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Settlement of Disputes Involving Trusts

Trusts often provide for gifts to persons who have not yet been identified or who may or may not receive the gift depending on the happening or not of some specified event. Who ultimately may receive the gift, if anyone, is not presently known. Therefore, any dispute concerning the trust cannot be settled by agreement of all possibly interested parties. The Illinois Trusts and Trustees Act provides for binding resolution of some of these questions by agreement in some cases.

The law allows a trustee and the current and presumptive remainder beneficiaries of a trust to enter into agreements that are binding on other beneficiaries that have a successor, contingent or other future interest in the trust. It provides also that beneficiaries, including primary beneficiaries, who are disabled adults, may be represented and bound by the consent of other beneficiaries if certain conditions are met.

These agreements are often called non-judicial settlement agreements. They can cover a variety of subjects, including:

• interpretation or construction of the terms of the trust;
• approval of a trustee's report or accounting;
• exercise or non-exercise of any power by a trustee;
• the grant to a trustee of any necessary or desirable administrative power;
• questions relating to property or an interest in property held by the trust;
• resignation or appointment of a trustee;
• determination of a trustee's compensation;
• transfer of a trust's principal place of administration;
• liability or indemnification of a trustee for an action relating to the trust;
• resolution of issues relating to administration, investment, distribution or other matters;
• modification of terms of the trust pertaining to administration of the trust; and
• termination of the trust, provided court approval is obtained and the court concludes continuance is not necessary to achieve any material purpose of the trust.

A primary beneficiary is one currently eligible to receive income or principal or one who will be eligible to do so if he or she survives to the final date of distribution. Primary beneficiaries who are adult and competent can represent those who are not on questions where they have substantially identical interests and no conflict of interest.

The presumptive remainder beneficiaries are those who would receive distributions if the triggering event or termination of a prior interest or of the trust were to occur on the date in question.

The Illinois Attorney General may represent a charity on charitable purposes not specifically named. A charity specifically named may represent itself.

Donald M. Thompson * 55 W. Monroe #3950; Chicago, IL 60603 - Illinois Probate Lawyer

Ph: 312-782-0844 * Fax: 312-201-1436 * Email: donthompsonlaw@sbcglobal.net