Full Text of SB2725 95th General Assembly
SB2725eng 95TH GENERAL ASSEMBLY
|
|
|
SB2725 Engrossed |
|
LRB095 05934 AJO 26026 b |
|
| 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 95th 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) (1) If the settlor is a beneficiary of the trust, at | 23 |
| least one trustee of a trust described in this Section must be |
|
|
|
SB2725 Engrossed |
- 2 - |
LRB095 05934 AJO 26026 b |
|
| 1 |
| a corporate fiduciary authorized by the laws of this State to | 2 |
| act as a trustee and whose activities are subject to | 3 |
| supervision by the Director of the Division of Banking of this | 4 |
| State, the Office of the Comptroller of the Currency, or the | 5 |
| Office of Thrift Supervision, or any successor thereto; and | 6 |
| (2) maintains or arranges for custody in this State of | 7 |
| some or all of the property that is the subject of the | 8 |
| trust described in this Section, maintains records for the | 9 |
| trust on an exclusive or nonexclusive basis, prepares or | 10 |
| arranges for the preparation of fiduciary income tax | 11 |
| returns for the trust, or otherwise materially | 12 |
| participates in the administration of the trust. | 13 |
| (c) (1) Except as provided in this subsection, if a trust | 14 |
| has a restriction as provided in subsection (a) of this | 15 |
| Section, a creditor or other claimant of the settlor may not | 16 |
| satisfy a claim, or liability on a claim, in either law or | 17 |
| equity, out of the settlor's transfer or the settlor's | 18 |
| beneficial interest in the trust. For purposes of this Section, | 19 |
| a creditor includes one holding or seeking to enforce a | 20 |
| judgment entered by a court or other body having adjudicative | 21 |
| authority as well as one with a right to payment, whether or | 22 |
| not reduced to judgment, liquidated, unliquidated, fixed, | 23 |
| contingent, matured, unmatured, disputed, undisputed, legal, | 24 |
| equitable, secured, or unsecured. | 25 |
| (2) A trust described in this Section does not prevent | 26 |
| a creditor or person described in this subsection (c) from |
|
|
|
SB2725 Engrossed |
- 3 - |
LRB095 05934 AJO 26026 b |
|
| 1 |
| satisfying a claim or liability out of the settlor's | 2 |
| beneficial interest in or transfer into trust if: | 3 |
| (i) the claim is a judgment, order, decree, or | 4 |
| other legally enforceable decision or ruling resulting | 5 |
| from a judicial, arbitration, mediation, or | 6 |
| administrative proceeding commenced prior to or within | 7 |
| 3 years after the trust is created; | 8 |
| (ii) the settlor's transfer into trust is made with | 9 |
| actual intent to hinder, delay, or defraud that | 10 |
| creditor or claimant; | 11 |
| (iii) the trust provides that the settlor may | 12 |
| revoke or terminate all or part of the trust; | 13 |
| (iv) the claim is for a payment owed by the settlor | 14 |
| under a child support judgment or order; | 15 |
| (v) the claim is by a spouse or former spouse of | 16 |
| the settlor on account of an agreement or court order | 17 |
| for the payment of support or maintenance or for a | 18 |
| division or distribution of property; | 19 |
| (vi) the claim is a tax or other amount owed by the | 20 |
| settlor to any governmental entity; | 21 |
| (vii) the claim is by a governmental entity for | 22 |
| recovery of public assistance received by the settlor | 23 |
| from the governmental entity; | 24 |
| (viii) the transfer is made when the settlor is | 25 |
| insolvent or the transfer renders the settlor | 26 |
| insolvent; |
|
|
|
SB2725 Engrossed |
- 4 - |
LRB095 05934 AJO 26026 b |
|
| 1 |
| (ix) the claim is a judgment, award, order, | 2 |
| sentence, fine, penalty, or other determination of | 3 |
| liability of the settlor for conduct of the settlor | 4 |
| constituting fraud, intentional infliction of harm, or | 5 |
| a crime; or | 6 |
| (x) the settlor transferred assets into the trust | 7 |
| that: (1) were listed in a written representation of | 8 |
| the settlor's assets given to a claimant to induce the | 9 |
| claimant to enter into a transaction or agreement with | 10 |
| the settlor; or (2) were transferred from the settlor's | 11 |
| control in breach of any written agreement, covenant, | 12 |
| or security interest between the settlor and the | 13 |
| claimant. | 14 |
| (d) The statute of limitations for actions to satisfy a | 15 |
| claim or liability out of the settlor's beneficial interest in | 16 |
| or transfer into trust under this Section is the statute of | 17 |
| limitations applicable to the underlying action. | 18 |
| (e) The satisfaction of a claim under this Section is | 19 |
| limited to that part of the trust or transfer to which it | 20 |
| applies. | 21 |
| (f) For purposes of this Section, a trust is not revoked or | 22 |
| terminated by: | 23 |
| (i) a power to veto a distribution from the trust; | 24 |
| (ii) a testamentary special power of appointment or | 25 |
| similar power; | 26 |
| (iii) the right to receive a distribution of income, |
|
|
|
SB2725 Engrossed |
- 5 - |
LRB095 05934 AJO 26026 b |
|
| 1 |
| principal, or both in the discretion of another, including | 2 |
| a trustee other than the settlor; | 3 |
| (iv) an interest in a charitable remainder unitrust or | 4 |
| charitable remainder annuity trust as defined in Internal | 5 |
| Revenue Code Section 664 or any successor provision; | 6 |
| (v) a right to receive principal subject to an | 7 |
| ascertainable standard set forth in the trust; or | 8 |
| (vi) the power to appoint a nonsubordinate adviser or | 9 |
| trust protector who can remove and appoint trustees, who | 10 |
| can direct, consent to, or disapprove distributions, or who | 11 |
| is an investment adviser or has the power to appoint an | 12 |
| investment adviser or investment director pursuant to the | 13 |
| laws of this State. | 14 |
| (g) The courts of this State shall have exclusive | 15 |
| jurisdiction over any action brought under this Section. |
|