Illinois Trust Law: What Every Trust Holder Needs to Know

Illinois adopted a brand new trust code in 2020, replacing the older Trusts and Trustees Act that had been in place for decades. The new Illinois Trust Code is based on the Uniform Trust Code, but Illinois made enough modifications that general UTC advice doesn't always fit. The biggest wrinkle? Illinois has a dual-track compliance system where different rules apply depending on whether your trust became irrevocable before or after January 1, 2020.

If you have a trust governed by Illinois law or you're serving as trustee in Illinois, this guide covers what actually applies to you.

This guide applies to both revocable and irrevocable trusts in Illinois. However, the notice and accounting rules are most relevant after a trust becomes irrevocable, and the specific rules depend on when that happened.

Where Illinois trust law lives

The Illinois Trust Code is at 760 ILCS 3/, enacted by Public Act 101-48 and effective January 1, 2020. It replaced the former Trusts and Trustees Act (760 ILCS 5/). The new code is organized into Articles 1 through 16 plus Article 99, and its structure closely tracks the UTC with Illinois-specific modifications throughout.

If your trust was created or became irrevocable before 2020, you may need to reference both the new code and the old one, since certain grandfathering provisions apply.

What Illinois trustees are required to do

Illinois trustee duties are in Article 8 of the Trust Code. The core obligations are familiar, but Illinois added some distinctive twists.

Act in good faith. Section 801 requires the trustee to administer the trust in good faith, according to the trust's terms and purposes.

Put beneficiaries first. The duty of loyalty under section 802 requires administration in the beneficiaries' interest. Self-dealing is prohibited unless specifically authorized.

Treat beneficiaries fairly. Section 803 requires impartiality among beneficiaries with different interests (for example, between someone receiving current income and someone who will inherit the remaining assets later).

Invest prudently, with some Illinois flexibility. Illinois kept its own prudent investor law (Article 9, sections 900 through 915) rather than adopting the UTC's version. The Illinois version includes two notable additions: trustees can consider ESG factors (environmental, social, and governance considerations) in investment decisions, and they can consider the emotional or sentimental value of certain trust assets to beneficiaries. That second point matters for things like a family home or a closely held business that beneficiaries may want to keep even if selling would be the "prudent" financial move.

Delegate wisely. Section 807 significantly expanded what trustees can delegate compared to prior Illinois law. You can now delegate any duties that a prudent trustee could properly delegate, including discretionary decisions. The old Illinois law prohibited delegating discretionary acts entirely.

TrustHelm tip: TrustHelm identifies whether your trust became irrevocable before or after January 1, 2020, and applies the correct compliance track automatically. The platform flags your 90-day notice deadline and tracks which beneficiaries need automatic accounting versus on-request reporting.

The dual-track compliance system

This is the most complex part of Illinois trust law, and the area most likely to trip up trustees. Different rules apply depending on when your trust became irrevocable.

Track 1: Trusts irrevocable after January 1, 2020

If the trust became irrevocable on or after January 1, 2020 (including trusts where the creator died on or after that date), section 813.1 applies:

90-day notice when the trust becomes irrevocable. The trustee must notify each qualified beneficiary within 90 days of the trust becoming irrevocable. The notice must disclose: the trust's existence, the beneficiary's right to request a copy of the trust document, and whether they have rights to accountings.

Mandatory annual accounting to current beneficiaries. The trustee must provide annual accounting to all current beneficiaries (people currently receiving or eligible to receive distributions). This is a mandatory rule under section 105(b)(11), meaning the trust creator cannot waive it, no matter what the trust document says.

Annual accounting to remainder beneficiaries is optional. For presumptive remainder beneficiaries (people who will inherit after the current beneficiaries), annual accounting is a default rule that the trust creator can waive in the trust document. Many Illinois trusts do waive this.

Additional notice requirements. The trustee must provide 90-day notice for co-trustee changes, changes in contact information, and any planned changes to trustee compensation.

Track 2: Trusts irrevocable before January 1, 2020

If the trust became irrevocable before 2020, section 813.2 applies. The rules are simpler but less detailed:

The trustee must furnish at least annually a current account showing receipts, disbursements, and an inventory of trust assets to income beneficiaries. This carries forward the obligation from the old Trusts and Trustees Act.

The newer, more detailed notification requirements (90-day notice on irrevocability, separate treatment of remainder beneficiaries, notice of compensation changes) do not apply to pre-2020 irrevocable trusts.

How trustee compensation works in Illinois

If the trust document sets compensation, that controls. If the trust is silent, section 708(a) provides for compensation that is "reasonable under the circumstances." There is no statutory fee schedule.

The court can adjust trust-specified compensation if the trustee's actual duties differ substantially from what was originally contemplated, or if the amount is unreasonable (section 708(b)). This is a mandatory rule under section 105(b)(9), meaning the trust document cannot strip the court of this power. Even if the trust says "the trustee's compensation shall be $X and is not subject to review," the court can still adjust it.

Professional trustees in Illinois typically charge 0.5% to 1.5% of trust assets annually. Family member trustees often waive compensation or accept a modest flat fee.

Statute of limitations for trust claims

Illinois has different limitations periods depending on which compliance track applies:

Post-2020 trusts (Track 1): Under section 1005(a)(1), beneficiaries have 2 years from adequate disclosure to bring claims. This is shorter than many states and rewards trustees who provide thorough, transparent accountings.

Pre-2020 trusts (Track 2): Under section 1005(a)(2), beneficiaries have 3 years from when an account was furnished.

Backstop: Section 1005(b) provides a 5-year absolute limit from the earlier of: the trustee's removal, resignation, or death; the termination of the beneficiary's interest; or the trust's termination.

Fraud exception: If the trustee fraudulently concealed information, the 5-year statute from discovery applies under 735 ILCS 5/13-215.

The shorter 2-year window for post-2020 trusts is one of the benefits of the new code for trustees. Providing clear, complete accountings starts a shorter clock.

Illinois-specific rules that catch people off guard

"Silent trusts" are partially available. Section 307 allows the trust creator to appoint a "designated representative" to receive notices on behalf of beneficiaries under age 30. This delays when young beneficiaries learn about the trust, which some families use to prevent an inheritance from affecting a young person's motivation. However, the mandatory notice of the trust's existence cannot be fully eliminated. You can delay the details, but you can't completely hide the trust.

Illinois prioritizes the trust creator's intent. Unlike some UTC states that shifted focus to the "best interests of the beneficiaries," Illinois remained a "grantor intent" state. This means when there's ambiguity in the trust document, courts look primarily at what the creator intended rather than what might be best for the beneficiaries today. This distinction matters when beneficiaries want to modify a trust and argue that changes would serve their interests even if the creator didn't contemplate them.

Exculpation clauses get extra scrutiny. Section 1008 creates a statutory presumption that an exculpation clause is invalid if the trustee drafted or caused the clause to be drafted. The trustee can overcome this presumption only by showing the clause is fair under the circumstances or that the trust creator had independent legal counsel. This is designed to prevent attorneys from drafting themselves favorable protections when they also serve as trustee.

Nonjudicial settlement agreements are more limited. Section 111 deliberately narrowed the scope of nonjudicial settlement agreements compared to the UTC. The prior Illinois law had a broad catchall provision allowing settlements on almost any matter. The new code requires court approval for modifications that fall outside specific enumerated categories. This means some trust changes that could be done informally in other UTC states require a court proceeding in Illinois.

ESG investing is explicitly permitted. If you want to consider environmental, social, or governance factors when investing trust assets, Illinois law specifically allows it. Many states haven't addressed this question, leaving trustees uncertain about whether ESG-focused investing could be challenged as a breach of the prudent investor duty.

TrustHelm tip: TrustHelm tracks your trust's "track" under the Illinois dual-track system and adjusts your compliance calendar accordingly. If your trust became irrevocable before 2020, you see the simpler Track 2 requirements. After 2020, you see the full Track 1 notification and accounting schedule.

The most common Illinois trust mistakes

Not knowing which compliance track applies. The single biggest mistake is applying Track 1 rules to a pre-2020 trust or Track 2 rules to a post-2020 trust. The answer depends entirely on when the trust became irrevocable, not when it was created.

Missing the 90-day notice window (Track 1). For post-2020 irrevocable trusts, the trustee has 90 days to notify qualified beneficiaries. This is longer than California's 60 days or Florida's 60 days, but it still goes by fast, especially when the trigger event is a death and the family is grieving.

Assuming you can waive accounting to all beneficiaries. Under Track 1, annual accounting to current beneficiaries is mandatory and cannot be waived. The trust document can only waive accounting to remainder beneficiaries. Trustees who rely on broad waiver language in the trust document may be surprised to learn it doesn't apply to current beneficiaries.

Ignoring the designated representative option. If the trust creator wanted to delay disclosure to younger beneficiaries, they needed to appoint a designated representative in the trust document. If they didn't, and the trust is now irrevocable, it may be too late to add one without a court proceeding.

Not adjusting investment strategy for Illinois's ESG provision. This isn't a "mistake" in the traditional sense, but Illinois trustees who aren't aware of the ESG provision may be missing an opportunity to align trust investments with the beneficiaries' values while remaining within the law.

Relying on old Trusts and Trustees Act guidance. The 2020 code changed enough that advice based on the old Act can be misleading. If your attorney or financial advisor is referencing 760 ILCS 5/ instead of 760 ILCS 3/, their guidance may be outdated.

How Illinois compares to other states

Illinois adopted the Uniform Trust Code in 2020, making it one of the more recent adopters. Because the code is newer, it reflects lessons learned from other states' experiences with the UTC.

Dual-track compliance is unusual. Most states applied their trust code retroactively to all existing trusts. Illinois chose to grandfather pre-2020 irrevocable trusts under simpler rules. This is fairer to trustees who started their administration under the old law, but it adds complexity.

The 2-year limitations period is short. For post-2020 trusts, the 2-year window from adequate disclosure is shorter than California's 3 years or Florida's 4 years (without the limitation notice). This benefits trustees who provide thorough accountings.

ESG investing is explicitly addressed. Most states haven't legislated on whether ESG factors are permissible in trust investing. Illinois's explicit authorization provides clarity that trustees in other states don't have.

The silent trust provision is moderate. Illinois allows delaying detailed information until age 30 through a designated representative, but can't fully suppress the trust's existence. This is less flexible than states like Nevada or South Dakota, which allow near-total secrecy, but more flexible than states that require full disclosure to all adult beneficiaries.

Illinois is a "grantor intent" state. This makes it harder to modify trusts based on changed circumstances compared to states that prioritize beneficiary interests.

When to talk to an attorney

Illinois trust law is well-organized under the new code, but several situations call for professional guidance. You should consult an Illinois trust attorney if: you need to determine which compliance track applies to your trust, you want to set up a designated representative for younger beneficiaries, you're considering an exculpation clause and need to understand the presumption of invalidity, you need to modify a trust through a nonjudicial settlement agreement, or you're a successor trustee taking over a pre-2020 trust and need to understand which rules apply.

For finding a qualified estate planning attorney in your area, visit TrustHelm's Find an Attorney directory.

This guide is for educational purposes only and does not constitute legal advice. Consult a qualified attorney for decisions about your trust.