|
|||||||
| |||||||
| |||||||
1 | AN ACT concerning civil law.
| ||||||
2 | Be it enacted by the People of the State of Illinois, | ||||||
3 | represented in the General Assembly:
| ||||||
4 | Section 5. The Trusts and Trustees Act is amended by adding | ||||||
5 | Section 5.4 as follows: | ||||||
6 | (760 ILCS 5/5.4 new) | ||||||
7 | Sec. 5.4. Spendthrift trusts. | ||||||
8 | (a) For trusts created on or after the effective date of | ||||||
9 | this amendatory Act of the 96th General Assembly, a settlor who | ||||||
10 | in writing irrevocably transfers property in any manner to a | ||||||
11 | trust having at least one trustee as defined in subsection (b) | ||||||
12 | of this Section may, subject to the limitations in subsection | ||||||
13 | (c) of this Section, provide that the income or principal | ||||||
14 | interest of the settlor as beneficiary may not be either | ||||||
15 | voluntarily or involuntarily transferred before payment or | ||||||
16 | delivery to the settlor as beneficiary by the trustee. This | ||||||
17 | Section shall be considered to be a restriction on the transfer | ||||||
18 | of the settlor's beneficial interest in the trust that is | ||||||
19 | enforceable under applicable nonbankruptcy law within the | ||||||
20 | meaning of Section 541(c)(2) of the Bankruptcy Code or any | ||||||
21 | successor provision. | ||||||
22 | (b) If the settlor is a beneficiary of the trust, at least | ||||||
23 | one trustee of a trust described in this Section must be a |
| |||||||
| |||||||
1 | corporate fiduciary who: | ||||||
2 | (1) is authorized by the laws of this State to act as a | ||||||
3 | trustee and whose activities are subject to supervision by | ||||||
4 | the Director of the Division of Banking of this State, the | ||||||
5 | Office of the Comptroller of the Currency, or the Office of | ||||||
6 | Thrift Supervision, or any successor thereto; and | ||||||
7 | (2) maintains or arranges for custody in this State of | ||||||
8 | some or all of the property that is the subject of the | ||||||
9 | trust described in this Section, maintains records for the | ||||||
10 | trust on an exclusive or nonexclusive basis, prepares or | ||||||
11 | arranges for the preparation of fiduciary income tax | ||||||
12 | returns for the trust, or otherwise materially | ||||||
13 | participates in the administration of the trust. | ||||||
14 | (c)(1) Except as provided in this subsection, if a trust | ||||||
15 | has a restriction as provided in subsection (a) of this | ||||||
16 | Section, a creditor or other claimant of the settlor may not | ||||||
17 | satisfy a claim, or liability on a claim, in either law or | ||||||
18 | equity, out of the settlor's transfer or the settlor's | ||||||
19 | beneficial interest in the trust. For purposes of this Section, | ||||||
20 | a creditor includes one holding or seeking to enforce a | ||||||
21 | judgment entered by a court or other body having adjudicative | ||||||
22 | authority as well as one with a right to payment, whether or | ||||||
23 | not reduced to judgment, liquidated, unliquidated, fixed, | ||||||
24 | contingent, matured, unmatured, disputed, undisputed, legal, | ||||||
25 | equitable, secured, or unsecured. | ||||||
26 | (2) A trust described in this Section does not prevent a |
| |||||||
| |||||||
1 | creditor or person described in this subsection (c) from | ||||||
2 | satisfying a claim or liability out of the settlor's beneficial | ||||||
3 | interest in or transfer into trust if: | ||||||
4 | (A) the claim is a judgment, order, decree, or other | ||||||
5 | legally enforceable decision or ruling resulting from a | ||||||
6 | judicial, arbitration, mediation, or administrative | ||||||
7 | proceeding commenced prior to or within 3 years after the | ||||||
8 | trust is created; | ||||||
9 | (B) the settlor's transfer into trust is made with | ||||||
10 | actual intent to hinder, delay, or defraud that creditor or | ||||||
11 | claimant; | ||||||
12 | (C) the trust provides that the settlor may revoke or | ||||||
13 | terminate all or part of the trust; | ||||||
14 | (D) the claim is for a payment owed by the settlor | ||||||
15 | under a child support judgment or order; | ||||||
16 | (E) the claim is by a spouse or former spouse of the | ||||||
17 | settlor on account of an agreement or court order for the | ||||||
18 | payment of support or maintenance or for a division or | ||||||
19 | distribution of property; | ||||||
20 | (F) the claim is a tax or other amount owed by the | ||||||
21 | settlor to any governmental entity; | ||||||
22 | (G) the claim is by a governmental entity for recovery | ||||||
23 | of public assistance received by the settlor from the | ||||||
24 | governmental entity; | ||||||
25 | (H) the transfer is made when the settlor is insolvent | ||||||
26 | or the transfer renders the settlor insolvent; |
| |||||||
| |||||||
1 | (I) the claim is a judgment, award, order, sentence, | ||||||
2 | fine, penalty, or other determination of liability of the | ||||||
3 | settlor for conduct of the settlor constituting fraud, | ||||||
4 | intentional infliction of harm, or a crime; or | ||||||
5 | (J) the settlor transferred assets into the trust that: | ||||||
6 | (i) were listed in a written representation of the | ||||||
7 | settlor's assets given to a claimant to induce the claimant | ||||||
8 | to enter into a transaction or agreement with the settlor; | ||||||
9 | or (ii) were transferred from the settlor's control in | ||||||
10 | breach of any written agreement, covenant, or security | ||||||
11 | interest between the settlor and the claimant. | ||||||
12 | (d) The statute of limitations for actions to satisfy a | ||||||
13 | claim or liability out of the settlor's beneficial interest in | ||||||
14 | or transfer into trust under this Section is the statute of | ||||||
15 | limitations applicable to the underlying action. | ||||||
16 | (e) The satisfaction of a claim under this Section is | ||||||
17 | limited to that part of the trust or transfer to which it | ||||||
18 | applies. | ||||||
19 | (f) For purposes of this Section, a trust is not revoked or | ||||||
20 | terminated by: | ||||||
21 | (1) a power to veto a distribution from the trust; | ||||||
22 | (2) a testamentary special power of appointment or | ||||||
23 | similar power; | ||||||
24 | (3) the right to receive a distribution of income, | ||||||
25 | principal, or both in the discretion of another, including | ||||||
26 | a trustee other than the settlor; |
| |||||||
| |||||||
1 | (4) an interest in a charitable remainder unitrust or | ||||||
2 | charitable remainder annuity trust as defined in Internal | ||||||
3 | Revenue Code Section 664 or any successor provision; | ||||||
4 | (5) a right to receive principal subject to an | ||||||
5 | ascertainable standard set forth in the trust; or | ||||||
6 | (6) the power to appoint a nonsubordinate adviser or | ||||||
7 | trust protector who can remove and appoint trustees, who | ||||||
8 | can direct, consent to, or disapprove distributions, or who | ||||||
9 | is an investment adviser or has the power to appoint an | ||||||
10 | investment adviser or investment director pursuant to the | ||||||
11 | laws of this State. | ||||||
12 | (g) The courts of this State shall have exclusive | ||||||
13 | jurisdiction over any action brought under this Section. |