The Uniform Trust Code is a model set of laws for the creating and regulation of trusts. This code has been adopted by the majority of states in one form or another, including Illinois. In fact, Illinois became the 34th state to adopt the code, which took effect on January 1, 2020. While this code is uniform, many states deviate from the model code in some instances. The code is complex and is likely best explained in detail by a practiced estate attorney.
The Wheaton Uniform Trust Code governs every aspect of creating, terminating, and modifying trusts. It sets out the requirements for these trusts and the duties of trustees. In disputes, judges look to the language of the code when making their rulings. Because of its importance in the process, anyone considering a trust could benefit from understanding how this code works.
An important part of the trust code, which differs significantly from prior state law, is the duty to account. Traditionally, a trustee owed a basic duty to provide an accounting for every income beneficiary. This accounting occurred annually, and non-income beneficiaries were excluded. Under the adoption of the Uniform Trust Code, state law now requires the trustee to provide every beneficiary with this accounting, whether or not they are guaranteed income beneficiaries.
The rules also require additional notification requirements. In Wheaton, a trustee must notify all beneficiaries when:
In Wheaton, beneficiaries may serve as their own trustees in some situations. Historically, this was not allowed, and any attempt to do so could allow the beneficiaries’ creditors to reach the assets of a trust. However, under the code, beneficiaries could act as trustees even when doing so is for their own benefit. While beneficiaries are allowed to make distributions from the trust while serving as trustees, it is only allowable if those distributions are based on an “ascertainable standard”. In other words, a beneficiary may not have broad discretion in how these disbursements are made. However, if the ascertainable standard sets out strict limits or even a direct schedule of payments, the code would allow a beneficiary to serve as trustee.
Unfortunately, the administration of a trust is not guaranteed to go smoothly. When beneficiaries believe a trustee has breached their duty, they have the right to bring a claim against the trustee; these claims are governed by the Wheaton Uniform Trust Code. Like with any lawsuit, there is a time limit to bring these claims. A beneficiary has two years from the settlor’s death or six months from the date the trustee notifies the beneficiaries to bring the claim.
The Wheaton Uniform Trust Code is important to every aspect of setting up, administering, and terminating a trust. These rules could seem archaic to the untrained eye, making the guidance of an experienced estate attorney crucial. If you intend to move forward with a trust, you could be well served to discuss your options with a seasoned attorney as soon as possible. Call for a consultation today.
