Content Editor: Maryjo F. Pirages Reynolds
Original Author Credit: Allison M. Huntley
Trustees have numerous responsibilities surrounding trust administration. These duties range from filing tax returns to distributing trust assets. If the trust requires the trustee to distribute more than $4,000 worth of assets to a charitable organization, the trustee may be required to register the trust with the Illinois Attorney General’s Office pursuant to the Charitable Trust Act. In these situations, trustees need to complete the initial registration and to submit annual financial reports thereafter.
A trustee may be subject to the requirements of the Charitable Trust Act if the trustee is a “person, individual, group of individuals, association, corporation, not-for-profit corporation, estate representative, or other legal entity holding property for or solicited for any charitable purpose; or any chief operating officer, director, executive director or owner of a corporation soliciting or holding property for a charitable purpose.” 760 ILCS 55/3. If the trustee fits within this definition and the trust does not fall within an exception, the trustee must register the trust “within 6 months after any part of the income or principal is received for application to the charitable purpose….” 760 ILCS 55/6.
For example, if the settlor of a trust designates $50,000.00 worth of assets in her trust to a local women’s shelter, passes away on December 30, 2015, thereby funding her trust, because $50,000.00 is available for distribution to the shelter on December 30th, the trustee needs to register the trust. Such registration must be done before June 30, 2016 – six months after the date on which the funds became available for distribution to the charitable organization.
The registration process is relatively straightforward and the forms described below may be found on the Illinois Attorney General’s website. First, the trustee must complete Form CO-1. The Form requires information about the trust, including its name, address, and income as well as details about the trustee, including her contact information and background. Depending on how long the trust has been in operation, the Trust must also submit Form CO-2, if in operation for less than one (1) year, or Form AG990-IL, if in operation for more than one year. These two (2) forms call for a detailed analysis of the trust’s financials. Once the trust is registered, the trustee must submit annual reports to the Illinois Attorney General’s Office within six (6) months of the trust’s fiscal year end.
Compliance with these requirements is necessary to administer a charitable trust. If you have questions regarding the applicability of the Charitable Trust Act to your trust or regarding your duties as a trustee under the Act, please contact our office.
Maryjo Pirages is an associate attorney of the firm and a member of the Employment & Labor Law, Trusts & Estates, and Corporate & Business Groups. Maryjo counsels and represents employers in a range of employment matters, including statutory and administrative regulations compliance, contracts, and employee handbooks and policies. Maryjo’s goal is to work hand-in-hand with employers so that they may proactively implement and stay up-to-date with their policies in order to limit their liability and exposure. Additionally, she assists individuals and families in their estate planning and administration.