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TRUSTS AND FIDUCIARIES
(760 ILCS 3/) Illinois Trust Code.

760 ILCS 3/Art. 12

 
    (760 ILCS 3/Art. 12 heading)
Article 12. Trust Decanting.
(Source: P.A. 101-48, eff. 1-1-20.)

760 ILCS 3/1201

    (760 ILCS 3/1201)
    Sec. 1201. Article title. This Article may be referred to as the Trust Decanting Law.
(Source: P.A. 101-48, eff. 1-1-20.)

760 ILCS 3/1202

    (760 ILCS 3/1202)
    (Text of Section before amendment by P.A. 102-279)
    Sec. 1202. Definitions. In this Article:
    (1) "Appointive property" means the property or property interest subject to a power of appointment.
    (2) "Authorized fiduciary" means:
        (A) a trustee or other fiduciary, other than a
    
settlor, that has discretion to distribute or direct a trustee to distribute part or all of the principal of the first trust to one or more current beneficiaries;
        (B) a special fiduciary appointed under Section
    
1209; or
        (C) a special-needs fiduciary under Section 1213.
    (3) "Court" means the court in this State having jurisdiction in matters relating to trusts.
    (4) "Decanting power" or "the decanting power" means the power of an authorized fiduciary under this Article to distribute property of a first trust to one or more second trusts or to modify the terms of the first trust.
    (5) "Expanded distributive discretion" means a discretionary power of distribution that is not limited to an ascertainable standard or a reasonably definite standard.
    (6) "First trust" means a trust over which an authorized fiduciary may exercise the decanting power.
    (7) "First-trust instrument" means the trust instrument for a first trust.
    (8) "Reasonably definite standard" means a clearly measurable standard under which a holder of a power of distribution is legally accountable within the meaning of Section 674(b)(5)(A) of the Internal Revenue Code, as amended, and any applicable regulations.
    (9) "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
    (10) "Second trust" means:
        (A) a first trust after modification under this
    
Article; or
        (B) a trust to which a distribution of property from
    
a first trust is or may be made under this Article.
    (11) "Second-trust instrument" means the trust instrument for a second trust.
(Source: P.A. 101-48, eff. 1-1-20.)
 
    (Text of Section after amendment by P.A. 102-279)
    Sec. 1202. Definitions. In this Article:
    (1) (Blank).
    (2) "Authorized fiduciary" means:
        (A) a trustee or other fiduciary, other than a
    
settlor, that has discretion to distribute or direct a trustee to distribute part or all of the principal of the first trust to one or more current beneficiaries;
        (B) a special fiduciary appointed under Section
    
1209; or
        (C) a special-needs fiduciary under Section 1213.
    (3) "Court" means the court in this State having jurisdiction in matters relating to trusts.
    (4) "Decanting power" or "the decanting power" means the power of an authorized fiduciary under this Article to distribute property of a first trust to one or more second trusts or to modify the terms of the first trust.
    (5) "Expanded distributive discretion" means a discretionary power of distribution that is not limited to an ascertainable standard or a reasonably definite standard.
    (6) "First trust" means a trust over which an authorized fiduciary may exercise the decanting power.
    (7) "First-trust instrument" means the trust instrument for a first trust.
    (8) "Reasonably definite standard" means a clearly measurable standard under which a holder of a power of distribution is legally accountable within the meaning of Section 674(b)(5)(A) of the Internal Revenue Code, as amended, and any applicable regulations.
    (9) "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
    (10) "Second trust" means:
        (A) a first trust after modification under this
    
Article; or
        (B) a trust to which a distribution of property from
    
a first trust is or may be made under this Article.
    (11) "Second-trust instrument" means the trust instrument for a second trust.
(Source: P.A. 101-48, eff. 1-1-20; 102-279, eff. 1-1-22.)

760 ILCS 3/1203

    (760 ILCS 3/1203)
    Sec. 1203. Scope.
    (a) Except as otherwise provided in subsections (b) and (c), this Article applies to an express trust that is irrevocable or revocable by the settlor only with the consent of the trustee or a person holding an adverse interest.
    (b) This Article does not apply to a trust held solely for charitable purposes.
    (c) Subject to Section 1215, a trust instrument may restrict or prohibit exercise of the decanting power.
    (d) This Article does not limit the power of a trustee, powerholder, or other person to distribute or appoint property in further trust or to modify a trust under the trust instrument, law of this State other than this Article, common law, a court order, or a nonjudicial settlement agreement.
    (e) This Article does not affect the ability of a settlor to provide in a trust instrument for the distribution or appointment in further trust of the trust property or for modification of the trust instrument.
(Source: P.A. 101-48, eff. 1-1-20.)

760 ILCS 3/1204

    (760 ILCS 3/1204)
    Sec. 1204. Fiduciary duty.
    (a) In exercising the decanting power, an authorized fiduciary shall act in accordance with its fiduciary duties, including the duty to act in accordance with the purposes of the first trust.
    (b) This Article does not create or imply a duty to exercise the decanting power or to inform beneficiaries about the applicability of this Article.
    (c) Except as otherwise provided in a first-trust instrument, for purposes of this Article and Section 801, the terms of the first trust are deemed to include the decanting power.
(Source: P.A. 101-48, eff. 1-1-20.)

760 ILCS 3/1205

    (760 ILCS 3/1205)
    Sec. 1205. Application; governing law. This Article applies to a trust created before, on, or after the effective date of this Code that:
        (1) has its principal place of administration in
    
this State, including a trust whose principal place of administration has been changed to this State; or
        (2) provides by its trust instrument that it is
    
governed by the law of this State or is governed by the law of this State for the purpose of:
            (A) administration, including administration of
        
a trust whose governing law for purposes of administration has been changed to the law of this State;
            (B) construction of terms of the trust; or
            (C) determining the meaning or effect of terms
        
of the trust.
(Source: P.A. 101-48, eff. 1-1-20.)

760 ILCS 3/1206

    (760 ILCS 3/1206)
    Sec. 1206. Reasonable reliance. A trustee or other person that reasonably relies on the validity of a distribution of part or all of the property of a trust to another trust, or a modification of a trust, under this Article, law of this State other than this Article or the law of another jurisdiction is not liable to any person for any action or failure to act as a result of the reliance.
(Source: P.A. 101-48, eff. 1-1-20.)

760 ILCS 3/1207

    (760 ILCS 3/1207)
    Sec. 1207. Notice.
    (a) In this Section, a notice period begins on the day notice is given under subsection (c) and ends 59 days after the day notice is given.
    (b) Except as otherwise provided in this Article, an authorized fiduciary may exercise the decanting power without the consent of any person and without court approval.
    (c) Except as otherwise provided in subsection (f), an authorized fiduciary shall give notice in a record of the intended exercise of the decanting power not later than 60 days before the exercise to:
        (1) each settlor of the first trust, if living or
    
then in existence;
        (2) each qualified beneficiary of the first trust;
        (3) each holder of a presently exercisable power of
    
appointment over any part or all of the first trust;
        (4) each person that currently has the right to
    
remove or replace the authorized fiduciary;
        (5) each other fiduciary of the first trust;
        (6) each fiduciary of the second trust; and
        (7) the Attorney General's Charitable Trust Bureau,
    
if the first trust contains a charitable interest.
    (d) An authorized fiduciary is not required to give notice under subsection (c) to a qualified beneficiary who is a minor and has no representative. The authorized fiduciary is not required to give notice under subsection (c) to a person that is not known to the fiduciary or is known to the fiduciary but cannot be located by the fiduciary after reasonable diligence.
    (e) A notice under subsection (c) must:
        (1) specify the manner in which the authorized
    
fiduciary intends to exercise the decanting power;
        (2) specify the proposed effective date for exercise
    
of the power;
        (3) include a copy of the first-trust instrument;
    
and
        (4) include a copy of all second-trust instruments.
    (f) The decanting power may be exercised before expiration of the notice period under subsection (a) if all persons entitled to receive notice waive the period in a signed record.
    (g) The receipt of notice, waiver of the notice period, or expiration of the notice period does not affect the right of a person to file an application under Section 1209 with the court asserting that:
        (1) an attempted exercise of the decanting power is
    
ineffective because it did not comply with this Article or was an abuse of discretion or breach of fiduciary duty; or
        (2) Section 1222 applies to the exercise of the
    
decanting power.
    (h) An exercise of the decanting power is not ineffective because of the failure to give notice to one or more persons under subsection (c) if the authorized fiduciary acted with reasonable care to comply with subsection (c).
    (i) If the first trust contains a charitable interest and the Attorney General objects to the proposed exercise of the decanting power in writing delivered to the authorized fiduciary before the end of the notice period, the authorized fiduciary may proceed with the proposed exercise of the decanting power only with either court approval or the later written consent of the Attorney General.
(Source: P.A. 101-48, eff. 1-1-20.)

760 ILCS 3/1208

    (760 ILCS 3/1208)
    Sec. 1208. (Reserved).
(Source: P.A. 101-48, eff. 1-1-20.)

760 ILCS 3/1209

    (760 ILCS 3/1209)
    Sec. 1209. Court involvement.
    (a) On application of an authorized fiduciary, a person entitled to notice under Section 1207(c), a beneficiary, or, with respect to a charitable interest, the Attorney General or any other person that has standing to enforce the charitable interest, the court may:
        (1) provide instructions to the authorized fiduciary
    
regarding whether a proposed exercise of the decanting power is permitted under this Article and consistent with the fiduciary duties of the authorized fiduciary;
        (2) appoint a special fiduciary and authorize the
    
special fiduciary to determine whether the decanting power should be exercised under this Article and to exercise the decanting power;
        (3) approve an exercise of the decanting power;
        (4) determine that a proposed or attempted exercise
    
of the decanting power is ineffective because:
            (A) after applying Section 1222, the proposed or
        
attempted exercise does not or did not comply with this Article; or
            (B) the proposed or attempted exercise would be
        
or was an abuse of the fiduciary's discretion or a breach of fiduciary duty;
        (5) determine the extent to which Section 1222
    
applies to a prior exercise of the decanting power;
        (6) provide instructions to the trustee regarding
    
the application of Section 1222 to a prior exercise of the decanting power; or
        (7) order other appropriate relief to carry out the
    
purposes of this Article.
    (b) On application of an authorized fiduciary, the court may approve:
        (1) an increase in the fiduciary's compensation
    
under Section 1216; or
        (2) a modification under Section 1218 of a provision
    
granting a person the right to remove or replace the fiduciary.
(Source: P.A. 101-48, eff. 1-1-20.)

760 ILCS 3/1210

    (760 ILCS 3/1210)
    Sec. 1210. Formalities. An exercise of the decanting power must be made in a record signed by an authorized fiduciary. The signed record must, directly or by reference to the notice required by Section 1207, identify the first trust and the second trust or trusts and state the property of the first trust being distributed to each second trust and the property, if any, that remains in the first trust.
(Source: P.A. 101-48, eff. 1-1-20.)

760 ILCS 3/1211

    (760 ILCS 3/1211)
    (Text of Section before amendment by P.A. 102-279)
    Sec. 1211. Decanting power under expanded distributive discretion.
    (a) In this Section:
        (1) "Noncontingent" right means a right that is not
    
subject to the exercise of discretion or the occurrence of a specified event that is not certain to occur. The term does not include a right held by a beneficiary if any person has discretion to distribute property subject to the right of any person other than the beneficiary or the beneficiary's estate.
        (2) "Successor beneficiary" means a beneficiary that
    
on the date the beneficiary's qualification is determined is not a qualified beneficiary. The term does not include a person that is a beneficiary only because the person holds a nongeneral power of appointment.
        (3) "Vested interest" means:
            (A) a right to a mandatory distribution that is
        
a noncontingent right as of the date of the exercise of the decanting power;
            (B) a current and noncontingent right, annually
        
or more frequently, to a mandatory distribution of income, a specified dollar amount, or a percentage of value of some or all of the trust property;
            (C) a current and noncontingent right, annually
        
or more frequently, to withdraw income, a specified dollar amount, or a percentage of value of some or all of the trust property;
            (D) a presently exercisable general power of
        
appointment; or
            (E) a right to receive an ascertainable part of
        
the trust property on the trust's termination that is not subject to the exercise of discretion or to the occurrence of a specified event that is not certain to occur.
    (b) Subject to subsection (c) and Section 1214, an authorized fiduciary that has expanded distributive discretion to distribute the principal of a first trust to one or more current beneficiaries may exercise the decanting power over the principal of the first trust.
    (c) Subject to Section 1213, in an exercise of the decanting power under this Section, a second trust may not:
        (1) include as a current beneficiary a person that
    
is not a current beneficiary of the first trust, except as otherwise provided in subsection (d);
        (2) include as a presumptive remainder beneficiary
    
or successor beneficiary a person that is not a current beneficiary, presumptive remainder beneficiary, or successor beneficiary of the first trust, except as otherwise provided in subsection (d); or
        (3) reduce or eliminate a vested interest.
    (d) Subject to subsection (c)(3) and Section 1214, in an exercise of the decanting power under this Section, a second trust may be a trust created or administered under the law of any jurisdiction and may:
        (1) retain a power of appointment granted in the
    
first trust;
        (2) omit a power of appointment granted in the first
    
trust, other than a presently exercisable general power of appointment;
        (3) create or modify a power of appointment if the
    
powerholder is a current beneficiary of the first trust and the authorized fiduciary has expanded distributive discretion to distribute principal to the beneficiary; and
        (4) create or modify a power of appointment if the
    
powerholder is a presumptive remainder beneficiary or successor beneficiary of the first trust, but the exercise of the power may take effect only after the powerholder becomes, or would have become if then living, a current beneficiary.
    (e) A power of appointment described in subsection (d)(1) through (4) of subsection (d) may be general or nongeneral. The class of permissible appointees in favor of which the power may be exercised may be broader than or different from the beneficiaries of the first trust.
    (f) If an authorized fiduciary has expanded distributive discretion to distribute part but not all of the principal of a first trust, the fiduciary may exercise the decanting power under this Section over that part of the principal over which the authorized fiduciary has expanded distributive discretion.
(Source: P.A. 101-48, eff. 1-1-20.)
 
    (Text of Section after amendment by P.A. 102-279)
    Sec. 1211. Decanting power under expanded distributive discretion.
    (a) In this Section:
        (1) "Noncontingent" right means a right that is not
    
subject to the exercise of discretion or the occurrence of a specified event that is not certain to occur. The term does not include a right held by a beneficiary if any person has discretion to distribute property subject to the right of any person other than the beneficiary or the beneficiary's estate.
        (2) "Successor beneficiary" means a beneficiary that
    
on the date the beneficiary's qualification is determined is not a qualified beneficiary. The term does not include a person that is a beneficiary only because the person holds a nongeneral power of appointment.
        (3) "Vested interest" means:
            (A) a right to a mandatory distribution that is
        
a noncontingent right as of the date of the exercise of the decanting power;
            (B) a current and noncontingent right, annually
        
or more frequently, to a mandatory distribution of income, a specified dollar amount, or a percentage of value of some or all of the trust property;
            (C) a current and noncontingent right, annually
        
or more frequently, to withdraw income, a specified dollar amount, or a percentage of value of some or all of the trust property;
            (D) a presently exercisable general power of
        
appointment; or
            (E) a right to receive an ascertainable part of
        
the trust property on the trust's termination that is not subject to the exercise of discretion or to the occurrence of a specified event that is not certain to occur.
    (b) Subject to subsection (c) and Section 1214, an authorized fiduciary that has expanded distributive discretion to distribute the principal of a first trust to one or more current beneficiaries may exercise the decanting power over the principal of the first trust.
    (c) Subject to Section 1213, in an exercise of the decanting power under this Section, a second trust may not:
        (1) include as a current beneficiary a person that
    
is not a current beneficiary of the first trust, except as otherwise provided in subsection (d) or in the terms of the first trust;
        (2) include as a presumptive remainder beneficiary
    
or successor beneficiary a person that is not a current beneficiary, presumptive remainder beneficiary, or successor beneficiary of the first trust, except as otherwise provided in subsection (d); or
        (3) reduce or eliminate a vested interest.
    (d) Subject to subsection (c)(3) and Section 1214, in an exercise of the decanting power under this Section, a second trust may be a trust created or administered under the law of any jurisdiction and may:
        (1) retain a power of appointment granted in the
    
first trust;
        (2) omit a power of appointment granted in the first
    
trust, other than a presently exercisable general power of appointment;
        (3) create or modify a power of appointment if the
    
powerholder is a current beneficiary of the first trust and the authorized fiduciary has expanded distributive discretion to distribute principal to the beneficiary; and
        (4) create or modify a power of appointment if the
    
powerholder is a presumptive remainder beneficiary or successor beneficiary of the first trust, but the exercise of the power may take effect only after the powerholder becomes, or would have become if then living, a current beneficiary.
    (e) A power of appointment described in subsection (d)(1) through (4) of subsection (d) may be general or nongeneral. The class of permissible appointees in favor of which the power may be exercised may be broader than or different from the beneficiaries of the first trust.
    (f) If an authorized fiduciary has expanded distributive discretion to distribute part but not all of the principal of a first trust, the fiduciary may exercise the decanting power under this Section over that part of the principal over which the authorized fiduciary has expanded distributive discretion.
(Source: P.A. 101-48, eff. 1-1-20; 102-279, eff. 1-1-22.)

760 ILCS 3/1212

    (760 ILCS 3/1212)
    Sec. 1212. Decanting power under limited distributive discretion.
    (a) In this Section, "limited distributive discretion" means a discretionary power of distribution that is limited to an ascertainable standard or a reasonably definite standard.
    (b) An authorized fiduciary that has limited distributive discretion over the principal of the first trust for the benefit of one or more current beneficiaries may exercise the decanting power over the principal of the first trust.
    (c) Under this Section and subject to Section 1214, a second trust may be created or administered under the law of any jurisdiction. Under this Section, the second trusts, in the aggregate, must grant each beneficiary of the first trust beneficial interests that are substantially similar to the beneficial interests of the beneficiary in the first trust.
    (d) A power to make a distribution under a second trust for the benefit of a beneficiary who is an individual is substantially similar to a power under the first trust to make a distribution directly to the beneficiary. A distribution is for the benefit of a beneficiary if:
        (1) the distribution is applied for the benefit of
    
the beneficiary;
        (2) the beneficiary is incapacitated or in the
    
opinion of the trustee is unable to manage property or business affairs, and the distribution is made as permitted under this Code; or
        (3) the distribution is made as permitted under the
    
terms of the first-trust instrument and the second-trust instrument for the benefit of the beneficiary.
    (e) If an authorized fiduciary has limited distributive discretion over part but not all of the principal of a first trust, the fiduciary may exercise the decanting power under this Section over that part of the principal over which the authorized fiduciary has limited distributive discretion.
(Source: P.A. 101-48, eff. 1-1-20.)

760 ILCS 3/1213

    (760 ILCS 3/1213)
    Sec. 1213. Trust for beneficiary with disability.
    (a) In this Section:
        (1) "Beneficiary with a disability" means a
    
beneficiary of the first trust who the special-needs fiduciary believes may qualify for governmental benefits based on disability, whether or not the beneficiary currently receives those benefits or is an individual who has been adjudicated incompetent.
        (2) "Best interests" of a beneficiary with a
    
disability include, without limitation, consideration of the financial impact to the family of the beneficiary who has a disability.
        (3) "Governmental benefits" means financial aid or
    
services from a state, federal, or other public agency.
        (4) "Special-needs fiduciary" means, with respect to
    
a trust that has a beneficiary with a disability:
            (A) a trustee or other fiduciary, other than a
        
settlor, that has discretion to distribute part or all of the principal of a first trust to one or more current beneficiaries;
            (B) if no trustee or fiduciary has discretion
        
under subparagraph (A), a trustee or other fiduciary, other than a settlor, that has discretion to distribute part or all of the income of the first trust to one or more current beneficiaries; or
            (C) if no trustee or fiduciary has discretion
        
under subparagraphs (A) and (B), a trustee or other fiduciary, other than a settlor, that is required to distribute part or all of the income or principal of the first trust to one or more current beneficiaries.
        (5) "Special-needs trust" means a trust the trustee
    
believes would not be considered a resource for purposes of determining whether the beneficiary with a disability is eligible for governmental benefits.
    (b) A special-needs fiduciary may exercise the decanting power under Section 1211 over the principal of a first trust as if the fiduciary had authority to distribute principal to a beneficiary with a disability subject to expanded distributive discretion if:
        (1) a second trust is a special-needs trust that
    
benefits the beneficiary with a disability; and
        (2) the special-needs fiduciary determines that
    
exercise of the decanting power will further the purposes of the first trust or the best interests of the beneficiary with a disability.
    (c) In an exercise of the decanting power under this Section, the following rules apply:
        (1) If the first trust was created by the
    
beneficiary with a disability, or to the extent the first trust was funded by the beneficiary with a disability, then notwithstanding paragraph (2) of subsection (c) of Section 1211, the interest in the second trust of a beneficiary with a disability may:
            (A) be a pooled trust as defined by Medicaid law
        
for the benefit of the beneficiary with a disability under 42 U.S.C. 1396p(d)(4)(C), as amended; or
            (B) contain payback provisions complying with
        
reimbursement requirements of Medicaid law under 42 U.S.C. 1396p(d)(4)(A), as amended.
        (2) Paragraph (3) of subsection (c) of Section 1211
    
does not apply to the interests of the beneficiary with a disability.
        (3) Except as affected by any change to the
    
interests of the beneficiary with a disability, the second trusts, in the aggregate, must grant each other beneficiary of the first trust beneficial interests in the second trusts that are substantially similar to the beneficiary's beneficial interests in the first trust.
(Source: P.A. 101-48, eff. 1-1-20.)

760 ILCS 3/1214

    (760 ILCS 3/1214)
    Sec. 1214. Protection of charitable interests.
    (a) In this Section:
        (1) "Determinable charitable interest" means a
    
charitable interest that is a right to a mandatory distribution currently, periodically, on the occurrence of a specified event, or after the passage of a specified time and that is unconditional or that will in all events be held for charitable purposes.
        (2) "Unconditional" means not subject to the
    
occurrence of a specified event that is not certain to occur, other than a requirement in a trust instrument that a charitable organization be in existence or qualify under a particular provision of the Internal Revenue Code on the date of the distribution if the charitable organization meets the requirement on the date of determination.
    (b) If a first trust contains a determinable charitable interest, the Attorney General has the rights of a qualified beneficiary and may represent and bind the charitable interest.
    (c) If a first trust contains a charitable interest, the second trusts in the aggregate may not:
        (1) diminish the charitable interest;
        (2) diminish the interest of an identified
    
charitable organization that holds the charitable interest;
        (3) alter any charitable purpose stated in the
    
first-trust instrument; or
        (4) alter any condition or restriction related to
    
the charitable interest.
    (d) If there are 2 or more second trusts, the second trusts shall be treated as one trust for purposes of determining whether the exercise of the decanting power diminishes the charitable interest or diminishes the interest of an identified charitable organization for purposes of subsection (c).
    (e) If a first trust contains a determinable charitable interest, the second trusts that include charitable interests pursuant to subsection (c) must be administered under the law of this State unless:
        (1) the Attorney General, after receiving notice
    
under Section 1207, fails to object in a signed record delivered to the authorized fiduciary within the notice period;
        (2) the Attorney General consents in a signed record
    
to the second trusts being administered under the law of another jurisdiction; or
        (3) the court approves the exercise of the decanting
    
power.
    (f) This Article does not limit the powers and duties of the Attorney General under Illinois law.
(Source: P.A. 101-48, eff. 1-1-20.)

760 ILCS 3/1215

    (760 ILCS 3/1215)
    (Text of Section before amendment by P.A. 102-279)
    Sec. 1215. Trust limitation on decanting.
    (a) An authorized fiduciary may not exercise the decanting power to the extent the first-trust instrument expressly prohibits exercise of:
        (1) the decanting power; or
        (2) a power granted by state law to the fiduciary to
    
distribute part or all of the principal of the trust to another trust or to modify the trust.
    (b) Exercise of the decanting power is subject to any restriction in the first-trust instrument that expressly applies to exercise of:
        (1) the decanting power; or
        (2) a power granted by state law to a fiduciary to
    
distribute part or all of the principal of the trust to another trust or to modify the trust.
    (c) A general prohibition of the amendment or revocation of a first trust, a spendthrift clause, or a clause restraining the voluntary or involuntary transfer of a beneficiary's interest does not preclude exercise of the decanting power.
    (d) Subject to subsections (a) and (b), an authorized fiduciary may exercise the decanting power under this Article even if the first-trust instrument permits the authorized fiduciary or another person to modify the first-trust instrument or to distribute part or all of the principal of the first trust to another trust.
    (e) If a first-trust instrument contains an express prohibition described in subsection (a) or an express restriction described in subsection (b), that provision must be included in the second-trust instrument.
(Source: P.A. 101-48, eff. 1-1-20.)
 
    (Text of Section after amendment by P.A. 102-279)
    Sec. 1215. Trust limitation on decanting.
    (a) An authorized fiduciary may not exercise the decanting power to the extent the first-trust instrument expressly prohibits exercise of:
        (1) the decanting power; or
        (2) a power granted by state law to the fiduciary to
    
distribute part or all of the principal of the trust to another trust or to modify the trust.
    (b) Exercise of the decanting power is subject to any restriction in the first-trust instrument that expressly applies to exercise of:
        (1) the decanting power; or
        (2) a power granted by state law to a fiduciary to
    
distribute part or all of the principal of the trust to another trust or to modify the trust.
    (c) A general prohibition of the amendment or revocation of a first trust, a spendthrift provision, or a clause restraining the voluntary or involuntary transfer of a beneficiary's interest does not preclude exercise of the decanting power.
    (d) Subject to subsections (a) and (b), an authorized fiduciary may exercise the decanting power under this Article even if the first-trust instrument permits the authorized fiduciary or another person to modify the first-trust instrument or to distribute part or all of the principal of the first trust to another trust.
    (e) If a first-trust instrument contains an express prohibition described in subsection (a) or an express restriction described in subsection (b), that provision must be included in the second-trust instrument.
(Source: P.A. 101-48, eff. 1-1-20; 102-279, eff. 1-1-22.)

760 ILCS 3/1216

    (760 ILCS 3/1216)
    Sec. 1216. Change in compensation.
    (a) If a first-trust instrument specifies an authorized fiduciary's compensation, the fiduciary may not exercise the decanting power to increase the fiduciary's compensation beyond the specified compensation unless:
        (1) all qualified beneficiaries of the second trust
    
consent to the increase in a signed record; or
        (2) the increase is approved by the court.
    (b) If a first-trust instrument does not specify an authorized fiduciary's compensation, the fiduciary may not exercise the decanting power to increase the fiduciary's compensation above the compensation permitted by Section 708 unless:
        (1) all qualified beneficiaries of the second trust
    
consent to the increase in a signed record; or
        (2) the increase is approved by the court.
    (c) A change in an authorized fiduciary's compensation that is incidental to other changes made by the exercise of the decanting power is not an increase in the fiduciary's compensation for purposes of subsections (a) and (b).
(Source: P.A. 101-48, eff. 1-1-20.)

760 ILCS 3/1217

    (760 ILCS 3/1217)
    Sec. 1217. Relief from liability and indemnification.
    (a) Except as otherwise provided in this Section, a second-trust instrument may not relieve an authorized fiduciary from liability for breach of trust to a greater extent than the first-trust instrument.
    (b) A second-trust instrument may provide for indemnification of an authorized fiduciary of the first trust or another person acting in a fiduciary capacity under the first trust for any liability or claim that would have been payable from the first trust if the decanting power had not been exercised.
    (c) A second-trust instrument may not reduce fiduciary liability in the aggregate.
    (d) Subject to subsection (c), a second-trust instrument may divide and reallocate fiduciary powers among fiduciaries, including one or more trustees, distribution advisors, investment advisors, trust protectors, or other persons, and relieve a fiduciary from liability for an act or failure to act of another fiduciary as permitted by law of this State other than this Article.
(Source: P.A. 101-48, eff. 1-1-20.)

760 ILCS 3/1218

    (760 ILCS 3/1218)
    Sec. 1218. Removal or replacement of authorized fiduciary. An authorized fiduciary may not exercise the decanting power to modify a provision in the first-trust instrument granting another person power to remove or replace the fiduciary unless:
        (1) the person holding the power consents to the
    
modification in a signed record and the modification applies only to the person;
        (2) the person holding the power and the qualified
    
beneficiaries of the second trust consent to the modification in a signed record and the modification grants a substantially similar power to another person; or
        (3) the court approves the modification and the
    
modification grants a substantially similar power to another person.
(Source: P.A. 101-48, eff. 1-1-20.)

760 ILCS 3/1219

    (760 ILCS 3/1219)
    Sec. 1219. Tax-related limitations.
    (a) In this Section:
        (1) "Grantor trust" means a trust as to which a
    
settlor of a first trust is considered the owner under Sections 671 through 677 of the Internal Revenue Code or Section 679 of the Internal Revenue Code.
        (2) "Nongrantor trust" means a trust that is not a
    
grantor trust.
        (3) "Qualified benefits property" means property
    
subject to the minimum distribution requirements of Section 401(a)(9) of the Internal Revenue Code, and any applicable regulations, or to any similar requirements that refer to Section 401(a)(9) of the Internal Revenue Code or the regulations.
    (b) An exercise of the decanting power is subject to the following limitations:
        (1) If a first trust contains property that
    
qualified, or would have qualified but for provisions of this Article other than this Section, for a marital deduction for purposes of the gift or estate tax under the Internal Revenue Code or a state gift, estate, or inheritance tax, the second-trust instrument must not include or omit any term that, if included in or omitted from the trust instrument for the trust to which the property was transferred, would have prevented the transfer from qualifying for the deduction, or would have reduced the amount of the deduction, under the same provisions of the Internal Revenue Code or state law under which the transfer qualified.
        (2) If the first trust contains property that
    
qualified, or would have qualified but for provisions of this Article other than this Section, for a charitable deduction for purposes of the income, gift, or estate tax under the Internal Revenue Code or a state income, gift, estate, or inheritance tax, the second-trust instrument must not include or omit any term that, if included in or omitted from the trust instrument for the trust to which the property was transferred, would have prevented the transfer from qualifying for the deduction, or would have reduced the amount of the deduction, under the same provisions of the Internal Revenue Code or state law under which the transfer qualified.
        (3) If the first trust contains property that
    
qualified, or would have qualified but for provisions of this Article other than this Section, for the exclusion from the gift tax described in Section 2503(b) of the Internal Revenue Code, the second-trust instrument must not include or omit a term that, if included in or omitted from the trust instrument for the trust to which the property was transferred, would have prevented the transfer from qualifying under the same provision of Section 2503 of the Internal Revenue Code. If the first trust contains property that qualified, or would have qualified but for provisions of this Article other than this Section, for the exclusion from the gift tax described in Section 2503(b) of the Internal Revenue Code, by application of Section 2503(c) of the Internal Revenue Code, the second-trust instrument must not include or omit a term that, if included or omitted from the trust instrument for the trust to which the property was transferred, would have prevented the transfer from qualifying under Section 2503(c) of the Internal Revenue Code.
        (4) If the property of the first trust includes
    
shares of stock in an S corporation, as defined in Section 1361 of the Internal Revenue Code and the first trust is, or but for provisions of this Article other than this Section would be, a permitted shareholder under any provision of Section 1361 of the Internal Revenue Code, an authorized fiduciary may exercise the power with respect to part or all of the S-corporation stock only if any second trust receiving the stock is a permitted shareholder under Section 1361(c)(2) of the Internal Revenue Code. If the property of the first trust includes shares of stock in an S corporation and the first trust is, or but for provisions of this Article other than this Section, would be, a qualified subchapter-S trust within the meaning of Section 1361(d) of the Internal Revenue Code, the second-trust instrument must not include or omit a term that prevents the second trust from qualifying as a qualified subchapter-S trust.
        (5) If the first trust contains property that
    
qualified, or would have qualified but for provisions of this Article other than this Section, for a zero inclusion ratio for purposes of the generation-skipping transfer tax under Section 2642(c) of the Internal Revenue Code the second-trust instrument must not include or omit a term that, if included in or omitted from the first-trust instrument, would have prevented the transfer to the first trust from qualifying for a zero inclusion ratio under Section 2642(a) of the Internal Revenue Code.
        (6) If the first trust is directly or indirectly the
    
beneficiary of qualified benefits property, the second-trust instrument may not include or omit any term that, if included in or omitted from the first-trust instrument, would have increased the minimum distributions required with respect to the qualified benefits property under Section 401(a)(9) of the Internal Revenue Code and any applicable regulations, or any similar requirements that refer to Section 401(a)(9) of the Internal Revenue Code or the regulations. If an attempted exercise of the decanting power violates the preceding sentence, the trustee is deemed to have held the qualified benefits property and any reinvested distributions of the property as a separate share from the date of the exercise of the power and Section 1222 applies to the separate share.
        (7) If the first trust qualifies as a grantor trust
    
because of the application of Section 672(f)(2)(A) of the Internal Revenue Code the second trust may not include or omit a term that, if included in or omitted from the first-trust instrument, would have prevented the first trust from qualifying under Section 672(f)(2)(A) of the Internal Revenue Code.
        (8) In this paragraph (8), "tax benefit" means a
    
federal or state tax deduction, exemption, exclusion, or other benefit not otherwise listed in this Section, except for a benefit arising from being a grantor trust. Subject to paragraph (9) of this subsection (b), a second-trust instrument may not include or omit a term that, if included in or omitted from the first-trust instrument, would have prevented qualification for a tax benefit if:
            (A) the first-trust instrument expressly
        
indicates an intent to qualify for the benefit or the first-trust instrument clearly is designed to enable the first trust to qualify for the benefit; and
            (B) the transfer of property held by the first
        
trust or the first trust qualified, or but for provisions of this Article other than this Section, would have qualified for the tax benefit.
        (9) Subject to paragraph (4) of this subsection (b):
            (A) except as otherwise provided in paragraph
        
(7) of this subsection (b), the second trust may be a nongrantor trust, even if the first trust is a grantor trust; and
            (B) except as otherwise provided in paragraph
        
(10) of this subsection (b), the second trust may be a grantor trust, even if the first trust is a nongrantor trust.
        (10) An authorized fiduciary may not exercise the
    
decanting power if a settlor objects in a signed record delivered to the fiduciary within the notice period and:
            (A) the first trust and second trusts are both
        
grantor trusts, in whole or in part, the first trust grants the settlor or another person the power to cause the second trust to cease to be a grantor trust, and the second trust does not grant an equivalent power to the settlor or other person; or
            (B) the first trust is a nongrantor trust and
        
the second trust is a grantor trust, in whole or in part, with respect to the settlor, unless:
                (i) the settlor has the power at all times
            
to cause the second trust to cease to be a grantor trust; or
                (ii) the first-trust instrument contains a
            
provision granting the settlor or another person a power that would cause the first trust to cease to be a grantor trust and the second-trust instrument contains the same provision.
(Source: P.A. 101-48, eff. 1-1-20.)

760 ILCS 3/1220

    (760 ILCS 3/1220)
    Sec. 1220. Duration of second trust.
    (a) Subject to subsection (b), a second trust may have a duration that is the same as or different from the duration of the first trust.
    (b) To the extent that property of a second trust is attributable to property of the first trust, the second trust is subject to any rules governing maximum perpetuity, accumulation, or suspension of the power of alienation applicable to property of the first trust.
(Source: P.A. 101-48, eff. 1-1-20.)

760 ILCS 3/1221

    (760 ILCS 3/1221)
    Sec. 1221. Need to distribute not required. An authorized fiduciary may exercise the decanting power whether or not under the first trust's discretionary distribution standard the fiduciary would have made or could have been compelled to make a discretionary distribution of principal at the time of the exercise.
(Source: P.A. 101-48, eff. 1-1-20.)

760 ILCS 3/1222

    (760 ILCS 3/1222)
    Sec. 1222. Savings provision.
    (a) If exercise of the decanting power would be effective under this Article except that the second-trust instrument in part does not comply with this Article, the exercise of the power is effective and the following rules apply to the principal of the first trust subject to the exercise of the power:
        (1) A provision in the second-trust instrument that
    
is not permitted under this Article is void to the extent necessary to comply with this Article.
        (2) A provision required by this Article to be in
    
the second-trust instrument that is not contained in the instrument is deemed to be included in the instrument to the extent necessary to comply with this Article.
    (b) If a trustee or other fiduciary of a second trust discovers that subsection (a) applies to a prior exercise of the decanting power, the fiduciary shall take such appropriate corrective action as is consistent with the fiduciary's duties.
(Source: P.A. 101-48, eff. 1-1-20.)

760 ILCS 3/1223

    (760 ILCS 3/1223)
    Sec. 1223. Trust for care of animal.
    (a) In this Section:
        (1) "Animal trust" means a trust or an interest in a
    
trust created to provide for the care of one or more designated domestic or pet animals.
        (2) "Protector" means a person described in
    
paragraph (3) of subsection (b) of Section 408.
    (b) The decanting power may be exercised over an animal trust that has a protector to the extent the trust could be decanted under this Article as if each animal that benefits from the trust were an individual, if the protector consents in a signed record to the exercise of the decanting power.
    (c) A protector for an animal has the rights under this Article of a qualified beneficiary.
    (d) Notwithstanding any other provision of this Article, if a first trust is an animal trust, in an exercise of the decanting power, the second trust must provide that trust property may be applied only to its intended purpose for the period the first trust benefited the animal.
(Source: P.A. 101-48, eff. 1-1-20.)

760 ILCS 3/1224

    (760 ILCS 3/1224)
    Sec. 1224. (Reserved).
(Source: P.A. 101-48, eff. 1-1-20.)

760 ILCS 3/1225

    (760 ILCS 3/1225)
    Sec. 1225. Settlor.
    (a) For purposes of the laws of this State other than this Article and subject to subsection (b), a settlor of a first trust is deemed to be the settlor of the second trust with respect to the portion of the principal of the first trust subject to the exercise of the decanting power.
    (b) In determining settlor intent with respect to a second trust, the intent of a settlor of the first trust, the intent of a settlor of the second trust, and the intent of the authorized fiduciary may be considered.
(Source: P.A. 101-48, eff. 1-1-20.)

760 ILCS 3/1226

    (760 ILCS 3/1226)
    Sec. 1226. Later-discovered property.
    (a) Except as otherwise provided in subsection (c), if exercise of the decanting power was intended to distribute all the principal of the first trust to one or more second trusts, later-discovered property otherwise belonging to the first trust and property paid to or acquired by the first trust after the exercise of the power is part of the trust estate of the second trust.
    (b) Except as otherwise provided in subsection (c), if exercise of the decanting power was intended to distribute less than all the principal of the first trust to one or more second trusts, later-discovered property belonging to the first trust or property paid to or acquired by the first trust after exercise of the decanting power remains part of the trust estate of the first trust.
    (c) An authorized fiduciary may provide in an exercise of the decanting power or by the terms of a second trust for disposition of later-discovered property belonging to the first trust or property paid to or acquired by the first trust after exercise of the decanting power.
(Source: P.A. 101-48, eff. 1-1-20.)

760 ILCS 3/1227

    (760 ILCS 3/1227)
    Sec. 1227. Obligations. A debt, liability, or other obligation enforceable against property of a first trust is enforceable to the same extent against that property when held by the second trust after exercise of the decanting power.
(Source: P.A. 101-48, eff. 1-1-20.)