Illinois Compiled Statutes
760 ILCS 3/ - Illinois Trust Code.
Article 5 - Creditor's Claims; Spendthrift and Discretionary Trusts

(760 ILCS 3/Art. 5 heading)

(760 ILCS 3/501)
Sec. 501. Rights of beneficiary's creditor or assignee. Except as provided in Section 504, to the extent a beneficiary's interest is not subject to a spendthrift provision, the court may authorize a creditor or assignee of the beneficiary to reach the beneficiary's interest by attachment of present or future distributions to or for the benefit of the beneficiary or other means. The court may limit the award to such relief as is appropriate under the circumstances.

(Source: P.A. 101-48, eff. 1-1-20.)

(760 ILCS 3/502)
Sec. 502. Spendthrift provision.
(a) A spendthrift provision is valid only if it prohibits both voluntary and involuntary transfer of a beneficiary's interest.
(b) A term of a trust providing that the interest of a beneficiary is held subject to a "spendthrift trust", or words of similar import, is sufficient to restrain both voluntary and involuntary transfer of the beneficiary's interest.
(c) A beneficiary may not transfer an interest in a trust in violation of a valid spendthrift provision and, except as otherwise provided in this Article, a creditor or assignee of the beneficiary may not reach the interest or a distribution by the trustee before its receipt by the beneficiary.
(d) A valid spendthrift provision does not prevent the appointment of interests through the exercise of a power of appointment.

(Source: P.A. 101-48, eff. 1-1-20.)

(760 ILCS 3/503)
Sec. 503. Exceptions to spendthrift provision.
(a) In this Section, "child" includes any person for whom an order or judgment for child support has been entered in this or another state.
(b) A spendthrift provision is unenforceable against:
(c) Except as otherwise provided in this subsection and in Section 504, a claimant against which a spendthrift provision cannot be enforced may obtain from a court an order attaching present or future distributions to or for the benefit of the beneficiary. The court may limit the award to such relief as is appropriate under the circumstances. Notwithstanding this subsection, the remedies provided in this subsection apply to a claim for unpaid child support obligations by a beneficiary's child, spouse, former spouse, judgment creditor, or claim described in subsection (b) only as a last resort upon an initial showing that traditional methods of enforcing the claim are insufficient.

(Source: P.A. 101-48, eff. 1-1-20.)

(760 ILCS 3/504)
Sec. 504. Discretionary distributions; effect of standard.
(a) As used in this Section, "discretionary distribution" means a distribution that is subject to the trustee's discretion regardless of whether the discretion is expressed in the form of a standard of distribution and regardless of whether the trustee has abused the discretion.
(b) Regardless of whether a trust contains a spendthrift provision, and regardless of whether the beneficiary is acting as trustee, if a trustee may make discretionary distributions to or for the benefit of a beneficiary, a creditor of the beneficiary, including a creditor described in subsection (b) of Section 503, may not:
(c) If the trustee's discretion to make distributions for the trustee's own benefit is limited by an ascertainable standard, a creditor may not reach or compel distribution of the beneficial interest except to the extent the interest would be subject to the creditor's claim were the beneficiary not acting as trustee.
(d) This Section does not limit the right of a beneficiary to maintain a judicial proceeding against a trustee for an abuse of discretion or failure to comply with a standard for distribution.

(Source: P.A. 101-48, eff. 1-1-20.)

(760 ILCS 3/505)
Sec. 505. Creditor's claim against settlor.
(a) Whether or not the terms of a trust contain a spendthrift provision, the following rules apply:
(b) For purposes of this Section:
(Source: P.A. 101-48, eff. 1-1-20; 102-279, eff. 1-1-22.)

(760 ILCS 3/506)
Sec. 506. Overdue distribution.
(a) In this Section, "mandatory distribution" means a distribution of income or principal that the trustee is required to make to a beneficiary under the trust instrument, including a distribution upon termination of the trust. The term does not include a distribution subject to the exercise of the trustee's discretion even if (1) the discretion is expressed in the form of a standard of distribution, or (2) the terms of the trust authorizing a distribution couple language of discretion with language of direction.
(b) Whether or not a trust contains a spendthrift provision, a creditor or assignee of a beneficiary may reach a mandatory distribution of income or principal, including a distribution upon termination of the trust, if the trustee has not made the distribution to the beneficiary within a reasonable time after the designated distribution date.

(Source: P.A. 101-48, eff. 1-1-20.)

(760 ILCS 3/507)
Sec. 507. Personal obligations of trustee. Trust property is not subject to personal obligations of the trustee, even if the trustee becomes insolvent or bankrupt.

(Source: P.A. 101-48, eff. 1-1-20.)

(760 ILCS 3/508)
Sec. 508. Lapse of power to withdraw. A beneficiary of a trust may not be considered to be a settlor or to have made a transfer to the trust merely because of a lapse, release, or waiver of his or her power of withdrawal to the extent that the value of the affected property does not exceed the greatest of the amounts specified in Sections 2041(b)(2), 2514(e), and 2503(b) of the Internal Revenue Code.

(Source: P.A. 101-48, eff. 1-1-20.)

(760 ILCS 3/509)
Sec. 509. Trust for beneficiary with a disability.
(a) As used in this Section:
(b) A discretionary trust for the benefit of an individual who has a disability that substantially impairs the individual's ability to provide for his or her own care or custody and constitutes a substantial disability, is not liable to pay or reimburse this State or any public agency for financial aid or services to the individual except to the extent the trust was created by the individual or trust property has been distributed directly to or is otherwise under the control of the individual, except that this exception does not apply to a trust created with the property of the individual with a disability or property within his or her control if the trust complies with Medicaid reimbursement requirements of federal law. Notwithstanding any other provisions to the contrary, a trust created with the property of the individual with a disability or property within his or her control is liable, after the reimbursement of Medicaid expenditures, to this State for reimbursement of any other service charges outstanding at the death of the individual with a disability. Property, goods, and services purchased or owned by a trust for and used or consumed by a beneficiary with a disability shall not be considered trust property distributed to or under the control of the beneficiary.
(c) Except as otherwise prohibited by law, the court or a person with a disability may irrevocably assign resources of that person to either or both of: (i) an ABLE account, as defined under Section 16.6 of the State Treasurer Act; or (ii) a discretionary trust that complies with the Medicaid reimbursement requirements of federal law. A court may reserve the right to determine the amount, duration, or enforcement of the irrevocable assignment.

(Source: P.A. 101-48, eff. 1-1-20.)