Illinois Land Trust Agreement

ILLINOIS LAND TRUST AGREEMENT

TABLE OF CONTENTS

1. Parties and Establishment
2. Recitals
3. Definitions
4. Trust Property
5. Nature of Trustee's Title; Power and Authority
6. Beneficial Interest — Personal Property Only
7. Power of Direction
8. Trustee's Duties and Limitations
9. Trustee Compensation; Indemnification
10. Successor Trustee (765 ILCS 410/)
11. Succession of Beneficial Interest on Death (POD)
12. Assignment of Beneficial Interest
13. Beneficial Interest Disclosure Compliance
14. Term and Termination
15. General Provisions
16. Execution and Notarization

ARTICLE I — PARTIES AND ESTABLISHMENT

Section 1.1 Trust Name

This trust shall be known as [TRUST NAME] Land Trust No. [____], dated [__/__/____] (the "Land Trust" or "Trust").

Section 1.2 Settlor

Settlor:

Section 1.3 Trustee

Trustee:

Section 1.4 Beneficiary(ies)

Initial Beneficiary(ies):

Total: 100%

Section 1.5 Holder(s) of Power of Direction

Power of Direction Holder(s):

ARTICLE II — RECITALS

WHEREAS, Settlor is the owner of the real property described in Schedule A;

WHEREAS, Settlor desires to convey legal and equitable title to said real property to Trustee in trust, to be held subject to the terms and conditions of this Agreement and the deed in trust recorded contemporaneously;

WHEREAS, the parties intend to create an Illinois land trust as recognized under common law and 765 ILCS 405/1, under which the beneficiary's interest shall be personal property only;

NOW, THEREFORE, in consideration of the mutual covenants herein and the sum of $10.00 and other good and valuable consideration, the parties agree as follows.

ARTICLE III — DEFINITIONS

"Beneficial Interest" means the interest of any Beneficiary in this Land Trust, which interest is personal property only, in accordance with 765 ILCS 405/1.

"Beneficiary" means any person or entity holding a Beneficial Interest in this Trust as identified in Section 1.4 or pursuant to any subsequent assignment.

"Deed in Trust" means the deed of conveyance recorded with the [COUNTY] County Recorder of Deeds vesting title to the Trust Property in Trustee.

"Power of Direction" means the written authority, vested in the Holder(s) identified in Section 1.5, to direct Trustee to sell, convey, mortgage, lease, or otherwise deal with the Trust Property.

"Trust Property" means the real estate and appurtenances described in Schedule A, together with any additions thereto.

"Trustee" means the corporate fiduciary identified in Section 1.3 and any duly appointed successor under 765 ILCS 410/.

ARTICLE IV — TRUST PROPERTY

Section 4.1 Initial Property

Settlor hereby conveys and Trustee accepts the real property legally described in Schedule A (the "Trust Property"), title to which has been transferred by Deed in Trust recorded as Document No. [_______] in the office of the [COUNTY] County Recorder.

Section 4.2 Additions to Trust

Additional real property may be added to this Trust by deed in trust to Trustee, subject to Trustee's acceptance and the payment of any fees.

ARTICLE V — NATURE OF TRUSTEE'S TITLE; POWER AND AUTHORITY

Section 5.1 Full Legal and Equitable Title

Trustee holds both legal and equitable title to the Trust Property pursuant to 765 ILCS 405/1, subject only to the execution of this Trust.

Section 5.2 Recorded Powers

The Deed in Trust grants Trustee, and Trustee shall have as to any third party dealing in good faith with Trustee, full power and authority to: protect, conserve, sell, contract to sell, convey, mortgage, lease, encumber, partition, exchange, donate, and otherwise manage or dispose of the Trust Property.

Section 5.3 No Duty to Inquire

Any party dealing with Trustee is not obligated to inquire into the authority of Trustee, the application of proceeds, or the identity of any Beneficiary or Holder of the Power of Direction. All such third-party reliance is conclusive.

ARTICLE VI — BENEFICIAL INTEREST: PERSONAL PROPERTY ONLY

Section 6.1 Personal Property Classification

The interest of each Beneficiary is and shall be deemed personal property only, and no Beneficiary has any legal or equitable interest in the Trust Property as real estate (765 ILCS 405/1).

Section 6.2 No Right to Title in Beneficiary

No Beneficiary may demand or require that the Trustee convey legal title to any Beneficiary except by direction in accordance with Article VII.

Section 6.3 Tax Treatment

For federal income tax purposes, the Trust is intended to be disregarded as a grantor trust under IRC §§ 671–679, with all items of income, gain, loss, deduction, and credit passing through to the Beneficiary(ies). Trustee shall not file a separate fiduciary income tax return unless required.

ARTICLE VII — POWER OF DIRECTION

Section 7.1 Vesting

The Power of Direction is vested in the Holder(s) identified in Section 1.5.

Section 7.2 Exercise

Trustee shall act with respect to the Trust Property only upon the written direction of the Holder of the Power of Direction. Such direction shall be in writing, signed by the Holder, and may be delivered by:

• ☐ Personal delivery to Trustee's trust department
• ☐ Certified mail, return receipt requested
• ☐ Other method approved by Trustee in writing

Section 7.3 Multiple Holders

Where the Power of Direction is held jointly, Trustee shall act only upon direction signed by:

• ☐ All Holders unanimously
• ☐ A majority in interest of the Holders
• ☐ Any one Holder acting alone

Section 7.4 Successor Holder

Upon the death, incapacity, or resignation of any Holder, the Power of Direction shall pass to:

Section 7.5 Trustee Reliance

Trustee may conclusively rely on any written direction reasonably believed to be genuine and signed by a Holder, and shall have no duty to investigate the propriety of the direction.

ARTICLE VIII — TRUSTEE'S DUTIES AND LIMITATIONS

Section 8.1 Limited (Passive) Trustee

Trustee shall hold bare legal title to the Trust Property and shall have no duty to manage, inspect, insure, maintain, repair, or pay expenses relating to the Trust Property except upon written direction. The Beneficiaries shall have the exclusive right to manage and control the Trust Property, possess it, lease it, collect rents, and otherwise enjoy its use.

Section 8.2 No Investment Duty

Trustee shall have no duty to invest, reinvest, or diversify the Trust Property.

Section 8.3 Notice of Adverse Claims

Trustee shall forward to the Holder of the Power of Direction any process, notice, or claim received concerning the Trust Property within ten (10) business days of receipt.

Section 8.4 Recordkeeping

Trustee shall maintain a register identifying Beneficiaries, their respective Beneficial Interests, and Holders of the Power of Direction. Trustee shall not be required to disclose such register except (a) upon request of a Beneficiary as to that Beneficiary's interest, (b) upon court order, or (c) as required by law (including 765 ILCS 405/2 and 55 ILCS 5/3-5020.5).

ARTICLE IX — TRUSTEE COMPENSATION; INDEMNIFICATION

Section 9.1 Fees

Trustee shall receive compensation in accordance with its published fee schedule in effect from time to time, including:

• Acceptance fee: $[____]
• Annual fee: $[____]
• Transaction fees: per schedule
• Termination fee: $[____]

Section 9.2 Indemnification

Beneficiaries, jointly and severally, shall indemnify, defend, and hold Trustee harmless from and against any and all claims, liabilities, costs, and expenses (including reasonable attorneys' fees) arising out of or relating to the Trust Property or Trustee's actions taken in good faith upon written direction.

Section 9.3 Lien for Fees and Indemnity

Trustee shall have a lien upon the Trust Property and a right of setoff against any Trust funds for unpaid fees and indemnity obligations.

ARTICLE X — SUCCESSOR TRUSTEE (765 ILCS 410/)

Section 10.1 Resignation

Trustee may resign upon thirty (30) days' written notice to all Beneficiaries and the Holder of the Power of Direction.

Section 10.2 Designation of Successor

A successor Trustee shall be designated by the Holder of the Power of Direction. If no successor is designated within thirty (30) days, the resigning Trustee may petition the circuit court of the county where the Trust Property is located for appointment of a successor in accordance with the Land Trust Successor Trustee Act, 765 ILCS 410/.

Section 10.3 Vesting in Successor

Upon acceptance, the successor Trustee shall succeed to all rights, title, powers, and duties of the predecessor Trustee, by operation of law and without the necessity of any conveyance, subject only to recording of an acceptance/affidavit pursuant to 765 ILCS 410/ where required.

ARTICLE XI — SUCCESSION OF BENEFICIAL INTEREST ON DEATH (POD)

Section 11.1 Payable-on-Death Designation

Each Beneficiary's interest shall be payable on death to the contingent beneficiary(ies) designated below, who shall succeed to the deceased Beneficiary's Beneficial Interest without the need for probate of the Trust Property.

Section 11.2 Mechanics

Upon receipt of a certified death certificate of a Beneficiary and a written claim from a contingent beneficiary, Trustee shall record the change on its register and treat the contingent beneficiary as a Beneficiary hereunder. No deed shall be required.

Section 11.3 Surviving Joint Beneficiary

If Beneficiaries hold their interests as joint tenants with right of survivorship, the surviving joint Beneficiary shall succeed to the deceased Beneficiary's interest by operation of law.

ARTICLE XII — ASSIGNMENT OF BENEFICIAL INTEREST

Section 12.1 Assignability

A Beneficial Interest is freely assignable by written assignment delivered to and acknowledged by Trustee in writing.

Section 12.2 Form of Assignment

An assignment shall identify the assignor, the assignee, the percentage interest assigned, and shall be signed by the assignor and acknowledged before a notary public.

Section 12.3 Effective Date

An assignment shall be effective upon Trustee's written acknowledgment on its register. Trustee may charge an assignment fee.

Section 12.4 Restrictions

The following restrictions on assignment apply (check all that apply):

☐ No restrictions.
☐ Right of first refusal among existing Beneficiaries.
☐ Written consent of all Beneficiaries required.
☐ Other: [_______________________________]

ARTICLE XIII — BENEFICIAL INTEREST DISCLOSURE COMPLIANCE

Section 13.1 State Disclosure (765 ILCS 405/2)

Trustee and Beneficiaries shall, upon application to the State of Illinois or any agency or political subdivision for any benefit, authorization, license, permit, lease, or grant relating to the Trust Property, identify each Beneficiary by name, address, and percentage interest, as required by 765 ILCS 405/2 and 765 ILCS 405/2.1.

Section 13.2 Cook County Disclosure

If the Trust Property is located in Cook County and is residential real property that is not owner-occupied, Trustee shall comply with the Cook County Recorder of Deeds beneficial interest disclosure requirements under 55 ILCS 5/3-5020.5 and applicable Cook County ordinances, including filing the required affidavit identifying beneficial owners.

Section 13.3 Municipal Disclosure

Trustee and Beneficiaries shall comply with all municipal beneficial-interest disclosure ordinances (including, where applicable, those of the City of Chicago) governing applications for zoning relief, building permits, business licenses, and similar approvals.

Section 13.4 No Nominee Beneficiaries

In all disclosures required by law, the identified Beneficiary shall be the true beneficial owner and not a nominee for another person, in accordance with 765 ILCS 405/2.

ARTICLE XIV — TERM AND TERMINATION

Section 14.1 Term

The term of this Trust shall be twenty (20) years from the date hereof, unless sooner terminated in accordance with Section 14.2 or extended in writing by all Beneficiaries before expiration.

Section 14.2 Early Termination

This Trust may be terminated earlier by:

• ☐ Written direction of all Beneficiaries to convey the Trust Property to themselves or a designated grantee.
• ☐ Sale of the Trust Property and distribution of net proceeds to the Beneficiaries.
• ☐ Operation of law.

Section 14.3 Distribution Upon Termination

Upon termination, after payment of Trustee's fees and any outstanding obligations, Trustee shall convey the Trust Property (or distribute remaining proceeds) to the Beneficiaries in proportion to their Beneficial Interests, or as otherwise directed in writing.

Section 14.4 Expiration of Term Without Sale

If the term expires without sale or extension, Trustee shall convey the Trust Property to the then-Beneficiaries in their respective shares as tenants in common (or as joint tenants if the Beneficiaries so direct).

ARTICLE XV — GENERAL PROVISIONS

Section 15.1 Governing Law

This Trust is governed by the laws of the State of Illinois, including 765 ILCS 405/, 765 ILCS 407/, and 765 ILCS 410/.

Section 15.2 Severability

If any provision is held invalid, the remaining provisions shall continue in full force.

Section 15.3 Amendments

This Trust may be amended in writing signed by Trustee, all Beneficiaries, and the Holder(s) of the Power of Direction. An amendment that changes Trustee's duties requires Trustee's written consent.

Section 15.4 Notices

All notices shall be in writing and delivered to the addresses set forth in Article I, or to such other address as a party may designate by written notice.

Section 15.5 No Partnership

This Agreement does not create a partnership, joint venture, or other entity among Beneficiaries or between Beneficiaries and Trustee.

Section 15.6 Counterparts

This Agreement may be executed in counterparts, each of which shall be deemed an original.

Section 15.7 Mortgage / Due-on-Sale

The Beneficiaries acknowledge that transfer of the Trust Property to Trustee, or assignment of a Beneficial Interest, may constitute a transfer triggering a "due-on-sale" clause under any mortgage encumbering the Trust Property. The Garn–St. Germain Act, 12 U.S.C. § 1701j-3(d), exempts certain transfers to inter vivos trusts for residential property of fewer than five dwelling units where the borrower remains a beneficiary; the Beneficiaries are responsible for verifying applicability with the lender.

Section 15.8 Homestead

Neither the conveyance to Trustee nor the holding of Beneficial Interests is intended to waive any Illinois homestead exemption otherwise available to the Beneficiaries occupying the Trust Property as their principal residence.

ARTICLE XVI — EXECUTION AND NOTARIZATION

Section 16.1 Settlor's Signature

Executed this [____] day of [_______________], 20[____].

SETTLOR:

X _______________________________________
[PRINTED NAME OF SETTLOR]

Section 16.2 Trustee's Acceptance

Trustee hereby accepts the trust created hereunder upon the terms and conditions set forth above.

TRUSTEE: [CORPORATE TRUSTEE NAME]

By: _______________________________________
[NAME], [TITLE]

Date: [__/__/____]

Section 16.3 Beneficiary Acknowledgment

The undersigned Beneficiary(ies) acknowledge and agree to be bound by this Trust Agreement.

X _______________________________________
[BENEFICIARY 1 PRINTED NAME] Date: [__/__/____]

X _______________________________________
[BENEFICIARY 2 PRINTED NAME] Date: [__/__/____]

Section 16.4 Holder of Power of Direction Acknowledgment

X _______________________________________
[HOLDER PRINTED NAME] Date: [__/__/____]

Section 16.5 Notarial Acknowledgment

STATE OF ILLINOIS
COUNTY OF [_______________] ss.

On this [____] day of [_______________], 20[____], before me, the undersigned notary public, personally appeared [NAME(S)], who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacity(ies).

WITNESS my hand and official seal.

_______________________________________
Notary Public, State of Illinois
My Commission Expires: [__/__/____]

[NOTARY SEAL]

SCHEDULE A — LEGAL DESCRIPTION OF TRUST PROPERTY

Common Address: [STREET ADDRESS, CITY, IL, ZIP]

Permanent Index Number (PIN): [__-__-___-___-____]

Legal Description:

[INSERT FULL LEGAL DESCRIPTION FROM PRIOR DEED — LOT, BLOCK, SUBDIVISION, PLAT BOOK REFERENCE, OR METES AND BOUNDS]

Deed in Trust Recording Information:

SCHEDULE B — BENEFICIAL INTEREST REGISTER

(Maintained by Trustee; not recorded.)

Holder(s) of Power of Direction:

SOURCES AND REFERENCES

• 765 ILCS 405/ — Land Trust Beneficial Interest Disclosure Act
• 765 ILCS 407/ — Land Trust Beneficiary Rights Act
• 765 ILCS 410/ — Land Trust Successor Trustee Act
• 55 ILCS 5/3-5020.5 — County Recorder beneficial interest disclosure
• 205 ILCS 620/ — Corporate Fiduciary Act
• 12 U.S.C. § 1701j-3(d) — Garn–St. Germain due-on-sale exemption
• Chicago Title Land Trust Company — practitioner forms and procedures
• Illinois Institute for Continuing Legal Education (IICLE) — Land Trusts handbook