IL SB2984

Amends the Trusts and Trustees Act to allow trustees to convert trusts to "total return trusts" that distribute a fixed percentage (4% by default) of net fair market value annually instead of traditional income-based distributions.

Permits conversion by trustee action with 60-day notice to beneficiaries without objection, or by agreement with all primary beneficiaries, or by court order if conversion would better serve the trust's purposes.

Defines "total return trust" distributions as a percentage of assets averaged over the preceding 3 years (or trust's existence if shorter), with distributions sourced first from net income, then from other income and capital gains, then from principal.

Revises virtual representation provisions in Section 16.1 to clarify how minors, disabled persons, unborn beneficiaries, and unascertainable beneficiaries can be represented in trust matters by other beneficiaries, guardians, agents, or parents without conflicts of interest.

Expands nonjudicial settlement agreement authority to allow interested persons (including trustees and beneficiaries) to resolve trust disputes without court involvement on matters including trust interpretation, compensation, trustee removal/appointment, and termination (with court approval required for terminations).