State of Illinois
91st General Assembly
Legislation

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91_SB1690enr

 
SB1690 Enrolled                                LRB9111451DJcd

 1        AN  ACT to amend the Principal and Income Act by changing
 2    Section 14.

 3        Be it enacted by the People of  the  State  of  Illinois,
 4    represented in the General Assembly:

 5        Section  5.  The  Principal  and Income Act is amended by
 6    changing Section 14 as follows:

 7        (760 ILCS 15/14) (from Ch. 30, par. 514)
 8        Sec. 14.  Charges against income and principal.
 9        (a)  The following charges shall be made against income:
10             (1)  ordinary expenses, other than  compensation  as
11        provided   in  paragraph  (6)  of  this  subsection  (a),
12        incurred  by  the  trustee   in   connection   with   the
13        administration  or  protection  of  the  trust  property,
14        including  regularly recurring taxes assessed against any
15        portion  of  the  principal,  water  rates,  premiums  on
16        insurance  taken  upon  the  interests  of   the   income
17        beneficiary,  remainderman,  or trustee, interest paid by
18        the trustee (except interest  on  taxes  as  provided  in
19        paragraphs  paragraph  (7) and (8) of this subsection and
20        paragraphs (5), (6), and (7) of subsection (c)), ordinary
21        repairs and maintenance;
22             (2)  (blank);    a    reasonable    allowance    for
23        depreciation on property which is subject to depreciation
24        under generally accepted accounting  principles,  but  no
25        allowance  shall be made for depreciation of any property
26        subject to a trust under an  instrument  executed  before
27        the  effective  date  of this Act, or for depreciation of
28        that portion of any real property used by  a  beneficiary
29        as  a  residence;  such  allowance  shall be charged only
30        against  the  income  from  the   property   subject   to
31        depreciation and shall not accrue from year to year;
 
SB1690 Enrolled            -2-                 LRB9111451DJcd
 1             (3)  one-half  of  court  costs, attorney's fees and
 2        other expenses  and  fees  on  any  judicial  accounting,
 3        unless the court directs otherwise;
 4             (4)  court costs, attorney's fees and other expenses
 5        and  fees  on  other  judicial  proceedings if the matter
 6        primarily concerns the income interest, unless the  court
 7        directs otherwise;
 8             (5)  special   compensation   and   expenses  of  or
 9        incurred by the trustee in connection with income;
10             (6)  one-half of the  regular  compensation  of  the
11        trustee,   attorney,  investment  counsel,  custodian  or
12        accountant, subject to paragraph (1) of subsection (c);
13             (7)  any  tax,  including  interest  and   penalties
14        thereon,  levied  upon  receipts  defined as income under
15        this Act or the  trust  instrument  and  payable  by  the
16        trustee;.
17             (8)  one-half   of   the  interest  on  all  estate,
18        inheritance,  and  generation-skipping   transfer   taxes
19        apportioned  to the trust and one-half of the interest on
20        any penalties on those taxes.
21        (a-5)  A  reasonable  allowance   for   depreciation   on
22    property  that  is  subject  to  depreciation under generally
23    accepted accounting principles may be charged by the trustee,
24    but no allowance shall  be  made  for  depreciation  of  that
25    portion  of  any  real  property  used  by a beneficiary as a
26    residence.  Such an allowance shall be charged  only  against
27    the  income  from  the  property  subject to depreciation and
28    shall not accrue from year to year.
29        (b)  If charges against income are of an unusual  amount,
30    the  trustee  may  by  means  of reserves or other reasonable
31    means charge them  over  a  reasonable  period  of  time  and
32    withhold  from  distribution  sufficient  sums  to regularize
33    distributions.
34        (c)  The  following  charges  shall   be   made   against
 
SB1690 Enrolled            -3-                 LRB9111451DJcd
 1    principal:
 2             (1)  one-half  of  the  regular  compensation of the
 3        trustee,  attorney,  investment  counsel,  custodian   or
 4        accountant shall be paid out of principal, provided that,
 5        if in the judgment of the trustee, the charging of a part
 6        or  all of that portion of such compensation to principal
 7        is  impracticable  because  of  the  lack  of  sufficient
 8        principal cash and readily marketable intangible personal
 9        property, or inadvisable because of  the  nature  of  the
10        assets,  that  part  or all of such compensation shall be
11        paid out of income. The decision of the trustee to pay  a
12        larger  portion or all of such compensation out of income
13        shall be conclusive, and the income of  the  trust  shall
14        not  be  entitled  to reimbursement from principal at any
15        subsequent time or times;
16             (2)  special  compensation  and   expenses   of   or
17        incurred  by  the  trustee  in connection with principal,
18        trustee's  compensation  computed  on  principal  as   an
19        acceptance,  distribution or termination fee, and, unless
20        the court directs otherwise, court costs, attorney's fees
21        and other  expenses  and  fees  in  judicial  proceedings
22        primarily  concerning  matters  of  principal  or  in any
23        action to  construe  the  trust  or  protect  it  or  the
24        property or assure the title to any trust property;
25             (3)  charges  not  provided  for  in subsection (a),
26        including  the  cost   of   investing   and   reinvesting
27        principal,  the  payments on principal of an indebtedness
28        (including a mortgage amortized by periodic  payments  of
29        principal),  and expenses for preparation of property for
30        rental or sale;
31             (4)  extraordinary repairs or expenses  incurred  in
32        making  a  capital  improvement  to  principal, including
33        special assessments;
34             (4.5)  costs   and    disbursements    related    to
 
SB1690 Enrolled            -4-                 LRB9111451DJcd
 1        environmental  matters,  including reclamation, assessing
 2        environmental   conditions,   remedying   and    removing
 3        environmental    contamination,    monitoring    remedial
 4        activities  and  the  release  of  substances, preventing
 5        future releases of substances,  collecting  amounts  from
 6        persons  liable  or  potentially  liable for the costs of
 7        those activities, penalties imposed  under  environmental
 8        laws  or  regulations  and  other payments made to comply
 9        with those laws or regulations, statutory or  common  law
10        claims  by  third  parties, and defending claims based on
11        environmental matters;
12             (5)  any  tax,  including  interest  and   penalties
13        thereon,  levied  upon  profit,  gain,  or other receipts
14        allocated to principal  notwithstanding  denomination  of
15        the tax as an income tax by the taxing authority;
16             (6)  any   tax,  including  interest  and  penalties
17        thereon, levied upon amounts not actually received by the
18        trustee before the date the  tax  is  payable,  including
19        extensions,  notwithstanding  the denomination of the tax
20        as an income tax by the taxing authority, except that if,
21        in the judgment of  the  trustee,  the  charging  against
22        principal  of  part  or  all  of the tax is impracticable
23        because of  a  lack  of  sufficient  principal  cash  and
24        readily   marketable   intangible  personal  property  or
25        inadvisable because of the nature of the assets that part
26        or all of the tax shall be charged against  income.   The
27        decision  of the trustee to charge part or all of the tax
28        against income shall be conclusive, and the income of the
29        trust  shall  not  be  entitled  to  reimbursement   from
30        principal  at  any subsequent time or times.  If any part
31        or all of the amount on which tax was previously paid and
32        charged  against  principal  is  later  received  by  the
33        trustee and if  the  receipt  is  otherwise  credited  to
34        income,  then  when the amount is received the portion of
 
SB1690 Enrolled            -5-                 LRB9111451DJcd
 1        the tax previously paid  and  charged  against  principal
 2        attributable  to the amount so received shall be deducted
 3        from the amount and credited to principal;
 4             (7)  all  if  an   estate,   inheritance,   and   or
 5        generation-skipping  transfer  taxes and any penalties on
 6        the taxes apportioned to the trust and  one-half  of  the
 7        interest  on  those  taxes and penalties tax is levied in
 8        respect of a trust in which both  an  income  beneficiary
 9        and   a   remainderman   have  an  interest,  any  amount
10        apportioned  to  the  trust,   including   interest   and
11        penalties,  even  though  the income beneficiary also has
12        rights in the principal,  except  that  interest  on  any
13        portion  of  the  tax  deferred  under a provision of the
14        statute imposing the tax shall be charged against income;
15             (8)  a net loss in any fiscal or calendar year  from
16        the operation of a business or an agricultural or farming
17        operation,  to  be repaid from income as available in the
18        succeeding year or years;
19             (9)  monies paid for the purchase of options.
20    (Source: P.A. 82-390; 87-714.)

21        Section 99.  Effective date.  This Act takes effect  upon
22    becoming law.

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