IL SB1066

Adds Section 5.4 to the Trusts and Trustees Act allowing settlors to create spendthrift trusts that protect the settlor's beneficial interest from voluntary or involuntary transfer before payment by the trustee, applicable to trusts created after the bill's effective date.

Requires that if the settlor is a beneficiary, at least one trustee must be a corporate fiduciary authorized by Illinois, the Office of the Comptroller of the Currency, or Office of Thrift Supervision, and must maintain custody of trust property, keep records, or materially participate in trust administration.

Prohibits creditors from satisfying claims against the settlor's beneficial interest in the trust, except for claims: (1) from judicial or administrative proceedings commenced within 3 years of trust creation; (2) involving actual intent to defraud; (3) for child support or spousal support/property division; (4) for taxes owed to government; (5) involving fraud, intentional harm, or crimes by the settlor; or (6) related to assets misrepresented to the creditor or transferred in breach of a security agreement.

Specifies that certain powers do not constitute trust revocation or termination, including powers to veto distributions, testamentary powers of appointment, discretionary distribution rights, charitable remainder trust interests, and powers to appoint nonsubordinate advisers or trust protectors.

Establishes that the statute of limitations for claims against the trust follows the underlying action's statute of limitations, and recovery is limited to the applicable portion of the trust.