103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB3583

 

Introduced 2/9/2024, by Sen. Laura Fine

 

SYNOPSIS AS INTRODUCED:
 
760 ILCS 3/103

    Amends the Illinois Trust Code. Amends the definition of "charitable trust" to exclude: (i) a testamentary trust that provides for ancillary charitable gifts or distributions in addition to posthumous distributions to persons, not charitable organizations, that has become irrevocable through the death of the testator and is capable of being settled and terminated within 18 months of such death, during such period of settlement and termination; or (ii) a testamentary estate that provides for ancillary charitable gifts or bequests in addition to bequests to persons not charitable organizations.


LRB103 37527 JRC 67650 b

 

 

A BILL FOR

 

SB3583LRB103 37527 JRC 67650 b

1    AN ACT concerning civil law.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Trust Code is amended by changing
5Section 103 as follows:
 
6    (760 ILCS 3/103)
7    Sec. 103. Definitions. In this Code:
8    (1) "Action", with respect to an act of a trustee,
9includes a failure to act.
10    (1.5) "Appointive property" means the property or property
11interest subject to a power of appointment.
12    (2) "Ascertainable standard" means a standard relating to
13an individual's health, education, support, or maintenance
14within the meaning of Section 2041(b)(1)(A) or 2514(c)(1) of
15the Internal Revenue Code and any applicable regulations.
16    (3) "Beneficiary" means a person that:
17        (A) has a present or future beneficial interest in a
18    trust, vested or contingent, assuming nonexercise of
19    powers of appointment, excluding the right of a settlor to
20    be reimbursed for tax obligations as provided in paragraph
21    (3) of subsection (a) of Section 505;
22        (B) in a capacity other than that of trustee, holds a
23    power of appointment over trust property; or

 

 

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1        (C) is an identified charitable organization that will
2    or may receive distributions under the terms of the trust.
3"Beneficiary" does not include a permissible appointee of
4power of appointment, other than the holder of a presently
5exercisable general power of appointment, until the power is
6exercised in favor of such appointee.
7    (4) "Charitable interest" means an interest in a trust
8that:
9        (A) is held by an identified charitable organization
10    and makes the organization a qualified beneficiary;
11        (B) benefits only charitable organizations and, if the
12    interest were held by an identified charitable
13    organization, would make the organization a qualified
14    beneficiary; or
15        (C) is held solely for charitable purposes and, if the
16    interest were held by an identified charitable
17    organization, would make the organization a qualified
18    beneficiary.
19    (5) "Charitable organization" means:
20        (A) a person, other than an individual, organized and
21    operated exclusively for charitable purposes; or
22        (B) a government or governmental subdivision, agency,
23    or instrumentality, to the extent it holds funds
24    exclusively for a charitable purpose.
25    (6) "Charitable purpose" means the relief of poverty, the
26advancement of education or religion, the promotion of health,

 

 

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1municipal or other governmental purpose, or another purpose
2the achievement of which is beneficial to the community.
3    (7) "Charitable trust" means a trust, or portion of a
4trust, created for a charitable purpose but excludes:
5        (A) a testamentary trust that provides for ancillary
6    charitable gifts or distributions in addition to
7    posthumous distributions to persons, not charitable
8    organizations, that has become irrevocable through the
9    death of the testator and is capable of being settled and
10    terminated within 18 months of such death, during such
11    period of settlement and termination; or
12        (B) a testamentary estate that provides for ancillary
13    charitable gifts or bequests in addition to bequests to
14    persons not charitable organizations.
15    (8) "Community property" means all personal property,
16wherever situated, that was acquired as or became, and
17remained, community property under the laws of another
18jurisdiction, and all real property situated in another
19jurisdiction that is community property under the laws of that
20jurisdiction.
21    (9) "Current beneficiary" means a beneficiary that on the
22date the beneficiary's qualification is determined is a
23distributee or permissible distributee of trust income or
24principal. The term "current beneficiary" includes the holder
25of a presently exercisable general power of appointment but
26does not include a person who is a beneficiary only because the

 

 

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1person holds any other power of appointment. In a revocable
2trust, "current beneficiary" does not include a person who may
3receive trust assets only through the exercise of a power to
4make a gift on behalf of the settlor.
5    (10) "Directing party" means any investment trust advisor,
6distribution trust advisor, or trust protector.
7    (11) "Donor", with reference to a power of appointment,
8means a person that creates a power of appointment.
9    (12) "Environmental law" means a federal, state, or local
10law, rule, regulation, or ordinance relating to protection of
11the environment.
12    (13) "General power of appointment" means a power of
13appointment exercisable in favor of a powerholder, the
14powerholder's estate, a creditor of the powerholder, or a
15creditor of the powerholder's estate.
16    (14) "Guardian of the estate" means a person appointed by
17a court to administer the estate of a minor or adult
18individual.
19    (15) "Guardian of the person" means a person appointed by
20a court to make decisions regarding the support, care,
21education, health, and welfare of a minor or adult individual.
22    (16) "Incapacitated" or "incapacity" means the inability
23of an individual to manage property or business affairs
24because the individual is a minor, adjudicated incompetent,
25has an impairment in the ability to receive and evaluate
26information or make or communicate decisions even with the use

 

 

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1of technological assistance; or is at a location that is
2unknown and not reasonably ascertainable. Without limiting the
3ways in which incapacity may be established, an individual is
4incapacitated if:
5        (i) a plenary guardian has been appointed for the
6    individual under subsection (c) of Section 11a-12 of the
7    Probate Act of 1975;
8        (ii) a limited guardian has been appointed for the
9    individual under subsection (b) of Section 11a-12 of the
10    Probate Act of 1975 and the court has found that the
11    individual lacks testamentary capacity; or
12        (iii) the individual was examined by a licensed
13    physician who determined that the individual was
14    incapacitated and the physician made a signed written
15    record of the physician's determination within 90 days
16    after the examination and no licensed physician
17    subsequently made a signed written record of the
18    physician's determination that the individual was not
19    incapacitated within 90 days after examining the
20    individual.
21    (17) "Internal Revenue Code" means the Internal Revenue
22Code of 1986 as amended from time to time and includes
23corresponding provisions of any subsequent federal tax law.
24    (18) "Interested persons" means: (A) the trustee; and (B)
25all beneficiaries, or their respective representatives
26determined after giving effect to the provisions of Article 3,

 

 

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1whose consent or joinder would be required in order to achieve
2a binding settlement were the settlement to be approved by the
3court. "Interested persons" includes a trust advisor,
4investment advisor, distribution advisor, trust protector, or
5other holder, or committee of holders, of fiduciary or
6nonfiduciary powers, if the person then holds powers material
7to a particular question or dispute to be resolved or affected
8by a nonjudicial settlement in accordance with Section 111 or
9by a judicial proceeding.
10    (19) "Interests of the beneficiaries" means the beneficial
11interests provided in the trust instrument.
12    (20) "Jurisdiction", with respect to a geographic area,
13includes a State or country.
14    (21) "Legal capacity" means that the person is not
15incapacitated.
16    (22) "Nongeneral power of appointment" means a power of
17appointment that is not a general power of appointment.
18    (22.5) "Permissible appointee" means a person in whose
19favor a powerholder may exercise a power of appointment.
20    (23) "Person" means an individual, estate, trust, business
21or nonprofit entity, public corporation, government or
22governmental subdivision, agency, or instrumentality, or other
23legal entity.
24    (24) "Power of appointment" means a power that enables a
25powerholder acting in a nonfiduciary capacity to designate a
26recipient of an ownership interest in or another power of

 

 

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1appointment over the appointive property. The term "power of
2appointment" does not include a power of attorney.
3    (25) "Power of withdrawal" means a presently exercisable
4general power of appointment other than a power:
5        (A) exercisable by the powerholder as trustee that is
6    limited by an ascertainable standard; or
7        (B) exercisable by another person only upon consent of
8    the trustee or a person holding an adverse interest.
9    (26) "Powerholder" means a person in which a donor creates
10a power of appointment.
11    (27) "Presently exercisable power of appointment" means a
12power of appointment exercisable by the powerholder at the
13relevant time. The term "presently exercisable power of
14appointment":
15        (A) includes a power of appointment exercisable only
16    after the occurrence of a specified event, the
17    satisfaction of an ascertainable standard, or the passage
18    of a specified time only after:
19            (i) the occurrence of the specified event;
20            (ii) the satisfaction of the ascertainable
21        standard; or
22            (iii) the passage of the specified time; and
23        (B) does not include a power exercisable only at the
24    powerholder's death.
25    (28) "Presumptive remainder beneficiary" means a
26beneficiary of a trust, as of the date of determination and

 

 

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1assuming nonexercise of all powers of appointment, who either:
2(A) would be a distributee or permissible distributee of trust
3income or principal if the trust terminated on that date; or
4(B) would be a distributee or permissible distributee of trust
5income or principal if the interests of all distributees
6currently eligible to receive income or principal from the
7trust terminated on that date without causing the trust to
8terminate.
9    (29) "Property" means anything that may be the subject of
10ownership, whether real or personal, legal or equitable, or
11any interest therein.
12    (30) "Qualified beneficiary" means each current
13beneficiary and presumptive remainder beneficiary.
14    (31) "Revocable", as applied to a trust, means revocable
15by the settlor without the consent of the trustee or a person
16holding an adverse interest. A revocable trust is deemed
17revocable during the settlor's lifetime.
18    (32) "Settlor", except as otherwise provided in Sections
19113 and 1225, means a person, including a testator, who
20creates, or contributes property to, a trust. If more than one
21person creates or contributes property to a trust, each person
22is a settlor of the portion of the trust property attributable
23to that person's contribution except to the extent another
24person has the power to revoke or withdraw that portion.
25    (33) "Sign" means, with present intent to authenticate or
26adopt a record:

 

 

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1        (A) to execute or adopt a tangible symbol; or
2        (B) to attach to or logically associate with the
3    record an electronic symbol, sound, or process.
4    (34) "Spendthrift provision" means a term of a trust that
5restrains both voluntary and involuntary transfer of a
6beneficiary's interest.
7    (35) "State" means a State of the United States, the
8District of Columbia, Puerto Rico, the United States Virgin
9Islands, or any territory or insular possession subject to the
10jurisdiction of the United States. The term "state" includes
11an Indian tribe or band recognized by federal law or formally
12acknowledged by a state.
13    (36) "Terms of the trust" means:
14        (A) except as otherwise provided in paragraph (B), the
15    manifestation of the settlor's intent regarding a trust's
16    provisions as:
17            (i) expressed in the trust instrument; or
18            (ii) established by other evidence that would be
19        admissible in a judicial proceeding; or
20        (B) the trust's provisions as established, determined,
21    or modified by:
22            (i) a trustee or other person in accordance with
23        applicable law;
24            (ii) a court order; or
25            (iii) a nonjudicial settlement agreement under
26        Section 111.

 

 

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1    (37) "Trust" means (A) a trust created by will, deed,
2agreement, declaration, or other written instrument, or (B) an
3oral trust under Section 407.
4    (38) "Trust accounting" means one or more written
5communications from the trustee with respect to the accounting
6year that describe: (A) the trust property, liabilities,
7receipts, and disbursements, including the amount of the
8trustee's compensation; (B) the value of the trust assets on
9hand at the close of the accounting period, to the extent
10feasible; and (C) all other material facts related to the
11trustee's administration of the trust.
12    (39) "Trust instrument" means the written instrument
13stating the terms of a trust, including any amendment, any
14court order or nonjudicial settlement agreement establishing,
15construing, or modifying the terms of the trust in accordance
16with Section 111, Sections 410 through 416, or other
17applicable law, and any additional trust instrument under
18Article 12.
19    (40) "Trustee" includes an original, additional, and
20successor trustee, and a co-trustee.
21    (41) "Unascertainable beneficiary" means a beneficiary
22whose identity is uncertain or not reasonably ascertainable.
23(Source: P.A. 101-48, eff. 1-1-20; 102-279, eff. 1-1-22.)