Public Act 098-0866
 
SB2002 EnrolledLRB098 06513 JDS 36556 b

    AN ACT concerning government.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The Trusts and Trustees Act is amended by
changing Section 16.3 as follows:
 
    (760 ILCS 5/16.3)
    Sec. 16.3. Directed trusts.
    (a) Definitions. In this Section:
        (1) "Directing party" means any investment trust
    advisor, distribution trust advisor, or trust protector as
    provided in this Section.
        (2) "Distribution trust advisor" means any one or more
    persons given authority by the governing instrument to
    direct, consent to, veto, or otherwise exercise all or any
    portion of the distribution powers and discretions of the
    trust, including but not limited to authority to make
    discretionary distribution of income or principal.
        (3) "Excluded fiduciary" means any fiduciary that by
    the governing instrument is directed to act in accordance
    with the exercise of specified powers by a directing party,
    in which case such specified powers shall be deemed granted
    not to the fiduciary but to the directing party and such
    fiduciary shall be deemed excluded from exercising such
    specified powers. If a governing instrument provides that a
    fiduciary as to one or more specified matters is to act,
    omit action, or make decisions only with the consent of a
    directing party, then such fiduciary is an excluded
    fiduciary with respect to such matters. Notwithstanding
    any provision of this Section to the contrary, a person
    does not fail to qualify as an excluded fiduciary solely by
    reason of having effectuated, participated in, or
    consented to a transaction, including but not limited to
    any transaction described in Section 16.1 or Section 16.4
    of this Act, invoking the provisions of this Section with
    respect to any new or existing trust.
        (4) "Fiduciary" means any person expressly given one or
    more fiduciary duties by the governing instrument,
    including but not limited to a trustee.
        (5) "Governing instrument" refers to the instrument
    stating the terms of a trust, including but not limited to
    any court order or nonjudicial settlement agreement
    establishing, construing, or modifying the terms of the
    trust in accordance with Section 16.1, 16.4, or 16.6 or
    other applicable law.
        (6) "Investment trust advisor" means any one or more
    persons given authority by the governing instrument to
    direct, consent to, veto, or otherwise exercise all or any
    portion of the investment powers of the trust.
        (7) "Power" means authority to take or withhold an
    action or decision, including but not limited to an
    expressly specified power, the implied power necessary to
    exercise a specified power, and authority inherent in a
    general grant of discretion.
        (8) "Trust protector" means any one or more persons
    given any one or more of the powers specified in subsection
    (d), whether or not designated with the title of trust
    protector by the governing instrument.
    (b) Powers of investment trust advisor. An investment trust
advisor may be designated in the governing instrument of a
trust. The powers of an investment trust advisor may be
exercised or not exercised in the sole and absolute discretion
of the investment trust advisor, and are binding on all other
persons, including but not limited to each beneficiary,
fiduciary, excluded fiduciary, and any other party having an
interest in the trust. The governing instrument may use the
title "investment trust advisor" or any similar name or
description demonstrating the intent to provide for the office
and function of an investment trust advisor. Unless the terms
of the governing instrument provide otherwise, the investment
trust advisor has the authority to:
        (1) direct the trustee with respect to the retention,
    purchase, transfer, assignment, sale, or encumbrance of
    trust property and the investment and reinvestment of
    principal and income of the trust;
        (2) direct the trustee with respect to all management,
    control, and voting powers related directly or indirectly
    to trust assets, including but not limited to voting
    proxies for securities held in trust;
        (3) select and determine reasonable compensation of
    one or more advisors, managers, consultants, or
    counselors, including the trustee, and to delegate to them
    any of the powers of the investment trust advisor in
    accordance with subsection (b) of Section 5.1; and
        (4) determine the frequency and methodology for
    valuing any asset for which there is no readily available
    market value.
    (c) Powers of distribution trust advisor. A distribution
trust advisor may be designated in the governing instrument of
a trust. The powers of a distribution trust advisor may be
exercised or not exercised in the sole and absolute discretion
of the distribution trust advisor, and are binding on all other
persons, including but not limited to each beneficiary,
fiduciary, excluded fiduciary, and any other party having an
interest in the trust. The governing instrument may use the
title "distribution trust advisor" or any similar name or
description demonstrating the intent to provide for the office
and function of a distribution trust advisor. Unless the terms
of the governing instrument provide otherwise, the
distribution trust advisor has authority to direct the trustee
with regard to all decisions relating directly or indirectly to
discretionary distributions to or for one or more
beneficiaries.
    (d) Powers of trust protector. A trust protector may be
designated in the governing instrument of a trust. The powers
of a trust protector may be exercised or not exercised in the
sole and absolute discretion of the trust protector, and are
binding on all other persons, including but not limited to each
beneficiary, investment trust advisor, distribution trust
advisor, fiduciary, excluded fiduciary, and any other party
having an interest in the trust. The governing instrument may
use the title "trust protector" or any similar name or
description demonstrating the intent to provide for the office
and function of a trust protector. The powers granted to a
trust protector by the governing instrument may include but are
not limited to authority to do any one or more of the
following:
        (1) modify or amend the trust instrument to achieve
    favorable tax status or respond to changes in the Internal
    Revenue Code, federal laws, State law, or the rulings and
    regulations under such laws;
        (2) increase, decrease, or modify the interests of any
    beneficiary or beneficiaries of the trust;
        (3) modify the terms of any power of appointment
    granted by the trust; provided, however, such modification
    or amendment may not grant a beneficial interest to any
    individual, class of individuals, or other parties not
    specifically provided for under the trust instrument;
        (4) remove, appoint, or remove and appoint, a trustee,
    investment trust advisor, distribution trust advisor,
    another directing party, investment committee member, or
    distribution committee member, including designation of a
    plan of succession for future holders of any such office;
        (5) terminate the trust, including determination of
    how the trustee shall distribute the trust property to be
    consistent with the purposes of the trust;
        (6) change the situs of the trust, the governing law of
    the trust, or both;
        (7) appoint one or more successor trust protectors,
    including designation of a plan of succession for future
    trust protectors;
        (8) interpret terms of the trust instrument at the
    request of the trustee;
        (9) advise the trustee on matters concerning a
    beneficiary; or
        (10) amend or modify the trust instrument to take
    advantage of laws governing restraints on alienation,
    distribution of trust property, or to improve the
    administration of the trust.
    If a charity is a current beneficiary or a presumptive
remainder beneficiary of the trust, a trust protector must give
notice to the Attorney General's Charitable Trust Bureau at
least 60 days before taking any of the actions authorized under
item (2), (3), (4), (5), or (6) of this subsection. The
Attorney General's Charitable Trust Bureau may, however, waive
this notice requirement.
    (e) Duty and liability of directing party. A directing
party is a fiduciary of the trust subject to the same duties
and standards applicable to a trustee of a trust as provided by
applicable law unless the governing instrument provides
otherwise, but the governing instrument may not, however,
relieve or exonerate a directing party from the duty to act or
withhold acting as the directing party in good faith reasonably
believes is in the best interests of the trust.
    (f) Duty and liability of excluded fiduciary. The excluded
fiduciary shall act in accordance with the governing instrument
and comply with the directing party's exercise of the powers
granted to the directing party by the governing instrument.
Unless otherwise provided in the governing instrument, an
excluded fiduciary has no duty to monitor, review, inquire,
investigate, recommend, evaluate, or warn with respect to a
directing party's exercise or failure to exercise any power
granted to the directing party by the governing instrument,
including but not limited to any power related to the
acquisition, disposition, retention, management, or valuation
of any asset or investment. Except as otherwise provided in
this Section or the governing instrument, an excluded fiduciary
is not liable, either individually or as a fiduciary, for any
action, inaction, consent, or failure to consent by a directing
party, including but not limited to any of the following:
        (1) if a governing instrument provides that an excluded
    fiduciary is to follow the direction of a directing party,
    and such excluded fiduciary acts in accordance with such a
    direction, then except in cases of willful misconduct on
    the part of the excluded fiduciary in complying with the
    direction of the directing party, the excluded fiduciary is
    not liable for any loss resulting directly or indirectly
    from following any such direction, including but not
    limited to compliance regarding the valuation of assets for
    which there is no readily available market value;
        (2) if a governing instrument provides that an excluded
    fiduciary is to act or omit to act only with the consent of
    a directing party, then except in cases of willful
    misconduct on the part of the excluded fiduciary, the
    excluded fiduciary is not liable for any loss resulting
    directly or indirectly from any act taken or omitted as a
    result of such directing party's failure to provide such
    consent after having been asked to do so by the excluded
    fiduciary; or
        (3) if a governing instrument provides that, or for any
    other reason, an excluded fiduciary is required to assume
    the role or responsibilities of a directing party, or if
    the excluded party appoints a directing party or successor
    to a directing party, then the excluded fiduciary shall
    also assume the same fiduciary and other duties and
    standards that applied to such directing party.
    (g) Submission to court jurisdiction; effect on directing
party. By accepting an appointment to serve as a directing
party of a trust that is subject to the laws of this State, the
directing party submits to the jurisdiction of the courts of
this State even if investment advisory agreements or other
related agreements provide otherwise, and the directing party
may be made a party to any action or proceeding if issues
relate to a decision or action of the directing party.
    (h) Duty to inform excluded fiduciary. Each directing party
shall keep the excluded fiduciary and any other directing party
reasonably informed regarding the administration of the trust
with respect to any specific duty or function being performed
by the directing party to the extent that the duty or function
would normally be performed by the excluded fiduciary or to the
extent that providing such information to the excluded
fiduciary or other directing party is reasonably necessary for
the excluded fiduciary or other directing party to perform its
duties, and the directing party shall provide such information
as reasonably requested by the excluded fiduciary or other
directing party. Neither the performance nor the failure to
perform of a directing party's duty to inform as provided in
this subsection affects whatsoever the limitation on the
liability of the excluded fiduciary as provided in this
Section.
    (i) Reliance on counsel. An excluded fiduciary may, but is
not required to, obtain and rely upon an opinion of counsel on
any matter relevant to this Section.
    (j) Applicability. On and after its effective date, this
Section applies to:
        (1) all existing and future trusts that appoint or
    provide for a directing party, including but not limited to
    a party granted power or authority effectively comparable
    in substance to that of a directing party as provided in
    this Section; or
        (2) any existing or future trust that:
            (A) is modified in accordance with applicable law
        or the terms of the governing instrument to appoint or
        provide for a directing party; or
            (B) is modified to appoint or provide for a
        directing party, including but not limited to a party
        granted power or authority effectively comparable in
        substance to that of a directing party, in accordance
        with (i) a court order, or (ii) a nonjudicial
        settlement agreement made in accordance with Section
        16.1, whether or not such order or agreement specifies
        that this Section governs the responsibilities,
        actions, and liabilities of persons designated as a
        directing party or excluded fiduciary.
(Source: P.A. 97-921, eff. 1-1-13.)

Effective Date: 1/1/2015