Full Text of HB2403 94th General Assembly
HB2403 94TH GENERAL ASSEMBLY
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94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006 HB2403
Introduced 2/16/2005, by Rep. Mark H. Beaubien, Jr. SYNOPSIS AS INTRODUCED: |
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760 ILCS 15/14 |
from Ch. 30, par. 514 |
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Amends the Principal and Income Act. Provides that if, in the judgment of the trustee, the charging of the required part of the compensation due to the trustee, attorney, investment counsel, custodian, or accountant is (i)impractical because of the lack of sufficient income cash or principal cash and readily marketable intangible property or (ii) inadvisable because of the nature of the asset, then the trustee may pay the compensation out of the principal or income as the trustee sees fit. Provides that the decision to pay compensation out of the income or principal is conclusive and neither the income nor the principal is entitled to reimbursement. Makes other changes. Effective immediately.
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A BILL FOR
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HB2403 |
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LRB094 08679 LCB 38890 b |
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| AN ACT concerning civil law.
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| Be it enacted by the People of the State of Illinois,
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| represented in the General Assembly:
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| Section 5. The Principal and Income Act is amended by | 5 |
| changing Section 14 as follows:
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| (760 ILCS 15/14) (from Ch. 30, par. 514)
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| Sec. 14. Charges against income and principal.
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| (a) The following charges shall be made against income:
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| (1) ordinary expenses, other than compensation as | 10 |
| provided in paragraph
(6) of this subsection (a), incurred | 11 |
| by the trustee in connection with the
administration or | 12 |
| protection of the trust property, including regularly
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| recurring taxes assessed against any portion of the | 14 |
| principal, water rates,
premiums on insurance taken upon | 15 |
| the interests of the income beneficiary,
remainderman, or | 16 |
| trustee, interest paid by the trustee (except interest
on | 17 |
| taxes as provided in paragraphs (7) and (8) of this
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| subsection and paragraphs
(5), (6), and (7) of subsection | 19 |
| (c)), ordinary repairs and maintenance;
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| (2) (blank);
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| (3) one-half of court costs, attorney's fees and other | 22 |
| expenses and fees
on any judicial accounting, unless the | 23 |
| court directs otherwise;
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| (4) court costs, attorney's fees and other expenses and | 25 |
| fees on other
judicial proceedings if the matter primarily | 26 |
| concerns the income interest,
unless the court directs | 27 |
| otherwise;
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| (5) special compensation and expenses of or incurred by | 29 |
| the trustee in
connection with income;
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| (6) one-half of the regular compensation of the | 31 |
| trustee, attorney,
investment counsel, custodian or | 32 |
| accountant, subject to paragraph (1) of
subsection (d)
(c) ;
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LRB094 08679 LCB 38890 b |
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| (7) any tax, including interest and penalties thereon, | 2 |
| levied upon
receipts defined as income under this Act or | 3 |
| the trust instrument and
payable by the trustee;
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| (8) one-half of the interest on all estate, | 5 |
| inheritance, and
generation-skipping transfer taxes | 6 |
| apportioned to the trust and one-half of the
interest on | 7 |
| any penalties on those taxes.
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| (a-5) A reasonable allowance for depreciation on property | 9 |
| that is subject to
depreciation under generally accepted | 10 |
| accounting principles may be charged by
the trustee, but no | 11 |
| allowance shall be made for depreciation of that portion of
any | 12 |
| real property used by a beneficiary as a residence. Such an | 13 |
| allowance
shall be charged only against the income from the | 14 |
| property subject to
depreciation and shall not accrue from year | 15 |
| to year.
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| (b) If charges against income are of an unusual amount, the | 17 |
| trustee may
by means of reserves or other reasonable means | 18 |
| charge them over a
reasonable period of time and withhold from | 19 |
| distribution sufficient sums to
regularize distributions.
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| (c) The following charges shall be made against principal:
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| (1) one-half of the regular compensation of the | 22 |
| trustee, attorney,
investment counsel, custodian or | 23 |
| accountant , subject to subsection (d), shall be paid out of | 24 |
| principal,
provided that, if in the judgment of the | 25 |
| trustee, the charging of a part or
all of that portion of | 26 |
| such compensation to principal is impracticable
because of | 27 |
| the lack of sufficient principal cash and readily | 28 |
| marketable
intangible personal property, or inadvisable | 29 |
| because of the nature of the
assets, that part or all of | 30 |
| such compensation shall be paid out of income.
The decision | 31 |
| of the trustee to pay a larger portion or all of such
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| compensation out of income shall be conclusive, and the | 33 |
| income of the trust
shall not be entitled to reimbursement | 34 |
| from principal at any subsequent
time or times;
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| (2) special compensation and expenses of or incurred by | 36 |
| the trustee in
connection with principal, trustee's |
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| compensation computed on principal
as an acceptance, | 2 |
| distribution or termination fee, and, unless the court
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| directs otherwise, court costs, attorney's fees and other | 4 |
| expenses and fees
in judicial proceedings primarily | 5 |
| concerning matters of principal or in
any action to | 6 |
| construe the trust or protect it or the property or assure
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| the title to any trust property;
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| (3) charges not provided for in subsection (a), | 9 |
| including the cost of
investing and reinvesting principal, | 10 |
| the payments on principal of an
indebtedness (including a | 11 |
| mortgage amortized by periodic payments of
principal), and | 12 |
| expenses for preparation of property for rental or sale;
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| (4) extraordinary repairs or expenses incurred in | 14 |
| making a capital
improvement to principal, including | 15 |
| special assessments;
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| (4.5) costs and disbursements related to environmental | 17 |
| matters,
including reclamation, assessing environmental | 18 |
| conditions, remedying and
removing environmental | 19 |
| contamination, monitoring remedial activities and the
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| release of substances, preventing future releases of | 21 |
| substances, collecting
amounts from persons liable or | 22 |
| potentially liable for the costs of those
activities, | 23 |
| penalties imposed under environmental laws or regulations | 24 |
| and other
payments made to comply with those laws or | 25 |
| regulations, statutory or common law
claims by third | 26 |
| parties, and defending claims based on environmental | 27 |
| matters;
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| (5) any tax, including interest and penalties thereon, | 29 |
| levied upon profit,
gain, or other receipts allocated to | 30 |
| principal notwithstanding denomination
of the tax as an | 31 |
| income tax by the taxing authority;
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| (6) any tax, including interest and penalties thereon, | 33 |
| levied upon
amounts not actually received by the trustee | 34 |
| before the date the tax is
payable, including extensions, | 35 |
| notwithstanding the denomination of the tax
as an income | 36 |
| tax by the taxing authority, except that if, in the |
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| judgment of
the trustee, the charging against principal of | 2 |
| part or all of the tax is
impracticable because of a lack | 3 |
| of sufficient principal cash and readily
marketable | 4 |
| intangible personal property or inadvisable because of the
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| nature of the assets that part or all of the tax shall be | 6 |
| charged against
income. The decision of the trustee to | 7 |
| charge part or all of the tax
against income shall be | 8 |
| conclusive, and the income of the trust shall not
be | 9 |
| entitled to reimbursement from principal at any subsequent | 10 |
| time or
times. If any part or all of the amount on which | 11 |
| tax was previously paid
and charged against principal is | 12 |
| later received by the trustee and if the
receipt is | 13 |
| otherwise credited to income, then when the amount is | 14 |
| received
the portion of the tax previously paid and charged | 15 |
| against principal
attributable to the amount so received | 16 |
| shall be deducted from the amount
and credited to | 17 |
| principal;
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| (7) all estate, inheritance, and
generation-skipping
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| transfer taxes and any penalties on the taxes apportioned | 20 |
| to the trust and
one-half of the interest on those taxes | 21 |
| and penalties;
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| (8) a net loss in any fiscal or calendar year from the | 23 |
| operation of a
business or an agricultural or farming | 24 |
| operation, to be repaid from income
as available in the | 25 |
| succeeding year or years;
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| (9) monies paid for the purchase of options.
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| (d) If, in the judgment of the trustee, the charging of all | 28 |
| or part of the compensation provided for in item (6) of | 29 |
| subsection (a) is impractical because of the lack of sufficient | 30 |
| income cash or in item (1) of subsection (c) is impractical | 31 |
| because of the lack of sufficient principal cash and readily | 32 |
| marketable intangible personal property, or inadvisable | 33 |
| because of the nature of the assets, such part or all of such | 34 |
| compensation shall be paid out of income or principal as the | 35 |
| trustee determines. The decision of the trustee to pay a larger | 36 |
| portion or all of such compensation out of income or principal |
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| shall be conclusive, and neither the income nor principal of | 2 |
| the trust shall be entitled to reimbursement at any subsequent | 3 |
| time or times. The provisions of this subsection (d) shall not | 4 |
| apply to the extent that they would cause a trust otherwise | 5 |
| qualifying for a federal or State tax benefit or other benefit | 6 |
| not to so qualify for that benefit. This subsection (d) is | 7 |
| available to trusts in existence on the effective date of this | 8 |
| amendatory Act of the 94th General Assembly or created after | 9 |
| that date.
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| (Source: P.A. 91-923, eff. 7-7-00.)
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| Section 99. Effective date. This Act takes effect upon | 12 |
| becoming law.
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