(760 ILCS 3/417)
    Sec. 417. Combination and division of trusts.
    (a) Subject to subsections (b), (c), and (d), after notice to the qualified beneficiaries, a trustee may:
        (1) consolidate 2 or more trusts having
substantially similar terms into a single trust;
        (2) sever any trust estate on a fractional basis
into 2 or more separate trusts; and
        (3) segregate by allocation to a separate account or
trust a specific amount or specific property.
    (b) No consolidation, severance, or segregation may be made if the result impairs the rights of any beneficiary or adversely affects achievement of the material purposes of the subject trust or trusts.
    (c) A severance or consolidation may be made for any reason including to reflect a partial disclaimer, to reflect differences in perpetuities periods, to reflect or result in differences in federal or state tax attributes, to satisfy any federal tax requirement or election, or to reduce potential generation-skipping transfer tax liability, and shall be made in a manner consistent with the rules governing disclaimers, federal tax attributes, requirements or elections, or any applicable federal or state tax rules or regulations.
    (d) A separate account or trust created by severance or segregation:
        (1) shall be treated as a separate trust for all
purposes on and after the effective date of the severance or segregation; and
        (2) shall be held on terms and conditions that are
substantially equivalent to the terms of the trust from which it was severed or segregated so that the aggregate interests of each beneficiary in the several trusts are substantially equivalent to the beneficiary's interests in the trust before severance, except that any terms of the trust before severance that would affect the perpetuities period or qualification of the trust for any federal or state tax deduction, exclusion, election, exemption, or other special federal or state tax status must remain identical in each of the separate trusts created.
    (e) Income earned on a severed or segregated amount or property after severance or segregation occurs shall pass to the designated taker of the amount or property.
    (f) In managing, investing, administering, and distributing the trust property of any separate account or trust and in making applicable federal or state tax elections, the trustee may consider the differences in federal or state tax attributes and all other factors the trustee believes pertinent and may make disproportionate distributions from the separate accounts or trusts.
(Source: P.A. 101-48, eff. 1-1-20.)