Full Text of SB2002 98th General Assembly
SB2002sam001 98TH GENERAL ASSEMBLY | Sen. Kirk W. Dillard Filed: 4/2/2014
| | 09800SB2002sam001 | | LRB098 06513 HEP 57976 a |
|
| 1 | | AMENDMENT TO SENATE BILL 2002
| 2 | | AMENDMENT NO. ______. Amend Senate Bill 2002 by replacing | 3 | | everything after the enacting clause with the following:
| 4 | | "Section 5. The Trusts and Trustees Act is amended by | 5 | | changing Section 16.3 as follows: | 6 | | (760 ILCS 5/16.3) | 7 | | Sec. 16.3. Directed trusts. | 8 | | (a) Definitions. In this Section: | 9 | | (1) "Directing party" means any investment trust | 10 | | advisor, distribution trust advisor, or trust protector as | 11 | | provided in this Section. | 12 | | (2) "Distribution trust advisor" means any one or more | 13 | | persons given authority by the governing instrument to | 14 | | direct, consent to, veto, or otherwise exercise all or any | 15 | | portion of the distribution powers and discretions of the | 16 | | trust, including but not limited to authority to make |
| | | 09800SB2002sam001 | - 2 - | LRB098 06513 HEP 57976 a |
|
| 1 | | discretionary distribution of income or principal. | 2 | | (3) "Excluded fiduciary" means any fiduciary that by | 3 | | the governing instrument is directed to act in accordance | 4 | | with the exercise of specified powers by a directing party, | 5 | | in which case such specified powers shall be deemed granted | 6 | | not to the fiduciary but to the directing party and such | 7 | | fiduciary shall be deemed excluded from exercising such | 8 | | specified powers. If a governing instrument provides that a | 9 | | fiduciary as to one or more specified matters is to act, | 10 | | omit action, or make decisions only with the consent of a | 11 | | directing party, then such fiduciary is an excluded | 12 | | fiduciary with respect to such matters. Notwithstanding | 13 | | any provision of this Section to the contrary, a person | 14 | | does not fail to qualify as an excluded fiduciary solely by | 15 | | reason of having effectuated, participated in, or | 16 | | consented to a transaction, including but not limited to | 17 | | any transaction described in Section 16.1 or Section 16.4 | 18 | | of this Act, invoking the provisions of this Section with | 19 | | respect to any new or existing trust. | 20 | | (4) "Fiduciary" means any person expressly given one or | 21 | | more fiduciary duties by the governing instrument, | 22 | | including but not limited to a trustee. | 23 | | (5) "Governing instrument" refers to the instrument | 24 | | stating the terms of a trust, including but not limited to | 25 | | any court order or nonjudicial settlement agreement | 26 | | establishing, construing, or modifying the terms of the |
| | | 09800SB2002sam001 | - 3 - | LRB098 06513 HEP 57976 a |
|
| 1 | | trust in accordance with Section 16.1, 16.4, or 16.6 or | 2 | | other applicable law. | 3 | | (6) "Investment trust advisor" means any one or more | 4 | | persons given authority by the governing instrument to | 5 | | direct, consent to, veto, or otherwise exercise all or any | 6 | | portion of the investment powers of the trust. | 7 | | (7) "Power" means authority to take or withhold an | 8 | | action or decision, including but not limited to an | 9 | | expressly specified power, the implied power necessary to | 10 | | exercise a specified power, and authority inherent in a | 11 | | general grant of discretion. | 12 | | (8) "Trust protector" means any one or more persons | 13 | | given any one or more of the powers specified in subsection | 14 | | (d), whether or not designated with the title of trust | 15 | | protector by the governing instrument. | 16 | | (b) Powers of investment trust advisor. An investment trust | 17 | | advisor may be designated in the governing instrument of a | 18 | | trust. The powers of an investment trust advisor may be | 19 | | exercised or not exercised in the sole and absolute discretion | 20 | | of the investment trust advisor, and are binding on all other | 21 | | persons, including but not limited to each beneficiary, | 22 | | fiduciary, excluded fiduciary, and any other party having an | 23 | | interest in the trust. The governing instrument may use the | 24 | | title "investment trust advisor" or any similar name or | 25 | | description demonstrating the intent to provide for the office | 26 | | and function of an investment trust advisor. Unless the terms |
| | | 09800SB2002sam001 | - 4 - | LRB098 06513 HEP 57976 a |
|
| 1 | | of the governing instrument provide otherwise, the investment | 2 | | trust advisor has the authority to: | 3 | | (1) direct the trustee with respect to the retention, | 4 | | purchase, transfer, assignment, sale, or encumbrance of | 5 | | trust property and the investment and reinvestment of | 6 | | principal and income of the trust; | 7 | | (2) direct the trustee with respect to all management, | 8 | | control, and voting powers related directly or indirectly | 9 | | to trust assets, including but not limited to voting | 10 | | proxies for securities held in trust; | 11 | | (3) select and determine reasonable compensation of | 12 | | one or more advisors, managers, consultants, or | 13 | | counselors, including the trustee, and to delegate to them | 14 | | any of the powers of the investment trust advisor in | 15 | | accordance with subsection (b) of Section 5.1; and | 16 | | (4) determine the frequency and methodology for | 17 | | valuing any asset for which there is no readily available | 18 | | market value. | 19 | | (c) Powers of distribution trust advisor. A distribution | 20 | | trust advisor may be designated in the governing instrument of | 21 | | a trust. The powers of a distribution trust advisor may be | 22 | | exercised or not exercised in the sole and absolute discretion | 23 | | of the distribution trust advisor, and are binding on all other | 24 | | persons, including but not limited to each beneficiary, | 25 | | fiduciary, excluded fiduciary, and any other party having an | 26 | | interest in the trust. The governing instrument may use the |
| | | 09800SB2002sam001 | - 5 - | LRB098 06513 HEP 57976 a |
|
| 1 | | title "distribution trust advisor" or any similar name or | 2 | | description demonstrating the intent to provide for the office | 3 | | and function of a distribution trust advisor. Unless the terms | 4 | | of the governing instrument provide otherwise, the | 5 | | distribution trust advisor has authority to direct the trustee | 6 | | with regard to all decisions relating directly or indirectly to | 7 | | discretionary distributions to or for one or more | 8 | | beneficiaries. | 9 | | (d) Powers of trust protector. A trust protector may be | 10 | | designated in the governing instrument of a trust. The powers | 11 | | of a trust protector may be exercised or not exercised in the | 12 | | sole and absolute discretion of the trust protector, and are | 13 | | binding on all other persons, including but not limited to each | 14 | | beneficiary, investment trust advisor, distribution trust | 15 | | advisor, fiduciary, excluded fiduciary, and any other party | 16 | | having an interest in the trust. The governing instrument may | 17 | | use the title "trust protector" or any similar name or | 18 | | description demonstrating the intent to provide for the office | 19 | | and function of a trust protector. The powers granted to a | 20 | | trust protector by the governing instrument may include but are | 21 | | not limited to authority to do any one or more of the | 22 | | following: | 23 | | (1) modify or amend the trust instrument to achieve | 24 | | favorable tax status or respond to changes in the Internal | 25 | | Revenue Code, federal laws, State law, or the rulings and | 26 | | regulations under such laws; |
| | | 09800SB2002sam001 | - 6 - | LRB098 06513 HEP 57976 a |
|
| 1 | | (2) increase, decrease, or modify the interests of any | 2 | | beneficiary or beneficiaries of the trust; | 3 | | (3) modify the terms of any power of appointment | 4 | | granted by the trust; provided, however, such modification | 5 | | or amendment may not grant a beneficial interest to any | 6 | | individual, class of individuals, or other parties not | 7 | | specifically provided for under the trust instrument; | 8 | | (4) remove, appoint, or remove and appoint, a trustee, | 9 | | investment trust advisor, distribution trust advisor, | 10 | | another directing party, investment committee member, or | 11 | | distribution committee member, including designation of a | 12 | | plan of succession for future holders of any such office; | 13 | | (5) terminate the trust, including determination of | 14 | | how the trustee shall distribute the trust property to be | 15 | | consistent with the purposes of the trust; | 16 | | (6) change the situs of the trust, the governing law of | 17 | | the trust, or both; | 18 | | (7) appoint one or more successor trust protectors, | 19 | | including designation of a plan of succession for future | 20 | | trust protectors; | 21 | | (8) interpret terms of the trust instrument at the | 22 | | request of the trustee; | 23 | | (9) advise the trustee on matters concerning a | 24 | | beneficiary; or | 25 | | (10) amend or modify the trust instrument to take | 26 | | advantage of laws governing restraints on alienation, |
| | | 09800SB2002sam001 | - 7 - | LRB098 06513 HEP 57976 a |
|
| 1 | | distribution of trust property, or to improve the | 2 | | administration of the trust. | 3 | | If a charity is a current beneficiary or a presumptive | 4 | | remainder beneficiary of the trust, a trust protector must give | 5 | | notice to the Attorney General's Charitable Trust Bureau at | 6 | | least 60 days before taking any of the actions authorized under | 7 | | item (2), (3), (4), (5), or (6) of this subsection. The | 8 | | Attorney General's Charitable Trust Bureau may, however, waive | 9 | | this notice requirement. | 10 | | (e) Duty and liability of directing party. A directing | 11 | | party is a fiduciary of the trust subject to the same duties | 12 | | and standards applicable to a trustee of a trust as provided by | 13 | | applicable law unless the governing instrument provides | 14 | | otherwise, but the governing instrument may not, however, | 15 | | relieve or exonerate a directing party from the duty to act or | 16 | | withhold acting as the directing party in good faith reasonably | 17 | | believes is in the best interests of the trust. | 18 | | (f) Duty and liability of excluded fiduciary. The excluded | 19 | | fiduciary shall act in accordance with the governing instrument | 20 | | and comply with the directing party's exercise of the powers | 21 | | granted to the directing party by the governing instrument. | 22 | | Unless otherwise provided in the governing instrument, an | 23 | | excluded fiduciary has no duty to monitor, review, inquire, | 24 | | investigate, recommend, evaluate, or warn with respect to a | 25 | | directing party's exercise or failure to exercise any power | 26 | | granted to the directing party by the governing instrument, |
| | | 09800SB2002sam001 | - 8 - | LRB098 06513 HEP 57976 a |
|
| 1 | | including but not limited to any power related to the | 2 | | acquisition, disposition, retention, management, or valuation | 3 | | of any asset or investment. Except as otherwise provided in | 4 | | this Section or the governing instrument, an excluded fiduciary | 5 | | is not liable, either individually or as a fiduciary, for any | 6 | | action, inaction, consent, or failure to consent by a directing | 7 | | party, including but not limited to any of the following: | 8 | | (1) if a governing instrument provides that an excluded | 9 | | fiduciary is to follow the direction of a directing party, | 10 | | and such excluded fiduciary acts in accordance with such a | 11 | | direction, then except in cases of willful misconduct on | 12 | | the part of the excluded fiduciary in complying with the | 13 | | direction of the directing party, the excluded fiduciary is | 14 | | not liable for any loss resulting directly or indirectly | 15 | | from following any such direction, including but not | 16 | | limited to compliance regarding the valuation of assets for | 17 | | which there is no readily available market value; | 18 | | (2) if a governing instrument provides that an excluded | 19 | | fiduciary is to act or omit to act only with the consent of | 20 | | a directing party, then except in cases of willful | 21 | | misconduct on the part of the excluded fiduciary, the | 22 | | excluded fiduciary is not liable for any loss resulting | 23 | | directly or indirectly from any act taken or omitted as a | 24 | | result of such directing party's failure to provide such | 25 | | consent after having been asked to do so by the excluded | 26 | | fiduciary; or |
| | | 09800SB2002sam001 | - 9 - | LRB098 06513 HEP 57976 a |
|
| 1 | | (3) if a governing instrument provides that, or for any | 2 | | other reason, an excluded fiduciary is required to assume | 3 | | the role or responsibilities of a directing party, or if | 4 | | the excluded party appoints a directing party or successor | 5 | | to a directing party, then the excluded fiduciary shall | 6 | | also assume the same fiduciary and other duties and | 7 | | standards that applied to such directing party. | 8 | | (g) Submission to court jurisdiction; effect on directing | 9 | | party. By accepting an appointment to serve as a directing | 10 | | party of a trust that is subject to the laws of this State, the | 11 | | directing party submits to the jurisdiction of the courts of | 12 | | this State even if investment advisory agreements or other | 13 | | related agreements provide otherwise, and the directing party | 14 | | may be made a party to any action or proceeding if issues | 15 | | relate to a decision or action of the directing party. | 16 | | (h) Duty to inform excluded fiduciary. Each directing party | 17 | | shall keep the excluded fiduciary and any other directing party | 18 | | reasonably informed regarding the administration of the trust | 19 | | with respect to any specific duty or function being performed | 20 | | by the directing party to the extent that the duty or function | 21 | | would normally be performed by the excluded fiduciary or to the | 22 | | extent that providing such information to the excluded | 23 | | fiduciary or other directing party is reasonably necessary for | 24 | | the excluded fiduciary or other directing party to perform its | 25 | | duties, and the directing party shall provide such information | 26 | | as reasonably requested by the excluded fiduciary or other |
| | | 09800SB2002sam001 | - 10 - | LRB098 06513 HEP 57976 a |
|
| 1 | | directing party. Neither the performance nor the failure to | 2 | | perform of a directing party's duty to inform as provided in | 3 | | this subsection affects whatsoever the limitation on the | 4 | | liability of the excluded fiduciary as provided in this | 5 | | Section. | 6 | | (i) Reliance on counsel. An excluded fiduciary may, but is | 7 | | not required to, obtain and rely upon an opinion of counsel on | 8 | | any matter relevant to this Section. | 9 | | (j) Applicability. On and after its effective date, this | 10 | | Section applies to: | 11 | | (1) all existing and future trusts that appoint or | 12 | | provide for a directing party, including but not limited to | 13 | | a party granted power or authority effectively comparable | 14 | | in substance to that of a directing party as provided in | 15 | | this Section; or | 16 | | (2) any existing or future trust that: | 17 | | (A) is modified in accordance with applicable law | 18 | | or the terms of the governing instrument to appoint or | 19 | | provide for a directing party; or | 20 | | (B) is modified to appoint or provide for a | 21 | | directing party, including but not limited to a party | 22 | | granted power or authority effectively comparable in | 23 | | substance to that of a directing party, in accordance | 24 | | with (i) a court order, or (ii) a nonjudicial | 25 | | settlement agreement made in accordance with Section | 26 | | 16.1, whether or not such order or agreement specifies |
| | | 09800SB2002sam001 | - 11 - | LRB098 06513 HEP 57976 a |
|
| 1 | | that this Section governs the responsibilities, | 2 | | actions, and liabilities of persons designated as a | 3 | | directing party or excluded fiduciary.
| 4 | | (Source: P.A. 97-921, eff. 1-1-13.)".
|
|