September 25, 2020
By: Emily C. Kaminski
Illinois has revised its trust laws with a new Trust Code. The new law applies to all trusts. Here are some highlights of the Trust Code:
Accounts: The trustee must deliver an annual accounting to (a) all current beneficiaries; and (b) all presumptive remainder beneficiaries. The creator of the trust (called the settlor) can limit the duty to account to presumptive remainder beneficiaries but cannot limit the duty to account to current beneficiaries. An example: If your trust gives some assets to your spouse and then to your children after your spouse dies, the new law requires an annual accounting to your spouse and to your children, but the trust document can avoid the requirement of sending the accounting to your children during your spouse’s lifetime.
Notice: The trustee must send notice to current beneficiaries and presumptive remainders in five instances: (a) when a trust becomes irrevocable; (b) when there is a new trustee or a change in the trustee’s contact information; (c) when a trustee resigns; (d) when a trustee is changed; or (e) when there is a change in the trustee’s compensation. The trust document can narrow or eliminate all except the first: notice that trust has become irrevocable must be given within 90 days.
Designated Representative: The settlor may designate a person in the governing document to represent and bind beneficiaries other than a current beneficiary that has attained age 30. The designated representative is a fiduciary subject to the standards applicable to a trustee.
Duty to Inform: The trustee must notify all qualified beneficiaries of the following: (a) the trust’s existence; (b) the beneficiary’s right to request a complete copy of the trust instrument; and (c) whether or not such beneficiary has the right to receive or request accountings. This duty cannot be eliminated by the terms of the trust agreement.
Statute of Limitations: The time to commence a trust contest is limited to the earlier of two years after the settlor’s death, or six months after the date the trustee sends notice of the trust to the beneficiaries.
Nine-month period. Nine months after the date of the death of the settlor of a revocable trust, the trustee may distribute the trust property in accordance with the trust instrument.
Estate planning documents should be reviewed to include the new duties for the trustees and to update all plans to be in compliance with the Trust Code.