Typically, a Trustee is an individual or entity who is responsible for all of the duties necessary to administer a trust, but, in this new statute, the Illinois legislature has created new roles to assist the Trustee in the performance of his or its duties.
On May 16, a bill entitled “Directed Trusts” passed both houses of the Illinois legislature. According to the synopsis of the bill, the amendment to the Illinois Trusts and Trustees Act “adds provisions establishing a directed trust as a type of trust and establishes responsibilities among” different directing parties. The bill was sent to the governor for signature on June 14. If the governor does not veto the bill, or sign it before then, the bill will become law on August 13.
The bill creates three types of directing parties: (1) an investment trust advisor, (2) a distribution trust advisor, and (3) a trust protector. Each of these three types of directing parties, if appointed pursuant to a governing instrument, is “a fiduciary of the trust subject to the same duties and standards applicable to a trustee of a trust as provided by applicable law” unless the trust instrument states otherwise.
If a trust appoints any of these directing parties, each party serves in the role appointed to him or her, and is only responsible and only liable for the role to which he or she is appointed. This differs from a situation in which multiple trustees are appointed over a trust and the trustees divide the responsibilities amongst themselves based on their respective strengths. In this situation, each trustee is still responsible for and liable for all aspects of the trust administration, whether he or she participated in that role or not.
As you might imagine, a “distribution trust advisor” is defined as a person or persons “given authority by the governing instrument to direct, consent to, veto, or otherwise exercise all or any portion of the distribution powers and discretions of the trust, including but not limited to authority to make discretionary distribution of income or principal.”
An “investment trust advisor” is defined as a person or persons with the authority “to direct, consent to, veto, or otherwise exercise all or any portion of the investment powers of the trust.”
A “trust protector” is defined by a list of powers found in the bill, including, for example, the power to modify or amend the trust instrument to achieve favorable tax status, remove and appoint trustees, or to terminate the trust.
The bill is now awaiting review of the governor. The full text of the bill can be found on the Illinois General Assembly webpage.