Section 672(c) of the Internal Revenue Code if the
4beneficiary were the grantor, that successor fiduciary's
5discretionary powers are limited as follows:
6 (1) the fiduciary's discretionary power to make
7 distributions to or for the benefit of that beneficiary is
8 limited to an ascertainable standard;
9 (2) the fiduciary's discretionary power may not be
10 exercised to satisfy any of that beneficiary's legal
11 obligations for support or other purposes; and
12 (3) the fiduciary's discretionary power may not be
13 exercised to grant to that beneficiary a general power of
14 appointment.
15 (d) Subsection (c) does not apply if:
16 (1) the appointment of the trustee or other fiduciary
17 by the beneficiary may be made only in conjunction with
18 another person having a substantial interest in the
19 property of the trust subject to the power that is adverse
20 to the interest of the beneficiary within the meaning of
21 Section 2041(b)(1)(C)(ii) of the Internal Revenue Code; or
22 (2) the appointment is in conformity with a procedure
23 governing appointments approved by the court before the
24 effective date of this Code.
25 (e) Subsections (b) and (c) do not apply to:
26 (1) a person other than a settlor who is a beneficiary

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1 and trustee or other fiduciary of a trust that confers on
2 such fiduciary a power exercisable only in conjunction with
3 another person having a substantial interest in the
4 property subject to the power that is adverse to the
5 interest of that fiduciary within the meaning of Section
6 2041(b)(1)(C)(ii) of the Internal Revenue Code;
7 (2) a power held by the settlor's spouse who is the
8 trustee or other fiduciary of a trust for which a marital
9 deduction, as defined in Section 2056(b)(5) or 2523(e) of
10 the Internal Revenue Code, was previously allowed;
11 (3) any trust during any period that the trust may be
12 revoked or amended by its settlor;
13 (4) a trust if contributions to the trust qualify for
14 the annual exclusion under Section 2503(c) of the Internal
15 Revenue Code; or
16 (5) any portion of a trust over which the trustee or
17 other fiduciary is expressly granted in the trust
18 instrument a presently exercisable or testamentary general
19 power of appointment.
20 (f) A power whose exercise is limited or prohibited by
21subsections (b) and (c) may be exercised by a majority of the
22remaining trustees or other fiduciaries whose exercise of the
23power is not so limited or prohibited. If the power of all
24trustees or other fiduciaries is so limited or prohibited, the
25court may appoint a special fiduciary with authority to
26exercise the power.

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1 Section 815. General powers of trustee.
2 (a) A trustee, without authorization by the court, may
3exercise:
4 (1) powers conferred by the trust instrument; or
5 (2) except as limited by the trust instrument:
6 (A) all powers over the trust property that an
7 unmarried owner with legal capacity has over
8 individually owned property;
9 (B) any other powers appropriate to achieve the
10 proper investment, management, and distribution of the
11 trust property; and
12 (C) any other powers conferred by this Code.
13 (b) The exercise of a power is subject to the fiduciary
14duties prescribed by this Code.
15 Section 816. Specific powers of trustee. Without limiting
16the authority conferred by Section 815, a trustee may:
17 (1) collect trust property and accept or reject
18 additions to the trust property from a settlor or any other
19 person;
20 (2) acquire or sell property, for cash or on credit, at
21 public or private sale;
22 (3) exchange, partition, or otherwise change the
23 character of trust property;
24 (4) deposit trust money in an account in a regulated

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1 financial-service institution;
2 (5) borrow money, with or without security, and
3 mortgage or pledge or otherwise encumber trust property for
4 a period within or extending beyond the duration of the
5 trust;
6 (6) with respect to an interest in a proprietorship,
7 partnership, limited liability company, business trust,
8 corporation, or other form of business or enterprise,
9 continue the business or other enterprise and take any
10 action that may be taken by shareholders, members, or
11 property owners, including merging, dissolving, pledging
12 other trust assets or guaranteeing a debt obligation of the
13 business or enterprise, or otherwise changing the form of
14 business organization or contributing additional capital;
15 (7) with respect to stocks or other securities,
16 exercise the rights of an absolute owner, including the
17 right to:
18 (A) vote, or give proxies to vote, with or without
19 power of substitution, or enter into or continue a
20 voting trust agreement;
21 (B) hold a security in the name of a nominee or in
22 other form without disclosure of the trust so that
23 title may pass by delivery;
24 (C) pay calls, assessments, and other sums
25 chargeable or accruing against the securities, and
26 sell or exercise stock subscription or conversion

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1 rights;
2 (D) deposit the securities with a depositary or
3 other regulated financial-service institution; and
4 (E) participate in mergers, consolidations,
5 foreclosures, reorganizations or liquidations.
6 (8) with respect to an interest in real property,
7 construct, or make ordinary or extraordinary repairs to,
8 alterations to, or improvements in, buildings or other
9 structures, demolish improvements, raze existing or erect
10 new party walls or buildings, subdivide or develop land,
11 dedicate any interest in real estate, dedicate land to
12 public use or grant public or private easements, enter into
13 contracts relating to real estate, and make or vacate plats
14 and adjust boundaries;
15 (9) enter into a lease for any purpose as lessor or
16 lessee, including a lease or other arrangement for
17 exploration and removal of natural resources, with or
18 without the option to purchase or renew, for a period
19 within or extending beyond the duration of the trust;
20 (10) grant an option involving a sale, lease, or other
21 disposition of trust property or acquire an option for the
22 acquisition of property, including an option exercisable
23 beyond the duration of the trust, and exercise an option so
24 acquired;
25 (11) insure the property of the trust against damage or
26 loss and insure the trustee, the trustee's agents, and

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1 beneficiaries against liability arising from the
2 administration of the trust;
3 (12) abandon or decline to administer property of no
4 value or of insufficient value to justify its collection or
5 continued administration;
6 (13) with respect to possible liability for violation
7 of environmental law:
8 (A) inspect or investigate property the trustee
9 holds or has been asked to hold, or property owned or
10 operated by an organization in which the trustee holds
11 or has been asked to hold an interest, for the purpose
12 of determining the application of environmental law
13 with respect to the property;
14 (B) take action to prevent, abate, or otherwise
15 remedy any actual or potential violation of any
16 environmental law affecting property held directly or
17 indirectly by the trustee, whether taken before or
18 after the assertion of a claim or the initiation of
19 governmental enforcement;
20 (C) decline to accept property into trust or
21 disclaim any power with respect to property that is or
22 may be burdened with liability for violation of
23 environmental law;
24 (D) compromise claims against the trust that may be
25 asserted for an alleged violation of environmental
26 law; and

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1 (E) pay the expense of any inspection, review,
2 abatement, or remedial action to comply with
3 environmental law;
4 (14) pay, contest, prosecute, or abandon any claim,
5 settle a claim or charges in favor of or against the trust,
6 and release, in whole or in part, a claim belonging to the
7 trust;
8 (15) pay taxes, assessments, compensation of the
9 trustee and of employees and agents of the trust, and other
10 expenses incurred in the administration of the trust;
11 (16) exercise elections with respect to federal,
12 state, and local taxes;
13 (17) select a mode of payment under any employee
14 benefit or retirement plan, annuity, or life insurance
15 payable to the trustee, exercise rights related to the
16 employee benefit or retirement plan, annuity, or life
17 insurance payable to the trustee, including exercise the
18 right to indemnification for expenses and against
19 liabilities, and take appropriate action to collect the
20 proceeds;
21 (18) make loans out of trust property, including loans
22 to a beneficiary on terms and conditions the trustee
23 considers to be fair and reasonable under the
24 circumstances, and the trustee has a lien on future
25 distributions for repayment of those loans;
26 (19) pledge trust property to guarantee loans made by

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1 others to the beneficiary;
2 (20) appoint a trustee to act in another jurisdiction
3 to act as sole or cotrustee with respect to any part or all
4 of trust property located in the other jurisdiction, confer
5 upon the appointed trustee any or all of the rights,
6 powers, and duties of the appointing trustee, require that
7 the appointed trustee furnish security, and remove any
8 trustee so appointed;
9 (21) distribute income and principal in one or more of
10 the following ways, without being required to see to the
11 application of any distribution, as the trustee believes to
12 be for the best interests of any beneficiary who at the
13 time of distribution is incapacitated or in the opinion of
14 the trustee is unable to manage property or business
15 affairs because of incapacity:
16 (A) directly to the beneficiary;
17 (B) to the guardian of the estate, or if none, the
18 guardian of the person of the beneficiary;
19 (C) to a custodian for the beneficiary under any
20 state's Uniform Transfers to Minors Act, Uniform Gifts
21 to Minors Act or Uniform Custodial Trust Act, and, for
22 that purpose, to create a custodianship or custodial
23 trust;
24 (D) to an adult relative of the beneficiary to be
25 expended on the beneficiary's behalf;
26 (E) by expending the money or using the property

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1 directly for the benefit of the beneficiary;
2 (F) to a trust, created prior to the time the
3 distribution becomes payable, for the sole benefit of
4 the beneficiary and those dependent upon the
5 beneficiary during his or her lifetime, to be
6 administered as a part of the trust, except that any
7 amount distributed to the trust under this
8 subparagraph (F) shall be separately accounted for by
9 the trustee of the trust and shall be indefeasibly
10 vested in the beneficiary so that if the beneficiary
11 dies prior to complete distribution of the amounts, the
12 amounts and the accretions, earnings, and income, if
13 any, shall be paid to the beneficiary's estate, except
14 that this subparagraph (F) does not apply to the extent
15 that it would cause a trust otherwise qualifying for
16 the federal estate tax marital deduction not to
17 qualify; and
18 (G) by managing it as a separate fund on the
19 beneficiary's behalf, subject to the beneficiary's
20 continuing right to withdraw the distribution;
21 (22) on distribution of trust property or the division
22 or termination of a trust, make distributions in divided or
23 undivided interests, allocate particular assets in
24 proportionate or disproportionate shares, value the trust
25 property for those purposes, and adjust for resulting
26 differences in valuation;

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1 (23) resolve a dispute concerning the interpretation
2 of the trust or its administration by judicial proceeding,
3 nonjudicial settlement agreement under Section 111,
4 mediation, arbitration, or other procedure for alternative
5 dispute resolution;
6 (24) prosecute or defend an action, claim, or judicial
7 proceeding in any jurisdiction to protect trust property
8 and the trustee in the performance of the trustee's duties;
9 (25) execute contracts, notes, conveyances, and other
10 instruments that are useful to achieve or facilitate the
11 exercise of the trustee's powers, regardless of whether the
12 instruments contain covenants and warranties binding upon
13 and creating a charge against the trust estate or excluding
14 personal liability;
15 (26) on termination of the trust, exercise the powers
16 appropriate to wind up the administration of the trust and
17 distribute the trust property to the persons entitled to
18 it;
19 (27) enter into agreements for bank or other deposit
20 accounts, safe deposit boxes, or custodian, agency, or
21 depositary arrangements for all or any part of the trust
22 estate, including, to the extent fair to the beneficiaries,
23 agreements for services provided by a bank operated by or
24 affiliated with the trustee, and to pay reasonable
25 compensation for those services, including, to the extent
26 fair to the beneficiaries, compensation to the bank

HB2526- 105 -LRB100 08824 HEP 18965 b
1 operated by or affiliated with the trustee, except that
2 nothing in this Section shall be construed as removing any
3 depositary arrangements from the requirements of the
4 prudent investor rule;
5 (28) engage attorneys, auditors, financial advisers,
6 and other agents and pay reasonable compensation to such
7 persons;
8 (29) invest in or hold undivided interests in property;
9 (30) if fair to the beneficiaries, deal with the
10 executor, trustee, or other representative of any other
11 trust or estate in which a beneficiary of the trust has an
12 interest, notwithstanding the fact that the trustee is an
13 executor, trustee, or other representative of the other
14 trust or estate;
15 (31) make equitable division or distribution in cash or
16 in kind, or both, and for that purpose may value any
17 property divided or distributed in kind;
18 (32) rely upon an affidavit, certificate, letter, or
19 other evidence reasonably believed to be genuine and on the
20 basis of any such evidence to make any payment or
21 distribution in good faith without liability;
22 (33) except as otherwise directed by the court, have
23 all of the rights, powers, and duties given to or imposed
24 upon the trustee by law and the provisions of the trust
25 instrument during the period between the termination of the
26 trust and the distribution of the trust assets and during

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1 any period in which any litigation is pending that may void
2 or invalidate the trust in whole or in part or affect the
3 rights, powers, duties, or discretions of the trustee;
4 (34) plant and harvest crops; breed, raise, purchase,
5 and sell livestock; lease land, equipment, or livestock for
6 cash or on shares, purchase and sell, exchange or otherwise
7 acquire or dispose of farm equipment and farm produce of
8 all kinds; make improvements, construct, repair, or
9 demolish and remove any buildings, structures, or fences,
10 engage agents, managers, and employees and delegate powers
11 to them; engage in drainage and conservation programs;
12 terrace, clear, ditch, and drain lands and install
13 irrigation systems; replace improvements and equipment;
14 fertilize and improve the soil; engage in the growing,
15 improvement, and sale of trees and other forest crops;
16 participate or decline to participate in governmental
17 agricultural or land programs; and perform such acts as the
18 trustee deems appropriate using such methods as are
19 commonly employed by other farm owners in the community in
20 which the farm property is located;
21 (35) drill, mine, and otherwise operate for the
22 development of oil, gas, and other minerals; enter into
23 contracts relating to the installation and operation of
24 absorption and repressuring plants; enter into unitization
25 or pooling agreements for any purpose including primary,
26 secondary, or tertiary recovery; place and maintain pipe

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1 lines; execute oil, gas, and mineral leases, division and
2 transfer orders, grants, deeds, releases and assignments,
3 and other instruments; participate in a cooperative coal
4 marketing association or similar entity; and perform such
5 other acts as the trustee deems appropriate using such
6 methods as are commonly employed by owners of similar
7 interests in the community in which the interests are
8 located;
9 (36) continue an unincorporated business and
10 participate in its management by having the trustee or one
11 or more agents of the trustee act as a manager with
12 appropriate compensation from the business and incorporate
13 the business;
14 (37) continue a business in the partnership form and
15 participate in its management by having the trustee or one
16 or more agents of the trustee act as a partner, limited
17 partner, or employee with appropriate compensation from
18 the business; enter into new partnership agreements and
19 incorporate the business; and, with respect to activities
20 under this paragraph (37), the trustee or the agent or
21 agents of the trustee shall not be personally liable to
22 third persons with respect to actions not sounding in tort
23 unless the trustee or agent fails to identify the trust
24 estate and disclose that the trustee or agent is acting in
25 a representative capacity, except that nothing in this
26 paragraph impairs in any way the liability of the trust

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1 estate with respect to activities under this paragraph (37)
2 to the extent of the assets of the trust estate.
3 Section 817. Distribution upon termination. Before
4distributing property to a beneficiary upon the termination of
5a trust in whole or in part, including the exercise by a
6beneficiary of a right to withdraw trust principal, the trustee
7has the right to require from the beneficiary a written
8approval of the trustee's accountings provided to the
9beneficiary and, at the trustee's election, a refunding
10agreement from the beneficiary for liabilities that would
11otherwise be payable from trust property to the extent of the
12beneficiary's share of the distribution. An accounting
13approved under this Section is binding on the beneficiary
14providing the approval and on the beneficiary's successors,
15heirs, representatives, and assigns. A trustee may elect to
16withhold a distribution or require a reasonable reserve for the
17payment of debts, expenses, and taxes payable from the trust
18pending the receipt of a written approval of the trustee's
19accountings provided to the beneficiary and refunding
20agreement from a beneficiary or a judicial settlement of
21accounts.
22 Section 818. Notice of proposed action.
23 (a) A trustee or directing party may give a notice of
24proposed action under this Section regarding any matter

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1governed by this Code over which the trustee or directing party
2is granted power or discretion under the trust instrument or
3any provision of this Code if there is no other notice or
4consent procedure prescribed for the matter in another Section
5of this Code.
6 (b) A trustee or directing party shall provide any notice
7of proposed action to all qualified beneficiaries of a trust,
8except that a trustee or directing party is not required to
9give a notice of proposed action to any person who consents, at
10any time before or after the proposed action is taken, in
11writing to the proposed action.
12 (c) A notice of proposed action shall state that the notice
13is given as set forth in this Section and shall state all of
14the following:
15 (1) The name and mailing address of the trustee or
16 directing party.
17 (2) The name and telephone number of a person who may
18 be contacted for additional information.
19 (3) A description of the proposed action and an
20 explanation of the reasons for the action.
21 (4) The time period in which objections to the proposed
22 action may be made, which shall not expire until at least
23 60 days after the trustee or directing party provides the
24 notice of proposed action.
25 (5) A statement that if no objection is received during
26 the time period in which objections to the proposed action

HB2526- 110 -LRB100 08824 HEP 18965 b
1 may be made, the trustee or directing party is not liable
2 to any current or future beneficiary with respect to the
3 proposed action.
4 (6) The date on or after which the proposed action may
5 be taken or is effective.
6 (7) If the notice is sent to a representative of a
7 beneficiary under Article 3, the beneficiary or
8 beneficiaries represented by the representative.
9 (d) A qualified beneficiary may object to a proposed action
10by delivering a written objection to the trustee or directing
11party at the address stated in the notice of proposed action
12within the period specified in the notice of proposed action.
13 (e) A trustee or directing party is not liable to any
14beneficiary for an action regarding a matter governed by this
15Section if:
16 (1) the action to which the notice of proposed action
17 pertained does not constitute a per se breach of trust;
18 (2) the trustee or directing party does not receive a
19 written objection to the proposed action from the
20 beneficiary within the applicable period; and
21 (3) the other requirements of this Section are
22 satisfied.
23 (f) If the trustee or directing party receives a written
24objection within the applicable period, either the trustee or
25directing party or a beneficiary may petition the court to have
26the proposed action taken as proposed, taken with

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1modifications, or denied. In the proceeding, a beneficiary
2objecting to the proposed action has the burden of proving that
3the trustee's proposed action should not be taken. A
4beneficiary who has not objected is not estopped from opposing
5the proposed action in the proceeding. If the trustee or
6directing party decides not to implement the proposed action,
7the trustee or directing party shall provide written notice to
8each qualified beneficiary of the decision not to take the
9action. The decision of the trustee or directing party not to
10implement the proposed action does not itself give rise to
11liability to any beneficiary. Within 60 days after receiving
12notice from the trustee or directing party that it will not to
13implement the proposed action, a beneficiary may petition the
14court to have the action taken and has the burden of proving
15that it should be taken.
16 (g) Notwithstanding any other provision of this Section,
17the trustee or directing party may not use a notice of proposed
18action to address any of the following actions:
19 (1) Allowance of the trustee's or directing party's
20 compensation.
21 (2) Allowance of compensation of the attorney for the
22 trustee or directing party.
23 (3) Settlement of a trustee's or directing party's
24 accounts.
25 (4) Preliminary and final distributions from a trust
26 and discharge of any trustee or directing party.

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1 (5) Sale of property of the trust to the trustee or
2 directing party or to the attorney for the trustee or
3 directing party.
4 (6) Exchange of property of the trust for property of
5 the trustee or directing party or for property of the
6 attorney for the trustee or directing party.
7 (7) Grant of an option to purchase property of the
8 trust to the trustee or directing party or to the attorney
9 for the trustee or directing party.
10 (8) Allowance, payment, or compromise of a claim of the
11 trustee or directing party, or the attorney for the trustee
12 or directing party, against the trust.
13 (9) Compromise or settlement of a claim, action, or
14 proceeding by the trust against the trustee or directing
15 party or against the attorney for the trustee or directing
16 party.
17 (10) Extension, renewal, or modification of the terms
18 of a debt or other obligation of the trustee or directing
19 party, or the attorney for the trustee or directing party,
20 owing to or in favor of the trust.
21 (h) Notwithstanding any other provision of this Code,
22delivery of notice of a proposed action to a representative
23under Article 3 on behalf of a beneficiary is effective for
24purposes of this Section only if the representative previously
25acknowledged or acknowledges in writing prior to the end of the
26period for objections to the proposed action that the

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1representative is representing the beneficiary.
2 (i) Notwithstanding any other provision, the provisions of
3this Section are not intended to and do not impose on any
4trustee or directing party a duty to inform any beneficiary in
5advance of transactions relating to the trust property.
6 Section 819. Nominee registration. The trustee may cause
7stocks, bonds, and other real or personal property belonging to
8the trust to be registered and held in the name of a nominee
9without mention of the trust in any instrument or record
10constituting or evidencing title thereto. The trustee is liable
11for the acts of the nominee with respect to any investment so
12registered. The records of the trustee shall show at all times
13the ownership of the investment by the trustee, and the stocks,
14bonds, and other similar investments shall be in the possession
15and control of the trustee and be kept separate and apart from
16assets that are the individual property of the trustee.
17 Section 820. Proceeds of eminent domain or partition. If a
18trustee is appointed by a court of this State to receive money
19under eminent domain or partition proceedings and to invest it
20for the benefit of the person who would be entitled to the real
21estate or its income if it had not been taken or sold, on
22petition of any interested person describing the real estate to
23be purchased, the price to be paid, the probable income to be
24derived and the state of the title, the court may authorize the

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1trustee to invest all or any part of the money in other real
2estate in this State. Title to the real estate so purchased
3shall be taken in the name of the trustee. If the interest of
4the beneficiary in the real estate taken or sold was a legal
5interest, the court shall direct the trustee to convey to the
6beneficiary a legal estate upon the same conditions and
7limitations of title, but the conveyance by the trustee shall
8preserve any right of entry for condition broken, possibility
9of reverter created by the instrument of title or any reversion
10or other vested interest that arose by operation of law at the
11time the instrument took effect. The court shall not direct the
12conveyance by the trustee unless there is a person or class of
13persons in being who would have a vested interest in the real
14estate taken or sold under the instrument of title to the real
15estate and who would be entitled to possession of the real
16estate if it had not been taken or sold.
17 Section 821. Lands or estates subject to future interest or
18power of appointment; waste; appointment of trustee. If lands
19or any estate therein are subject to any legal or equitable
20future interest of any kind or to any power of appointment,
21whether a trust is involved or not, and it is made to appear
22that such lands or estate are liable to waste or depreciation
23in value, or that the sale thereof and the safe and proper
24investment of the proceeds will inure to the benefit and
25advantage of the persons entitled thereto, or that it is

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1otherwise necessary for the conservation, preservation or
2protection of the property or estate or of any present or
3future interest therein that such lands or estate be sold,
4mortgaged, leased, converted, exchanged, improved, managed or
5otherwise dealt with, the court may, pending the happening of
6the contingency, if any, and the vesting in possession of such
7future interest, declare a trust, and appoint a trustee or
8trustees for such lands or estate and vest in a trustee or
9trustees title to the property, and authorize and direct the
10sale of such property, either at a public sale or at private
11sale, and upon such terms and conditions as the court may
12direct, and in such case may authorize the trustee or trustees
13to make such sale and to receive, hold and invest the proceeds
14thereof under the direction of the court for the benefit of the
15persons entitled or who may become entitled thereto according
16to their respective rights and interests, authorize and direct
17that all or any portion of the property, or the proceeds
18thereof, so subject to such future interests or powers of
19appointment, be leased, mortgaged, converted, exchanged,
20improved, managed, invested, reinvested, or otherwise dealt
21with, as the rights and interests of the parties and the
22equities of the case may require, and to that end may confer
23all necessary powers on the trustee or trustees. All orders of
24every court entered pursuant to this Section subsequent to June
2530, 1982 and prior to September 16, 1985 vesting title to
26property in a trustee are hereby validated and such title is

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1vested in such trustee effective the day the court entered such
2order.
3
Article 9. Illinois Uniform Prudent Investor Act; life
4
insurance; affiliated investments.
5 Section 900. Article title. This Article may be referred to
6as the Illinois Uniform Prudent Investor Act.
7 Section 901. Prudent investor rule.
8 (a) Except as otherwise provided in subsection (b), a
9trustee administering a trust has a duty to invest and manage
10the trust assets to comply with the prudent investor rule set
11forth in this Article.
12 (b) The prudent investor rule, a default rule, may be
13expanded, restricted, eliminated, or otherwise altered by
14express provisions of the trust instrument. A trustee is not
15liable to a beneficiary for the trustee's reasonable and good
16faith reliance on those express provisions.
17 Section 902. Standard of care; portfolio strategy; risk and
18return objectives.
19 (a) A trustee has a duty to invest and manage trust assets
20as a prudent investor would, considering the purposes, terms,
21distribution requirements, and other circumstances of the
22trust. This standard requires the exercise of reasonable care,

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1skill, and caution and applies not in isolation, but in the
2context of the trust portfolio as a whole and as a part of an
3overall investment strategy that incorporates risk and return
4objectives reasonably suitable to the trust.
5 (b) A trustee has a duty to pursue an investment strategy
6that considers both the reasonable production of income and
7safety of capital, consistent with the trustee's duty of
8impartiality and the purposes of the trust. Whether investments
9are underproductive or overproductive of income shall be judged
10by the portfolio as a whole and not as to any particular asset.
11 (c) The circumstances that a trustee may consider in making
12investment decisions include, without limitation:
13 (1) the general economic conditions;
14 (2) the possible effect of inflation or deflation;
15 (3) the expected tax consequences of investment
16 decisions or strategies;
17 (4) the role each investment or course of action plays
18 within the overall portfolio;
19 (5) the expected total return including both income
20 yield and appreciation of capital;
21 (6) the duty to incur only reasonable and appropriate
22 costs;
23 (7) environmental and social considerations;
24 (8) governance policies of the entities in which the
25 trustee may invest;
26 (9) needs for liquidity, regularity of income, and

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1 preservation or appreciation of capital; and
2 (10) an asset's special relationship or value, if any,
3 to the purpose of the trust or to one or more of the
4 beneficiaries.
5 (d) In addition to the circumstances listed in subsection
6(c), a trustee may, but need not, consider related trusts and
7the assets of beneficiaries known to the trustee when making
8investment decisions.
9 Section 903. Diversification. A trustee has a duty to
10diversify the investments of the trust unless, under the
11circumstances, the trustee reasonably believes it is in the
12interests of the beneficiaries and furthers the purposes of the
13trust not to diversify.
14 Section 904. Duties at inception of trusteeship. A trustee
15has a duty, within a reasonable time after the acceptance of a
16trusteeship, to review trust assets and to make and implement
17decisions concerning the retention and disposition of original
18pre-existing investments, in order to conform to the provisions
19of this Article. A trustee's decision to retain or dispose of
20an asset may properly be influenced by the asset's special
21relationship or value to the purposes of the trust or to some
22or all of the beneficiaries, consistent with the trustee's duty
23of impartiality.

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1 Section 905. Court action. Nothing in this Article
2abrogates or restricts the power of an appropriate court in
3proper cases to: (i) direct or permit the trustee to deviate
4from the terms of the trust instrument; or (ii) to direct or
5permit the trustee to take, or to restrain the trustee from
6taking, any action regarding the making or retention of
7investments.
8 Section 906. (Reserved).
9 Section 907. (Reserved).
10 Section 908. Reviewing compliance. No specific investment
11course of action is, taken alone, prudent or imprudent. The
12trustee may invest in every kind of property and type of
13investment, subject to this Article. A trustee's investment
14decisions and actions are to be judged in terms of the
15trustee's reasonable business judgment regarding the
16anticipated effect on the trust portfolio as a whole under the
17facts and circumstances prevailing at the time of the decision
18or action. This Article is a test of conduct and not of
19resulting performance.
20 Section 909. Delegation of investment and management
21functions. Notwithstanding any other provision of this Code,
22prior to delegating any investment functions to an agent in

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1accordance with the provisions of subsection (b) of Section
2807, a trustee shall conduct an inquiry into the experience,
3performance history, professional licensing or registration,
4if any, and financial stability of the investment agent.
5 Section 910. Language invoking standard of Article. The
6following terms or comparable language in the investment powers
7and related provisions of a trust instrument, unless otherwise
8limited or modified by that instrument, shall be construed as
9authorizing any investment or strategy permitted under this
10Article: "investments permissible by law for investment of
11trust funds", "legal investments", "authorized investments",
12"using the judgment and care under the circumstances then
13prevailing that persons of prudence, discretion, and
14intelligence exercise in the management of their own affairs,
15not in regard to speculation but in regard to the permanent
16disposition of their funds, considering the probable income as
17well as the probable safety of their capital", "prudent man
18rule", "prudent trustee rule", "prudent person rule", and
19"prudent investor rule".
20 Section 911. (See Section 900 for short title.)
21 Section 912. Application to existing trusts. The Sections
22of this Article that proceed this Section apply to all existing
23and future trusts, but only as to actions or inactions

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1occurring on or after January 1, 1992.
2 Section 913. Life insurance.
3 (a) Notwithstanding any other provision, the duties of a
4trustee with respect to acquiring or retaining as a trust asset
5a contract of insurance upon the life of the settlor, upon the
6lives of the settlor and the settlor's spouse, or upon the life
7of any person for which the trustee has an insurable interest
8in accordance with Section 113, do not include any of the
9following duties:
10 (1) to determine whether any contract of life insurance
11 in the trust, or to be acquired by the trust, is or remains
12 a proper investment, including, without limitation, with
13 respect to:
14 (A) the type of insurance contract;
15 (B) the quality of the insurance contract;
16 (C) the quality of the insurance company; or
17 (D) the investments held within the insurance
18 contract.
19 (2) to diversify the investment among different
20 policies or insurers, among available asset classes, or
21 within an insurance contract;
22 (3) to inquire about or investigate into the health or
23 financial condition of an insured;
24 (4) to prevent the lapse of a life insurance contract
25 if the trust does not receive contributions or hold other

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1 readily marketable assets to pay the life insurance
2 contract premiums; or
3 (5) to exercise any policy options, rights, or
4 privileges available under any contract of life insurance
5 in the trust, including any right to borrow the cash value
6 or reserve of the policy, acquire a paid-up policy, or
7 convert to a different policy.
8 (b) The trustee is not liable to the beneficiaries of the
9trust, the beneficiaries of the contract of insurance, or to
10any other party for loss arising from the absence of these
11duties regarding insurance contracts under this Section.
12 (c) This Section applies to an irrevocable trust created
13after the effective date of this Code or to a revocable trust
14that becomes irrevocable after the effective date of this Code.
15The trustee of a trust described under this Section established
16prior to the effective date of this Code shall notify the
17settlor in writing that, unless the settlor provides written
18notice to the contrary to the trustee within 90 days of the
19trustee's notice, the provisions of this Section apply to the
20trust. This Section does not apply if, within 90 days of the
21trustee's notice, the settlor notifies the trustee in writing
22that this Section does not apply. If the settlor is deceased,
23then the trustee shall give notice to all of the legally
24competent current beneficiaries, and this Section applies to
25the trust unless the majority of the beneficiaries notify the
26trustee to the contrary in writing within 90 days of the

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1trustee's notice.
2 Section 914. Investments in affiliated investments;
3transactions with affiliates.
4 (a) As used in this Section:
5 (1) "Affiliate" means any corporation or other entity
6 that directly or indirectly is controlled by a financial
7 institution acting in a fiduciary capacity, or is related
8 to the financial institution by shareholding or other means
9 of common ownership and control.
10 (2) "Affiliated investment" means an investment for
11 which the fiduciary or an affiliate of the fiduciary acts
12 as adviser, administrator, distributor, placement agent,
13 underwriter, broker, or in any other capacity for which the
14 fiduciary or an affiliate of the fiduciary receives or has
15 received compensation from the investment.
16 (3) "Fiduciary capacity" includes an agent with
17 investment discretion to determine what securities or
18 other assets to purchase or sell on behalf of a fiduciary
19 account.
20 (b) A financial institution acting in any fiduciary
21capacity may purchase any affiliated investment, including,
22but not limited to, insurance, equity derivatives, or
23securities underwritten or otherwise distributed by the
24financial institution or by an affiliate, through or directly
25from the financial institution or an affiliate or from a

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1syndicate or selling group that includes the financial
2institution or an affiliate, if the purchase is otherwise
3prudent under the applicable fiduciary investment standard.
4 (c) The compensation paid to a financial institution acting
5in any fiduciary capacity or an affiliate of the financial
6institution for any affiliated investment under this Section
7must be reasonable and may not be prohibited by the instrument
8governing the fiduciary relationship. The compensation for the
9affiliated investment may be in addition to the compensation
10that the financial institution is otherwise entitled to receive
11from the fiduciary account.
12 (d) A financial institution shall disclose, at least
13annually:
14 (1) any purchase of an affiliated investment
15 authorized by this Section, including all compensation
16 paid or to be paid by the fiduciary account or to be
17 received by an affiliate arising from the affiliated
18 investment;
19 (2) the capacities in which the financial institution
20 or an affiliate acts for the issuer of the securities or
21 the provider of the products or services; and
22 (3) that the financial institution or an affiliate may
23 have an interest in the affiliated investment.
24 (e) The disclosure shall be given, in writing or
25electronically by any document prepared for an affiliated
26investment under federal or state securities laws or in a

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1written summary that includes all compensation received or to
2be received by the financial institution or any affiliate and
3an explanation of the manner in which the compensation is
4calculated (either as a percentage of the assets invested or by
5some other formula or method), to each principal in an agency
6relationship and to all persons entitled to receive account
7statements of any other fiduciary account.
8 (f) This Section applies to the purchase of securities made
9at the time of the initial offering of the securities or at any
10time thereafter.
11 (g) A financial institution that has complied with the
12terms of this Section has full authority to administer an
13affiliated investment, including the authority to vote proxies
14on the affiliated investment.
15
Article 10. Liability of trustees and rights of persons dealing
16
with trustee.
17 Section 1001. Remedies for breach of trust.
18 (a) A violation by a trustee of a duty the trustee owes to
19a beneficiary is a breach of trust.
20 (b) To remedy a breach of trust that has occurred or may
21occur, the court may:
22 (1) compel the trustee to perform the trustee's duties;
23 (2) enjoin the trustee from committing a breach of
24 trust;

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1 (3) compel the trustee to redress a breach of trust by
2 paying money, restoring property, or other means;
3 (4) order a trustee to account;
4 (5) appoint a special fiduciary to take possession of
5 the trust property and administer the trust;
6 (6) suspend the trustee;
7 (7) remove the trustee as provided in Section 706;
8 (8) reduce or deny compensation to the trustee; or
9 (9) subject to Section 1012, void an act of the
10 trustee, impose a lien or a constructive trust on trust
11 property, or trace trust property wrongfully disposed of
12 and recover the property or its proceeds.
13 (c) Nothing in this Section limits the equitable powers of
14the court to order other appropriate relief.
15 Section 1002. Damages for breach of trust.
16 (a) A trustee who commits a breach of trust is liable to
17the beneficiaries affected for the greater of:
18 (1) the amount required to restore the value of the
19 trust property and trust distributions to what they would
20 have been had the breach not occurred; or
21 (2) the value of any benefit received by the trustee by
22 reason of the breach.
23 (b) Except as otherwise provided in this subsection, if
24more than one trustee is liable to the beneficiaries for a
25breach of trust, a trustee is entitled to contribution from the

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1other trustee or trustees liable for the breach. A trustee is
2not entitled to contribution if the trustee was substantially
3more at fault than another trustee or if the trustee committed
4the breach of trust in bad faith or with reckless indifference
5to the purposes of the trust or the interests of the
6beneficiaries. A trustee who received a benefit from the breach
7of trust is not entitled to contribution from another trustee
8to the extent of the benefit received.
9 Section 1003. No damages in absence of breach. Absent a
10breach of trust, a trustee is not liable to a beneficiary for a
11loss or depreciation in the value of trust property or for any
12benefit received by the trustee by reason of the administration
13of the trust.
14 Section 1004. Attorney's fees and costs. In a judicial
15proceeding involving the administration of a trust, the court,
16as equity may require, may award costs and expenses, including
17reasonable attorney's fees, to any party, to be paid by another
18party or from the trust that is the subject of the controversy.
19 Section 1005. Limitation on action against trustee.
20 (a) A beneficiary may not commence a proceeding against a
21trustee for breach of trust for any matter disclosed in writing
22by a trust accounting, or otherwise as provided in Sections
23813.1, 813.2, and Section 1102, after the date on which the

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1disclosure becomes binding upon the beneficiary as provided
2below:
3 (1) With respect to a trust that becomes irrevocable
4 after the effective date of this Code and to trustees
5 accepting appointment after the effective date of this
6 Code, a matter disclosed in writing by a trust accounting
7 or otherwise pursuant to Section 813.1 and Section 1102 is
8 binding on each person who receives the information and
9 each person represented as provided in Article 3 by a
10 person who receives the information, and all of the
11 person's respective successors, representatives, heirs,
12 and assigns, unless an action against the trustee is
13 instituted within 2 years after the date the information is
14 furnished. A trust accounting or other communication
15 adequately discloses the existence of a potential claim for
16 breach of trust if it provides sufficient information so
17 that the person entitled to receive the information knows
18 of the potential claim or should have inquired into its
19 existence.
20 (2) With respect to a trust that became irrevocable
21 prior to the effective date of this Code or a trustee that
22 accepted appointment prior to the effective date of this
23 Code, a current account is binding on each beneficiary
24 receiving the account and on the beneficiary's heirs and
25 assigns unless an action against the trustee is instituted
26 by the beneficiary or the beneficiary's heirs and assigns

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1 within 3 years after the date the current account is
2 furnished, and a final accounting is binding on each
3 beneficiary receiving the final accounting and all persons
4 claiming by or through the beneficiary, unless an action
5 against the trustee is instituted by the beneficiary or
6 person claiming by or through him or her within 3 years
7 after the date the final account is furnished. If the
8 account is provided to the representative of the estate of
9 the beneficiary or to a spouse, parent, adult child, or
10 guardian of the person of the beneficiary, the account is
11 binding on the beneficiary unless an action is instituted
12 against the trustee by the representative of the estate of
13 the beneficiary or by the spouse, parent, adult child, or
14 guardian of the person to whom the account is furnished
15 within 3 years after the date it is furnished.
16 (3) Notwithstanding paragraphs (1) and (2) of this
17 subsection (a), with respect to trust estates that
18 terminated and were distributed 10 years or less prior to
19 January 1, 1988, the final account furnished to the
20 beneficiaries entitled to distribution of the trust estate
21 is binding on the beneficiaries receiving the final
22 account, and all persons claiming by or through them,
23 unless an action against the trustee is instituted by the
24 beneficiary or person claiming by or through him or her
25 within 5 years after January 1, 1988 or within 10 years
26 after the date the final account was furnished, whichever

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1 is longer.
2 (4) Notwithstanding paragraphs (1), (2) and (3) of this
3 subsection (a), with respect to trust estates that
4 terminated and were distributed more than 10 years before
5 January 1, 1988, the final account furnished to the
6 beneficiaries entitled to distribution of the trust estate
7 is binding on the beneficiaries receiving the final
8 account, and all persons claiming by or through them,
9 unless an action against the trustee is instituted by the
10 beneficiary or person claiming by or through him or her
11 within 2 years after January 1, 1988.
12 (b) Unless barred earlier under subsection (a), a judicial
13proceeding by a beneficiary against a trustee for breach of
14trust must be commenced within 5 years after the first to occur
15of:
16 (1) the removal, resignation, or death of the trustee;
17 (2) the termination of the beneficiary's interest in
18 the trust; or
19 (3) the termination of the trust.
20 (c) Notwithstanding any other provision of this Section, a
21beneficiary may bring any action against the trustee for
22fraudulent concealment within the time limit set forth in
23Section 13-215 of the Code of Civil Procedure.
24 Section 1006. Reliance on trust instrument. A trustee who
25acts in reasonable reliance on the express language of the

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1trust instrument is not liable to a beneficiary for a breach of
2trust to the extent the breach resulted from the reliance.
3 Section 1007. Event affecting administration or
4distribution. If the happening of an event, including, but not
5limited to, marriage, divorce, performance of educational
6requirements, or death, affects the administration or
7distribution of a trust, a trustee who has exercised reasonable
8care to ascertain the happening of the event is not liable for
9a loss resulting from the trustee's lack of knowledge.
10 Section 1008. Exculpation of trustee.
11 (a) A term of a trust relieving a trustee of liability for
12breach of trust is unenforceable to the extent that it:
13 (1) relieves the trustee of liability for breach of
14 trust committed in bad faith or with reckless indifference
15 to the purposes of the trust or the interests of the
16 beneficiaries; or
17 (2) was inserted as the result of an abuse by the
18 trustee of a fiduciary or confidential relationship to the
19 settlor.
20 (b) An exculpatory term drafted or caused to be drafted by
21the trustee is invalid as an abuse of a fiduciary or
22confidential relationship unless the trustee proves that the
23exculpatory term is fair under the circumstances and that its
24existence and contents were adequately communicated to the

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1settlor. These conditions are satisfied if the settlor was
2represented by independent counsel.
3 Section 1009. Beneficiary's consent, release, or
4ratification.
5 (a) A trustee is not liable to a beneficiary, or to anyone
6claiming by or through the beneficiary, for breach of trust if
7the beneficiary consented to the conduct constituting the
8breach, released the trustee from liability for the breach, or
9ratified the transaction constituting the breach, unless:
10 (1) the consent, release, or ratification of the
11 beneficiary was induced by improper conduct of the trustee;
12 or
13 (2) at the time of the consent, release, or
14 ratification, the beneficiary did not know of the
15 beneficiary's rights or of the material facts relating to
16 the breach.
17 (b) If the beneficiary's consent, release, or ratification
18involves a self-dealing transaction, the consent, release, or
19ratification is binding only if the transaction was fair and
20reasonable. The condition that a self-dealing transaction must
21be fair and reasonable is satisfied if the beneficiary was
22represented by independent counsel. No consideration is
23required for the consent, release, or ratification to be valid.
24 Section 1010. Limitation on personal liability of trustee.

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1 (a) Except as otherwise provided in the contract, a trustee
2is not personally liable on a contract properly entered into in
3the trustee's fiduciary capacity in the course of administering
4the trust if the trustee in the contract disclosed the
5fiduciary capacity.
6 (b) A trustee is personally liable for torts committed in
7the course of administering a trust, or for obligations arising
8from ownership or control of trust property, including
9liability for violation of environmental law, only if the
10trustee is personally at fault.
11 (c) A claim based on a contract entered into by a trustee
12in the trustee's fiduciary capacity, on an obligation arising
13from ownership or control of trust property, or on a tort
14committed in the course of administering a trust, may be
15asserted in a judicial proceeding against the trustee in the
16trustee's fiduciary capacity, whether or not the trustee is
17personally liable for the claim.
18 Section 1011. Interest as general partner.
19 (a) Except as otherwise provided in subsection (c) or
20unless personal liability is imposed in the contract, a trustee
21who holds an interest as a general partner in a general or
22limited partnership is not personally liable on a contract
23entered into by the partnership after the trust's acquisition
24of the interest if the fiduciary capacity was disclosed in the
25contract or in a statement previously filed pursuant to the

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1Uniform Partnership Act (1997) or Uniform Limited Partnership
2Act (2001) or any other similar state law.
3 (b) Except as otherwise provided in subsection (c), a
4trustee who holds an interest as a general partner is not
5personally liable for torts committed by the partnership or for
6obligations arising from ownership or control of the interest
7unless the trustee is personally at fault.
8 (c) The immunity provided by this Section does not apply if
9an interest in the partnership is held by the trustee in a
10capacity other than that of trustee or is held by the trustee's
11spouse or one or more of the trustee's descendants, siblings,
12or parents, or the spouse of any of them.
13 (d) If the trustee of a revocable trust holds an interest
14as a general partner, the settlor is personally liable for
15contracts and other obligations of the partnership as if the
16settlor were a general partner.
17 Section 1012. Protection of person dealing with trustee.
18 (a) A person other than a beneficiary or a beneficiary's
19representative under Article 3 acting in a representative
20capacity who in good faith assists a trustee, or who in good
21faith and for value deals with a trustee, without knowledge
22that the trustee is exceeding or improperly exercising the
23trustee's powers is protected from liability as if the trustee
24properly exercised the power.
25 (b) A person other than a beneficiary or a beneficiary's

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1representative under Article 3 acting in a representative
2capacity who in good faith deals with a trustee is not required
3to inquire into the extent of the trustee's powers or the
4propriety of their exercise.
5 (c) A person, including a beneficiary, who in good faith
6delivers assets to a trustee need not ensure their proper
7application.
8 (d) A person other than a beneficiary who in good faith
9assists a former trustee, or who in good faith and for value
10deals with a former trustee, without knowledge that the
11trusteeship has terminated is protected from liability as if
12the former trustee were still a trustee.
13 (e) Comparable protective provisions of other laws
14relating to commercial transactions or transfer of securities
15by fiduciaries prevail over the protection provided by this
16Section.
17 Section 1013. Certification of trust.
18 (a) Instead of furnishing a copy of the trust instrument to
19a person other than a beneficiary, the trustee may furnish to
20the person a certification of trust containing the following
21information:
22 (1) that the trust exists and the date the trust
23 instrument was executed;
24 (2) the identity of the settlor;
25 (3) the identity and address of the currently acting

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1 trustee;
2 (4) the powers of the trustee;
3 (5) the revocability or irrevocability of the trust,
4 whether the trust is amendable or unamendable, and the
5 identity of any person holding a power to revoke the trust;
6 (6) the authority of cotrustees to sign or otherwise
7 authenticate and whether all or less than all are required
8 in order to exercise powers of the trustee;
9 (7) the trust's taxpayer identification number; and
10 (8) the manner of taking title to trust property.
11 (b) A certification of trust must be signed or otherwise
12authenticated by one or more of the trustees. A third party may
13require that the certification of trust be acknowledged.
14 (c) A certification of trust must state that the trust has
15not been revoked, modified, or amended in any manner that would
16cause the representations contained in the certification of
17trust to be incorrect.
18 (d) A certification of trust need not contain the
19dispositive terms of a trust.
20 (e) A recipient of a certification of trust may require the
21trustee to furnish copies of those excerpts from the original
22trust instrument and later amendments that designate the
23trustee and confer upon the trustee the power to act in the
24pending transaction.
25 (f) A person who acts in reliance upon a certification of
26trust without actual knowledge that the representations

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1contained therein are incorrect is not liable to any person for
2so acting and may assume without inquiry the existence of the
3facts contained in the certification. Knowledge of the trust
4instrument may not be inferred solely from the fact that a copy
5of all or part of the trust instrument is held by the person
6relying upon the certification.
7 (g) A person who in good faith enters into a transaction in
8reliance upon a certification of trust may enforce the
9transaction against the trust property as if the
10representations contained in the certification were correct.
11 (h) A person making a demand for the trust instrument in
12addition to a certification of trust or excerpts is liable for
13damages if the court determines that the person did not act in
14good faith in demanding the trust instrument. A person required
15to examine a complete copy of the trust instrument for purposes
16of complying with applicable federal, state, or local law, a
17person acting in a fiduciary capacity with respect to a trust,
18and the Attorney General's Charitable Trust Bureau are deemed
19to be acting in good faith when demanding a copy of the trust
20instrument. This Section does not modify or limit any
21obligation a trustee may have to furnish a copy of a trust
22instrument to the Attorney General under the Charitable Trust
23Act or the Solicitation for Charity Act.
24 (i) This Section does not limit the right of a person to
25obtain a copy of the trust instrument in a judicial proceeding
26concerning the trust.

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1 (j) A certification of trust may be substantially as
2follows, but nothing in this subsection invalidates or bars the
3use of a certification of trust in any other or different form:
4
CERTIFICATION OF TRUST
5Name of trust:...............................................
6Date trust instrument was executed:..........................
7Tax Identification Number of trust (SSN or EIN):.............
8Name(s) of settlor(s) of trust:..............................
9Name(s) of currently acting trustee(s):......................
10Address(es) of currently acting trustee(s):..................
11.... This trust states that .... of .... cotrustee(s) are
12required to exercise the powers of the trustee.
13.... The cotrustees authorized to sign or otherwise
14authenticate on behalf of the trust are:.....................
15.... There are no cotrustees authorized to sign or otherwise
16authenticate on behalf of the trust.
17Name(s) of successor trustee(s):.............................
18The trustee(s) has (have) the power to (state, synopsize, or
19describe relevant powers):.
20Title to the trust property shall be taken as follows (for
21example, "John Doe and Jane Doe, cotrustees of the Doe Family
22Living Trust, dated January 4, 1999"):.......................
23.... This is an irrevocable trust.
24.... This is a revocable trust. Name(s) of person(s) holding
25power to revoke the trust:...................................
26.... This is an unamendable trust.

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1.... This trust is amendable. Name(s) of person(s) holding
2power to amend the trust:....................................
3I (we) certify that the above-named trust is in full force and
4has not been revoked, modified, or amended in any manner that
5would cause the representations in this Certification of Trust
6to be incorrect.
7IN WITNESS THEREOF, each of the undersigned, being a trustee of
8the above-named trust with the authority to execute this
9Certification of Trust, does hereby execute it this ..... day
10of .........., .......
11Trustee Signature: .............
12Printed Name: ..................
13Trustee Signature: .............
14Printed Name: ..................
15[OPTIONAL:
16State of .................)
17County of ................)
18This instrument was signed and acknowledged before me on
19.........., ...... (date) by (name/s of person/s):.........

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1(Signature of Notary Public):
2............................
3(SEAL)]
4 Section 1014. Reliance on Secretary of Financial and
5Professional Regulation. No trustee or other person is liable
6under this Code for any act done or omitted in good faith in
7conformity with any rule, interpretation, or opinion issued by
8the Secretary of Financial and Professional Regulation,
9notwithstanding that after the act or omission has occurred,
10the rule, opinion, or interpretation upon which reliance is
11placed is amended, rescinded, or determined by judicial or
12other authority to be invalid for any reason.
13
Article 11. Total return trusts.
14 Section 1101. Total return trust defined; trustee duty to
15inform.
16 (a) In this Article, "total return trust" means a trust
17converted in accordance with this Article that the trustee
18shall manage and invest seeking a total return without regard
19to whether the return is from income or appreciation of
20principal.
21 (b) Notwithstanding any other provision of this Article, a
22trustee has no duty to inform beneficiaries about the
23availability of this Article and has no duty to review the

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1trust to determine whether any action should be taken under
2this Article unless requested to do so in writing by a
3qualified beneficiary.
4 Section 1102. Conversion by trustee. A trustee may convert
5a trust to a total return trust as described in this Article if
6all of the following apply:
7 (1) The trust describes the amount that may or must be
8 distributed to a beneficiary by referring to the trust's
9 income, and the trustee determines that conversion to a
10 total return trust will enable the trustee to better carry
11 out the purposes of the trust and the conversion is in the
12 best interests of the beneficiaries;
13 (2) the trustee sends a written notice of the trustee's
14 decision to convert the trust to a total return trust,
15 specifying a prospective effective date for the conversion
16 and including a copy of this Article, to all of the
17 qualified beneficiaries; and
18 (3) no qualified beneficiary objects to the conversion
19 to a total return trust in a writing delivered to the
20 trustee within 60 days after the notice is sent.
21 Section 1103. Conversion by agreement. Conversion to a
22total return trust may be made by agreement between a trustee
23and all qualified beneficiaries. The agreement may include any
24actions a court could properly order under Section 1108 of this

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1Article; however, any distribution percentage determined by
2the agreement may not be less than 3% nor greater than 5%.
3 Section 1104. Conversion or reconversion by court.
4 (a) The trustee may for any reason elect to petition the
5court to order conversion to a total return trust, including
6without limitation the reason that conversion under Section
71102 is unavailable because a beneficiary timely objects to the
8conversion to a total return trust.
9 (b) A beneficiary may request the trustee to convert to a
10total return trust or adjust the distribution percentage. If
11the trustee declines or fails to act within 6 months after
12receiving a written request to do so, the beneficiary may
13petition the court to order the conversion or adjustment.
14 (c) The trustee may petition the court prospectively to
15reconvert from a total return trust or adjust the distribution
16percentage if the trustee determines that the reconversion or
17adjustment will enable the trustee to better carry out the
18purposes of the trust. A beneficiary may request the trustee to
19petition the court prospectively to reconvert from a total
20return trust or adjust the distribution percentage. If the
21trustee declines or fails to act within 6 months after
22receiving a written request to do so, the beneficiary may
23petition the court to order the reconversion or adjustment.
24 (d) In a judicial proceeding under this Section, the
25trustee may, but need not, present the trustee's opinions and

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1reasons (1) for supporting or opposing conversion to (or
2reconversion from or adjustment of the distribution percentage
3of) a total return trust, including whether the trustee
4believes conversion (or reconversion or adjustment of the
5distribution percentage) would enable the trustee to better
6carry out the purposes of the trust, and (2) about any other
7matters relevant to the proposed conversion (or reconversion or
8adjustment of the distribution percentage). A trustee's
9actions in accordance with this Section shall not be deemed
10improper or inconsistent with the trustee's duty of
11impartiality unless the court finds from all the evidence that
12the trustee acted in bad faith.
13 (e) The court shall order conversion to (or reconversion
14prospectively from or adjustment of the distribution
15percentage of) a total return trust if the court determines
16that the conversion (or reconversion or adjustment of the
17distribution percentage) will enable the trustee to better
18carry out the purposes of the trust and the conversion (or
19reconversion or adjustment of the distribution percentage) is
20in the best interests of the beneficiaries.
21 (f) The court may order any of the following actions in a
22proceeding brought by a trustee or a beneficiary under this
23Section:
24 (1) select a distribution percentage other than 4%;
25 (2) average the valuation of the trust's net assets
26 over a period other than 3 years;

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1 (3) reconvert prospectively from or adjust the
2 distribution percentage of a total return trust;
3 (4) direct the distribution of net income (determined
4 as if the trust were not a total return trust) in excess of
5 the distribution amount as to any or all trust assets if
6 the distribution is necessary to preserve a tax benefit; or
7 (5) change or direct any administrative procedure as
8 the court determines necessary or helpful for the proper
9 functioning of the total return trust.
10 (g) Nothing in this Section limits the equitable powers of
11the court to grant other relief.
12 Section 1105. Post conversion. While a trust is a total
13return trust, all of the following apply to the trust:
14 (1) the trustee shall make income distributions in
15 accordance with the trust instrument subject to the
16 provisions of this Article;
17 (2) the term "income" in the trust instrument means an
18 annual amount (the "distribution amount") equal to a
19 percentage (the "distribution percentage") of the net fair
20 market value of the trust's assets, whether the assets are
21 considered income or principal under the Principal and
22 Income Act, averaged over the lesser of:
23 (A) the 3 preceding years; or
24 (B) the period during which the trust has been in
25 existence;

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1 (3) the distribution percentage for any trust
2 converted to a total return trust by a trustee in
3 accordance with Section 1102 shall be 4%;
4 (4) the trustee shall pay to a beneficiary (in the case
5 of an underpayment) and shall recover from a beneficiary
6 (in the case of an overpayment) an amount equal to the
7 difference between the amount properly payable and the
8 amount actually paid, plus interest compounded annually at
9 a rate per annum equal to the distribution percentage in
10 the year or years while the underpayment or overpayment
11 exists; and
12 (5) a change in the method of determining a reasonable
13 current return by converting to a total return trust in
14 accordance with this Article and substituting the
15 distribution amount for net trust accounting income is a
16 proper change in the definition of trust income
17 notwithstanding any contrary provision of the Principal
18 and Income Act, and the distribution amount shall be deemed
19 a reasonable current return that fairly apportions the
20 total return of a total return trust.
21 Section 1106. Administration.
22 (a) As used in this Section, "excluded asset" means an
23asset for which there is no readily available market value and
24that the trustee determines in accordance with subsection (d)
25shall be excluded from the net fair market value of the trust's

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1assets for purposes of determining the distribution amount
2under paragraph (2) of Section 1105.
3 (b) The trustee, in the trustee's discretion, may determine
4any of the following matters in administering a total return
5trust as the trustee from time to time determines necessary or
6helpful for the proper functioning of the trust:
7 (1) the effective date of a conversion to a total
8 return trust;
9 (2) the manner of prorating the distribution amount for
10 a short year in which a beneficiary's interest commences or
11 ceases;
12 (3) whether distributions are made in cash or in kind;
13 (4) the manner of adjusting valuations and
14 calculations of the distribution amount to account for
15 other payments from or contributions to the trust;
16 (5) whether to value the trust's assets annually or
17 more frequently;
18 (6) what valuation dates and how many valuation dates
19 to use;
20 (7) valuation decisions about any asset for which there
21 is no readily available market value, including:
22 (A) how frequently to value such an asset; and
23 (B) whether and how often to engage a professional
24 appraiser to value such an asset;
25 (8) which trust assets are excluded assets; and
26 (9) any other administrative matters as the trustee

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1 determines necessary or helpful for the proper functioning
2 of the total return trust.
3 (c) The trustee shall distribute any net income received
4from excluded assets as provided in the trust instrument.
5 (d) Unless the trustee determines there are compelling
6reasons to the contrary considering all relevant factors
7including the best interests of the beneficiaries, the trustee
8shall treat each asset for which there is no readily available
9market value as an excluded asset. Examples of assets for which
10there is a readily available market value include: cash and
11cash equivalents; stocks, bonds, and other securities and
12instruments for which there is an established market on a stock
13exchange, in an over-the-counter market, or otherwise; and any
14other property that can reasonably be expected to be sold
15within one week of the decision to sell without extraordinary
16efforts by the seller. Examples of assets for which there is no
17readily available market value include: stocks, bonds, and
18other securities and instruments for which there is no
19established market on a stock exchange, in an over-the-counter
20market, or otherwise; real property; tangible personal
21property; and artwork and other collectibles.
22 (e) If tangible personal property or real property is
23possessed or occupied by a beneficiary, the trustee shall not
24limit or restrict any right of the beneficiary to use the
25property in accordance with the trust instrument regardless of
26whether the trustee treats the property as an excluded asset.

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1 Section 1107. Allocations.
2 (a) Expenses, taxes, and other charges that would be
3deducted from income if the trust were not a total return trust
4shall not be deducted from the distribution amount.
5 (b) Unless otherwise provided by the trust instrument, the
6trustee shall fund the distribution amount each year from the
7following sources for that year in the order listed:
8 (1) first from net income (as the term would be
9 determined if the trust were not a total return trust);
10 (2) then from other ordinary income as determined for
11 federal income tax purposes;
12 (3) then from net realized short-term capital gains as
13 determined for federal income tax purposes;
14 (4) then from net realized long-term capital gains as
15 determined for federal income tax purposes;
16 (5) then from trust principal comprised of assets for
17 which there is a readily available market value; and
18 (6) then from other trust principal.
19 Section 1108. Restrictions. Conversion to a total return
20trust does not affect any provision in the trust instrument:
21 (1) directing or authorizing the trustee to distribute
22 principal;
23 (2) directing or authorizing the trustee to distribute
24 a fixed annuity or a fixed fraction of the value of trust

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1 assets;
2 (3) authorizing a beneficiary to withdraw a portion or
3 all of the principal; or
4 (4) in any manner that would diminish an amount
5 permanently set aside for charitable purposes under the
6 trust instrument unless both income and principal are so
7 set aside.
8 Section 1109. Tax limitations.
9 (a) If a particular trustee is a beneficiary of the trust
10and conversion or failure to convert would enhance or diminish
11the beneficial interest of the trustee, or if possession or
12exercise of the conversion power by a particular trustee would
13alone cause any individual to be treated as owner of a part of
14the trust for income tax purposes or cause a part of the trust
15to be included in the gross estate of any individual for estate
16tax purposes, then the particular trustee may not participate
17as a trustee in the exercise of the conversion power except
18that the particular trustee may petition the court under
19subsection (a) of Section 1104 to order conversion in
20accordance with this Article.
21 (b) If the particular trustee has one or more cotrustees to
22whom subsection (a) does not apply, the cotrustee or cotrustees
23may convert the trust to a total return trust in accordance
24with this Article.

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1 Section 1110. Releases. A trustee may irrevocably release
2the power granted by this Article if the trustee reasonably
3believes the release is in the best interests of the trust and
4its beneficiaries. The release may be personal to the releasing
5trustee or may apply generally to some or all subsequent
6trustees, and the release may be for any specified period,
7including a period measured by the life of an individual.
8 Section 1111. Remedies. A trustee who reasonably and in
9good faith takes any action under this Article is not liable to
10any interested person. If a trustee reasonably and in good
11faith takes any action under this Article and an interested
12person opposes the action, the person's exclusive remedy is to
13obtain an order of the court directing the trustee to convert
14the trust to a total return trust, to reconvert from a total
15return trust, to change the distribution percentage, or to
16order any administrative procedures the court determines
17necessary or helpful for the proper functioning of the trust.
18An action by a trustee under this Article is presumed taken or
19omitted reasonably and in good faith unless it is determined by
20the court to have been an abuse of discretion.
21 Section 1112. Application. This Article is available to
22trusts in existence on or after August 22, 2002. This Article
23shall be construed as pertaining to the administration of a
24trust and shall be available to any trust that is administered

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1in Illinois or that is governed by Illinois law with respect to
2the meaning and effect of its terms unless one of the following
3apply:
4 (1) The trust is a trust described in Section
5 642(c)(5), 664(d), 2702(a)(3), or 2702(b) of the Internal
6 Revenue Code.
7 (2) The trust instrument expressly prohibits use of
8 this Article by specific reference to this Article or a
9 prior corresponding law. A provision in the trust
10 instrument in the form: "Neither the provisions of Article
11 11 of the Illinois Trust Code nor any corresponding
12 provision of future law may be used in the administration
13 of this trust" or a similar provision demonstrating that
14 intent is sufficient to preclude the use of this Article.
15 Section 1113. Application to express trusts.
16 (a) In this Section:
17 (1) "Unitrust" means a trust the terms of which require
18 distribution of a unitrust amount, without regard to
19 whether the trust has been converted to a total return
20 trust in accordance with this Article or whether the trust
21 is established by express terms of the trust instrument.
22 (2) "Unitrust amount" means an amount equal to a
23 percentage of a trust's assets that may or must be
24 distributed to one or more beneficiaries annually in
25 accordance with the terms of the trust. The unitrust amount

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1 may be determined by reference to the net fair market value
2 of the trust's assets as of a particular date or as an
3 average determined on a multiple year basis.
4 (b) A unitrust changes the definition of income by
5substituting the unitrust amount for net trust accounting
6income as the method of determining current return and shall be
7given effect notwithstanding any contrary provision of the
8Principal and Income Act. By way of example and not limitation,
9a unitrust amount determined by a percentage of not less than
103% nor greater than 5% is conclusively presumed a reasonable
11current return that fairly apportions the total return of a
12unitrust.
13 (c) Subsection (b) of Section 1107 applies to a unitrust
14except to the extent its trust instrument expressly provides
15otherwise.
16 (d) This Section does not apply to a charitable remainder
17unitrust as defined by Section 664(d) of the Internal Revenue
18Code.
19
Article 12. Trust decanting.
20 Section 1201. Article title. This Article may be referred
21to as the Trust Decanting Law.
22 Section 1202. Definitions. In this Article:
23 (1) "Appointive property" means the property or property

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1interest subject to a power of appointment.
2 (2) "Authorized fiduciary" means:
3 (A) a trustee or other fiduciary, other than a settlor,
4 that has discretion to distribute or direct a trustee to
5 distribute part or all of the principal of the first trust
6 to one or more current beneficiaries;
7 (B) a special fiduciary appointed under Section 1209;
8 or
9 (C) a special-needs fiduciary under Section 1213.
10 (3) "Court" means the court in this State having
11jurisdiction in matters relating to trusts.
12 (4) "Decanting power" or "the decanting power" means the
13power of an authorized fiduciary under this Article to
14distribute property of a first trust to one or more second
15trusts or to modify the terms of the first trust.
16 (5) "Expanded distributive discretion" means a
17discretionary power of distribution that is not limited to an
18ascertainable standard or a reasonably definite standard.
19 (6) "First trust" means a trust over which an authorized
20fiduciary may exercise the decanting power.
21 (7) "First-trust instrument" means the trust instrument
22for a first trust.
23 (8) "Reasonably definite standard" means a clearly
24measurable standard under which a holder of a power of
25distribution is legally accountable within the meaning of
26Section 674(b)(5)(A) of the Internal Revenue Code, as amended,

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1and any applicable regulations.
2 (9) "Record" means information that is inscribed on a
3tangible medium or that is stored in an electronic or other
4medium and is retrievable in perceivable form.
5 (10) "Second trust" means:
6 (A) a first trust after modification under this
7 Article; or
8 (B) a trust to which a distribution of property from a
9 first trust is or may be made under this Article.
10 (11) "Second-trust instrument" means the trust instrument
11for a second trust.
12 Section 1203. Scope.
13 (a) Except as otherwise provided in subsections (b) and
14(c), this Article applies to an express trust that is
15irrevocable or revocable by the settlor only with the consent
16of the trustee or a person holding an adverse interest.
17 (b) This Article does not apply to a trust held solely for
18charitable purposes.
19 (c) Subject to Section 1215, a trust instrument may
20restrict or prohibit exercise of the decanting power.
21 (d) This Article does not limit the power of a trustee,
22powerholder, or other person to distribute or appoint property
23in further trust or to modify a trust under the trust
24instrument, law of this State other than this Article, common
25law, a court order, or a nonjudicial settlement agreement.

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1 (e) This Article does not affect the ability of a settlor
2to provide in a trust instrument for the distribution or
3appointment in further trust of the trust property or for
4modification of the trust instrument.
5 Section 1204. Fiduciary duty.
6 (a) In exercising the decanting power, an authorized
7fiduciary shall act in accordance with its fiduciary duties,
8including the duty to act in accordance with the purposes of
9the first trust.
10 (b) This Article does not create or imply a duty to
11exercise the decanting power or to inform beneficiaries about
12the applicability of this Article.
13 (c) Except as otherwise provided in a first-trust
14instrument, for purposes of this Article and Section 801 of
15this Code, the terms of the first trust are deemed to include
16the decanting power.
17 Section 1205. Application; governing law. This Article
18applies to a trust created before, on, or after the effective
19date of this Code that:
20 (1) has its principal place of administration in this
21 State, including a trust whose principal place of
22 administration has been changed to this State; or
23 (2) provides by its trust instrument that it is
24 governed by the law of this State or is governed by the law

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1 of this State for the purpose of:
2 (A) administration, including administration of a
3 trust whose governing law for purposes of
4 administration has been changed to the law of this
5 State;
6 (B) construction of terms of the trust; or
7 (C) determining the meaning or effect of terms of
8 the trust.
9 Section 1206. Reasonable reliance. A trustee or other
10person that reasonably relies on the validity of a distribution
11of part or all of the property of a trust to another trust, or a
12modification of a trust, under this Article, law of this State
13other than this Article or the law of another jurisdiction is
14not liable to any person for any action or failure to act as a
15result of the reliance.
16 Section 1207. Notice.
17 (a) In this Section, a notice period begins on the day
18notice is given under subsection (c) and ends 59 days after the
19day notice is given.
20 (b) Except as otherwise provided in this Article, an
21authorized fiduciary may exercise the decanting power without
22the consent of any person and without court approval.
23 (c) Except as otherwise provided in subsection (f), an
24authorized fiduciary shall give notice in a record of the

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1intended exercise of the decanting power not later than 60 days
2before the exercise to:
3 (1) each settlor of the first trust, if living or then
4 in existence;
5 (2) each qualified beneficiary of the first trust;
6 (3) each holder of a presently exercisable power of
7 appointment over any part or all of the first trust;
8 (4) each person that currently has the right to remove
9 or replace the authorized fiduciary;
10 (5) each other fiduciary of the first trust;
11 (6) each fiduciary of the second trust; and
12 (7) the Attorney General's Charitable Trust Bureau, if
13 the first trust contains a charitable interest.
14 (d) An authorized fiduciary is not required to give notice
15under subsection (c) to a qualified beneficiary who is a minor
16and has no representative. The authorized fiduciary is not
17required to give notice under subsection (c) to a person that
18is not known to the fiduciary or is known to the fiduciary but
19cannot be located by the fiduciary after reasonable diligence.
20 (e) A notice under subsection (c) must:
21 (1) specify the manner in which the authorized
22 fiduciary intends to exercise the decanting power;
23 (2) specify the proposed effective date for exercise of
24 the power;
25 (3) include a copy of the first-trust instrument; and
26 (4) include a copy of all second-trust instruments.

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1 (f) The decanting power may be exercised before expiration
2of the notice period under subsection (a) if all persons
3entitled to receive notice waive the period in a signed record.
4 (g) The receipt of notice, waiver of the notice period, or
5expiration of the notice period does not affect the right of a
6person to file an application under Section 1209 with the court
7asserting that:
8 (1) an attempted exercise of the decanting power is
9 ineffective because it did not comply with this Article or
10 was an abuse of discretion or breach of fiduciary duty; or
11 (2) Section 1222 applies to the exercise of the
12 decanting power.
13 (h) An exercise of the decanting power is not ineffective
14because of the failure to give notice to one or more persons
15under subsection (c) if the authorized fiduciary acted with
16reasonable care to comply with subsection (c).
17 Section 1208. (Reserved).
18 Section 1209. Court involvement.
19 (a) On application of an authorized fiduciary, a person
20entitled to notice under Section 1207(c), a beneficiary, or
21with respect to a charitable interest the Attorney General's
22Charitable Trust Bureau or any other person that has standing
23to enforce the charitable interest, the court may:
24 (1) provide instructions to the authorized fiduciary

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1 regarding whether a proposed exercise of the decanting
2 power is permitted under this Article and consistent with
3 the fiduciary duties of the authorized fiduciary;
4 (2) appoint a special fiduciary and authorize the
5 special fiduciary to determine whether the decanting power
6 should be exercised under this Article and to exercise the
7 decanting power;
8 (3) approve an exercise of the decanting power;
9 (4) determine that a proposed or attempted exercise of
10 the decanting power is ineffective because:
11 (A) after applying Section 1222, the proposed or
12 attempted exercise does not or did not comply with this
13 Article; or
14 (B) the proposed or attempted exercise would be or
15 was an abuse of the fiduciary's discretion or a breach
16 of fiduciary duty;
17 (5) determine the extent to which Section 1222 applies
18 to a prior exercise of the decanting power;
19 (6) provide instructions to the trustee regarding the
20 application of Section 1222 to a prior exercise of the
21 decanting power; or
22 (7) order other appropriate relief to carry out the
23 purposes of this Article.
24 (b) On application of an authorized fiduciary, the court
25may approve:
26 (1) an increase in the fiduciary's compensation under

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1 Section 1216; or
2 (2) a modification under Section 1218 of a provision
3 granting a person the right to remove or replace the
4 fiduciary.
5 Section 1210. Formalities. An exercise of the decanting
6power must be made in a record signed by an authorized
7fiduciary. The signed record must, directly or by reference to
8the notice required by Section 1207, identify the first trust
9and the second trust or trusts and state the property of the
10first trust being distributed to each second trust and the
11property, if any, that remains in the first trust.
12 Section 1211. Decanting power under expanded distributive
13discretion.
14 (a) In this Section:
15 (1) "Noncontingent" right means a right that is not
16 subject to the exercise of discretion or the occurrence of
17 a specified event that is not certain to occur. The term
18 does not include a right held by a beneficiary if any
19 person has discretion to distribute property subject to the
20 right of any person other than the beneficiary or the
21 beneficiary's estate.
22 (2) "Presumptive remainder beneficiary" means a
23 qualified beneficiary other than a current beneficiary.
24 (3) "Successor beneficiary" means a beneficiary that

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1 on the date the beneficiary's qualification is determined
2 is not a qualified beneficiary. The term does not include a
3 person that is a beneficiary only because the person holds
4 a nongeneral power of appointment.
5 (4) "Vested interest" means:
6 (A) a right to a mandatory distribution that is a
7 noncontingent right as of the date of the exercise of
8 the decanting power;
9 (B) a current and noncontingent right, annually or
10 more frequently, to a mandatory distribution of
11 income, a specified dollar amount, or a percentage of
12 value of some or all of the trust property;
13 (C) a current and noncontingent right, annually or
14 more frequently, to withdraw income, a specified
15 dollar amount, or a percentage of value of some or all
16 of the trust property;
17 (D) a presently exercisable general power of
18 appointment; or
19 (E) a right to receive an ascertainable part of the
20 trust property on the trust's termination that is not
21 subject to the exercise of discretion or to the
22 occurrence of a specified event that is not certain to
23 occur.
24 (b) Subject to subsection (c) and Section 1214, an
25authorized fiduciary that has expanded distributive discretion
26to distribute the principal of a first trust to one or more

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1current beneficiaries may exercise the decanting power over the
2principal of the first trust.
3 (c) Subject to Section 1213, in an exercise of the
4decanting power under this Section, a second trust may not:
5 (1) include as a current beneficiary a person that is
6 not a current beneficiary of the first trust, except as
7 otherwise provided in subsection (d);
8 (2) include as a presumptive remainder beneficiary or
9 successor beneficiary a person that is not a current
10 beneficiary, presumptive remainder beneficiary, or
11 successor beneficiary of the first trust, except as
12 otherwise provided in subsection (d); or
13 (3) reduce or eliminate a vested interest.
14 (d) Subject to subsection (c)(3) and Section 1214, in an
15exercise of the decanting power under this Section, a second
16trust may be a trust created or administered under the law of
17any jurisdiction and may:
18 (1) retain a power of appointment granted in the first
19 trust;
20 (2) omit a power of appointment granted in the first
21 trust, other than a presently exercisable general power of
22 appointment;
23 (3) create or modify a power of appointment if the
24 powerholder is a current beneficiary of the first trust and
25 the authorized fiduciary has expanded distributive
26 discretion to distribute principal to the beneficiary; and

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1 (4) create or modify a power of appointment if the
2 powerholder is a presumptive remainder beneficiary or
3 successor beneficiary of the first trust, but the exercise
4 of the power may take effect only after the powerholder
5 becomes, or would have become if then living, a current
6 beneficiary.
7 (e) A power of appointment described in subsection (d)(1)
8through (4) of subsection (d) may be general or nongeneral. The
9class of permissible appointees in favor of which the power may
10be exercised may be broader than or different from the
11beneficiaries of the first trust.
12 (f) If an authorized fiduciary has expanded distributive
13discretion to distribute part but not all of the principal of a
14first trust, the fiduciary may exercise the decanting power
15under this Section over that part of the principal over which
16the authorized fiduciary has expanded distributive discretion.
17 Section 1212. Decanting power under limited distributive
18discretion.
19 (a) In this Section, "limited distributive discretion"
20means a discretionary power of distribution that is limited to
21an ascertainable standard or a reasonably definite standard.
22 (b) An authorized fiduciary that has limited distributive
23discretion over the principal of the first trust for the
24benefit of one or more current beneficiaries may exercise the
25decanting power over the principal of the first trust.

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1 (c) Under this Section and subject to Section 1214, a
2second trust may be created or administered under the law of
3any jurisdiction. Under this Section, the second trusts, in the
4aggregate, must grant each beneficiary of the first trust
5beneficial interests that are substantially similar to the
6beneficial interests of the beneficiary in the first trust.
7 (d) A power to make a distribution under a second trust for
8the benefit of a beneficiary who is an individual is
9substantially similar to a power under the first trust to make
10a distribution directly to the beneficiary. A distribution is
11for the benefit of a beneficiary if:
12 (1) the distribution is applied for the benefit of the
13 beneficiary;
14 (2) the beneficiary is incapacitated or in the opinion
15 of the trustee is unable to manage property or business
16 affairs, and the distribution is made as permitted under
17 this Code; or
18 (3) the distribution is made as permitted under the
19 terms of the first-trust instrument and the second-trust
20 instrument for the benefit of the beneficiary.
21 (e) If an authorized fiduciary has limited distributive
22discretion over part but not all of the principal of a first
23trust, the fiduciary may exercise the decanting power under
24this Section over that part of the principal over which the
25authorized fiduciary has limited distributive discretion.

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1 Section 1213. Trust for beneficiary with disability.
2 (a) In this Section:
3 (1) "Beneficiary with a disability" means a
4 beneficiary of the first trust who the special-needs
5 fiduciary believes may qualify for governmental benefits
6 based on disability, whether or not the beneficiary
7 currently receives those benefits or is an individual who
8 has been adjudicated incompetent.
9 (2) "Best interests" of a beneficiary with a disability
10 include, without limitation, consideration of the
11 financial impact to the family of the beneficiary who has a
12 disability.
13 (3) "Governmental benefits" means financial aid or
14 services from a state, federal, or other public agency.
15 (4) "Special-needs fiduciary" means, with respect to a
16 trust that has a beneficiary with a disability:
17 (A) a trustee or other fiduciary, other than a
18 settlor, that has discretion to distribute part or all
19 of the principal of a first trust to one or more
20 current beneficiaries;
21 (B) if no trustee or fiduciary has discretion under
22 subparagraph (A), a trustee or other fiduciary, other
23 than a settlor, that has discretion to distribute part
24 or all of the income of the first trust to one or more
25 current beneficiaries; or
26 (C) if no trustee or fiduciary has discretion under

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1 subparagraphs (A) and (B), a trustee or other
2 fiduciary, other than a settlor, that is required to
3 distribute part or all of the income or principal of
4 the first trust to one or more current beneficiaries.
5 (5) "Special-needs trust" means a trust the trustee
6 believes would not be considered a resource for purposes of
7 determining whether the beneficiary with a disability is
8 eligible for governmental benefits.
9 (b) A special-needs fiduciary may exercise the decanting
10power under Section 1211 over the principal of a first trust as
11if the fiduciary had authority to distribute principal to a
12beneficiary with a disability subject to expanded distributive
13discretion if:
14 (1) a second trust is a special-needs trust that
15 benefits the beneficiary with a disability; and
16 (2) the special-needs fiduciary determines that
17 exercise of the decanting power will further the purposes
18 of the first trust or the best interests of the beneficiary
19 with a disability.
20 (c) In an exercise of the decanting power under this
21Section, the following rules apply:
22 (1) If the first trust was created by the beneficiary
23 with a disability, or to the extent the first trust was
24 funded by the beneficiary with a disability, then
25 notwithstanding paragraph (2) of subsection (c) of Section
26 1211, the interest in the second trust of a beneficiary

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1 with a disability may:
2 (A) be a pooled trust as defined by Medicaid law
3 for the benefit of the beneficiary with a disability
4 under 42 U.S.C. 1396p(d)(4)(C), as amended; or
5 (B) contain payback provisions complying with
6 reimbursement requirements of Medicaid law under 42
7 U.S.C. 1396p(d)(4)(A), as amended.
8 (2) Paragraph (3) of subsection (c) of Section 1211
9 does not apply to the interests of the beneficiary with a
10 disability.
11 (3) Except as affected by any change to the interests
12 of the beneficiary with a disability, the second trusts, in
13 the aggregate, must grant each other beneficiary of the
14 first trust beneficial interests in the second trusts that
15 are substantially similar to the beneficiary's beneficial
16 interests in the first trust.
17 Section 1214. Protection of charitable interests.
18 (a) In this Section:
19 (1) "Determinable charitable interest" means a
20 charitable interest that is a right to a mandatory
21 distribution currently, periodically, on the occurrence of
22 a specified event, or after the passage of a specified time
23 and that is unconditional or that will in all events be
24 held for charitable purposes.
25 (2) "Unconditional" means not subject to the

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1 occurrence of a specified event that is not certain to
2 occur, other than a requirement in a trust instrument that
3 a charitable organization be in existence or qualify under
4 a particular provision of the Internal Revenue Code on the
5 date of the distribution if the charitable organization
6 meets the requirement on the date of determination.
7 (b) If a first trust contains a determinable charitable
8interest, the Attorney General's Charitable Trust Bureau has
9the rights of a qualified beneficiary and may represent and
10bind the charitable interest.
11 (c) If a first trust contains a charitable interest, the
12second trusts in the aggregate may not:
13 (1) diminish the charitable interest;
14 (2) diminish the interest of an identified charitable
15 organization that holds the charitable interest;
16 (3) alter any charitable purpose stated in the
17 first-trust instrument; or
18 (4) alter any condition or restriction related to the
19 charitable interest.
20 (d) If there are 2 or more second trusts, the second trusts
21shall be treated as one trust for purposes of determining
22whether the exercise of the decanting power diminishes the
23charitable interest or diminishes the interest of an identified
24charitable organization for purposes of subsection (c).
25 (e) If a first trust contains a determinable charitable
26interest, the second trusts that include charitable interests

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1pursuant to subsection (c) must be administered under the law
2of this State unless:
3 (1) the Attorney General's Charitable Trust Bureau,
4 after receiving notice under Section 1207, fails to object
5 in a signed record delivered to the authorized fiduciary
6 within the notice period;
7 (2) the Attorney General's Charitable Trust Bureau
8 consents in a signed record to the second trusts being
9 administered under the law of another jurisdiction; or
10 (3) the court approves the exercise of the decanting
11 power.
12 (f) This Article does not limit the powers and duties of
13the Attorney General's Charitable Trust Bureau under Illinois
14law.
15 Section 1215. Trust limitation on decanting.
16 (a) An authorized fiduciary may not exercise the decanting
17power to the extent the first-trust instrument expressly
18prohibits exercise of:
19 (1) the decanting power; or
20 (2) a power granted by state law to the fiduciary to
21 distribute part or all of the principal of the trust to
22 another trust or to modify the trust.
23 (b) Exercise of the decanting power is subject to any
24restriction in the first-trust instrument that expressly
25applies to exercise of:

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1 (1) the decanting power; or
2 (2) a power granted by state law to a fiduciary to
3 distribute part or all of the principal of the trust to
4 another trust or to modify the trust.
5 (c) A general prohibition of the amendment or revocation of
6a first trust, a spendthrift clause, or a clause restraining
7the voluntary or involuntary transfer of a beneficiary's
8interest does not preclude exercise of the decanting power.
9 (d) Subject to subsections (a) and (b), an authorized
10fiduciary may exercise the decanting power under this Article
11even if the first-trust instrument permits the authorized
12fiduciary or another person to modify the first-trust
13instrument or to distribute part or all of the principal of the
14first trust to another trust.
15 (e) If a first-trust instrument contains an express
16prohibition described in subsection (a) or an express
17restriction described in subsection (b), that provision must be
18included in the second-trust instrument.
19 Section 1216. Change in compensation.
20 (a) If a first-trust instrument specifies an authorized
21fiduciary's compensation, the fiduciary may not exercise the
22decanting power to increase the fiduciary's compensation
23beyond the specified compensation unless:
24 (1) all qualified beneficiaries of the second trust
25 consent to the increase in a signed record; or

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1 (2) the increase is approved by the court.
2 (b) If a first-trust instrument does not specify an
3authorized fiduciary's compensation, the fiduciary may not
4exercise the decanting power to increase the fiduciary's
5compensation above the compensation permitted by Section 708
6unless:
7 (1) all qualified beneficiaries of the second trust
8 consent to the increase in a signed record; or
9 (2) the increase is approved by the court.
10 (c) A change in an authorized fiduciary's compensation that
11is incidental to other changes made by the exercise of the
12decanting power is not an increase in the fiduciary's
13compensation for purposes of subsections (a) and (b).
14 Section 1217. Relief from liability and indemnification.
15 (a) Except as otherwise provided in this Section, a
16second-trust instrument may not relieve an authorized
17fiduciary from liability for breach of trust to a greater
18extent than the first-trust instrument.
19 (b) A second-trust instrument may provide for
20indemnification of an authorized fiduciary of the first trust
21or another person acting in a fiduciary capacity under the
22first trust for any liability or claim that would have been
23payable from the first trust if the decanting power had not
24been exercised.
25 (c) A second-trust instrument may not reduce fiduciary

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1liability in the aggregate.
2 (d) Subject to subsection (c), a second-trust instrument
3may divide and reallocate fiduciary powers among fiduciaries,
4including one or more trustees, distribution advisors,
5investment advisors, trust protectors, or other persons, and
6relieve a fiduciary from liability for an act or failure to act
7of another fiduciary as permitted by law of this State other
8than this Article.
9 Section 1218. Removal or replacement of authorized
10fiduciary. An authorized fiduciary may not exercise the
11decanting power to modify a provision in the first-trust
12instrument granting another person power to remove or replace
13the fiduciary unless:
14 (1) the person holding the power consents to the
15 modification in a signed record and the modification
16 applies only to the person;
17 (2) the person holding the power and the qualified
18 beneficiaries of the second trust consent to the
19 modification in a signed record and the modification grants
20 a substantially similar power to another person; or
21 (3) the court approves the modification and the
22 modification grants a substantially similar power to
23 another person.
24 Section 1219. Tax-related limitations.

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1 (a) In this Section:
2 (1) "Grantor trust" means a trust as to which a settlor
3 of a first trust is considered the owner under Sections 671
4 through 677 of the Internal Revenue Code or Section 679 of
5 the Internal Revenue Code.
6 (2) "Nongrantor trust" means a trust that is not a
7 grantor trust.
8 (3) "Qualified benefits property" means property
9 subject to the minimum distribution requirements of
10 Section 401(a)(9) of the Internal Revenue Code, and any
11 applicable regulations, or to any similar requirements
12 that refer to Section 401(a)(9) of the Internal Revenue
13 Code or the regulations.
14 (b) An exercise of the decanting power is subject to the
15following limitations:
16 (1) If a first trust contains property that qualified,
17 or would have qualified but for provisions of this Article
18 other than this Section, for a marital deduction for
19 purposes of the gift or estate tax under the Internal
20 Revenue Code or a state gift, estate, or inheritance tax,
21 the second-trust instrument must not include or omit any
22 term that, if included in or omitted from the trust
23 instrument for the trust to which the property was
24 transferred, would have prevented the transfer from
25 qualifying for the deduction, or would have reduced the
26 amount of the deduction, under the same provisions of the

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1 Internal Revenue Code or state law under which the transfer
2 qualified.
3 (2) If the first trust contains property that
4 qualified, or would have qualified but for provisions of
5 this Article other than this Section, for a charitable
6 deduction for purposes of the income, gift, or estate tax
7 under the Internal Revenue Code or a state income, gift,
8 estate, or inheritance tax, the second-trust instrument
9 must not include or omit any term that, if included in or
10 omitted from the trust instrument for the trust to which
11 the property was transferred, would have prevented the
12 transfer from qualifying for the deduction, or would have
13 reduced the amount of the deduction, under the same
14 provisions of the Internal Revenue Code or state law under
15 which the transfer qualified.
16 (3) If the first trust contains property that
17 qualified, or would have qualified but for provisions of
18 this Article other than this Section, for the exclusion
19 from the gift tax described in Section 2503(b) of the
20 Internal Revenue Code, the second-trust instrument must
21 not include or omit a term that, if included in or omitted
22 from the trust instrument for the trust to which the
23 property was transferred, would have prevented the
24 transfer from qualifying under the same provision of
25 Section 2503 of the Internal Revenue Code. If the first
26 trust contains property that qualified, or would have

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1 qualified but for provisions of this Article other than
2 this Section, for the exclusion from the gift tax described
3 in Section 2503(b) of the Internal Revenue Code, by
4 application of Section 2503(c) of the Internal Revenue
5 Code, the second-trust instrument must not include or omit
6 a term that, if included or omitted from the trust
7 instrument for the trust to which the property was
8 transferred, would have prevented the transfer from
9 qualifying under Section 2503(c) of the Internal Revenue
10 Code.
11 (4) If the property of the first trust includes shares
12 of stock in an S corporation, as defined in Section 1361 of
13 the Internal Revenue Code and the first trust is, or but
14 for provisions of this Article other than this Section
15 would be, a permitted shareholder under any provision of
16 Section 1361 of the Internal Revenue Code, an authorized
17 fiduciary may exercise the power with respect to part or
18 all of the S-corporation stock only if any second trust
19 receiving the stock is a permitted shareholder under
20 Section 1361(c)(2) of the Internal Revenue Code. If the
21 property of the first trust includes shares of stock in an
22 S corporation and the first trust is, or but for provisions
23 of this Article other than this Section, would be, a
24 qualified subchapter-S trust within the meaning of Section
25 1361(d) of the Internal Revenue Code, the second-trust
26 instrument must not include or omit a term that prevents

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1 the second trust from qualifying as a qualified
2 subchapter-S trust.
3 (5) If the first trust contains property that
4 qualified, or would have qualified but for provisions of
5 this Article other than this Section, for a zero inclusion
6 ratio for purposes of the generation-skipping transfer tax
7 under Section 2642(c) of the Internal Revenue Code the
8 second-trust instrument must not include or omit a term
9 that, if included in or omitted from the first-trust
10 instrument, would have prevented the transfer to the first
11 trust from qualifying for a zero inclusion ratio under
12 Section 2642(a) of the Internal Revenue Code.
13 (6) If the first trust is directly or indirectly the
14 beneficiary of qualified benefits property, the
15 second-trust instrument may not include or omit any term
16 that, if included in or omitted from the first-trust
17 instrument, would have increased the minimum distributions
18 required with respect to the qualified benefits property
19 under Section 401(a)(9) of the Internal Revenue Code and
20 any applicable regulations, or any similar requirements
21 that refer to Section 401(a)(9) of the Internal Revenue
22 Code or the regulations. If an attempted exercise of the
23 decanting power violates the preceding sentence, the
24 trustee is deemed to have held the qualified benefits
25 property and any reinvested distributions of the property
26 as a separate share from the date of the exercise of the

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1 power and Section 1222 applies to the separate share.
2 (7) If the first trust qualifies as a grantor trust
3 because of the application of Section 672(f)(2)(A) of the
4 Internal Revenue Code the second trust may not include or
5 omit a term that, if included in or omitted from the
6 first-trust instrument, would have prevented the first
7 trust from qualifying under Section 672(f)(2)(A) of the
8 Internal Revenue Code.
9 (8) In this paragraph (8), "tax benefit" means a
10 federal or state tax deduction, exemption, exclusion, or
11 other benefit not otherwise listed in this Section, except
12 for a benefit arising from being a grantor trust. Subject
13 to paragraph (9) of this subsection (b), a second-trust
14 instrument may not include or omit a term that, if included
15 in or omitted from the first-trust instrument, would have
16 prevented qualification for a tax benefit if:
17 (A) the first-trust instrument expressly indicates
18 an intent to qualify for the benefit or the first-trust
19 instrument clearly is designed to enable the first
20 trust to qualify for the benefit; and
21 (B) the transfer of property held by the first
22 trust or the first trust qualified, or but for
23 provisions of this Article other than this Section,
24 would have qualified for the tax benefit.
25 (9) Subject to paragraph (4) of this subsection (b):
26 (A) except as otherwise provided in paragraph (7)

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1 of this subsection (b), the second trust may be a
2 nongrantor trust, even if the first trust is a grantor
3 trust; and
4 (B) except as otherwise provided in paragraph (10)
5 of this subsection (b), the second trust may be a
6 grantor trust, even if the first trust is a nongrantor
7 trust.
8 (10) An authorized fiduciary may not exercise the
9 decanting power if a settlor objects in a signed record
10 delivered to the fiduciary within the notice period and:
11 (A) the first trust and second trusts are both
12 grantor trusts, in whole or in part, the first trust
13 grants the settlor or another person the power to cause
14 the second trust to cease to be a grantor trust, and
15 the second trust does not grant an equivalent power to
16 the settlor or other person; or
17 (B) the first trust is a nongrantor trust and the
18 second trust is a grantor trust, in whole or in part,
19 with respect to the settlor, unless:
20 (i) the settlor has the power at all times to
21 cause the second trust to cease to be a grantor
22 trust; or
23 (ii) the first-trust instrument contains a
24 provision granting the settlor or another person a
25 power that would cause the first trust to cease to
26 be a grantor trust and the second-trust instrument

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1 contains the same provision.
2 Section 1220. Duration of second trust.
3 (a) Subject to subsection (b), a second trust may have a
4duration that is the same as or different from the duration of
5the first trust.
6 (b) To the extent that property of a second trust is
7attributable to property of the first trust, the second trust
8is subject to any rules governing maximum perpetuity,
9accumulation, or suspension of the power of alienation
10applicable to property of the first trust.
11 Section 1221. Need to distribute not required. An
12authorized fiduciary may exercise the decanting power whether
13or not under the first trust's discretionary distribution
14standard the fiduciary would have made or could have been
15compelled to make a discretionary distribution of principal at
16the time of the exercise.
17 Section 1222. Savings provision.
18 (a) If exercise of the decanting power would be effective
19under this Article except that the second-trust instrument in
20part does not comply with this Article, the exercise of the
21power is effective and the following rules apply to the
22principal of the first trust subject to the exercise of the
23power:

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1 (1) A provision in the second-trust instrument that is
2 not permitted under this Article is void to the extent
3 necessary to comply with this Article.
4 (2) A provision required by this Article to be in the
5 second-trust instrument that is not contained in the
6 instrument is deemed to be included in the instrument to
7 the extent necessary to comply with this Article.
8 (b) If a trustee or other fiduciary of a second trust
9discovers that subsection (a) applies to a prior exercise of
10the decanting power, the fiduciary shall take such appropriate
11corrective action as is consistent with the fiduciary's duties.
12 Section 1223. Trust for care of animal.
13 (a) In this Section:
14 (1) "Animal trust" means a trust or an interest in a
15 trust created to provide for the care of one or more
16 designated domestic or pet animals.
17 (2) "Protector" means a person described in paragraph
18 (3) of subsection (b) of Section 408.
19 (b) The decanting power may be exercised over an animal
20trust that has a protector to the extent the trust could be
21decanted under this Article as if each animal that benefits
22from the trust were an individual, if the protector consents in
23a signed record to the exercise of the decanting power.
24 (c) A protector for an animal has the rights under this
25Article of a qualified beneficiary.

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1 (d) Notwithstanding any other provision of this Article, if
2a first trust is an animal trust, in an exercise of the
3decanting power, the second trust must provide that trust
4property may be applied only to its intended purpose for the
5period the first trust benefitted the animal.
6 Section 1224. (Reserved).
7 Section 1225. Settlor.
8 (a) For purposes of the laws of this State other than this
9Article and subject to subsection (b), a settlor of a first
10trust is deemed to be the settlor of the second trust with
11respect to the portion of the principal of the first trust
12subject to the exercise of the decanting power.
13 (b) In determining settlor intent with respect to a second
14trust, the intent of a settlor of the first trust, the intent
15of a settlor of the second trust, and the intent of the
16authorized fiduciary may be considered.
17 Section 1226. Later-discovered property.
18 (a) Except as otherwise provided in subsection (c), if
19exercise of the decanting power was intended to distribute all
20the principal of the first trust to one or more second trusts,
21later-discovered property otherwise belonging to the first
22trust and property paid to or acquired by the first trust after
23the exercise of the power is part of the trust estate of the

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1second trust.
2 (b) Except as otherwise provided in subsection (c), if
3exercise of the decanting power was intended to distribute less
4than all the principal of the first trust to one or more second
5trusts, later-discovered property belonging to the first trust
6or property paid to or acquired by the first trust after
7exercise of the decanting power remains part of the trust
8estate of the first trust.
9 (c) An authorized fiduciary may provide in an exercise of
10the decanting power or by the terms of a second trust for
11disposition of later-discovered property belonging to the
12first trust or property paid to or acquired by the first trust
13after exercise of the decanting power.
14 Section 1227. Obligations. A debt, liability, or other
15obligation enforceable against property of a first trust is
16enforceable to the same extent against that property when held
17by the second trust after exercise of the decanting power.
18
Article 13. Uniform Powers of Appointment Act.
19 Section 1301. Article title. This Article may be referred
20to as the Uniform Powers of Appointment Act.
21 Section 1302. Definitions. In this Article:
22 (1) "Appointee" means a person to which a powerholder makes

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1an appointment of appointive property.
2 (2) "Appointive property" means the property or property
3interest subject to a power of appointment.
4 (3) "Blanket-exercise clause" means a clause in an
5instrument that exercises a power of appointment and is not a
6specific-exercise clause. The term includes a clause that:
7 (A) expressly uses the words "any power" in exercising
8 any power of appointment the powerholder has;
9 (B) expressly uses the words "any property" in
10 appointing any property over which the powerholder has a
11 power of appointment; or
12 (C) disposes of all property subject to disposition by
13 the powerholder.
14 (4) "Exclusionary power of appointment" means a power of
15appointment exercisable in favor of any one or more of the
16permissible appointees to the exclusion of the other
17permissible appointees.
18 (5) "Gift-in-default clause" means a clause identifying a
19taker in default of appointment.
20 (6) "Impermissible appointee" means a person that is not a
21permissible appointee.
22 (7) "Instrument" means a writing.
23 (8) "Permissible appointee" means a person in whose favor a
24powerholder may exercise a power of appointment.
25 (9) "Powerholder" means a person in which a donor creates a
26power of appointment.

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1 (10) "Specific-exercise clause" means a clause in an
2instrument that specifically refers to and exercises a
3particular power of appointment.
4 (11) "Taker in default of appointment" means a person that
5takes part or all of the appointive property to the extent the
6powerholder does not effectively exercise the power of
7appointment.
8 Section 1303. Governing law. Unless the terms of the
9instrument creating a power of appointment manifest a contrary
10intent:
11 (1) the creation, revocation, or amendment of the power is
12governed by the law of the donor's domicile at the relevant
13time; and
14 (2) the exercise, release, or disclaimer of the power, or
15the revocation or amendment of the exercise, release, or
16disclaimer of the power, is governed by the law of the
17powerholder's domicile at the relevant time.
18 Section 1304. Common law and principles of equity. The
19common law and principles of equity supplement this Article,
20except to the extent modified by this Article or law of this
21State other than this Article.
22 Section 1305. Creation of power of appointment.
23 (a) A power of appointment is created only if:

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1 (1) the instrument creating the power:
2 (A) is valid under applicable law; and
3 (B) except as otherwise provided in subsection
4 (b), transfers the appointive property; and
5 (2) the terms of the instrument creating the power
6 manifest the donor's intent to create, in a powerholder, a
7 power of appointment over the appointive property
8 exercisable in favor of a permissible appointee.
9 (b) Subdivision (a)(1)(B) of this Section does not apply to
10the creation of a power of appointment by the exercise of a
11power of appointment.
12 (c) A power of appointment may not be created in a deceased
13individual.
14 (d) Subject to an applicable rule against perpetuities, a
15power of appointment may be created in an unborn or
16unascertained powerholder.
17 Section 1306. Nontransferability. A powerholder may not
18transfer a power of appointment. If the powerholder dies
19without exercising or releasing the power, the power lapses.
20 Section 1307. Presumption of unlimited authority. Subject
21to Section 1309, and unless the terms of the instrument
22creating a power of appointment manifest a contrary intent, the
23power is:
24 (1) presently exercisable;

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1 (2) exclusionary; and
2 (3) except as otherwise provided in Section 1308,
3 general.
4 Section 1308. Exception to presumption of unlimited
5authority. Unless the terms of the instrument creating a power
6of appointment manifest a contrary intent, the power is
7nongeneral if:
8 (1) the power is exercisable only at the powerholder's
9 death; and
10 (2) the permissible appointees of the power are a
11 defined and limited class that does not include the
12 powerholder's estate, the powerholder's creditors, or the
13 creditors of the powerholder's estate.
14 Section 1309. Rules of classification.
15 (a) In this Section, "adverse party" means a person with a
16substantial beneficial interest in property that would be
17affected adversely by a powerholder's exercise or nonexercise
18of a power of appointment in favor of the powerholder, the
19powerholder's estate, a creditor of the powerholder, or a
20creditor of the powerholder's estate.
21 (b) If a powerholder may exercise a power of appointment
22only with the consent or joinder of an adverse party, the power
23is nongeneral.
24 (c) If the permissible appointees of a power of appointment

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1are not defined and limited, the power is exclusionary.
2 Section 1310. Power to revoke or amend. A donor may revoke
3or amend a power of appointment only to the extent that:
4 (1) the instrument creating the power is revocable by
5 the donor; or
6 (2) the donor reserves a power of revocation or
7 amendment in the instrument creating the power of
8 appointment.
9 Section 1311. Requisites for exercise of power of
10appointment. A power of appointment is exercised only:
11 (1) if the instrument exercising the power is valid
12 under applicable law;
13 (2) if the terms of the instrument exercising the
14 power:
15 (A) manifest the powerholder's intent to exercise
16 the power; and
17 (B) subject to Section 1314, satisfy the
18 requirements of exercise, if any, imposed by the donor;
19 and
20 (3) to the extent the appointment is a permissible
21 exercise of the power.
22 Section 1312. Intent to exercise: determining intent from
23residuary clause.

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1 (a) In this Section:
2 (1) "Residuary clause" does not include a residuary
3 clause containing a blanket-exercise clause or a
4 specific-exercise clause.
5 (2) "Will" includes a codicil and a testamentary
6 instrument that revises another will.
7 (b) A residuary clause in a powerholder's will, or a
8comparable clause in the powerholder's revocable trust,
9manifests the powerholder's intent to exercise a power of
10appointment only if:
11 (1) the terms of the instrument containing the
12 residuary clause do not manifest a contrary intent;
13 (2) the power is a general power exercisable in favor
14 of the powerholder's estate;
15 (3) there is no gift-in-default clause or it is
16 ineffective; and
17 (4) the powerholder did not release the power.
18 Section 1313. Intent to exercise: after-acquired power.
19Unless the terms of the instrument exercising a power of
20appointment manifest a contrary intent:
21 (1) except as otherwise provided in paragraph (2), a
22 blanket-exercise clause extends to a power acquired by the
23 powerholder after executing the instrument containing the
24 clause; and
25 (2) if the powerholder is also the donor of the power,

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1 the clause does not extend to the power unless there is no
2 gift-in-default clause or it is ineffective.
3 Section 1314. Substantial compliance with donor-imposed
4formal requirement. A powerholder's substantial compliance
5with a formal requirement of an appointment imposed by the
6donor, including a requirement that the instrument exercising
7the power of appointment make reference or specific reference
8to the power, is sufficient if:
9 (1) the powerholder knows of and intends to exercise
10 the power; and
11 (2) the powerholder's manner of attempted exercise of
12 the power does not impair a material purpose of the donor
13 in imposing the requirement.
14 Section 1315. Permissible appointment.
15 (a) A powerholder of a general power of appointment that
16permits appointment to the powerholder or the powerholder's
17estate may make any appointment, including an appointment in
18trust or creating a new power of appointment, that the
19powerholder could make in disposing of the powerholder's own
20property.
21 (b) A powerholder of a general power of appointment that
22permits appointment only to the creditors of the powerholder or
23of the powerholder's estate is restricted to appointing to
24those creditors.

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1 (c) Unless the terms of the instrument creating a power of
2appointment manifest a contrary intent, the powerholder of a
3nongeneral power may:
4 (1) make an appointment in any form, with any
5 conditions and limitations, including an appointment in
6 trust to any trustee, in favor of a permissible appointee;
7 (2) create a general or nongeneral power in a
8 permissible appointee that may be exercisable in favor of
9 persons other than permissible appointees of the original
10 nongeneral power; or
11 (3) create a nongeneral power in any person to appoint
12 to one or more of the permissible appointees of the
13 original nongeneral power.
14 Section 1316. Appointment to deceased appointee. Subject
15to Section 4-11 of the Probate Act of 1975, an appointment to a
16deceased appointee is ineffective.
17 Section 1317. Impermissible appointment.
18 (a) Except as otherwise provided in Section 1316, an
19exercise of a power of appointment in favor of an impermissible
20appointee is ineffective.
21 (b) An exercise of a power of appointment in favor of a
22permissible appointee is ineffective to the extent the
23appointment is a fraud on the power.

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1 Section 1318. Selective allocation doctrine. If a
2powerholder exercises a power of appointment in a disposition
3that also disposes of property the powerholder owns, the owned
4property and the appointive property must be allocated in the
5permissible manner that best carries out the powerholder's
6intent.
7 Section 1319. Capture doctrine: disposition of
8ineffectively appointed property under general power. To the
9extent a powerholder of a general power of appointment, other
10than a power to revoke, amend, or withdraw property from a
11trust, makes an ineffective appointment:
12 (1) the gift-in-default clause controls the
13 disposition of the ineffectively appointed property; or
14 (2) if there is no gift-in-default clause or to the
15 extent the clause is ineffective, the ineffectively
16 appointed property:
17 (A) passes to:
18 (i) the powerholder if the powerholder is a
19 permissible appointee and living; or
20 (ii) if the powerholder is an impermissible
21 appointee or not living, the powerholder's estate
22 if the estate is a permissible appointee; or
23 (B) if there is no taker under subparagraph (A),
24 passes under a reversionary interest to the donor or
25 the donor's transferee or successor in interest.

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1 Section 1320. Disposition of unappointed property under
2released or unexercised general power. To the extent a
3powerholder releases or fails to exercise a general power of
4appointment other than a power to revoke, amend, or withdraw
5property from a trust:
6 (1) the gift-in-default clause controls the
7 disposition of the unappointed property; or
8 (2) if there is no gift-in-default clause or to the
9 extent the clause is ineffective:
10 (A) except as otherwise provided in subparagraph
11 (B), the unappointed property passes to:
12 (i) the powerholder if the powerholder is a
13 permissible appointee and living; or
14 (ii) if the powerholder is an impermissible
15 appointee or not living, the powerholder's estate
16 if the estate is a permissible appointee; or
17 (B) to the extent the powerholder released the
18 power, or if there is no taker under subparagraph (A),
19 the unappointed property passes under a reversionary
20 interest to the donor or the donor's transferee or
21 successor in interest.
22 Section 1321. Disposition of unappointed property under
23released or unexercised nongeneral power. To the extent a
24powerholder releases, ineffectively exercises, or fails to

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1exercise a nongeneral power of appointment:
2 (1) the gift-in-default clause controls the disposition of
3the unappointed property; or
4 (2) if there is no gift-in-default clause or to the extent
5the clause is ineffective, the unappointed property:
6 (A) passes to the permissible appointees if:
7 (i) the permissible appointees are defined and
8 limited; and
9 (ii) the terms of the instrument creating the power
10 do not manifest a contrary intent; or
11 (B) if there is no taker under subparagraph (A), passes
12 under a reversionary interest to the donor or the donor's
13 transferee or successor in interest.
14 Section 1322. Disposition of unappointed property if
15partial appointment to taker in default. Unless the terms of
16the instrument creating or exercising a power of appointment
17manifest a contrary intent, if the powerholder makes a valid
18partial appointment to a taker in default of appointment, the
19taker in default of appointment may share fully in unappointed
20property.
21 Section 1323. Appointment to taker in default. If a
22powerholder of a general power makes an appointment to a taker
23in default of appointment and the appointee would have taken
24the property under a gift-in-default clause had the property

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1not been appointed, the power of appointment is deemed not to
2have been exercised, and the appointee takes under the
3gift-in-default clause.
4 Section 1324. Powerholder's authority to revoke or amend
5exercise. A powerholder may revoke or amend an exercise of a
6power of appointment only to the extent that:
7 (1) the powerholder reserves a power of revocation or
8 amendment in the instrument exercising the power of
9 appointment and, if the power is nongeneral, the terms of
10 the instrument creating the power of appointment do not
11 prohibit the reservation; or
12 (2) the terms of the instrument creating the power of
13 appointment provide that the exercise is revocable or
14 amendable.
15 Section 1325. Disposition of trust property subject to
16power. In disposing of trust property subject to a power of
17appointment exercisable by an instrument other than a will, a
18trustee acting in good faith shall have no liability to any
19appointee or taker in default of appointment for relying upon
20an instrument believed to be genuine purporting to exercise a
21power of appointment or for assuming that there is no
22instrument exercising the power of appointment in the absence
23of actual knowledge thereof within 3 months of the last date on
24which the power of appointment may be exercised.

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1 Section 1326. Disclaimer. As provided by Section 2-7 of the
2Probate Act of 1975:
3 (1) A powerholder may disclaim all or part of a power
4 of appointment.
5 (2) A permissible appointee, appointee, or taker in
6 default of appointment may disclaim all or part of an
7 interest in appointive property.
8 Section 1327. Authority to release. A powerholder may
9release a power of appointment, in whole or in part, except to
10the extent the terms of the instrument creating the power
11prevent the release.
12 Section 1328. Method of release. A powerholder of a
13releasable power of appointment may release the power in whole
14or in part:
15 (1) by substantial compliance with a method provided in
16 the terms of the instrument creating the power; or
17 (2) if the terms of the instrument creating the power
18 do not provide a method or the method provided in the terms
19 of the instrument is not expressly made exclusive, by an
20 instrument manifesting the powerholder's intent by clear
21 and convincing evidence.
22 Section 1329. Revocation or amendment of release. A

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1powerholder may revoke or amend a release of a power of
2appointment only to the extent that:
3 (1) the instrument of release is revocable by the
4 powerholder; or
5 (2) the powerholder reserves a power of revocation or
6 amendment in the instrument of release.
7 Section 1330. Power to contract: presently exercisable
8power of appointment. A powerholder of a presently exercisable
9power of appointment may contract:
10 (1) not to exercise the power; or
11 (2) to exercise the power if the contract when made
12 does not confer a benefit on an impermissible appointee.
13 Section 1331. Power to contract: power of appointment not
14presently exercisable. A powerholder of a power of appointment
15that is not presently exercisable may contract to exercise or
16not to exercise the power only if the powerholder:
17 (1) is also the donor of the power; and
18 (2) has reserved the power in a revocable trust.
19 Section 1332. Remedy for breach of contract to appoint or
20not to appoint. The remedy for a powerholder's breach of a
21contract to appoint or not to appoint is limited to damages
22payable out of the appointive property or, if appropriate,
23specific performance of the contract.

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1 Section 1333. Creditor claim: general power created by
2powerholder.
3 (a) In this Section, "power of appointment created by the
4powerholder" includes a power of appointment created in a
5transfer by another person to the extent the powerholder
6contributed value to the transfer.
7 (b) Appointive property subject to a general power of
8appointment created by the powerholder is subject to a claim of
9a creditor of the powerholder or of the powerholder's estate to
10the extent provided in the Uniform Fraudulent Transfer Act.
11 (c) Subject to subsection (b), appointive property subject
12to a general power of appointment created by the powerholder is
13not subject to a claim of a creditor of the powerholder or the
14powerholder's estate to the extent the powerholder irrevocably
15appointed the property in favor of a person other than the
16powerholder or the powerholder's estate.
17 (d) Subject to subsections (b) and (c), and notwithstanding
18the presence of a spendthrift provision or whether the claim
19arose before or after the creation of the power of appointment,
20appointive property subject to a general power of appointment
21created by the powerholder is subject to a claim of a creditor
22of:
23 (1) the powerholder, to the same extent as if the
24 powerholder owned the appointive property, if the power is
25 presently exercisable; and

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1 (2) the powerholder's estate, to the extent the estate
2 is insufficient to satisfy the claim and subject to the
3 right of a decedent to direct the source from which
4 liabilities are paid, if the power is exercisable at the
5 powerholder's death.
6 Section 1334. Creditor claim: general power not created by
7powerholder.
8 (a) Except as otherwise provided in subsection (b),
9appointive property subject to a general power of appointment
10created by a person other than the powerholder is subject to a
11claim of a creditor of:
12 (1) the powerholder, to the extent the powerholder's
13 property is insufficient, if the power is presently
14 exercisable; and
15 (2) the powerholder's estate if the power is exercised
16 at the powerholder's death, to the extent the estate is
17 insufficient, subject to the right of the deceased
18 powerholder to direct the source from which liabilities are
19 paid.
20 (b) Subject to subsection (c) of Section 1336, a power of
21appointment created by a person other than the powerholder that
22is subject to an ascertainable standard relating to an
23individual's health, education, support, or maintenance within
24the meaning of Section 2041(b)(1)(A) of the Internal Revenue
25Code or Section 2514(c)(1) of the Internal Revenue Code, as

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1amended, is treated for purposes of this Article as a
2nongeneral power.
3 Section 1335. Power to withdraw.
4 (a) For purposes of Sections 1333 through 1336, and except
5as otherwise provided in subsection (b), a power to withdraw
6property from a trust is treated, during the time the power may
7be exercised, as a presently exercisable general power of
8appointment to the extent of the property subject to the power
9to withdraw.
10 (b) A power to withdraw property from a trust ceases to be
11treated as a presently exercisable general power of appointment
12upon its lapse, release, or waiver.
13 Section 1336. Creditor claim: nongeneral power.
14 (a) Except as otherwise provided in subsections (b) and
15(c), appointive property subject to a nongeneral power of
16appointment is exempt from a claim of a creditor of the
17powerholder or the powerholder's estate.
18 (b) Appointive property subject to a nongeneral power of
19appointment is subject to a claim of a creditor of the
20powerholder or the powerholder's estate to the extent that the
21powerholder owned the property and, reserving the nongeneral
22power, transferred the property in violation of the Uniform
23Fraudulent Transfer Act.
24 (c) If the initial gift in default of appointment is to the

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1powerholder or the powerholder's estate, a nongeneral power of
2appointment is treated for purposes of this Section as a
3general power.
4 Section 1337. Uniformity of application and construction.
5In applying and construing this Article, consideration must be
6given to the need to promote uniformity of the law with respect
7to its subject matter among states that enact it.
8 Section 1338. Application to existing relationships.
9 (a) Except as otherwise provided in this Article, on and
10after the effective date of this Code:
11 (1) this Article applies to a power of appointment
12 created before, on, or after its effective date;
13 (2) this Article applies to a judicial proceeding
14 concerning a power of appointment commenced on or after its
15 effective date;
16 (3) this Article applies to a judicial proceeding
17 concerning a power of appointment commenced before its
18 effective date unless the court finds that application of a
19 particular provision of this Article would substantially
20 interfere with the effective conduct of the judicial
21 proceeding or prejudice a right of a party, in which case
22 the particular provision of this Article does not apply and
23 the superseded law applies;
24 (4) a rule of construction or presumption provided in

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1 this Article applies to an instrument executed before the
2 effective date of the Article unless there is a clear
3 indication of a contrary intent in the terms of the
4 instrument; and
5 (5) an act done before the effective date of this Code
6 is not affected by this Article.
7 (b) If a right is acquired, extinguished, or barred on the
8expiration of a prescribed period that commenced under law of
9this State other than this Article before the effective date of
10this Code, the law continues to apply to the right.
11 (c) No trustee is liable to any person in whose favor a
12power of appointment may have been exercised for any
13distribution of property made to persons entitled to take in
14default of the effective exercise of the power of appointment
15to the extent that the distribution shall have been completed
16prior to the effective date of this Code.
17
Article 14. Perpetuities.
18 Section 1401. Article title. Except for Section 1407, this
19Article may be referred to as the Act Concerning Perpetuities.
20 Section 1402. Purpose. This Article modifies the common law
21rule of property known as the rule against perpetuities, that,
22except as modified by statutes in force at the effective date
23of this Article and by this Article, shall remain in full force

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1and effect.
2 Section 1403. Definitions and terms. As used in this
3Article unless the context otherwise requires:
4 (a) Any reference in this Article to income to be "paid" or
5to income "payments" or to "receiving" income includes income
6payable or distributable to or applicable for the benefit of a
7beneficiary.
8 (b) "Instrument" means any writing pursuant to which any
9legal or equitable interest in property or in the income
10therefrom is affected, disposed of, or created.
11 (c) "Qualified perpetual trust" means any trust created by
12any written instrument executed on or after January 1, 1998,
13including an amendment to an instrument in existence prior to
14that date and the exercise of a power of appointment granted by
15an instrument executed or amended on or after that date:
16 (1) to which, by the specific terms governing the
17 trust, the rule against perpetuities does not apply; and
18 (2) the power of the trustee (or other person to whom
19 the power is properly granted or delegated) to sell
20 property of which is not limited by the trust instrument or
21 any provision of law for any period of time beyond the
22 period of the rule against perpetuities.
23 Section 1404. Application of rule against perpetuities.
24 (a) The rule against perpetuities does not apply:

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1 (1) to any disposition of property or interest therein
2 that, at the effective date of this Code, does not violate,
3 or is exempted by statute from the operation of, the common
4 law rule against perpetuities;
5 (2) to powers of a trustee to sell, lease or mortgage
6 property or to powers that relate to the administration or
7 management of trust assets, including, without limitation,
8 discretionary powers of a trustee to determine what
9 receipts constitute principal and what receipts constitute
10 income and powers to appoint a successor trustee;
11 (3) to mandatory powers of a trustee to distribute
12 income, or to discretionary powers of a trustee to
13 distribute principal prior to termination of a trust, to a
14 beneficiary having an interest in the principal that is
15 irrevocably vested in quality and quantity;
16 (4) to discretionary powers of a trustee to allocate
17 income and principal among beneficiaries, but no exercise
18 of any such power after the expiration of the period of the
19 rule against perpetuities is valid;
20 (5) to leases to commence in the future or upon the
21 happening of a future event, but no such lease is valid
22 unless the term of the lease actually commences in
23 possession within 40 years from the date of execution of
24 the lease;
25 (6) to commitments (A) by a lessor to enter into a
26 lease with a subtenant or with the holder of a leasehold

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1 mortgage or (B) by a lessee or sublessee to enter into a
2 lease with the holder of a mortgage;
3 (7) to options in gross or to preemptive rights in the
4 nature of a right of first refusal, but no option in gross
5 shall be valid for more than 40 years from the date of its
6 creation; or
7 (8) to qualified perpetual trusts as defined in Section
8 1403.
9 (b) The period of the rule against perpetuities shall not
10commence to run in connection with any disposition of property
11or interest therein, and no instrument shall be regarded as
12becoming effective for purposes of the rule against
13perpetuities, and no interest or power shall be deemed to be
14created for purposes of the rule against perpetuities as long
15as, by the terms of the instrument, the maker of the instrument
16has the power to revoke the instrument or to transfer or direct
17to be transferred to himself the entire legal and equitable
18ownership of the property or interest therein.
19 (c) In determining whether an interest violates the rule
20against perpetuities:
21 (1) it is presumed:
22 (A) that the interest was intended to be valid;
23 (B) in the case of an interest conditioned upon the
24 probate of a will, the appointment of an executor,
25 administrator or trustee, the completion of the
26 administration of an estate, the payment of debts, the

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1 sale or distribution of property, the determination of
2 federal or state tax liabilities or the happening of
3 any administrative contingency, that the contingency
4 must occur, if at all, within the period of the rule
5 against perpetuities; and
6 (C) if the instrument creates an interest in the
7 "widow", "widower", or "spouse" of another person,
8 that the maker of the instrument intended to refer to a
9 person who was living at the date that the period of
10 the rule against perpetuities commences to run;
11 (2) if any interest, but for this subsection, would be
12 invalid because it is made to depend upon any person
13 attaining or failing to attain an age in excess of 21
14 years, the age specified shall be reduced to 21 years as to
15 every person to whom the age contingency applies;
16 (3) notwithstanding the provisions of paragraphs (1)
17 and (2) of this subsection (c), if the validity of any
18 interest depends upon the possibility of the birth or
19 adoption of a child, the following apply:
20 (A) no person shall be deemed capable of having a
21 child until he has attained the age of 13 years;
22 (B) any person who has attained the age of 65 years
23 shall be deemed incapable of having a child;
24 (C) evidence is admissible as to the incapacity of
25 having a child by a living person who has not attained
26 the age of 65 years; and

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1 (D) the possibility of having a child or more
2 remote descendant by adoption shall be disregarded.
3 (d) Paragraphs (2), (3), and (6) of subsection (a) and
4subsection (b) of this Section are declaratory of existing law.
5 Section 1405. Trusts.
6 (a) Subject to the provisions of subsections (e) and (f) of
7this Section, a trust containing any limitation that, but for
8this subsection, would violate the rule against perpetuities as
9modified by Section 1404 shall terminate at the expiration of a
10period of:
11 (1) 21 years after the death of the last to die of all
12 of the beneficiaries of the instrument who were living at
13 the date when the period of the rule against perpetuities
14 commenced to run; or
15 (2) 21 years after that date if no beneficiary of the
16 instrument was then living, unless events occur that cause
17 an earlier termination in accordance with the terms of the
18 instrument and then the principal shall be distributed as
19 provided by the instrument.
20 (b) Subject to the provisions of subsections (c), (d) and
21(e) of this Section, when a trust terminates because of the
22application of subsection (a) of this Section, the trustee
23shall distribute the principal to those persons who would be
24the heirs at law of the maker of the instrument if he or she
25died at the expiration of the period specified in subsection

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1(a) of this Section and in the proportions then specified by
2statute, unless the trust was created by the exercise of a
3power of appointment and then the principal shall be
4distributed to the person who would have received it if the
5power had not been exercised.
6 (c) Before any distribution of principal is made pursuant
7to subsection (b) of this Section, the trustee shall
8distribute, out of principal, to each living beneficiary who,
9but for termination of the trust because of the application of
10subsection (a) of this Section, would have been entitled to be
11paid income after the expiration of the period specified in
12subsection (a) of this Section, an amount equal to the present
13value (determined as provided in subsection (d) of this Section
14of the income that the beneficiary would have been entitled to
15be paid after the expiration of that period.
16 (d) In determining the present value of income for purposes
17of any distribution to a beneficiary pursuant to subsection (c)
18of this Section:
19 (1) when income payments would have been subject in
20 whole or in part to any discretionary power, it shall be
21 assumed:
22 (A) that the income that would have been paid to an
23 individual income beneficiary would have been the
24 maximum amount of income that could have been paid to
25 him or her in the exercise of the power;
26 (B) if the income would or might have been payable

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1 to more than one beneficiary, that (except as
2 hereinafter provided) each beneficiary would have
3 received an equal share of the income, unless the
4 instrument specifies less than an equal share as the
5 maximum amount or proportion of income that would have
6 been paid to any beneficiary in the exercise of the
7 power, in which event the maximum specified shall
8 control; and
9 (C) if the income would or might have been payable
10 to the descendants of the maker of the instrument or of
11 another person, that, unless the instrument provides
12 otherwise, the descendants would have received the
13 income per stirpes;
14 (2)(A) present value shall be computed on an actuarial
15 basis and there shall be assumed a return of 5%, at simple
16 interest, on the value of the principal from which the
17 beneficiary would have been entitled to receive income; and
18 (B) if the interest in income was to be for the life of
19 the beneficiary or for the life of another, the computation
20 shall be made on the expectancy set forth in the most
21 recently published American Experience Tables of Mortality
22 and no other evidence of duration or expectancy shall be
23 considered;
24 (3) if the trustee cannot determine the present value
25 of any income interest in accordance with the provisions of
26 the instrument and the foregoing rules concerning income

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1 payments, the present value of the interest shall be deemed
2 to be zero.
3 (e) This Section applies only when a trust would violate
4the rule against perpetuities as modified by Section 1404 and
5does not apply to any trust that would have been valid apart
6from this Article.
7 (f) This Section does not apply when a trust violates the
8rule against perpetuities because the trust estate may not vest
9in the trustee within the period of the rule.
10 Section 1406. Applicability. Sections 1401 through 1405
11apply only to instruments, including instruments that exercise
12a power of appointment, that become effective after September
1322, 1969.
14 Section 1407. Vesting of any limitation of property.
15 (a) This Section may be referred to as the Perpetuities
16Vesting Law.
17 (b) The vesting of any limitation of property, whether
18created in the exercise of a power of appointment or in any
19other manner, shall not be regarded as deferred for purposes of
20the rule against perpetuities merely because the limitation is
21made to the estate of a person or to a personal representative,
22or to a trustee under a will, or to take effect on the probate
23of a will.
24 (c) This Section applies only to limitations created after

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1July 1, 1952.
2
Article 15. Miscellaneous provisions.
3 Section 1501. Uniformity of application and construction.
4In applying and construing this Code, consideration must be
5given to the need to promote uniformity of the law with respect
6to its subject matter among states that enact comparable
7provisions of the Uniform Trust Code.
8 Section 1502. Severability. If any provision of this Code
9or its application to any person or circumstances is held
10invalid, the invalidity does not affect other provisions or
11applications of this Code which can be given effect without the
12invalid provision or application, and to this end the
13provisions of this Code are severable.
14 Section 1503. (Reserved).
15 Section 1504. (See Section 9999 for effective date.)
16 (755 ILCS 5/4-2 rep.)
17 Section 1505. The Probate Act of 1975 is amended by
18repealing Section 4-2.
19 (760 ILCS 5/Act rep.)

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1 Section 1505.1. The Trusts and Trustees Act is repealed.
2 (760 ILCS 35/Act rep.)
3 Section 1505.2. The Trusts and Dissolutions of Marriage Act
4is repealed.
5 (765 ILCS 305/Act rep.)
6 Section 1505.3. The Statute Concerning Perpetuities is
7repealed.
8 (765 ILCS 310/Act rep.)
9 Section 1505.4. The Perpetuities Vesting Act is repealed.
10 (765 ILCS 315/Act rep.)
11 Section 1505.5. The Trust Accumulation Act is repealed.
12 (765 ILCS 320/Act rep.)
13 Section 1505.6. The Power of Appointment Exercise Act is
14repealed.
15 (765 ILCS 325/Act rep.)
16 Section 1505.7. The Termination of Powers Act is repealed.
17 Section 1506. Application to existing relationships.
18Except as otherwise provided in this Code, on the effective
19date of this Code:

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1 (1) This Code applies to all trusts created before, on,
2 or after its effective date.
3 (2) This Code applies to all judicial proceedings
4 concerning trusts commenced on or after its effective date.
5 As used in this Section, "judicial proceedings" includes
6 any proceeding before a court or administrative tribunal of
7 this State and any arbitration or mediation proceedings.
8 (3) this Code applies to all nonjudicial matters
9 concerning trusts commenced before, on, or after its
10 effective date. As used in this Section, "nonjudicial
11 matters" includes, but is not limited to, nonjudicial
12 settlement agreements entered into under Section 111 and
13 the grant of any consent, release, ratification, or
14 indemnification.
15 (4) This Code applies to judicial proceedings
16 concerning trusts commenced before its effective date
17 unless the court finds that application of a particular
18 provision of this Code would substantially interfere with
19 the effective conduct of the judicial proceedings or
20 prejudice the rights of the parties, in which case the
21 particular provision of this Code does not apply and the
22 superseded law applies.
23 (5) Any rule of construction or presumption provided in
24 this Code applies to trust instruments executed before the
25 effective date of this Code unless there is a clear
26 indication of a contrary intent in the trust instrument.

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1 (6) An act done before the effective date of this Code
2 is not affected by this Code.
3 (7) If a right is acquired, extinguished, or barred
4 upon the expiration of a prescribed period that has
5 commenced to run under any other statute before the
6 effective date of this Code, that statute continues to
7 apply to the right even if it has been repealed or
8 superseded.
9 (8) This Code shall be construed as pertaining to
10 administration of a trust and applies to any trust that is
11 administered in Illinois under Illinois law or that is
12 governed by Illinois law with respect to the meaning and
13 effect of its terms, except to the extent the trust
14 instrument expressly prohibits use of this Code by specific
15 reference to this Code.
16
Article 16. Amendatory provisions.
17 Section 1601. The Public Use Trust Act is amended by
18changing Section 2 as follows:
19 (30 ILCS 160/2) (from Ch. 127, par. 4002)
20 Sec. 2. (a) The Department of Agriculture, the Department
21of Natural Resources, and the Historic Preservation Agency have
22the power to enter into a trust agreement with a person or
23group of persons under which the State agency may receive or

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1collect money or other property from the person or group of
2persons and may expend such money or property solely for a
3public purpose within the powers and duties of that State
4agency and stated in the trust agreement. The State agency
5shall be the trustee under any such trust agreement.
6 (b) Money or property received under a trust agreement
7shall not be deposited in the State treasury and is not subject
8to appropriation by the General Assembly, but shall be held and
9invested by the trustee separate and apart from the State
10treasury. The trustee shall invest money or property received
11under a trust agreement as provided for trustees under the
12Illinois Trust Code Trusts and Trustees Act or as otherwise
13provided in the trust agreement.
14 (c) The trustee shall maintain detailed records of all
15receipts and disbursements in the same manner as required for
16trustees under the Illinois Trust Code Trusts and Trustees Act.
17The trustee shall provide an annual accounting of all receipts,
18disbursements, and inventory to all donors to the trust and the
19Auditor General. The annual accounting shall be made available
20to any member of the public upon request.
21(Source: P.A. 89-445, eff. 2-7-96.)
22 Section 1602. The Township Code is amended by changing
23Section 135-20 as follows:
24 (60 ILCS 1/135-20)

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1 Sec. 135-20. Powers of board of managers. The board of
2managers shall control and manage the cemeteries jointly
3acquired by the townships or road districts. The board of
4managers may receive in trust from the proprietors or owners of
5any lot in the cemeteries, or any person, corporation,
6association, or society interested in the maintenance of those
7cemeteries, any gift or legacy of money or real, personal, or
8mixed property that is donated or bequeathed to the board of
9managers for the use and maintenance of the lot or cemeteries.
10The board of managers may convert the property into money, may
11invest the money in securities in which trust funds may be
12invested under the Illinois Trust Code Trusts and Trustees Act,
13and may apply the income perpetually for the care of the lot or
14the care and maintenance of the cemeteries as specified in the
15gift or legacy or as provided by the board of managers if the
16gift or legacy does not specify the manner in which the income
17is to be expended.
18(Source: P.A. 83-1362; 88-62.)
19 Section 1603. The Corporate Fiduciary Act is amended by
20changing Sections 1-6, 6-10, and 9-5 as follows:
21 (205 ILCS 620/1-6) (from Ch. 17, par. 1551-6)
22 Sec. 1-6. General Corporate Powers. A corporate fiduciary
23shall have the powers:
24 (a) if it is a State bank, those powers granted under

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1 Sections 3 and 5 of the Illinois Banking Act; and
2 (b) if it is a State savings and loan association,
3 those powers granted under Sections 1-6 through 1-8 of the
4 Illinois Savings and Loan Act of 1985; and
5 (c) if it is a State savings bank, those powers granted
6 under the Savings Bank Act; and
7 (d) if it is a corporation organized under the Business
8 Corporation Act of 1983, as now or hereafter amended, or a
9 limited liability company organized under the Limited
10 Liability Company Act, those powers granted in Article 8
11 Sections 4.01 through 4.24 of the Illinois Trust Code
12 Trusts and Trustees Act, as now or hereafter amended, to
13 the extent the exercise of such powers by the corporate
14 fiduciary are not contrary to the instrument containing the
15 appointment of the corporate fiduciary, the court order
16 appointing the corporate fiduciary or any other statute
17 specifically limiting the power of the corporate fiduciary
18 under the circumstances; and
19 (e) subject to Article XLIV of the Illinois Insurance
20 Code, to act as the agent for any fire, life, or other
21 insurance company authorized by the State of Illinois, by
22 soliciting and selling insurance and collecting premiums
23 on policies issued by such company; and may receive for
24 services so rendered such fees or commissions as may be
25 agreed upon between the said corporate fiduciary and the
26 insurance company for which it may act as agent; provided,

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1 however, that no such corporate fiduciary shall in any case
2 assume or guarantee the payment of any premium on insurance
3 policies issued through its agency by its principal; and
4 provided further, that the corporate fiduciary shall not
5 guarantee the truth of any statement made by an assured in
6 filing his application for insurance.
7 The Commissioner may specify powers of corporate
8fiduciaries generally or of a particular corporate fiduciary
9and by rule or order limit or restrict such powers of corporate
10fiduciaries or a particular corporate fiduciary if he finds the
11exercise of such power by corporate fiduciaries generally or of
12the corporate fiduciary in particular may tend to be an unsafe
13or unsound practice, or if such power is otherwise not in the
14interest of beneficiaries of any fiduciary appointment.
15(Source: P.A. 90-41, eff. 10-1-97; 90-424, eff. 1-1-98; 90-655,
16eff. 7-30-98; 91-97, eff. 7-9-99.)
17 (205 ILCS 620/6-10) (from Ch. 17, par. 1556-10)
18 Sec. 6-10. The receiver for a corporate fiduciary, under
19the direction of the Commissioner, shall have the power and
20authority and is charged with the duties and responsibilities
21as follows:
22 (1) To take possession of, and for the purpose of the
23receivership, the title to the books, records and assets of
24every description of the corporate fiduciary.
25 (2) To proceed to collect all debts, dues and claims

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1belonging to the corporate fiduciary.
2 (3) To file with the Commissioner a copy of each report
3which he makes to the court, together with such other reports
4and records as the Commissioner may require.
5 (4) The receiver shall have authority to sue and defend in
6the receiver's own name and with respect to the affairs,
7assets, claims, debts and chooses in action of the corporate
8fiduciary.
9 (5) The receiver shall have authority, and it shall be the
10receiver's duty, to surrender to the customers of such
11corporate fiduciary, when requested in writing directed to the
12receiver by such customers, the assets, private papers and
13valuables left with the corporate fiduciary for safekeeping,
14under a custodial or agency agreement, upon satisfactory proof
15of ownership.
16 (6) As soon as can reasonably be done, the receiver shall
17resign on behalf of the corporate fiduciary, all trusteeships,
18guardianships, and all appointments as executor and
19administrator, or as custodian under the Illinois Uniform
20Transfers to Minors Act, as now or hereafter amended, or as
21fiduciary under custodial or agency agreements or under the
22terms of any other written agreement or court order whereunder
23the corporate fiduciary is holding property in a fiduciary
24capacity for the benefit of another person, making in each
25case, from the records and documents available to the receiver,
26a proper accounting, in the manner and scope as determined by

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1the Commissioner to be practical and advisable under the
2circumstances, on behalf of the corporate fiduciary. The
3receiver, prior to resigning, shall cause a successor trustee
4or fiduciary to be appointed pursuant to the terms set forth in
5the governing instrument or pursuant to the provisions of the
6Illinois Trust Code Trusts and Trustees Act, as now or
7hereafter amended, if applicable, then the receiver shall make
8application to the court having jurisdiction over the
9liquidation or winding up of the corporate fiduciary, for the
10appointment of a successor. The receiver, if a corporate
11fiduciary, shall not be disqualified from acting as successor
12trustee or fiduciary if appointed under the terms of the
13governing instrument, by court order or by the customer of the
14corporate fiduciary whose affairs are being liquidated or wound
15up and, in such case, no guardian ad litem need be appointed to
16review the accounting of the receiver unless the beneficiaries
17or customers of the corporate fiduciary so request in writing.
18 (7) The receiver shall have authority to redeem or take
19down collateral hypothecated by the corporate fiduciary to
20secure its notes and other evidence of indebtedness whenever
21the Commissioner deems it to be in the best interest of the
22creditors of the corporate fiduciary and directs the receiver
23so to do.
24 (8) Whenever the receiver shall find it necessary in the
25receiver's opinion to use and employ money of the corporate
26fiduciary, in order to protect fully and benefit the corporate

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1fiduciary, by the purchase or redemption of any property, real
2or personal, in which the corporate fiduciary may have any
3rights by reason of any bond, mortgage, assignment, or other
4claim thereto, the receiver may certify the facts together with
5the receiver's opinions as to the value of the property
6involved, and the value of the equity the corporate fiduciary
7may have in the property to the Commissioner, together with a
8request for the right and authority to use and employ so much
9of the money of the corporate fiduciary as may be necessary to
10purchase the property, or to redeem the same from a sale if
11there was a sale, and if such request is granted, the receiver
12may use so much of the money of the corporate fiduciary as the
13Commissioner may have authorized to purchase said property at
14such sale.
15 (9) The receiver shall deposit daily all monies collected
16by the receiver in any State or national bank selected by the
17Commissioner, who may require (and the bank so selected may
18furnish) of such depository satisfactory securities or
19satisfactory surety bond for the safekeeping and prompt payment
20of the money so deposited. The deposits shall be made in the
21name of the Commissioner in trust for the receiver and be
22subject to withdrawal upon the receiver's order or upon the
23order of such persons as the Commissioner may designate. Such
24monies may be deposited without interest, unless otherwise
25agreed. However, if any interest was paid by such depository,
26it shall accrue to the benefit of the particular trust or

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1fiduciary account to which the deposit belongs. Except as
2otherwise directed by the Commissioner, notwithstanding any
3other provision of this paragraph, the receiver's investment
4and other powers shall be those under the governing instrument
5or under the Illinois Trust Code Trusts and Trustees Act, as
6now or hereafter amended, and shall include the power to pay
7out income and principal in accordance with the terms of the
8governing instrument.
9 (10) The receiver shall do such things and take such steps
10from time to time under the direction and approval of the
11Commissioner as may reasonably appear to be necessary to
12conserve the corporate fiduciary's assets and secure the best
13interests of the creditors of the corporate fiduciary.
14 (11) The receiver shall record any judgment of dissolution
15entered in a dissolution proceeding and thereupon turn over to
16the Commissioner a certified copy thereof, together with all
17books of accounts and ledgers of such corporate fiduciary for
18preservation, as distinguished from the books of accounts and
19ledgers of the corporate fiduciary relating to the assets of
20the beneficiaries of such fiduciary relations, all of which
21books of accounts and ledgers shall be turned over by the
22receiver to the successor trustee or fiduciary.
23 (12) The receiver may cause all assets of the beneficiaries
24of such fiduciary relations to be registered in the name of the
25receiver or in the name of the receiver's nominee.
26 (13) The receiver shall have a reasonable period of time in

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1which to review all of the trust accounts, executorships,
2administrationships, guardianships, or other fiduciary
3relationships, in order to ascertain that the investments by
4the corporate fiduciary of the assets of such trust accounts,
5executorships, administrationships, guardianships, or other
6fiduciary relationships comply with the terms of the governing
7instrument, the prudent person rule governing the investment of
8such funds, or any other law regulating the investment of such
9funds.
10 (14) For its services in administering the trusts and other
11fiduciary accounts of the corporate fiduciary during the period
12of winding up the affairs of the corporate fiduciary, the
13receiver shall be entitled to be reimbursed for all costs and
14expenses incurred by the receiver and shall also be entitled to
15receive out of the assets of the individual fiduciary accounts
16being administered by the receiver during the period of winding
17up the affairs of the corporate fiduciary and prior to the
18appointment of a successor trustee or fiduciary, the usual and
19customary fees charged by the receiver in the administration of
20its own fiduciary accounts or reasonable fees approved by the
21Commissioner.
22 (15) The receiver, during its administration of the trusts
23and other fiduciary accounts of the corporate fiduciary during
24the winding up of the affairs of the corporate fiduciary, shall
25have all of the powers which are vested in trustees under the
26terms and provisions of the Illinois Trust Code Trusts and

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1Trustees Act, as now or hereafter amended.
2 (16) Upon the appointment of a successor trustee or
3fiduciary, the receiver shall deliver to such successor trustee
4or fiduciary all of the assets belonging to the individual
5trust or fiduciary account as to which the successor trustee or
6fiduciary succeeds, and the receiver shall thereupon be
7relieved of any further duties or obligations with respect
8thereto.
9(Source: P.A. 90-655, eff. 7-30-98.)
10 (205 ILCS 620/9-5) (from Ch. 17, par. 1559-5)
11 Sec. 9-5. Applicability of other Acts by reference.
12Corporate fiduciaries subject to the provisions of this Act
13shall continue to be subject to the provisions of other Acts
14which govern actions of trustees including, but not limited to:
15 (a) "An Act to provide for the appointment of successor
16trustees in land trust agreements", approved August 13, 1965,
17as amended.
18 (b) "An Act to require disclosure, under certification of
19perjury, of all beneficial interests in real property held in a
20land trust, in certain cases", approved September 21, 1973, as
21amended.
22 (c) "An Act in relation to land trusts and the power and
23authority of trustees of land trusts to deal with trust
24property", approved August 6, 1982, as amended.
25 (d) "An Act concerning the powers of corporations

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1authorized to accept and execute trusts, to register and hold
2securities of fiduciary accounts in bulk and to deposit same
3with a depository", approved September 1, 1972, as amended.
4 (e) the "Common Trust Fund Act", approved July 29, 1943, as
5amended.
6 (f) the Illinois Trust Code "Trusts and Trustees Act",
7approved September 10, 1973, as amended.
8 (g) "An Act concerning liability for participation in
9breaches of fiduciary obligations", approved July 7, 1931, as
10amended.
11(Source: P.A. 85-858.)
12 Section 1604. The Community-Integrated Living Arrangements
13Licensure and Certification Act is amended by changing Section
143 as follows:
15 (210 ILCS 135/3) (from Ch. 91 1/2, par. 1703)
16 Sec. 3. As used in this Act, unless the context requires
17otherwise:
18 (a) "Applicant" means a person, group of persons,
19association, partnership or corporation that applies for a
20license as a community mental health or developmental services
21agency under this Act.
22 (b) "Community mental health or developmental services
23agency" or "agency" means a public or private agency,
24association, partnership, corporation or organization which,

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1pursuant to this Act, certifies community-integrated living
2arrangements for persons with mental illness or persons with a
3developmental disability.
4 (c) "Department" means the Department of Human Services (as
5successor to the Department of Mental Health and Developmental
6Disabilities).
7 (d) "Community-integrated living arrangement" means a
8living arrangement certified by a community mental health or
9developmental services agency under this Act where 8 or fewer
10recipients with mental illness or recipients with a
11developmental disability who reside under the supervision of
12the agency. Examples of community integrated living
13arrangements include but are not limited to the following:
14 (1) "Adult foster care", a living arrangement for
15 recipients in residences of families unrelated to them, for
16 the purpose of providing family care for the recipients on
17 a full-time basis;
18 (2) "Assisted residential care", an independent living
19 arrangement where recipients are intermittently supervised
20 by off-site staff;
21 (3) "Crisis residential care", a non-medical living
22 arrangement where recipients in need of non-medical,
23 crisis services are supervised by on-site staff 24 hours a
24 day;
25 (4) "Home individual programs", living arrangements
26 for 2 unrelated adults outside the family home;

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1 (5) "Supported residential care", a living arrangement
2 where recipients are supervised by on-site staff and such
3 supervision is provided less than 24 hours a day;
4 (6) "Community residential alternatives", as defined
5 in the Community Residential Alternatives Licensing Act;
6 and
7 (7) "Special needs trust-supported residential care",
8 a living arrangement where recipients are supervised by
9 on-site staff and that supervision is provided 24 hours per
10 day or less, as dictated by the needs of the recipients,
11 and determined by service providers. As used in this item
12 (7), "special needs trust" means a trust for the benefit of
13 a beneficiary with a disability as described in Section
14 1213 15.1 of the Illinois Trust Code Trusts and Trustees
15 Act.
16 (e) "Recipient" means a person who has received, is
17receiving, or is in need of treatment or habilitation as those
18terms are defined in the Mental Health and Developmental
19Disabilities Code.
20 (f) "Unrelated" means that persons residing together in
21programs or placements certified by a community mental health
22or developmental services agency under this Act do not have any
23of the following relationships by blood, marriage or adoption:
24parent, son, daughter, brother, sister, grandparent, uncle,
25aunt, nephew, niece, great grandparent, great uncle, great
26aunt, stepbrother, stepsister, stepson, stepdaughter,

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1stepparent or first cousin.
2(Source: P.A. 99-143, eff. 7-27-15.)
3 Section 1605. The Title Insurance Act is amended by
4changing Section 21.1 as follows:
5 (215 ILCS 155/21.1)
6 Sec. 21.1. Receiver and involuntary liquidation.
7 (a) The Secretary's proceedings under this Section shall be
8the exclusive remedy and the only proceedings commenced in any
9court for the dissolution of, the winding up of the affairs of,
10or the appointment of a receiver for a title insurance company.
11 (b) If the Secretary, with respect to a title insurance
12company, finds that (i) its capital is impaired or it is
13otherwise in an unsound condition, (ii) its business is being
14conducted in an unlawful, fraudulent, or unsafe manner, (iii)
15it is unable to continue operations, or (iv) its examination
16has been obstructed or impeded, the Secretary may give notice
17to the board of directors of the title insurance company of his
18or her finding or findings. If the Secretary's findings are not
19corrected to his or her satisfaction within 60 days after the
20company receives the notice, the Secretary shall take
21possession and control of the title insurance company, its
22assets, and assets held by it for any person for the purpose of
23examination, reorganization, or liquidation through
24receivership.

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1 If, in addition to making a finding as provided in this
2subsection (b), the Secretary is of the opinion and finds that
3an emergency that may result in serious losses to any person
4exists, the Secretary may, in his or her discretion, without
5having given the notice provided for in this subsection, and
6whether or not proceedings under subsection (a) of this Section
7have been instituted or are then pending, take possession and
8control of the title insurance company and its assets for the
9purpose of examination, reorganization, or liquidation through
10receivership.
11 (c) The Secretary may take possession and control of a
12title insurance company, its assets, and assets held by it for
13any person by posting upon the premises of each office located
14in the State of Illinois at which it transacts its business as
15a title insurance company a notice reciting that the Secretary
16is assuming possession pursuant to this Act and the time when
17the possession shall be deemed to commence.
18 (d) Promptly after taking possession and control of a title
19insurance company the Secretary, represented by the Attorney
20General, shall file a copy of the notice posted upon the
21premises in the Circuit Court of either Cook County or Sangamon
22County, which cause shall be entered as a court action upon the
23dockets of the court under the name and style of "In the matter
24of the possession and control by the Secretary of the
25Department of Financial and Professional Regulation of (insert
26the name of the title insurance company)". If the Secretary

HB2526- 229 -LRB100 08824 HEP 18965 b
1determines (which determination may be made at the time of, or
2at any time subsequent to, taking possession and control of a
3title insurance company) that no practical possibility exists
4to reorganize the title insurance company after reasonable
5efforts have been made, the Secretary, represented by the
6Attorney General, shall also file a complaint, if it has not
7already been done, for the appointment of a receiver or other
8proceeding as is appropriate under the circumstances. The court
9where the cause is docketed shall be vested with the exclusive
10jurisdiction to hear and determine all issues and matters
11pertaining to or connected with the Secretary's possession and
12control of the title insurance company as provided in this Act,
13and any further issues and matters pertaining to or connected
14with the Secretary's possession and control as may be submitted
15to the court for its adjudication.
16 The Secretary, upon taking possession and control of a
17title insurance company, may, and if not previously done shall,
18immediately upon filing a complaint for dissolution make an
19examination of the affairs of the title insurance company or
20appoint a suitable person to make the examination as the
21Secretary's agent. The examination shall be conducted in
22accordance with and pursuant to the authority granted under
23Section 12 of this Act. The person conducting the examination
24shall have and may exercise on behalf of the Secretary all of
25the powers and authority granted to the Secretary under Section
2612. A copy of the report shall be filed in any dissolution

HB2526- 230 -LRB100 08824 HEP 18965 b
1proceeding filed by the Secretary. The reasonable fees and
2necessary expenses of the examining person, as approved by the
3Secretary or as recommended by the Secretary and approved by
4the court if a dissolution proceeding has been filed, shall be
5borne by the subject title insurance company and shall have the
6same priority for payment as the reasonable and necessary
7expenses of the Secretary in conducting an examination. The
8person appointed to make the examination shall make a proper
9accounting, in the manner and scope as determined by the
10Secretary to be practical and advisable under the
11circumstances, on behalf of the title insurance company and no
12guardian ad litem need be appointed to review the accounting.
13 (e) The Secretary, upon taking possession and control of a
14title insurance company and its assets, shall be vested with
15the full powers of management and control including, but not
16limited to, the following:
17 (1) the power to continue or to discontinue the
18 business;
19 (2) the power to stop or to limit the payment of its
20 obligations;
21 (3) the power to collect and to use its assets and to
22 give valid receipts and acquittances therefor;
23 (4) the power to transfer title and liquidate any bond
24 or deposit made under Section 4 of this Act;
25 (5) the power to employ and to pay any necessary
26 assistants;

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1 (6) the power to execute any instrument in the name of
2 the title insurance company;
3 (7) the power to commence, defend, and conduct in the
4 title insurance company's name any action or proceeding in
5 which it may be a party;
6 (8) the power, upon the order of the court, to sell and
7 convey the title insurance company's assets, in whole or in
8 part, and to sell or compound bad or doubtful debts upon
9 such terms and conditions as may be fixed in that order;
10 (9) the power, upon the order of the court, to make and
11 to carry out agreements with other title insurance
12 companies, financial institutions, or with the United
13 States or any agency of the United States for the payment
14 or assumption of the title insurance company's
15 liabilities, in whole or in part, and to transfer assets
16 and to make guaranties, in whole or in part, in connection
17 therewith;
18 (10) the power, upon the order of the court, to borrow
19 money in the name of the title insurance company and to
20 pledge its assets as security for the loan;
21 (11) the power to terminate his or her possession and
22 control by restoring the title insurance company to its
23 board of directors;
24 (12) the power to appoint a receiver which may be the
25 Secretary of the Department of Financial and Professional
26 Regulation, another title insurance company, or another

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1 suitable person and to order liquidation of the title
2 insurance company as provided in this Act; and
3 (13) the power, upon the order of the court and without
4 the appointment of a receiver, to determine that the title
5 insurance company has been closed for the purpose of
6 liquidation without adequate provision being made for
7 payment of its obligations, and thereupon the title
8 insurance company shall be deemed to have been closed on
9 account of inability to meet its obligations to its
10 insureds or escrow depositors.
11 (f) Upon taking possession, the Secretary shall make an
12examination of the condition of the title insurance company, an
13inventory of the assets and, unless the time shall be extended
14by order of the court or unless the Secretary shall have
15otherwise settled the affairs of the title insurance company
16pursuant to the provisions of this Act, within 90 days after
17the time of taking possession and control of the title
18insurance company, the Secretary shall either terminate his or
19her possession and control by restoring the title insurance
20company to its board of directors or appoint a receiver, which
21may be the Secretary of the Department of Financial and
22Professional Regulation, another title insurance company, or
23another suitable person and order the liquidation of the title
24insurance company as provided in this Act. All necessary and
25reasonable expenses of the Secretary's possession and control
26shall be a priority claim and shall be borne by the title

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1insurance company and may be paid by the Secretary from the
2title insurance company's own assets as distinguished from
3assets held for any other person.
4 (g) If the Secretary takes possession and control of a
5title insurance company and its assets, any period of
6limitation fixed by a statute or agreement that would otherwise
7expire on a claim or right of action of the title insurance
8company, on its own behalf or on behalf of its insureds or
9escrow depositors, or upon which an appeal must be taken or a
10pleading or other document filed by the title insurance company
11in any pending action or proceeding, shall be tolled until 6
12months after the commencement of the possession, and no
13judgment, lien, levy, attachment, or other similar legal
14process may be enforced upon or satisfied, in whole or in part,
15from any asset of the title insurance company or from any asset
16of an insured or escrow depositor while it is in the possession
17of the Secretary.
18 (h) If the Secretary appoints a receiver to take possession
19and control of the assets of insureds or escrow depositors for
20the purpose of holding those assets as fiduciary for the
21benefit of the insureds or escrow depositors pending the
22winding up of the affairs of the title insurance company being
23liquidated and the appointment of a successor escrowee for
24those assets, any period of limitation fixed by statute, rule
25of court, or agreement that would otherwise expire on a claim
26or right of action in favor of or against the insureds or

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1escrow depositors of those assets or upon which an appeal must
2be taken or a pleading or other document filed by a title
3insurance company on behalf of an insured or escrow depositor
4in any pending action or proceeding shall be tolled for a
5period of 6 months after the appointment of a receiver, and no
6judgment, lien, levy, attachment, or other similar legal
7process shall be enforced upon or satisfied, in whole or in
8part, from any asset of the insured or escrow depositor while
9it is in the possession of the receiver.
10 (i) If the Secretary determines at any time that no
11reasonable possibility exists for the title insurance company
12to be operated by its board of directors in accordance with the
13provisions of this Act after reasonable efforts have been made
14and that it should be liquidated through receivership, he or
15she shall appoint a receiver. The Secretary may require of the
16receiver such bond and security as the Secretary deems proper.
17The Secretary, represented by the Attorney General, shall file
18a complaint for the dissolution or winding up of the affairs of
19the title insurance company in a court of the county in which
20the principal office of the title insurance company is located
21and shall cause notice to be given in a newspaper of general
22circulation once each week for 4 consecutive weeks so that
23persons who may have claims against the title insurance company
24may present them to the receiver and make legal proof thereof
25and notifying those persons and all to whom it may concern of
26the filing of a complaint for the dissolution or winding up of

HB2526- 235 -LRB100 08824 HEP 18965 b
1the affairs of the title insurance company and stating the name
2and location of the court. All persons who may have claims
3against the assets of the title insurance company, as
4distinguished from the assets of insureds and escrow depositors
5held by the title insurance company, and the receiver to whom
6those persons have presented their claims may present the
7claims to the clerk of the court, and the allowance or
8disallowance of the claims by the court in connection with the
9proceedings shall be deemed an adjudication in a court of
10competent jurisdiction. Within a reasonable time after
11completion of publication, the receiver shall file with the
12court a correct list of all creditors of the title insurance
13company as shown by its books, who have not presented their
14claims and the amount of their respective claims after allowing
15adjusted credit, deductions, and set-offs as shown by the books
16of the title insurance company. The claims so filed shall be
17deemed proven unless objections are filed thereto by a party or
18parties interested therein within the time fixed by the court.
19 (j) The receiver for a title insurance company has the
20power and authority and is charged with the duties and
21responsibilities as follows:
22 (1) To take possession of and, for the purpose of the
23 receivership, title to the books, records, and assets of
24 every description of the title insurance company.
25 (2) To proceed to collect all debts, dues, and claims
26 belonging to the title insurance company.

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1 (3) To sell and compound all bad and doubtful debts on
2 such terms as the court shall direct.
3 (4) To sell the real and personal property of the title
4 insurance company, as distinguished from the real and
5 personal property of the insureds or escrow depositors, on
6 such terms as the court shall direct.
7 (5) To file with the Secretary a copy of each report
8 that he or she makes to the court, together with such other
9 reports and records as the Secretary may require.
10 (6) To sue and defend in his or her own name and with
11 respect to the affairs, assets, claims, debts, and choses
12 in action of the title insurance company.
13 (7) To surrender to the insureds and escrow depositors
14 of the title insurance company, when requested in writing
15 directed to the receiver by them, the escrowed funds (on a
16 pro rata basis), and escrowed documents in the receiver's
17 possession upon satisfactory proof of ownership and
18 determination by the receiver of available escrow funds.
19 (8) To redeem or take down collateral hypothecated by
20 the title insurance company to secure its notes and other
21 evidence of indebtedness whenever the court deems it to be
22 in the best interest of the creditors of the title
23 insurance company and directs the receiver so to do.
24 (k) Whenever the receiver finds it necessary in his or her
25opinion to use and employ money of the title insurance company
26in order to protect fully and benefit the title insurance

HB2526- 237 -LRB100 08824 HEP 18965 b
1company by the purchase or redemption of property, real or
2personal, in which the title insurance company may have any
3rights by reason of any bond, mortgage, assignment, or other
4claim thereto, the receiver may certify the facts together with
5the receiver's opinions as to the value of the property
6involved and the value of the equity the title insurance
7company may have in the property to the court, together with a
8request for the right and authority to use and employ so much
9of the money of the title insurance company as may be necessary
10to purchase the property, or to redeem the property from a sale
11if there was a sale, and if the request is granted, the
12receiver may use so much of the money of the title insurance
13company as the court may have authorized to purchase the
14property at the sale.
15 The receiver shall deposit daily all moneys collected by
16him or her in any State or national bank approved by the court.
17The deposits shall be made in the name of the Secretary, in
18trust for the receiver, and be subject to withdrawal upon the
19receiver's order or upon the order of those persons the
20Secretary may designate. The moneys may be deposited without
21interest, unless otherwise agreed. The receiver shall do the
22things and take the steps from time to time under the direction
23and approval of the court that may reasonably appear to be
24necessary to conserve the title insurance company's assets and
25secure the best interests of the creditors, insureds, and
26escrow depositors of the title insurance company. The receiver

HB2526- 238 -LRB100 08824 HEP 18965 b
1shall record any judgment of dissolution entered in a
2dissolution proceeding and thereupon turn over to the Secretary
3a certified copy of the judgment.
4 The receiver may cause all assets of the insureds and
5escrow depositors of the title insurance company to be
6registered in the name of the receiver or in the name of the
7receiver's nominee.
8 For its services in administering the escrows held by the
9title insurance company during the period of winding up the
10affairs of the title insurance company, the receiver is
11entitled to be reimbursed for all costs and expenses incurred
12by the receiver and shall also be entitled to receive out of
13the assets of the individual escrows being administered by the
14receiver during the period of winding up the affairs of the
15title insurance company and prior to the appointment of a
16successor escrowee the usual and customary fees charged by an
17escrowee for escrows or reasonable fees approved by the court.
18 The receiver, during its administration of the escrows of
19the title insurance company during the winding up of the
20affairs of the title insurance company, shall have all of the
21powers that are vested in trustees under the terms and
22provisions of the Illinois Trust Code Trusts and Trustees Act.
23 Upon the appointment of a successor escrowee, the receiver
24shall deliver to the successor escrowee all of the assets
25belonging to each individual escrow to which the successor
26escrowee succeeds, and the receiver shall thereupon be relieved

HB2526- 239 -LRB100 08824 HEP 18965 b
1of any further duties or obligations with respect thereto.
2 (l) The receiver shall, upon approval by the court, pay all
3claims against the assets of the title insurance company
4allowed by the court pursuant to subsection (i) of this
5Section, as well as claims against the assets of insureds and
6escrow depositors of the title insurance company in accordance
7with the following priority:
8 (1) All necessary and reasonable expenses of the
9 Secretary's possession and control and of its receivership
10 shall be paid from the assets of the title insurance
11 company.
12 (2) All usual and customary fees charged for services
13 in administering escrows shall be paid from the assets of
14 the individual escrows being administered. If the assets of
15 the individual escrows being administered are
16 insufficient, the fees shall be paid from the assets of the
17 title insurance company.
18 (3) Secured claims, including claims for taxes and
19 debts due the federal or any state or local government,
20 that are secured by liens perfected prior to the date of
21 filing of the complaint for dissolution, shall be paid from
22 the assets of the title insurance company.
23 (4) Claims by policyholders, beneficiaries, insureds,
24 and escrow depositors of the title insurance company shall
25 be paid from the assets of the insureds and escrow
26 depositors. If there are insufficient assets of the

HB2526- 240 -LRB100 08824 HEP 18965 b
1 insureds and escrow depositors, claims shall be paid from
2 the assets of the title insurance company.
3 (5) Any other claims due the federal government shall
4 be paid from the assets of the title insurance company.
5 (6) Claims for wages or salaries, excluding vacation,
6 severance, and sick leave pay earned by employees for
7 services rendered within 90 days prior to the date of
8 filing of the complaint for dissolution, shall be paid from
9 the assets of the title insurance company.
10 (7) All other claims of general creditors not falling
11 within any priority under this subsection (l) including
12 claims for taxes and debts due any state or local
13 government which are not secured claims and claims for
14 attorney's fees incurred by the title insurance company in
15 contesting the dissolution shall be paid from the assets of
16 the title insurance company.
17 (8