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91_SB1690enr
SB1690 Enrolled LRB9111451DJcd
1 AN ACT to amend the Principal and Income Act by changing
2 Section 14.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Principal and Income Act is amended by
6 changing Section 14 as follows:
7 (760 ILCS 15/14) (from Ch. 30, par. 514)
8 Sec. 14. Charges against income and principal.
9 (a) The following charges shall be made against income:
10 (1) ordinary expenses, other than compensation as
11 provided in paragraph (6) of this subsection (a),
12 incurred by the trustee in connection with the
13 administration or protection of the trust property,
14 including regularly recurring taxes assessed against any
15 portion of the principal, water rates, premiums on
16 insurance taken upon the interests of the income
17 beneficiary, remainderman, or trustee, interest paid by
18 the trustee (except interest on taxes as provided in
19 paragraphs paragraph (7) and (8) of this subsection and
20 paragraphs (5), (6), and (7) of subsection (c)), ordinary
21 repairs and maintenance;
22 (2) (blank); a reasonable allowance for
23 depreciation on property which is subject to depreciation
24 under generally accepted accounting principles, but no
25 allowance shall be made for depreciation of any property
26 subject to a trust under an instrument executed before
27 the effective date of this Act, or for depreciation of
28 that portion of any real property used by a beneficiary
29 as a residence; such allowance shall be charged only
30 against the income from the property subject to
31 depreciation and shall not accrue from year to year;
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1 (3) one-half of court costs, attorney's fees and
2 other expenses and fees on any judicial accounting,
3 unless the court directs otherwise;
4 (4) court costs, attorney's fees and other expenses
5 and fees on other judicial proceedings if the matter
6 primarily concerns the income interest, unless the court
7 directs otherwise;
8 (5) special compensation and expenses of or
9 incurred by the trustee in connection with income;
10 (6) one-half of the regular compensation of the
11 trustee, attorney, investment counsel, custodian or
12 accountant, subject to paragraph (1) of subsection (c);
13 (7) any tax, including interest and penalties
14 thereon, levied upon receipts defined as income under
15 this Act or the trust instrument and payable by the
16 trustee;.
17 (8) one-half of the interest on all estate,
18 inheritance, and generation-skipping transfer taxes
19 apportioned to the trust and one-half of the interest on
20 any penalties on those taxes.
21 (a-5) A reasonable allowance for depreciation on
22 property that is subject to depreciation under generally
23 accepted accounting principles may be charged by the trustee,
24 but no allowance shall be made for depreciation of that
25 portion of any real property used by a beneficiary as a
26 residence. Such an allowance shall be charged only against
27 the income from the property subject to depreciation and
28 shall not accrue from year to year.
29 (b) If charges against income are of an unusual amount,
30 the trustee may by means of reserves or other reasonable
31 means charge them over a reasonable period of time and
32 withhold from distribution sufficient sums to regularize
33 distributions.
34 (c) The following charges shall be made against
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1 principal:
2 (1) one-half of the regular compensation of the
3 trustee, attorney, investment counsel, custodian or
4 accountant shall be paid out of principal, provided that,
5 if in the judgment of the trustee, the charging of a part
6 or all of that portion of such compensation to principal
7 is impracticable because of the lack of sufficient
8 principal cash and readily marketable intangible personal
9 property, or inadvisable because of the nature of the
10 assets, that part or all of such compensation shall be
11 paid out of income. The decision of the trustee to pay a
12 larger portion or all of such compensation out of income
13 shall be conclusive, and the income of the trust shall
14 not be entitled to reimbursement from principal at any
15 subsequent time or times;
16 (2) special compensation and expenses of or
17 incurred by the trustee in connection with principal,
18 trustee's compensation computed on principal as an
19 acceptance, distribution or termination fee, and, unless
20 the court directs otherwise, court costs, attorney's fees
21 and other expenses and fees in judicial proceedings
22 primarily concerning matters of principal or in any
23 action to construe the trust or protect it or the
24 property or assure the title to any trust property;
25 (3) charges not provided for in subsection (a),
26 including the cost of investing and reinvesting
27 principal, the payments on principal of an indebtedness
28 (including a mortgage amortized by periodic payments of
29 principal), and expenses for preparation of property for
30 rental or sale;
31 (4) extraordinary repairs or expenses incurred in
32 making a capital improvement to principal, including
33 special assessments;
34 (4.5) costs and disbursements related to
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1 environmental matters, including reclamation, assessing
2 environmental conditions, remedying and removing
3 environmental contamination, monitoring remedial
4 activities and the release of substances, preventing
5 future releases of substances, collecting amounts from
6 persons liable or potentially liable for the costs of
7 those activities, penalties imposed under environmental
8 laws or regulations and other payments made to comply
9 with those laws or regulations, statutory or common law
10 claims by third parties, and defending claims based on
11 environmental matters;
12 (5) any tax, including interest and penalties
13 thereon, levied upon profit, gain, or other receipts
14 allocated to principal notwithstanding denomination of
15 the tax as an income tax by the taxing authority;
16 (6) any tax, including interest and penalties
17 thereon, levied upon amounts not actually received by the
18 trustee before the date the tax is payable, including
19 extensions, notwithstanding the denomination of the tax
20 as an income tax by the taxing authority, except that if,
21 in the judgment of the trustee, the charging against
22 principal of part or all of the tax is impracticable
23 because of a lack of sufficient principal cash and
24 readily marketable intangible personal property or
25 inadvisable because of the nature of the assets that part
26 or all of the tax shall be charged against income. The
27 decision of the trustee to charge part or all of the tax
28 against income shall be conclusive, and the income of the
29 trust shall not be entitled to reimbursement from
30 principal at any subsequent time or times. If any part
31 or all of the amount on which tax was previously paid and
32 charged against principal is later received by the
33 trustee and if the receipt is otherwise credited to
34 income, then when the amount is received the portion of
SB1690 Enrolled -5- LRB9111451DJcd
1 the tax previously paid and charged against principal
2 attributable to the amount so received shall be deducted
3 from the amount and credited to principal;
4 (7) all if an estate, inheritance, and or
5 generation-skipping transfer taxes and any penalties on
6 the taxes apportioned to the trust and one-half of the
7 interest on those taxes and penalties tax is levied in
8 respect of a trust in which both an income beneficiary
9 and a remainderman have an interest, any amount
10 apportioned to the trust, including interest and
11 penalties, even though the income beneficiary also has
12 rights in the principal, except that interest on any
13 portion of the tax deferred under a provision of the
14 statute imposing the tax shall be charged against income;
15 (8) a net loss in any fiscal or calendar year from
16 the operation of a business or an agricultural or farming
17 operation, to be repaid from income as available in the
18 succeeding year or years;
19 (9) monies paid for the purchase of options.
20 (Source: P.A. 82-390; 87-714.)
21 Section 99. Effective date. This Act takes effect upon
22 becoming law.
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