Id. at 605. The next case to deal with the power of direction was Caleca v. Caleca, 380 N.E.2d 493 (Ill. App. Ct. 1978). In that case, a father established a land trust.
See, e.g., Rudolph, 241 N.E.2d 600. Such an act would undermine completely the other beneficiaries' enjoyment of their beneficial interests. See First Fed. Sav. Bank v. Drovers Nat'l Bank, 606 N.E.2d 1253, 1257 (Ill.App.Ct. 1992) ("As long as the [settlors] retained the power of direction, they retained the legal right to mortgage the property (or, more precisely, to direct Drovers to do so), even at the potential cost of defeating the [beneficiaries'] interest in the property."); Caleca v. Caleca, 380 N.E.2d 493, 495 (Ill.App.Ct. 1978) (noting that when the settlor of a land trust retains power to direct the acts of the trustee, the settlor effectively retains the power to defeat the beneficiary's interest); cf. Rudolph, 241 N.E.2d at 605 ("By retaining the exclusive power to direct all acts of the trustee . . ., the [settlors] retained the power to defeat [the beneficiary's] interest in the trust . . ., and they never parted with the `exclusive dominion and control' of the trust or the trust res."). Because she retained the power granted to her as Helen Bowgren, rather than as a beneficiary, the trustee would need to comply with her written instructions.
Respondents are correct that “when the settlor of a land trust retains the power to direct the acts of a trustee to the exclusion of a beneficiary, the settlor effectively retains the power to defeat the beneficiary's interest during his lifetime, and a beneficiary will not be held to have a present irrevocable interest unless she can show by clear and convincing evidence that the settlor had a donative intent to make an irrevocable inter vivos gift of the beneficial interest.” Caleca v. Caleca, 63 Ill.App.3d 414, 417, 20 Ill.Dec. 515, 380 N.E.2d 493 (1978). However, we note that the instant case is different from those respondent cites in that it was not the settlor defeating a beneficiary's interest during his lifetime but rather was a beneficiary voluntarily assigning his power of direction to another after the settlor's beneficial interest had passed to the beneficiary.
As Stewart points out, the only trust document in the record — the 1992 deed conveying other property into the land trust — specifies that beneficiaries hold no legal or equitable interest in the trust property. Illinois law not only honors such language in a trust document (Caleca v. Caleca, 63 Ill. App.3d 414, 417, 380 N.E.2d 493, 495 (1978)), but such a provision is an essential part of the definition of a land trust in Illinois (see 765 ILCS 405/1, 415/2, 420/2, 430/1 (West 1996); see also Klein v. La Salle National Bank, 155 Ill.2d 201, 207, 613 N.E.2d 737, 740 (1993)). As this court discussed at length in Smith v. First National Bank, 254 Ill. App.3d 251, 264, 624 N.E.2d 899, 909 (1993), in a land trust, unlike other trusts, the trustee's sole purpose is to take and hold title to the trust res. Allowing the beneficiaries to perform that function on behalf of the trust would eviscerate the trust entirely.
( Rios v. Jones (1976), 63 Ill.2d 488; Illinois Chiropractic Society v. Giello (1960), 18 Ill.2d 306.) While we note that this case was not actually on appeal at the time the new law went into effect, but was still pending in the trial court on post-trial motions, we find the above rule applicable in light of the fact that the trial court had entered its final judgment and petitioner had filed his post-trial motion prior to the effective date of the new no-fault provision. See Rios v. Jones (1976), 63 Ill.2d 488; Caleca v. Caleca (1978), 63 Ill. App.3d 414. Contrary to respondent's argument, our supreme court has recently held that the no-fault provision is retroactive.