Much of what we think of when someone says “2020” is negative: COVID-19, economic roller coaster, riots and election irregularities might top the list. But for Illinois farmers who care about their estates, there was a positive development. Illinois enacted the Illinois Trust Code, and it went into effect Jan. 1, 2020.

Why does this matter to you?

Wills offer no advantages. One area where probate lawyers used to say wills are better than living trusts was with respect to lawsuits or other claims that might be made after a person’s death. If the executor in probate court published notice in the newspaper inviting anyone who has a claim against the decedent to file that claim, after six months passed, any unfiled claim was barred. The executor could divide and distribute the assets without fear of a creditor popping up later. Illinois had no similar safe period for a living trust, and claims could potentially be made many years after death. Now, under the ITC, any claim of a creditor that would be barred against the probate estate is also barred against the living trust.

Speak now or forever hold your peace. Another new provision of the ITC helps eliminate contests against your living trust by a disgruntled heir. If the trustee of your trust after your death notifies all beneficiaries and gives them a copy of the trust, any beneficiary who wants to contest your trust must do so within six months of your death. If they don’t by then, they never can, and your trustee can proceed to wind things up.

Another ITC provision encourages the trustee to distribute everything promptly after the nine-month anniversary of your death if all expenses and taxes are paid.

Beneficiary is defined. Before 2020, no Illinois law defined the word “beneficiary.” It was assumed beneficiaries would be people getting something from your trust! But the ITC defines beneficiaries to include people with a present right to receive money or property from your trust, and anyone who might benefit if the first line of beneficiaries dies.

For example, your trust probably says to divide assets among your children, but if a child dies before receiving assets, that share would go to his or her children. Those grandchildren are “contingent beneficiaries.” While your trust is being administered (between your death and the distribution of the assets to the children), your children and grandchildren are considered beneficiaries.

So what? If the trustee wants to wind things up as soon as possible after the nine-month anniversary, he or she must notify your children and grandchildren that they are beneficiaries. Imagine the grandchild’s thoughts: “I’m a beneficiary? Cool! How much and when do I get it?” But since your children are alive nine months after your death, the trustee gives everything to them. Grandchildren are disappointed. Was it a good idea to notify those grandchildren — especially the immature ones? The ITC says your trust agreement could direct the trustee to notify a more mature person on behalf of beneficiaries under the age of 30, heading off unwarranted expectations.

Accountings are optional. Another issue your trust can change is the requirement of giving accountings: A trustee must tell beneficiaries what the trust owns, how much income it has, how much money is distributed each year and to whom. This applies during the administration period, but annual accountings might continue for many years if you leave your assets to children in asset protection trusts.

Say you leave the farm in an asset protection trust for Bob to lower his income taxes and keep the farm safe from lawsuits and divorce. Bob gets income and principal from the trust, and he is a trustee. The trust says that on his death, Bob can leave whatever is left to whomever he wants, but if he doesn’t say otherwise, it will pass to his children by default. Under the new ITC, Bob would have to account to his children annually for the rest of his life. However, the ITC says if you don’t want Bob to have to do that, your trust agreement can say he doesn’t have to, making it much easier for him to enjoy the benefits of the trust.

Update your plan. The ITC clarifies some things, imposes some new requirements, and creates new opportunities and benefits. If your estate plan includes any type of trust, your attorney should be helping you amend it to maximize all benefits in this new law.

Ferguson is an attorney who owns The Estate Planning Center in Salem, Ill. Learn more at thefarmersestateplanningattorneys.com. The opinions of this writer are not necessarily those of Farm Progress/Informa.