On August 10th, the Governor signed Public Act 97-0921 (former HB 4662 and 4663) making Illinois one of a growing number of states with statutes that address directed trusts and trust decanting. These new statutes will go into effect January 1, 2013. This client alert covers the directed trust statute.
Section 16.3 is the new section added to the Illinois Trusts and Trustees Act (the “Act,” codified at 760 ILCS et seq.) on directed trusts. Unlike some states who have directed trust statutes that only address an investment advisor, the Illinois statute covers various roles that may be given to an advisor to the trustee, including an investment advisor, distribution advisor or trust protectors (each defined to be a “Directing Party”). The new statute defines the roles of these various advisors, lists the powers and authority that these advisors will have, subject to the terms of the governing instrument, and addresses the responsibility and liability of these advisors and the trustee. Importantly, the statute expressly states that any Directing Party is a fiduciary with the same responsibility to exercise the authority or power granted to them as a trustee.
