Sen. Kirk W. Dillard

Filed: 4/2/2014

 

 


 

 


 
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1
AMENDMENT TO SENATE BILL 2002

2    AMENDMENT NO. ______. Amend Senate Bill 2002 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Trusts and Trustees Act is amended by
5changing 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

 

 

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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

 

 

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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
17advisor may be designated in the governing instrument of a
18trust. The powers of an investment trust advisor may be
19exercised or not exercised in the sole and absolute discretion
20of the investment trust advisor, and are binding on all other
21persons, including but not limited to each beneficiary,
22fiduciary, excluded fiduciary, and any other party having an
23interest in the trust. The governing instrument may use the
24title "investment trust advisor" or any similar name or
25description demonstrating the intent to provide for the office
26and function of an investment trust advisor. Unless the terms

 

 

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1of the governing instrument provide otherwise, the investment
2trust 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
20trust advisor may be designated in the governing instrument of
21a trust. The powers of a distribution trust advisor may be
22exercised or not exercised in the sole and absolute discretion
23of the distribution trust advisor, and are binding on all other
24persons, including but not limited to each beneficiary,
25fiduciary, excluded fiduciary, and any other party having an
26interest in the trust. The governing instrument may use the

 

 

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1title "distribution trust advisor" or any similar name or
2description demonstrating the intent to provide for the office
3and function of a distribution trust advisor. Unless the terms
4of the governing instrument provide otherwise, the
5distribution trust advisor has authority to direct the trustee
6with regard to all decisions relating directly or indirectly to
7discretionary distributions to or for one or more
8beneficiaries.
9    (d) Powers of trust protector. A trust protector may be
10designated in the governing instrument of a trust. The powers
11of a trust protector may be exercised or not exercised in the
12sole and absolute discretion of the trust protector, and are
13binding on all other persons, including but not limited to each
14beneficiary, investment trust advisor, distribution trust
15advisor, fiduciary, excluded fiduciary, and any other party
16having an interest in the trust. The governing instrument may
17use the title "trust protector" or any similar name or
18description demonstrating the intent to provide for the office
19and function of a trust protector. The powers granted to a
20trust protector by the governing instrument may include but are
21not limited to authority to do any one or more of the
22following:
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;

 

 

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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,

 

 

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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
4remainder beneficiary of the trust, a trust protector must give
5notice to the Attorney General's Charitable Trust Bureau at
6least 60 days before taking any of the actions authorized under
7item (2), (3), (4), (5), or (6) of this subsection. The
8Attorney General's Charitable Trust Bureau may, however, waive
9this notice requirement.
10    (e) Duty and liability of directing party. A directing
11party is a fiduciary of the trust subject to the same duties
12and standards applicable to a trustee of a trust as provided by
13applicable law unless the governing instrument provides
14otherwise, but the governing instrument may not, however,
15relieve or exonerate a directing party from the duty to act or
16withhold acting as the directing party in good faith reasonably
17believes is in the best interests of the trust.
18    (f) Duty and liability of excluded fiduciary. The excluded
19fiduciary shall act in accordance with the governing instrument
20and comply with the directing party's exercise of the powers
21granted to the directing party by the governing instrument.
22Unless otherwise provided in the governing instrument, an
23excluded fiduciary has no duty to monitor, review, inquire,
24investigate, recommend, evaluate, or warn with respect to a
25directing party's exercise or failure to exercise any power
26granted to the directing party by the governing instrument,

 

 

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1including but not limited to any power related to the
2acquisition, disposition, retention, management, or valuation
3of any asset or investment. Except as otherwise provided in
4this Section or the governing instrument, an excluded fiduciary
5is not liable, either individually or as a fiduciary, for any
6action, inaction, consent, or failure to consent by a directing
7party, 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

 

 

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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
9party. By accepting an appointment to serve as a directing
10party of a trust that is subject to the laws of this State, the
11directing party submits to the jurisdiction of the courts of
12this State even if investment advisory agreements or other
13related agreements provide otherwise, and the directing party
14may be made a party to any action or proceeding if issues
15relate to a decision or action of the directing party.
16    (h) Duty to inform excluded fiduciary. Each directing party
17shall keep the excluded fiduciary and any other directing party
18reasonably informed regarding the administration of the trust
19with respect to any specific duty or function being performed
20by the directing party to the extent that the duty or function
21would normally be performed by the excluded fiduciary or to the
22extent that providing such information to the excluded
23fiduciary or other directing party is reasonably necessary for
24the excluded fiduciary or other directing party to perform its
25duties, and the directing party shall provide such information
26as reasonably requested by the excluded fiduciary or other

 

 

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1directing party. Neither the performance nor the failure to
2perform of a directing party's duty to inform as provided in
3this subsection affects whatsoever the limitation on the
4liability of the excluded fiduciary as provided in this
5Section.
6    (i) Reliance on counsel. An excluded fiduciary may, but is
7not required to, obtain and rely upon an opinion of counsel on
8any matter relevant to this Section.
9    (j) Applicability. On and after its effective date, this
10Section 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

 

 

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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.)".