(760 ILCS 5/1)(from Ch. 17, par. 1651) Sec. 1. Title. This Act shall be known and may be cited as the Trusts and Trustees Act. (Source: P. A. 78‑625.)
(760 ILCS 5/2)(from Ch. 17, par. 1652) Sec. 2. Definitions. As used in this Act: (1) "Trust" means a trust created by will, deed, agreement, declaration or other written instrument; (2) "Trustee" means the trustee or any successor or added trustee of the trust, whether appointed by or pursuant to the instrument creating the trust, by order of court or otherwise, and includes an individual and a corporation qualified to administer trusts in this State under "An Act to provide for and regulate the administration of trusts by trust companies", approved June 15, 1887, as amended, or under "An Act authorizing foreign corporations, including banks, and national banking associations domiciled in other states, to act in a fiduciary capacity in this State upon certain conditions herein set forth", approved July 13, 1953, as amended. (Source: P.A. 78‑625.)
(760 ILCS 5/3)(from Ch. 17, par. 1653) Sec. 3. Applicability. (1) A person establishing a trust may specify in the instrument the rights, powers, duties, limitations and immunities applicable to the trustee, beneficiary and others and those provisions where not otherwise contrary to law shall control, notwithstanding this Act. The provisions of this Act apply to the trust to the extent that they are not inconsistent with the provisions of the instrument. (2) This Act applies to every trust created by will, deed, agreement, declaration or other instrument, except that the provisions of Sections 4.01 through 4.08, Sections 4.10 through 4.12, and Sections 4.14 through 4.24 apply only to trusts executed on or after October 1, 1973 and, with respect to Section 17, to an order entered on or after that date, and provided further that the provisions of this Act do not apply to any: (a) land trust; (b) voting trust; (c) security instrument such as a trust deed or mortgage; (d) liquidation trust; (e) escrow; (f) instrument under which a nominee, custodian for property or paying or receiving agent is appointed; or (g) a trust created by a deposit arrangement in a banking or savings institution, commonly known as a "Totten trust" unless in the governing instrument any of the provisions of this Act are made applicable by specific reference. (3) This Act does not apply to the Grain Indemnity Trust Account or any other trust created under the Grain Code. (Source: P.A. 91‑357, eff. 7‑29‑99.)
(760 ILCS 5/4)(from Ch. 17, par. 1654) Sec. 4. Powers of Trustee. The trustee has the powers specified in the Sections following this Section and preceding Section 5. (Source: P.A. 95‑605, eff. 6‑1‑08.)
(760 ILCS 5/4.01)(from Ch. 17, par. 1655) Sec. 4.01. To sell, contract to sell and grant options to purchase any part or all of the trust estate at public or private sale, for cash or on credit, and to exchange any part or all of the trust estate for other property. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.02)(from Ch. 17, par. 1656) Sec. 4.02. To enter into leases for any period of time, though extending beyond the termination of the trust. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.03)(from Ch. 17, par. 1657) Sec. 4.03. To borrow money and to mortgage, pledge or otherwise encumber any part or all of the trust estate. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.04)(from Ch. 17, par. 1658) Sec. 4.04. To grant easements, subdivide, improve, give consents and enter into contracts relating to real estate or its use and to dedicate any interest in real estate. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.05)(from Ch. 17, par. 1659) Sec. 4.05. To designate or appoint a trustee to act in any other jurisdiction as sole trustee or co‑trustee of any part or all of the trust estate located in such other jurisdiction; to confer upon the appointed trustee any or all of the rights, powers and duties of the appointing trustee; and to remove the appointed trustee. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.06)(from Ch. 17, par. 1660) Sec. 4.06. To enter into agreements for bank or other deposit accounts, safe deposit boxes, custodian, agency or depositary arrangements for all or any part of the trust estate, including agreements for such services provided by a bank operated by or affiliated with the trustee, and to pay reasonable compensation for those services, including compensation to the bank operated by or affiliated with the trustee, except that nothing in this Section shall be construed as removing any depositary arrangements from the requirements of the prudent person rule. (Source: P.A. 85‑1211; 86‑1475.)
(760 ILCS 5/4.07)(from Ch. 17, par. 1661) Sec. 4.07. (a) To exercise all the rights and powers of an individual owner with respect to shares of stock, bonds or other securities in the trust estate, including, but not by way of limitation, voting, giving proxies, participating in voting trusts, mergers, consolidations, foreclosures, reorganizations or liquidations, and exercising or selling subscription or conversion rights; (b) If the provisions of the trust instrument direct that the trust estate be invested in obligations issued or guaranteed by the United States or any instrumentality or agency thereof, the trustee, if he does not make such investment directly, may invest the trust estate in interests in any open‑end or closed‑end management type investment company or investment trust registered under the Investment Company Act of 1940, as from time to time amended, provided that the portfolio of such investment company or investment trust is limited to obligations of the United States hereinabove described and to agreements to repurchase such obligations, which agreements, with respect to principal and interest, are at least 100% collateralized by such obligations marked to market on a daily basis, if the investment company or investment trust takes delivery of such obligations either directly or through an independent custodian designated in accordance with the Investment Company Act of 1940, as from time to time amended. Nothing in this subsection (b) shall be construed as removing any such investment from the requirements of the prudent man rule. (Source: P.A. 84‑541.)
(760 ILCS 5/4.08)(from Ch. 17, par. 1662) Sec. 4.08. To pay taxes and reasonable expenses incurred in administering the trust estate. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.09)(from Ch. 17, par. 1663) Sec. 4.09. To appoint attorneys, auditors, financial advisers and other agents and to pay reasonable compensation to such appointees. If the trustee uses reasonable care, skill, and caution in the selection of the agent, the trustee may rely upon the advice or recommendation of the agent without further investigation and, except as may otherwise be provided in subsection (b) of Section 5.1 with respect to investment agents, shall have no responsibility for actions taken or omitted upon the advice or recommendation of the agent. (Source: P.A. 89‑344, eff. 1‑1‑96.)
(760 ILCS 5/4.10)(from Ch. 17, par. 1664) Sec. 4.10. To delegate to a co‑trustee for any period of time any or all of the trustee's rights, powers and duties. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.11)(from Ch. 17, par. 1665) Sec. 4.11. To compromise, contest, prosecute or abandon claims or other charges in favor of or against the trust estate. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.12)(from Ch. 17, par. 1666) Sec. 4.12. To execute contracts, notes, conveyances and other instruments, whether or not containing covenants and warranties binding upon and creating a charge against the trust estate or excluding personal liability. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.13)(from Ch. 17, par. 1667) Sec. 4.13. Reception of additional trust property. To receive and administer additional property as part of the trust estate or as a separate trust having terms identical to the terms of the existing trust. The provisions of this amendatory Act of 1993 apply to all trusts created and actions taken before, on, or after the effective date of this amendatory Act of 1993. (Source: P.A. 88‑367.)
(760 ILCS 5/4.14)(from Ch. 17, par. 1668) Sec. 4.14. To invest in or hold undivided interests in property. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.15)(from Ch. 17, par. 1669) Sec. 4.15. To deal with the executor, trustee or other representative of any other trust or estate in which a beneficiary of the trust estate has an interest, notwithstanding the fact that the trustee is an executor, trustee or other representative of the other trust or estate. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.16)(from Ch. 17, par. 1670) Sec. 4.16. To make equitable division or distribution in cash or in kind, or both, and for that purpose to value any property divided or distributed in kind. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.17)(from Ch. 17, par. 1671) Sec. 4.17. To rely upon an affidavit, certificate, letter or other evidence reasonably believed to be genuine and on the basis of any such evidence to make any payment or distribution in good faith without liability. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.18)(from Ch. 17, par. 1672) Sec. 4.18. To have all of the rights, powers and duties given to or imposed upon the trustee by law and the provisions of the trust instrument during the period between the termination of the trust and the distribution thereof and during any period in which any litigation is pending which may void or invalidate the trust in whole or in part or affect the rights, powers, duties or discretions of the trustee except as otherwise directed by the court. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.19)(from Ch. 17, par. 1673) Sec. 4.19. To purchase and keep in force insurance of an appropriate nature and form and in a reasonable amount for the protection of the trust estate or the ownership thereof. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.20)(from Ch. 17, par. 1674) Sec. 4.20. To distribute income and amounts of principal in such one or more of the following ways as the trustee believes to be for the best interests of any beneficiary who at the time of distribution is under legal disability or in the opinion of the trustee is unable properly to manage his affairs because of illness, physical or mental disability or any other cause: (a) directly to the beneficiary; (b) to a duly appointed guardian of the beneficiary; (c) to a custodian for the beneficiary under the Uniform Transfers to Minors Act; (d) to an adult relative of the beneficiary; (e) by expending the money or using the property directly for the benefit of the beneficiary; and the trustee is not required to see to the application of any distribution so made; and (f) to a trust, created prior to the time the distribution becomes payable, for the sole benefit of the beneficiary and those dependent upon the beneficiary during his or her lifetime, to be administered as a part thereof, except that any amounts distributed to the trust pursuant to this paragraph (f) shall be separately accounted for by the trustee of the trust and shall be indefeasibly vested in the beneficiary so that if the beneficiary dies prior to complete distribution of such amounts, the amounts and the accretions, earnings, and income thereon, if any, shall be paid to the beneficiary's estate; provided, however, that this paragraph (f) shall not apply to the extent that it would cause a trust otherwise qualifying for the federal estate tax marital deduction not to so qualify. (Source: P.A. 93‑695, eff. 7‑9‑04.)
(760 ILCS 5/4.21)(from Ch. 17, par. 1674.1) Sec. 4.21. To plant and harvest crops; to breed, raise, purchase and sell livestock; to lease land, equipment or livestock for cash or on shares, to purchase and sell, exchange or otherwise acquire or dispose of farm equipment and farm produce of all kinds; to make improvements, construct, repair, or demolish and remove any buildings, structures or fences, to engage agents, managers and employees and delegate powers to them; to engage in drainage and conservation programs; to terrace, clear, ditch and drain lands and install irrigation systems; to replace improvements and equipment; to fertilize and improve the soil; to engage in the growing, improvement, and sale of trees and other forest crops; to participate or decline to participate in governmental agricultural or land programs; and to perform such acts as the trustee deems appropriate, using such methods as are commonly employed by other farm owners in the community in which the farm property is located. (Source: P.A. 82‑354.)
(760 ILCS 5/4.22)(from Ch. 17, par. 1674.2) Sec. 4.22. To drill, mine and otherwise operate for the development of oil, gas and other minerals; to enter into contracts relating to the installation and operation of absorption and repressuring plants; to enter into unitization or pooling agreements for any purpose including primary, secondary or tertiary recovery; to place and maintain pipe lines; to execute oil, gas and mineral leases, division and transfer orders, grants, deeds, releases and assignments and other instruments; to participate in a cooperative coal marketing association or similar entity; and to perform such other acts as the trustee deems appropriate, using such methods as are commonly employed by owners of such interests in the community in which the interests are located. (Source: P.A. 82‑354.)
(760 ILCS 5/4.23)(from Ch. 17, par. 1674.3) Sec. 4.23. To continue an unincorporated business and participate in its management by having the trustee or one or more agents of the trustee act as a manager with appropriate compensation from the business and to incorporate the business. (Source: P.A. 82‑354.)
(760 ILCS 5/4.24)(from Ch. 17, par. 1674.4) Sec. 4.24. To continue a business in the partnership form and participate in its management by having the trustee or one or more agents of the trustee act as a partner, limited partner or employee with appropriate compensation from the business; to enter into new partnership agreements; and to incorporate the business; and with respect to the foregoing activities, the trustee or the agent or agents of the trustee shall not be personally liable to third persons with respect to actions, not sounding in tort, unless he fails to identify the trust estate and reveal that he is acting in a representative capacity. Provided, however, that nothing in this Section shall impair in any way the liability of the trust estate with respect to the foregoing activities to the extent of the assets of the trust estate. (Source: P.A. 84‑518; 84‑621.)
(760 ILCS 5/4.25) Sec. 4.25. Severance and consolidation. To sever any trust estate on a fractional basis into 2 or more separate trusts for any reason; to segregate by allocation to a separate account or trust a specific amount or gift made from any trust to reflect a partial disclaimer, to reflect or result in differences in federal tax attributes, to satisfy any federal tax requirement or election, or to reduce potential generation‑skipping transfer tax liability, in a manner consistent with the rules governing disclaimers, such federal tax attributes, such requirements or elections, or any applicable tax rules or regulations, and income earned on a segregated amount or gift after segregation occurs shall pass to the designated take of such amount or gift; and to consolidate 2 or more trusts having substantially similar terms into a single trust. In managing, investing, administering, and distributing the trust property of any separate account or trust and in making applicable tax elections, the trustee may consider the differences in federal tax attributes and all other factors the trustee believes pertinent and may make disproportionate distributions from the separate trusts created. A separate account or trust created by severance or segregation shall be treated as a separate trust for all purposes from and after the date on which the severance or segregation is effective, and 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, provided, however, that any terms of the trust before severance that would affect qualification of the trust for any federal tax deduction, exclusion, election, exemption, or other special federal tax status must remain identical in each of the separate trusts created. The provisions of this amendatory Act of 1993 apply to all trusts created, and actions taken before, on, or after the effective date of this amendatory Act of 1993. (Source: P.A. 88‑367.)
(760 ILCS 5/4.26) Sec. 4.26. Small trust termination. To terminate the trust and distribute the trust estate, including principal and accrued and undistributed income, if the trustee determines, in the trustee's sole discretion with the consent of the recipients, that the market value of a trust is less than $100,000 and that the costs of continuing the trust will substantially impair accomplishment of the purpose of the trust. Distribution shall be made to the persons then entitled to receive or eligible to have the benefit of the income from the trust in the proportions in which they are entitled thereto, or if their interests are indefinite, to those persons per stirpes if they have a common ancestor, or if not, then in equal shares. The trustee shall give notice to the persons at least 30 days prior to the effective date of the termination. If a particular trustee is an income beneficiary of the trust or is legally obligated to an income beneficiary, then that particular trustee may not participate as a trustee in the exercise of this termination power; provided, however, that if the trust has one or more co‑trustees who are not so disqualified from participating, the co‑trustee or co‑trustees may exercise this power. This Section shall not apply to the extent that it would cause a trust otherwise qualifying for a federal or State tax benefit or other benefit not to so qualify, nor shall it apply to trusts for domestic or pet animals. The provisions of this amendatory Act of the 95th General Assembly apply to all trusts created before, on, or after its effective date. (Source: P.A. 95‑605, eff. 6‑1‑08.)
(760 ILCS 5/5)(from Ch. 17, par. 1675) Sec. 5. Investments. (a) Prudent Investor Rule. A trustee administering a trust has a duty to invest and manage the trust assets as follows: (1) The trustee has a duty to invest and manage
trust assets as a prudent investor would considering the purposes, terms, distribution requirements, and other circumstances of the trust. This standard requires the exercise of reasonable care, skill, and caution and is to be applied to investments not in isolation, but in the context of the trust portfolio as a whole and as a part of an overall investment strategy that should incorporate risk and return objectives reasonably suitable to the trust.
(2) No specific investment or course of action is,
taken alone, prudent or imprudent. The trustee may invest in every kind of property and type of investment, subject to this Section. The trustee's investment decisions and actions are to be judged in terms of the trustee's reasonable business judgment regarding the anticipated effect on the trust portfolio as a whole under the facts and circumstances prevailing at the time of the decision or action. The prudent investor rule is a test of conduct and not of resulting performance.
(3) The trustee has a duty to diversify the
investments of the trust unless, under the circumstances, the trustee reasonably believes it is in the interests of the beneficiaries and furthers the purposes of the trust not to diversify.
(4) The trustee has a duty, within a reasonable time
after the acceptance of the trusteeship, to review trust assets and to make and implement decisions concerning the retention and disposition of original pre‑existing investments in order to conform to the provisions of this Section. The trustee's decision to retain or dispose of an asset may properly be influenced by the asset's special relationship or value to the purposes of the trust or to some or all of the beneficiaries, consistent with the trustee's duty of impartiality.
(5) The trustee has a duty to pursue an investment
strategy that considers both the reasonable production of income and safety of capital, consistent with the trustee's duty of impartiality and the purposes of the trust. Whether investments are underproductive or overproductive of income shall be judged by the portfolio as a whole and not as to any particular asset.
(6) The circumstances that the trustee may consider
in making investment decisions include, without limitation, the general economic conditions, the possible effect of inflation, the expected tax consequences of investment decisions or strategies, the role each investment or course of action plays within the overall portfolio, the expected total return (including both income yield and appreciation of capital), and the duty to incur only reasonable and appropriate costs. The trustee may but need not consider related trusts and the assets of beneficiaries when making investment decisions.
(b) The provisions of this Section may be expanded, restricted, eliminated, or otherwise altered by express provisions of the trust instrument. The trustee is not liable to a beneficiary for the trustee's reasonable and good faith reliance on those express provisions. (c) Nothing in this Section abrogates or restricts the power of an appropriate court in proper cases (i) to direct or permit the trustee to deviate from the terms of the trust instrument or (ii) to direct or permit the trustee to take, or to restrain the trustee from taking, any action regarding the making or retention of investments. (d) The following terms or comparable language in the investment powers and related provisions of a trust instrument, unless otherwise limited or modified by that instrument, shall be construed as authorizing any investment or strategy permitted under this Section: "investments permissible by law for investment of trust funds", "legal investments", "authorized investments", "using the judgment and care under the circumstances then prevailing that men of prudence, discretion, and intelligence exercise in the management of their own affairs, not in regard to the speculation but in regard to the permanent disposition of their funds, considering the probable income as well as the probable safety of their capital", "prudent man rule", and "prudent person rule". (e) On and after the effective date of this amendatory Act of 1991, this Section applies to all existing and future trusts, but only as to actions or inactions occurring after that effective date. (Source: P.A. 87‑715.)
(760 ILCS 5/5.1)(from Ch. 17, par. 1675.1) Sec. 5.1. Duty not to delegate. (a) The trustee has a duty not to delegate to others the performance of any acts involving the exercise of judgment and discretion, except acts constituting investment functions that a prudent investor of comparable skills might delegate under the circumstances. The trustee may delegate those investment functions to an investment agent as provided in subsection (b). (b) For a trustee to properly delegate investment functions under subsection (a), all of the following requirements apply:
(760 ILCS 5/1)(from Ch. 17, par. 1651) Sec. 1. Title. This Act shall be known and may be cited as the Trusts and Trustees Act. (Source: P. A. 78‑625.)
(760 ILCS 5/2)(from Ch. 17, par. 1652) Sec. 2. Definitions. As used in this Act: (1) "Trust" means a trust created by will, deed, agreement, declaration or other written instrument; (2) "Trustee" means the trustee or any successor or added trustee of the trust, whether appointed by or pursuant to the instrument creating the trust, by order of court or otherwise, and includes an individual and a corporation qualified to administer trusts in this State under "An Act to provide for and regulate the administration of trusts by trust companies", approved June 15, 1887, as amended, or under "An Act authorizing foreign corporations, including banks, and national banking associations domiciled in other states, to act in a fiduciary capacity in this State upon certain conditions herein set forth", approved July 13, 1953, as amended. (Source: P.A. 78‑625.)
(760 ILCS 5/3)(from Ch. 17, par. 1653) Sec. 3. Applicability. (1) A person establishing a trust may specify in the instrument the rights, powers, duties, limitations and immunities applicable to the trustee, beneficiary and others and those provisions where not otherwise contrary to law shall control, notwithstanding this Act. The provisions of this Act apply to the trust to the extent that they are not inconsistent with the provisions of the instrument. (2) This Act applies to every trust created by will, deed, agreement, declaration or other instrument, except that the provisions of Sections 4.01 through 4.08, Sections 4.10 through 4.12, and Sections 4.14 through 4.24 apply only to trusts executed on or after October 1, 1973 and, with respect to Section 17, to an order entered on or after that date, and provided further that the provisions of this Act do not apply to any: (a) land trust; (b) voting trust; (c) security instrument such as a trust deed or mortgage; (d) liquidation trust; (e) escrow; (f) instrument under which a nominee, custodian for property or paying or receiving agent is appointed; or (g) a trust created by a deposit arrangement in a banking or savings institution, commonly known as a "Totten trust" unless in the governing instrument any of the provisions of this Act are made applicable by specific reference. (3) This Act does not apply to the Grain Indemnity Trust Account or any other trust created under the Grain Code. (Source: P.A. 91‑357, eff. 7‑29‑99.)
(760 ILCS 5/4)(from Ch. 17, par. 1654) Sec. 4. Powers of Trustee. The trustee has the powers specified in the Sections following this Section and preceding Section 5. (Source: P.A. 95‑605, eff. 6‑1‑08.)
(760 ILCS 5/4.01)(from Ch. 17, par. 1655) Sec. 4.01. To sell, contract to sell and grant options to purchase any part or all of the trust estate at public or private sale, for cash or on credit, and to exchange any part or all of the trust estate for other property. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.02)(from Ch. 17, par. 1656) Sec. 4.02. To enter into leases for any period of time, though extending beyond the termination of the trust. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.03)(from Ch. 17, par. 1657) Sec. 4.03. To borrow money and to mortgage, pledge or otherwise encumber any part or all of the trust estate. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.04)(from Ch. 17, par. 1658) Sec. 4.04. To grant easements, subdivide, improve, give consents and enter into contracts relating to real estate or its use and to dedicate any interest in real estate. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.05)(from Ch. 17, par. 1659) Sec. 4.05. To designate or appoint a trustee to act in any other jurisdiction as sole trustee or co‑trustee of any part or all of the trust estate located in such other jurisdiction; to confer upon the appointed trustee any or all of the rights, powers and duties of the appointing trustee; and to remove the appointed trustee. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.06)(from Ch. 17, par. 1660) Sec. 4.06. To enter into agreements for bank or other deposit accounts, safe deposit boxes, custodian, agency or depositary arrangements for all or any part of the trust estate, including agreements for such services provided by a bank operated by or affiliated with the trustee, and to pay reasonable compensation for those services, including compensation to the bank operated by or affiliated with the trustee, except that nothing in this Section shall be construed as removing any depositary arrangements from the requirements of the prudent person rule. (Source: P.A. 85‑1211; 86‑1475.)
(760 ILCS 5/4.07)(from Ch. 17, par. 1661) Sec. 4.07. (a) To exercise all the rights and powers of an individual owner with respect to shares of stock, bonds or other securities in the trust estate, including, but not by way of limitation, voting, giving proxies, participating in voting trusts, mergers, consolidations, foreclosures, reorganizations or liquidations, and exercising or selling subscription or conversion rights; (b) If the provisions of the trust instrument direct that the trust estate be invested in obligations issued or guaranteed by the United States or any instrumentality or agency thereof, the trustee, if he does not make such investment directly, may invest the trust estate in interests in any open‑end or closed‑end management type investment company or investment trust registered under the Investment Company Act of 1940, as from time to time amended, provided that the portfolio of such investment company or investment trust is limited to obligations of the United States hereinabove described and to agreements to repurchase such obligations, which agreements, with respect to principal and interest, are at least 100% collateralized by such obligations marked to market on a daily basis, if the investment company or investment trust takes delivery of such obligations either directly or through an independent custodian designated in accordance with the Investment Company Act of 1940, as from time to time amended. Nothing in this subsection (b) shall be construed as removing any such investment from the requirements of the prudent man rule. (Source: P.A. 84‑541.)
(760 ILCS 5/4.08)(from Ch. 17, par. 1662) Sec. 4.08. To pay taxes and reasonable expenses incurred in administering the trust estate. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.09)(from Ch. 17, par. 1663) Sec. 4.09. To appoint attorneys, auditors, financial advisers and other agents and to pay reasonable compensation to such appointees. If the trustee uses reasonable care, skill, and caution in the selection of the agent, the trustee may rely upon the advice or recommendation of the agent without further investigation and, except as may otherwise be provided in subsection (b) of Section 5.1 with respect to investment agents, shall have no responsibility for actions taken or omitted upon the advice or recommendation of the agent. (Source: P.A. 89‑344, eff. 1‑1‑96.)
(760 ILCS 5/4.10)(from Ch. 17, par. 1664) Sec. 4.10. To delegate to a co‑trustee for any period of time any or all of the trustee's rights, powers and duties. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.11)(from Ch. 17, par. 1665) Sec. 4.11. To compromise, contest, prosecute or abandon claims or other charges in favor of or against the trust estate. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.12)(from Ch. 17, par. 1666) Sec. 4.12. To execute contracts, notes, conveyances and other instruments, whether or not containing covenants and warranties binding upon and creating a charge against the trust estate or excluding personal liability. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.13)(from Ch. 17, par. 1667) Sec. 4.13. Reception of additional trust property. To receive and administer additional property as part of the trust estate or as a separate trust having terms identical to the terms of the existing trust. The provisions of this amendatory Act of 1993 apply to all trusts created and actions taken before, on, or after the effective date of this amendatory Act of 1993. (Source: P.A. 88‑367.)
(760 ILCS 5/4.14)(from Ch. 17, par. 1668) Sec. 4.14. To invest in or hold undivided interests in property. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.15)(from Ch. 17, par. 1669) Sec. 4.15. To deal with the executor, trustee or other representative of any other trust or estate in which a beneficiary of the trust estate has an interest, notwithstanding the fact that the trustee is an executor, trustee or other representative of the other trust or estate. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.16)(from Ch. 17, par. 1670) Sec. 4.16. To make equitable division or distribution in cash or in kind, or both, and for that purpose to value any property divided or distributed in kind. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.17)(from Ch. 17, par. 1671) Sec. 4.17. To rely upon an affidavit, certificate, letter or other evidence reasonably believed to be genuine and on the basis of any such evidence to make any payment or distribution in good faith without liability. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.18)(from Ch. 17, par. 1672) Sec. 4.18. To have all of the rights, powers and duties given to or imposed upon the trustee by law and the provisions of the trust instrument during the period between the termination of the trust and the distribution thereof and during any period in which any litigation is pending which may void or invalidate the trust in whole or in part or affect the rights, powers, duties or discretions of the trustee except as otherwise directed by the court. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.19)(from Ch. 17, par. 1673) Sec. 4.19. To purchase and keep in force insurance of an appropriate nature and form and in a reasonable amount for the protection of the trust estate or the ownership thereof. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.20)(from Ch. 17, par. 1674) Sec. 4.20. To distribute income and amounts of principal in such one or more of the following ways as the trustee believes to be for the best interests of any beneficiary who at the time of distribution is under legal disability or in the opinion of the trustee is unable properly to manage his affairs because of illness, physical or mental disability or any other cause: (a) directly to the beneficiary; (b) to a duly appointed guardian of the beneficiary; (c) to a custodian for the beneficiary under the Uniform Transfers to Minors Act; (d) to an adult relative of the beneficiary; (e) by expending the money or using the property directly for the benefit of the beneficiary; and the trustee is not required to see to the application of any distribution so made; and (f) to a trust, created prior to the time the distribution becomes payable, for the sole benefit of the beneficiary and those dependent upon the beneficiary during his or her lifetime, to be administered as a part thereof, except that any amounts distributed to the trust pursuant to this paragraph (f) shall be separately accounted for by the trustee of the trust and shall be indefeasibly vested in the beneficiary so that if the beneficiary dies prior to complete distribution of such amounts, the amounts and the accretions, earnings, and income thereon, if any, shall be paid to the beneficiary's estate; provided, however, that this paragraph (f) shall not apply to the extent that it would cause a trust otherwise qualifying for the federal estate tax marital deduction not to so qualify. (Source: P.A. 93‑695, eff. 7‑9‑04.)
(760 ILCS 5/4.21)(from Ch. 17, par. 1674.1) Sec. 4.21. To plant and harvest crops; to breed, raise, purchase and sell livestock; to lease land, equipment or livestock for cash or on shares, to purchase and sell, exchange or otherwise acquire or dispose of farm equipment and farm produce of all kinds; to make improvements, construct, repair, or demolish and remove any buildings, structures or fences, to engage agents, managers and employees and delegate powers to them; to engage in drainage and conservation programs; to terrace, clear, ditch and drain lands and install irrigation systems; to replace improvements and equipment; to fertilize and improve the soil; to engage in the growing, improvement, and sale of trees and other forest crops; to participate or decline to participate in governmental agricultural or land programs; and to perform such acts as the trustee deems appropriate, using such methods as are commonly employed by other farm owners in the community in which the farm property is located. (Source: P.A. 82‑354.)
(760 ILCS 5/4.22)(from Ch. 17, par. 1674.2) Sec. 4.22. To drill, mine and otherwise operate for the development of oil, gas and other minerals; to enter into contracts relating to the installation and operation of absorption and repressuring plants; to enter into unitization or pooling agreements for any purpose including primary, secondary or tertiary recovery; to place and maintain pipe lines; to execute oil, gas and mineral leases, division and transfer orders, grants, deeds, releases and assignments and other instruments; to participate in a cooperative coal marketing association or similar entity; and to perform such other acts as the trustee deems appropriate, using such methods as are commonly employed by owners of such interests in the community in which the interests are located. (Source: P.A. 82‑354.)
(760 ILCS 5/4.23)(from Ch. 17, par. 1674.3) Sec. 4.23. To continue an unincorporated business and participate in its management by having the trustee or one or more agents of the trustee act as a manager with appropriate compensation from the business and to incorporate the business. (Source: P.A. 82‑354.)
(760 ILCS 5/4.24)(from Ch. 17, par. 1674.4) Sec. 4.24. To continue a business in the partnership form and participate in its management by having the trustee or one or more agents of the trustee act as a partner, limited partner or employee with appropriate compensation from the business; to enter into new partnership agreements; and to incorporate the business; and with respect to the foregoing activities, the trustee or the agent or agents of the trustee shall not be personally liable to third persons with respect to actions, not sounding in tort, unless he fails to identify the trust estate and reveal that he is acting in a representative capacity. Provided, however, that nothing in this Section shall impair in any way the liability of the trust estate with respect to the foregoing activities to the extent of the assets of the trust estate. (Source: P.A. 84‑518; 84‑621.)
(760 ILCS 5/4.25) Sec. 4.25. Severance and consolidation. To sever any trust estate on a fractional basis into 2 or more separate trusts for any reason; to segregate by allocation to a separate account or trust a specific amount or gift made from any trust to reflect a partial disclaimer, to reflect or result in differences in federal tax attributes, to satisfy any federal tax requirement or election, or to reduce potential generation‑skipping transfer tax liability, in a manner consistent with the rules governing disclaimers, such federal tax attributes, such requirements or elections, or any applicable tax rules or regulations, and income earned on a segregated amount or gift after segregation occurs shall pass to the designated take of such amount or gift; and to consolidate 2 or more trusts having substantially similar terms into a single trust. In managing, investing, administering, and distributing the trust property of any separate account or trust and in making applicable tax elections, the trustee may consider the differences in federal tax attributes and all other factors the trustee believes pertinent and may make disproportionate distributions from the separate trusts created. A separate account or trust created by severance or segregation shall be treated as a separate trust for all purposes from and after the date on which the severance or segregation is effective, and 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, provided, however, that any terms of the trust before severance that would affect qualification of the trust for any federal tax deduction, exclusion, election, exemption, or other special federal tax status must remain identical in each of the separate trusts created. The provisions of this amendatory Act of 1993 apply to all trusts created, and actions taken before, on, or after the effective date of this amendatory Act of 1993. (Source: P.A. 88‑367.)
(760 ILCS 5/4.26) Sec. 4.26. Small trust termination. To terminate the trust and distribute the trust estate, including principal and accrued and undistributed income, if the trustee determines, in the trustee's sole discretion with the consent of the recipients, that the market value of a trust is less than $100,000 and that the costs of continuing the trust will substantially impair accomplishment of the purpose of the trust. Distribution shall be made to the persons then entitled to receive or eligible to have the benefit of the income from the trust in the proportions in which they are entitled thereto, or if their interests are indefinite, to those persons per stirpes if they have a common ancestor, or if not, then in equal shares. The trustee shall give notice to the persons at least 30 days prior to the effective date of the termination. If a particular trustee is an income beneficiary of the trust or is legally obligated to an income beneficiary, then that particular trustee may not participate as a trustee in the exercise of this termination power; provided, however, that if the trust has one or more co‑trustees who are not so disqualified from participating, the co‑trustee or co‑trustees may exercise this power. This Section shall not apply to the extent that it would cause a trust otherwise qualifying for a federal or State tax benefit or other benefit not to so qualify, nor shall it apply to trusts for domestic or pet animals. The provisions of this amendatory Act of the 95th General Assembly apply to all trusts created before, on, or after its effective date. (Source: P.A. 95‑605, eff. 6‑1‑08.)
(760 ILCS 5/5)(from Ch. 17, par. 1675) Sec. 5. Investments. (a) Prudent Investor Rule. A trustee administering a trust has a duty to invest and manage the trust assets as follows: (1) The trustee has a duty to invest and manage
trust assets as a prudent investor would considering the purposes, terms, distribution requirements, and other circumstances of the trust. This standard requires the exercise of reasonable care, skill, and caution and is to be applied to investments not in isolation, but in the context of the trust portfolio as a whole and as a part of an overall investment strategy that should incorporate risk and return objectives reasonably suitable to the trust.
(2) No specific investment or course of action is,
taken alone, prudent or imprudent. The trustee may invest in every kind of property and type of investment, subject to this Section. The trustee's investment decisions and actions are to be judged in terms of the trustee's reasonable business judgment regarding the anticipated effect on the trust portfolio as a whole under the facts and circumstances prevailing at the time of the decision or action. The prudent investor rule is a test of conduct and not of resulting performance.
(3) The trustee has a duty to diversify the
investments of the trust unless, under the circumstances, the trustee reasonably believes it is in the interests of the beneficiaries and furthers the purposes of the trust not to diversify.
(4) The trustee has a duty, within a reasonable time
after the acceptance of the trusteeship, to review trust assets and to make and implement decisions concerning the retention and disposition of original pre‑existing investments in order to conform to the provisions of this Section. The trustee's decision to retain or dispose of an asset may properly be influenced by the asset's special relationship or value to the purposes of the trust or to some or all of the beneficiaries, consistent with the trustee's duty of impartiality.
(5) The trustee has a duty to pursue an investment
strategy that considers both the reasonable production of income and safety of capital, consistent with the trustee's duty of impartiality and the purposes of the trust. Whether investments are underproductive or overproductive of income shall be judged by the portfolio as a whole and not as to any particular asset.
(6) The circumstances that the trustee may consider
in making investment decisions include, without limitation, the general economic conditions, the possible effect of inflation, the expected tax consequences of investment decisions or strategies, the role each investment or course of action plays within the overall portfolio, the expected total return (including both income yield and appreciation of capital), and the duty to incur only reasonable and appropriate costs. The trustee may but need not consider related trusts and the assets of beneficiaries when making investment decisions.
(b) The provisions of this Section may be expanded, restricted, eliminated, or otherwise altered by express provisions of the trust instrument. The trustee is not liable to a beneficiary for the trustee's reasonable and good faith reliance on those express provisions. (c) Nothing in this Section abrogates or restricts the power of an appropriate court in proper cases (i) to direct or permit the trustee to deviate from the terms of the trust instrument or (ii) to direct or permit the trustee to take, or to restrain the trustee from taking, any action regarding the making or retention of investments. (d) The following terms or comparable language in the investment powers and related provisions of a trust instrument, unless otherwise limited or modified by that instrument, shall be construed as authorizing any investment or strategy permitted under this Section: "investments permissible by law for investment of trust funds", "legal investments", "authorized investments", "using the judgment and care under the circumstances then prevailing that men of prudence, discretion, and intelligence exercise in the management of their own affairs, not in regard to the speculation but in regard to the permanent disposition of their funds, considering the probable income as well as the probable safety of their capital", "prudent man rule", and "prudent person rule". (e) On and after the effective date of this amendatory Act of 1991, this Section applies to all existing and future trusts, but only as to actions or inactions occurring after that effective date. (Source: P.A. 87‑715.)
(760 ILCS 5/5.1)(from Ch. 17, par. 1675.1) Sec. 5.1. Duty not to delegate. (a) The trustee has a duty not to delegate to others the performance of any acts involving the exercise of judgment and discretion, except acts constituting investment functions that a prudent investor of comparable skills might delegate under the circumstances. The trustee may delegate those investment functions to an investment agent as provided in subsection (b). (b) For a trustee to properly delegate investment functions under subsection (a), all of the following requirements apply:
(760 ILCS 5/1)(from Ch. 17, par. 1651) Sec. 1. Title. This Act shall be known and may be cited as the Trusts and Trustees Act. (Source: P. A. 78‑625.)
(760 ILCS 5/2)(from Ch. 17, par. 1652) Sec. 2. Definitions. As used in this Act: (1) "Trust" means a trust created by will, deed, agreement, declaration or other written instrument; (2) "Trustee" means the trustee or any successor or added trustee of the trust, whether appointed by or pursuant to the instrument creating the trust, by order of court or otherwise, and includes an individual and a corporation qualified to administer trusts in this State under "An Act to provide for and regulate the administration of trusts by trust companies", approved June 15, 1887, as amended, or under "An Act authorizing foreign corporations, including banks, and national banking associations domiciled in other states, to act in a fiduciary capacity in this State upon certain conditions herein set forth", approved July 13, 1953, as amended. (Source: P.A. 78‑625.)
(760 ILCS 5/3)(from Ch. 17, par. 1653) Sec. 3. Applicability. (1) A person establishing a trust may specify in the instrument the rights, powers, duties, limitations and immunities applicable to the trustee, beneficiary and others and those provisions where not otherwise contrary to law shall control, notwithstanding this Act. The provisions of this Act apply to the trust to the extent that they are not inconsistent with the provisions of the instrument. (2) This Act applies to every trust created by will, deed, agreement, declaration or other instrument, except that the provisions of Sections 4.01 through 4.08, Sections 4.10 through 4.12, and Sections 4.14 through 4.24 apply only to trusts executed on or after October 1, 1973 and, with respect to Section 17, to an order entered on or after that date, and provided further that the provisions of this Act do not apply to any: (a) land trust; (b) voting trust; (c) security instrument such as a trust deed or mortgage; (d) liquidation trust; (e) escrow; (f) instrument under which a nominee, custodian for property or paying or receiving agent is appointed; or (g) a trust created by a deposit arrangement in a banking or savings institution, commonly known as a "Totten trust" unless in the governing instrument any of the provisions of this Act are made applicable by specific reference. (3) This Act does not apply to the Grain Indemnity Trust Account or any other trust created under the Grain Code. (Source: P.A. 91‑357, eff. 7‑29‑99.)
(760 ILCS 5/4)(from Ch. 17, par. 1654) Sec. 4. Powers of Trustee. The trustee has the powers specified in the Sections following this Section and preceding Section 5. (Source: P.A. 95‑605, eff. 6‑1‑08.)
(760 ILCS 5/4.01)(from Ch. 17, par. 1655) Sec. 4.01. To sell, contract to sell and grant options to purchase any part or all of the trust estate at public or private sale, for cash or on credit, and to exchange any part or all of the trust estate for other property. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.02)(from Ch. 17, par. 1656) Sec. 4.02. To enter into leases for any period of time, though extending beyond the termination of the trust. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.03)(from Ch. 17, par. 1657) Sec. 4.03. To borrow money and to mortgage, pledge or otherwise encumber any part or all of the trust estate. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.04)(from Ch. 17, par. 1658) Sec. 4.04. To grant easements, subdivide, improve, give consents and enter into contracts relating to real estate or its use and to dedicate any interest in real estate. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.05)(from Ch. 17, par. 1659) Sec. 4.05. To designate or appoint a trustee to act in any other jurisdiction as sole trustee or co‑trustee of any part or all of the trust estate located in such other jurisdiction; to confer upon the appointed trustee any or all of the rights, powers and duties of the appointing trustee; and to remove the appointed trustee. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.06)(from Ch. 17, par. 1660) Sec. 4.06. To enter into agreements for bank or other deposit accounts, safe deposit boxes, custodian, agency or depositary arrangements for all or any part of the trust estate, including agreements for such services provided by a bank operated by or affiliated with the trustee, and to pay reasonable compensation for those services, including compensation to the bank operated by or affiliated with the trustee, except that nothing in this Section shall be construed as removing any depositary arrangements from the requirements of the prudent person rule. (Source: P.A. 85‑1211; 86‑1475.)
(760 ILCS 5/4.07)(from Ch. 17, par. 1661) Sec. 4.07. (a) To exercise all the rights and powers of an individual owner with respect to shares of stock, bonds or other securities in the trust estate, including, but not by way of limitation, voting, giving proxies, participating in voting trusts, mergers, consolidations, foreclosures, reorganizations or liquidations, and exercising or selling subscription or conversion rights; (b) If the provisions of the trust instrument direct that the trust estate be invested in obligations issued or guaranteed by the United States or any instrumentality or agency thereof, the trustee, if he does not make such investment directly, may invest the trust estate in interests in any open‑end or closed‑end management type investment company or investment trust registered under the Investment Company Act of 1940, as from time to time amended, provided that the portfolio of such investment company or investment trust is limited to obligations of the United States hereinabove described and to agreements to repurchase such obligations, which agreements, with respect to principal and interest, are at least 100% collateralized by such obligations marked to market on a daily basis, if the investment company or investment trust takes delivery of such obligations either directly or through an independent custodian designated in accordance with the Investment Company Act of 1940, as from time to time amended. Nothing in this subsection (b) shall be construed as removing any such investment from the requirements of the prudent man rule. (Source: P.A. 84‑541.)
(760 ILCS 5/4.08)(from Ch. 17, par. 1662) Sec. 4.08. To pay taxes and reasonable expenses incurred in administering the trust estate. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.09)(from Ch. 17, par. 1663) Sec. 4.09. To appoint attorneys, auditors, financial advisers and other agents and to pay reasonable compensation to such appointees. If the trustee uses reasonable care, skill, and caution in the selection of the agent, the trustee may rely upon the advice or recommendation of the agent without further investigation and, except as may otherwise be provided in subsection (b) of Section 5.1 with respect to investment agents, shall have no responsibility for actions taken or omitted upon the advice or recommendation of the agent. (Source: P.A. 89‑344, eff. 1‑1‑96.)
(760 ILCS 5/4.10)(from Ch. 17, par. 1664) Sec. 4.10. To delegate to a co‑trustee for any period of time any or all of the trustee's rights, powers and duties. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.11)(from Ch. 17, par. 1665) Sec. 4.11. To compromise, contest, prosecute or abandon claims or other charges in favor of or against the trust estate. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.12)(from Ch. 17, par. 1666) Sec. 4.12. To execute contracts, notes, conveyances and other instruments, whether or not containing covenants and warranties binding upon and creating a charge against the trust estate or excluding personal liability. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.13)(from Ch. 17, par. 1667) Sec. 4.13. Reception of additional trust property. To receive and administer additional property as part of the trust estate or as a separate trust having terms identical to the terms of the existing trust. The provisions of this amendatory Act of 1993 apply to all trusts created and actions taken before, on, or after the effective date of this amendatory Act of 1993. (Source: P.A. 88‑367.)
(760 ILCS 5/4.14)(from Ch. 17, par. 1668) Sec. 4.14. To invest in or hold undivided interests in property. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.15)(from Ch. 17, par. 1669) Sec. 4.15. To deal with the executor, trustee or other representative of any other trust or estate in which a beneficiary of the trust estate has an interest, notwithstanding the fact that the trustee is an executor, trustee or other representative of the other trust or estate. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.16)(from Ch. 17, par. 1670) Sec. 4.16. To make equitable division or distribution in cash or in kind, or both, and for that purpose to value any property divided or distributed in kind. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.17)(from Ch. 17, par. 1671) Sec. 4.17. To rely upon an affidavit, certificate, letter or other evidence reasonably believed to be genuine and on the basis of any such evidence to make any payment or distribution in good faith without liability. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.18)(from Ch. 17, par. 1672) Sec. 4.18. To have all of the rights, powers and duties given to or imposed upon the trustee by law and the provisions of the trust instrument during the period between the termination of the trust and the distribution thereof and during any period in which any litigation is pending which may void or invalidate the trust in whole or in part or affect the rights, powers, duties or discretions of the trustee except as otherwise directed by the court. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.19)(from Ch. 17, par. 1673) Sec. 4.19. To purchase and keep in force insurance of an appropriate nature and form and in a reasonable amount for the protection of the trust estate or the ownership thereof. (Source: P.A. 86‑1475.)
(760 ILCS 5/4.20)(from Ch. 17, par. 1674) Sec. 4.20. To distribute income and amounts of principal in such one or more of the following ways as the trustee believes to be for the best interests of any beneficiary who at the time of distribution is under legal disability or in the opinion of the trustee is unable properly to manage his affairs because of illness, physical or mental disability or any other cause: (a) directly to the beneficiary; (b) to a duly appointed guardian of the beneficiary; (c) to a custodian for the beneficiary under the Uniform Transfers to Minors Act; (d) to an adult relative of the beneficiary; (e) by expending the money or using the property directly for the benefit of the beneficiary; and the trustee is not required to see to the application of any distribution so made; and (f) to a trust, created prior to the time the distribution becomes payable, for the sole benefit of the beneficiary and those dependent upon the beneficiary during his or her lifetime, to be administered as a part thereof, except that any amounts distributed to the trust pursuant to this paragraph (f) shall be separately accounted for by the trustee of the trust and shall be indefeasibly vested in the beneficiary so that if the beneficiary dies prior to complete distribution of such amounts, the amounts and the accretions, earnings, and income thereon, if any, shall be paid to the beneficiary's estate; provided, however, that this paragraph (f) shall not apply to the extent that it would cause a trust otherwise qualifying for the federal estate tax marital deduction not to so qualify. (Source: P.A. 93‑695, eff. 7‑9‑04.)
(760 ILCS 5/4.21)(from Ch. 17, par. 1674.1) Sec. 4.21. To plant and harvest crops; to breed, raise, purchase and sell livestock; to lease land, equipment or livestock for cash or on shares, to purchase and sell, exchange or otherwise acquire or dispose of farm equipment and farm produce of all kinds; to make improvements, construct, repair, or demolish and remove any buildings, structures or fences, to engage agents, managers and employees and delegate powers to them; to engage in drainage and conservation programs; to terrace, clear, ditch and drain lands and install irrigation systems; to replace improvements and equipment; to fertilize and improve the soil; to engage in the growing, improvement, and sale of trees and other forest crops; to participate or decline to participate in governmental agricultural or land programs; and to perform such acts as the trustee deems appropriate, using such methods as are commonly employed by other farm owners in the community in which the farm property is located. (Source: P.A. 82‑354.)
(760 ILCS 5/4.22)(from Ch. 17, par. 1674.2) Sec. 4.22. To drill, mine and otherwise operate for the development of oil, gas and other minerals; to enter into contracts relating to the installation and operation of absorption and repressuring plants; to enter into unitization or pooling agreements for any purpose including primary, secondary or tertiary recovery; to place and maintain pipe lines; to execute oil, gas and mineral leases, division and transfer orders, grants, deeds, releases and assignments and other instruments; to participate in a cooperative coal marketing association or similar entity; and to perform such other acts as the trustee deems appropriate, using such methods as are commonly employed by owners of such interests in the community in which the interests are located. (Source: P.A. 82‑354.)
(760 ILCS 5/4.23)(from Ch. 17, par. 1674.3) Sec. 4.23. To continue an unincorporated business and participate in its management by having the trustee or one or more agents of the trustee act as a manager with appropriate compensation from the business and to incorporate the business. (Source: P.A. 82‑354.)
(760 ILCS 5/4.24)(from Ch. 17, par. 1674.4) Sec. 4.24. To continue a business in the partnership form and participate in its management by having the trustee or one or more agents of the trustee act as a partner, limited partner or employee with appropriate compensation from the business; to enter into new partnership agreements; and to incorporate the business; and with respect to the foregoing activities, the trustee or the agent or agents of the trustee shall not be personally liable to third persons with respect to actions, not sounding in tort, unless he fails to identify the trust estate and reveal that he is acting in a representative capacity. Provided, however, that nothing in this Section shall impair in any way the liability of the trust estate with respect to the foregoing activities to the extent of the assets of the trust estate. (Source: P.A. 84‑518; 84‑621.)
(760 ILCS 5/4.25) Sec. 4.25. Severance and consolidation. To sever any trust estate on a fractional basis into 2 or more separate trusts for any reason; to segregate by allocation to a separate account or trust a specific amount or gift made from any trust to reflect a partial disclaimer, to reflect or result in differences in federal tax attributes, to satisfy any federal tax requirement or election, or to reduce potential generation‑skipping transfer tax liability, in a manner consistent with the rules governing disclaimers, such federal tax attributes, such requirements or elections, or any applicable tax rules or regulations, and income earned on a segregated amount or gift after segregation occurs shall pass to the designated take of such amount or gift; and to consolidate 2 or more trusts having substantially similar terms into a single trust. In managing, investing, administering, and distributing the trust property of any separate account or trust and in making applicable tax elections, the trustee may consider the differences in federal tax attributes and all other factors the trustee believes pertinent and may make disproportionate distributions from the separate trusts created. A separate account or trust created by severance or segregation shall be treated as a separate trust for all purposes from and after the date on which the severance or segregation is effective, and 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, provided, however, that any terms of the trust before severance that would affect qualification of the trust for any federal tax deduction, exclusion, election, exemption, or other special federal tax status must remain identical in each of the separate trusts created. The provisions of this amendatory Act of 1993 apply to all trusts created, and actions taken before, on, or after the effective date of this amendatory Act of 1993. (Source: P.A. 88‑367.)
(760 ILCS 5/4.26) Sec. 4.26. Small trust termination. To terminate the trust and distribute the trust estate, including principal and accrued and undistributed income, if the trustee determines, in the trustee's sole discretion with the consent of the recipients, that the market value of a trust is less than $100,000 and that the costs of continuing the trust will substantially impair accomplishment of the purpose of the trust. Distribution shall be made to the persons then entitled to receive or eligible to have the benefit of the income from the trust in the proportions in which they are entitled thereto, or if their interests are indefinite, to those persons per stirpes if they have a common ancestor, or if not, then in equal shares. The trustee shall give notice to the persons at least 30 days prior to the effective date of the termination. If a particular trustee is an income beneficiary of the trust or is legally obligated to an income beneficiary, then that particular trustee may not participate as a trustee in the exercise of this termination power; provided, however, that if the trust has one or more co‑trustees who are not so disqualified from participating, the co‑trustee or co‑trustees may exercise this power. This Section shall not apply to the extent that it would cause a trust otherwise qualifying for a federal or State tax benefit or other benefit not to so qualify, nor shall it apply to trusts for domestic or pet animals. The provisions of this amendatory Act of the 95th General Assembly apply to all trusts created before, on, or after its effective date. (Source: P.A. 95‑605, eff. 6‑1‑08.)
(760 ILCS 5/5)(from Ch. 17, par. 1675) Sec. 5. Investments. (a) Prudent Investor Rule. A trustee administering a trust has a duty to invest and manage the trust assets as follows: (1) The trustee has a duty to invest and manage
trust assets as a prudent investor would considering the purposes, terms, distribution requirements, and other circumstances of the trust. This standard requires the exercise of reasonable care, skill, and caution and is to be applied to investments not in isolation, but in the context of the trust portfolio as a whole and as a part of an overall investment strategy that should incorporate risk and return objectives reasonably suitable to the trust.
(2) No specific investment or course of action is,
taken alone, prudent or imprudent. The trustee may invest in every kind of property and type of investment, subject to this Section. The trustee's investment decisions and actions are to be judged in terms of the trustee's reasonable business judgment regarding the anticipated effect on the trust portfolio as a whole under the facts and circumstances prevailing at the time of the decision or action. The prudent investor rule is a test of conduct and not of resulting performance.
(3) The trustee has a duty to diversify the
investments of the trust unless, under the circumstances, the trustee reasonably believes it is in the interests of the beneficiaries and furthers the purposes of the trust not to diversify.
(4) The trustee has a duty, within a reasonable time
after the acceptance of the trusteeship, to review trust assets and to make and implement decisions concerning the retention and disposition of original pre‑existing investments in order to conform to the provisions of this Section. The trustee's decision to retain or dispose of an asset may properly be influenced by the asset's special relationship or value to the purposes of the trust or to some or all of the beneficiaries, consistent with the trustee's duty of impartiality.
(5) The trustee has a duty to pursue an investment
strategy that considers both the reasonable production of income and safety of capital, consistent with the trustee's duty of impartiality and the purposes of the trust. Whether investments are underproductive or overproductive of income shall be judged by the portfolio as a whole and not as to any particular asset.
(6) The circumstances that the trustee may consider
in making investment decisions include, without limitation, the general economic conditions, the possible effect of inflation, the expected tax consequences of investment decisions or strategies, the role each investment or course of action plays within the overall portfolio, the expected total return (including both income yield and appreciation of capital), and the duty to incur only reasonable and appropriate costs. The trustee may but need not consider related trusts and the assets of beneficiaries when making investment decisions.
(b) The provisions of this Section may be expanded, restricted, eliminated, or otherwise altered by express provisions of the trust instrument. The trustee is not liable to a beneficiary for the trustee's reasonable and good faith reliance on those express provisions. (c) Nothing in this Section abrogates or restricts the power of an appropriate court in proper cases (i) to direct or permit the trustee to deviate from the terms of the trust instrument or (ii) to direct or permit the trustee to take, or to restrain the trustee from taking, any action regarding the making or retention of investments. (d) The following terms or comparable language in the investment powers and related provisions of a trust instrument, unless otherwise limited or modified by that instrument, shall be construed as authorizing any investment or strategy permitted under this Section: "investments permissible by law for investment of trust funds", "legal investments", "authorized investments", "using the judgment and care under the circumstances then prevailing that men of prudence, discretion, and intelligence exercise in the management of their own affairs, not in regard to the speculation but in regard to the permanent disposition of their funds, considering the probable income as well as the probable safety of their capital", "prudent man rule", and "prudent person rule". (e) On and after the effective date of this amendatory Act of 1991, this Section applies to all existing and future trusts, but only as to actions or inactions occurring after that effective date. (Source: P.A. 87‑715.)
(760 ILCS 5/5.1)(from Ch. 17, par. 1675.1) Sec. 5.1. Duty not to delegate. (a) The trustee has a duty not to delegate to others the performance of any acts involving the exercise of judgment and discretion, except acts constituting investment functions that a prudent investor of comparable skills might delegate under the circumstances. The trustee may delegate those investment functions to an investment agent as provided in subsection (b). (b) For a trustee to properly delegate investment functions under subsection (a), all of the following requirements apply:
