THE ILLINOIS TRUST CODE: A Version of the Uniform Trust ... CBA proposed Illinois... ·...

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Transcript of THE ILLINOIS TRUST CODE: A Version of the Uniform Trust ... CBA proposed Illinois... ·...

  • THE ILLINOIS TRUST CODE:

    A Version of the Uniform Trust Code Modified for Illinois

    As Drafted by the CBA Trust Law/UTC Subcommittee Dated November 16, 2015

    Adapted from the Uniform Trust Code

    Originally drafted by the

    NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS

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    THE ILLINOIS TRUST CODE

    TABLE OF CONTENTS

    ARTICLE 1 GENERAL PROVISIONS AND DEFINITIONS

    SECTION 101. SHORT TITLE SECTION 102. SCOPE SECTION 103. DEFINITIONS SECTION 104. KNOWLEDGE SECTION 105. DEFAULT AND MANDATORY RULES. SECTION 106. COMMON LAW OF TRUSTS; PRINCIPLES OF EQUITY SECTION 107. GOVERNING LAW SECTION 108. PRINCIPAL PLACE OF ADMINISTRATION. SECTION 109. METHODS AND WAIVER OF NOTICE SECTION 110. OTHERS TREATED AS QUALIFIED BENEFICIARIES SECTION 111. NONJUDICIAL SETTLEMENT AGREEMENTS SECTION 112. RULES OF CONSTRUCTION SECTION 113. INSURABLE INTEREST OF TRUSTEE SECTION 114. GIFT TO A DECEASED BENEFICIARY UNDER AN INTER VIVOS TRUST

    ARTICLE 2 JUDICIAL PROCEEDINGS

    SECTION 201. ROLE OF COURT IN ADMINISTRATION OF TRUSTS SECTION 202. JURISDICTION OVER TRUSTEE AND BENEFICIARY SECTION 203. [RESERVED] SECTION 204. VENUE

    ARTICLE 3 REPRESENTATION

    SECTION 301. REPRESENTATION: BASIC EFFECT SECTION 302. REPRESENTATION BY HOLDERS OF CERTAIN POWERS

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    SECTION 303. REPRESENTATION BY OTHERS SECTION 304. [RESERVED] SECTION 305. APPOINTMENT OF REPRESENTATIVE SECTION 306. REPRESENTATION OF CHARITY SECTION 307. DESIGNATED REPRESENTATIVE

    ARTICLE 4 CREATION, VALIDITY, MODIFICATION,

    AND TERMINATION OF TRUST

    SECTION 401. METHODS OF CREATING TRUST SECTION 402. REQUIREMENTS FOR CREATION SECTION 403. TRUSTS CREATED IN OTHER JURISDICTIONS SECTION 404. TRUST PURPOSES SECTION 405. CHARITABLE PURPOSES; ENFORCEMENT SECTION 406. CREATION OF TRUST INDUCED BY FRAUD, DURESS, OR UNDUE INFLUENCE. SECTION 407. EVIDENCE OF ORAL TRUST SECTION 408. TRUSTS FOR DOMESTIC OR PET ANIMALS SECTION 409. NONCHARITABLE TRUST WITHOUT ASCERTAINABLE BENEFICIARY SECTION 410. MODIFICATION OR TERMINATION OF TRUST; PROCEEDINGS FOR APPROVAL OR DISAPPROVAL SECTION 411. MODIFICATION OR TERMINATION OF NONCHARITABLE IRREVOCABLE TRUST BY CONSENT SECTION 412. MODIFICATION OR TERMINATION BECAUSE OF UNANTICIPATED CIRCUMSTANCES OR INABILITY TO ADMINISTER TRUST EFFECTIVELY SECTION 413. CY PRES SECTION 414. MODIFICATION OR TERMINATION OF UNECONOMIC TRUST SECTION 415. REFORMATION TO CORRECT MISTAKES SECTION 416. MODIFICATION TO ACHIEVE SETTLORS TAX OBJECTIVES SECTION 417. COMBINATION AND DIVISION OF TRUSTS

    ARTICLE 5 CREDITORS CLAIMS; SPENDTHRIFT

    AND DISCRETIONARY TRUSTS

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    SECTION 501. RIGHTS OF BENEFICIARYS CREDITOR OR ASSIGNEE SECTION 502. SPENDTHRIFT PROVISION SECTION 503. EXCEPTIONS TO SPENDTHRIFT PROVISION SECTION 504. DISCRETIONARY DISTRIBUTIONS; EFFECT OF STANDARD SECTION 505. CREDITORS CLAIM AGAINST SETTLOR SECTION 506. OVERDUE DISTRIBUTION SECTION 507. PERSONAL OBLIGATIONS OF TRUSTEE SECTION 508. LAPSE OF POWER TO WITHDRAW SECTION 509. TRUST FOR DISABLED BENEFICIARY

    ARTICLE 6 REVOCABLE TRUSTS

    SECTION 601. CAPACITY OF SETTLOR OF REVOCABLE TRUST SECTION 602. REVOCATION OR AMENDMENT OF REVOCABLE TRUST SECTION 603. SETTLORS POWERS; POWERS OF WITHDRAWAL SECTION 604. LIMITATION ON ACTION CONTESTING VALIDITY OF REVOCABLE TRUST; DISTRIBUTION OF TRUST PROPERTY SECTION 605. REVOCATION OF PROVISIONS IN REVOCABLE TRUST BY DIVORCE OR ANNULMENT

    ARTICLE 7 OFFICE OF TRUSTEE

    SECTION 701. ACCEPTING OR DECLINING TRUSTEESHIP SECTION 702. TRUSTEES BOND SECTION 703. COTRUSTEES SECTION 704. VACANCY IN TRUSTEESHIP; APPOINTMENT OF SUCCESSOR SECTION 705. RESIGNATION OF TRUSTEE SECTION 706. REMOVAL OF TRUSTEE SECTION 707. DELIVERY OF PROPERTY BY FORMER TRUSTEE SECTION 708. COMPENSATION OF TRUSTEE SECTION 709. REIMBURSEMENT OF EXPENSES

    ARTICLE 8 DUTIES AND POWERS OF TRUSTEE

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    SECTION 801. DUTY TO ADMINISTER TRUST SECTION 802. DUTY OF LOYALTY SECTION 803. IMPARTIALITY SECTION 804. PRUDENT ADMINISTRATION SECTION 805. COSTS OF ADMINISTRATION SECTION 806. [RESERVED] SECTION 807. DELEGATION BY TRUSTEE SECTION 808. DIRECTED TRUSTS SECTION 809. CONTROL AND PROTECTION OF TRUST PROPERTY SECTION 810. RECORDKEEPING AND IDENTIFICATION OF TRUST PROPERTY SECTION 811. ENFORCEMENT AND DEFENSE OF CLAIMS SECTION 812. POWERS AND DUTIES OF SUCCESSOR; LIABILITY FOR ACTS OF PREDECESSOR; APPROVAL OF ACCOUNTS SECTION 813.1 DUTY TO INFORM AND ACCOUNT; TRUSTS IRREVOCABLE AND TRUSTEES ACCEPTING APPOINTMENT AFTER EFFECTIVE DATE OF THIS CODE SECTION 813.2 DUTY TO INFORM AND ACCOUNT; TRUSTS IRREVOCABLE AND TRUSTEES ACCEPTING APPOINTMENT PRIOR TO THE EFFECTIVE DATE OF THIS CODE SECTION 814. DISCRETIONARY POWERS; TAX SAVINGS

    SECTION 815. GENERAL POWERS OF TRUSTEE SECTION 816. SPECIFIC POWERS OF TRUSTEE SECTION 817. DISTRIBUTION UPON TERMINATION SECTION 818. NOTICE OF PROPOSED ACTION SECTION 819. NOMINEE REGISTRATION SECTION 820. PROCEEDS OF EMINENT DOMAIN OR PARTITION SECTION 821. LANDS OR ESTATES SUBJECT TO FUTURE INTEREST OR POWER OF APPOINTMENT; WASTE; APPOINTMENT OF TRUSTEE

    ARTICLE 9 PRUDENT INVESTOR ACT, LIFE INSURANCE AND AFFILIATED INVESTMENTS

    SECTION 901. PRUDENT INVESTOR RULE

    SECTION 902. STANDARD OF CARE; PORTFOLIO STRATEGY; RISK AND RETURN OBJECTIVES.

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    SECTION 903. DIVERSIFICATION

    SECTION 904. DUTIES AT INCEPTION OF TRUSTEESHIP

    SECTION 905. COURT ACTION

    SECTION 906. [RESERVED]

    SECTION 907. [RESERVED]

    SECTION 908. REVIEWING COMPLIANCE

    SECTION 909. DELEGATION OF INVESTMENT AND MANAGEMENT FUNCTIONS

    SECTION 910. LANGUAGE INVOKING STANDARD OF ARTICLE

    SECTION 911. SHORT TITLE

    SECTION 912. EFFECTIVE DATE

    SECTION 913. LIFE INSURANCE SECTION 914. INVESTMENTS IN AFFILIATED INVESTMENTS; TRANSACTIONS WITH AFFILIATES

    ARTICLE 10 LIABILITY OF TRUSTEES AND RIGHTS OF PERSONS DEALING WITH TRUSTEE

    SECTION 1001. REMEDIES FOR BREACH OF TRUST SECTION 1002. DAMAGES FOR BREACH OF TRUST SECTION 1003. NO DAMAGES IN ABSENCE OF BREACH SECTION 1004. ATTORNEYS FEES AND COSTS SECTION 1005. LIMITATION ON ACTION AGAINST TRUSTEE SECTION 1006. RELIANCE ON TRUST INSTRUMENT SECTION 1007. EVENT AFFECTING ADMINISTRATION OR DISTRIBUTION SECTION 1008. EXCULPATION OF TRUSTEE. SECTION 1009. BENEFICIARYS CONSENT, RELEASE, OR RATIFICATION SECTION 1010. LIMITATION ON PERSONAL LIABILITY OF TRUSTEE SECTION 1011. INTEREST AS GENERAL PARTNER SECTION 1012. PROTECTION OF PERSON DEALING WITH TRUSTEE SECTION 1013. CERTIFICATION OF TRUST SECTION 1014. RELIANCE ON COMMISSIONER OF BANKS AND REAL ESTATE

    ARTICLE 11

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    TOTAL RETURN TRUSTS SECTION 1101. GENERAL SECTION 1102. CONVERSION BY TRUSTEE SECTION 1103. CONVERSION BY AGREEMENT SECTION 1104. CONVERSION OR RECONVERSION BY COURT SECTION 1105. POST CONVERSION SECTION 1106. ADMINISTRATION SECTION 1107. ALLOCATIONS SECTION 1108. RESTRICTIONS SECTION 1109. TAX LIMITATIONS SECTION 1110. RELEASES SECTION 1111. REMEDIES SECTION 1112. APPLICATION SECTION 1113. APPLICATION TO EXPRESS TRUSTS

    ARTICLE 12 TRUST DECANTING ACT

    SECTION 1201. SHORT TITLE SECTION 1202. DEFINITIONS SECTION 1203. SCOPE SECTION 1204. FIDUCIARY DUTY SECTION 1205. APPLICATION; GOVERNING LAW SECTION 1206. REASONABLE RELIANCE SECTION 1207. NOTICE SECTION 1208. [RESERVED] SECTION 1209. COURT INVOLVEMENT SECTION 1210. FORMALITIES SECTION 1211. DECANTING POWER UNDER EXPANDED DISTRIBUTIVE DISCRETION SECTION 1212. DECANTING POWER UNDER LIMITED DISTRIBUTIVE DISCRETION SECTION 1213. TRUST FOR BENEFICIARY WITH DISABILITY SECTION 1214. PROTECTION OF CHARTIABLE INTERESTS SECTION 1215. TRUST LIMITATION ON DECANTING

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    SECTION 1216. CHANGE IN COMPENSATION SECTION 1217. RELIEF FROM LIABILITY AND INDEMNIFICATION SECTION 1218. REMOVAL OR REPLACEMENT OF AUTHORIZED FIDUCIARY SECTION 1219. TAX-RELATED LIMITATIONS SECTION 1220. DURATION OF SECOND TRUST SECTION 1221. NEED TO DISTRIBUTE NOT REQUIRED SECTION 1222. SAVINGS PROVISION SECTION 1223. TRUST FOR CARE OF ANIMAL SECTION 1224. [RESERVED] SECTION 1225. SETTLOR SECTION 1226. LATER-DISCOVERED PROPERTY SECTION 1227. OBLIGATIONS

    ARTICLE 13 UNIFORM POWERS OF APPOINTMENT

    SECTION 1301. SHORT TITLE SECTION 1302. DEFINITIONS SECTION 1303. GOVERNING LAW SECTION 1304. COMMON LAW AND PRINCIPLES OF EQUITY SECTION 1305. CREATION OF POWER OF APPOINTMENT SECTION 1306. NONTRANSFERABILITY SECTION 1307. PRESUMPTION OF UNLIMITED AUTHORITY SECTION 1308. EXCEPTION TO PRESUMPTION OF UNLIMITED AUTHORITY SECTION 1309. RULES OF CLASSIFICATION SECTION 1310. POWER TO REVOKE OR AMEND SECTION 1311. REQUISITES FOR EXERCISE OF POWER OF APPOINTMENT SECTION 1312. INTENT TO EXERCISE: DETERMINING INTENT FROM RESIDUARY CLAUSE SECTION 1313. INTENT TO EXERCISE: AFTER-ACQUIRED POWER. SECTION 1314. SUBSTANTIAL COMPLIANCE WITH DONOR-IMPOSED FORMAL REQUIREMENT SECTION 1315. PERMISSIBLE APPOINTMENT SECTION 1316. APPOINTMENT TO DECEASED APPOINTEE SECTION 1317. IMPERMISSIBLE APPOINTMENT

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    SECTION 1318. SELECTIVE ALLOCATION DOCTRINE SECTION 1319. CAPTURE DOCTRINE: DISPOSITION OF INEFFECTIVELY APPOINTED PROPERTY UNDER GENERAL POWER SECTION 1320. DISPOSITION OF UNAPPOINTED PROPERTY UNDER RELEASED OR UNEXERCISED GENERAL POWER SECTION 1321. DISPOSITION OF UNAPPOINTED PROPERTY UNDER RELEASED OR UNEXERCISED NONGENERAL POWER SECTION 1322. DISPOSITION OF UNAPPOINTED PROPERTY IF PARTIAL APPOINTMENT TO TAKER IN DEFAULT SECTION 1323. APPOINTMENT TO TAKER IN DEFAULT SECTION 1324. POWERHOLDERS AUTHORITY TO REVOKE OR AMEND EXERCISE SECTION 1325. DISPOSITION OF TRUST PROPERTY SUBJECT TO POWER. SECTION 1326. DISCLAIMER SECTION 1327. AUTHORITY TO RELEASE SECTION 1328. METHOD OF RELEASE SECTION 1329. REVOCATION OR AMENDMENT OF RELEASE SECTION 1330. POWER TO CONTRACT: PRESENTLY EXERCISABLE POWER OF APPOINTMENT SEC