Effective January 1, 2010, the new Illinois Virtual Representation Law will allow trustees and beneficiaries of an Illinois trust to modify trust provisions by agreement under certain conditions, notwithstanding seemingly irrevocable contrary provisions imposed by the party establishing the trust.
Modifications can be made for multiple reasons including ambiguous trust provisions - both dispositive and administrative - drafting errors, and change in circumstances.
The purpose of the law is to promote private resolution of disputed issues rather than through what might become contentious and expensive litigation through the courts.
No court approval is required for modifications except in the case when a trust is sought to be terminated. A trust that contains "spendthrift" provisions, i. e., provisions designed to prevent creditors of beneficiaries from reaching the assets in the trust, may not be terminated.
There has been a similar law in Illinois since 1994; however, the prior law was not as expansive, and, most importantly, was available only to income or principal beneficiaries who were adults and not disabled, thus preventing application of the law where trust beneficiaries were minors, disabled, or future or contingent beneficiaries. The new law allows adults who are competent to "represent" future or contingent beneficiaries whose interests are substantially identical as the present beneficiaries so long as no conflict of interest exists.
The above description is a general summary of the new law. Please do not hesitate to contact us if you have any questions.
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