Illinois Enacts Directed Trusts Statute

On August 10, 2012, Illinois Governor Quinn signed into law House Bill 4663, which amends the Illinois Trusts and Trustees Act to provide protection for a trustee when acting or not acting pursuant to the directions of a directing party. The statute takes effect on January 1, 2013, and its provisions will apply to trusts when specifically incorporated by the settlor or by court order. Additionally, the provisions of the directed trusts statute may be incorporated into existing trusts by using Illinois' virtual representation and nonjudicial settlement agreement statutes.

Settlors of trusts are becoming more interested in giving third parties certain powers to direct the actions of a trustee as trust administration has become more complicated. For instance, a settlor may desire to name a family member as trustee, but empower a professional investment advisor to direct trust investments. Or, a settlor may wish to name a professional fiduciary to administer the trust,