SB384: Bill Text

SB384,45 Section 45. 700.16 (1) (c) of the statutes is amended to read:

SB384,25,8 700.16 (1) (c) If a future interest or trust is created by exercise of a power of appointment, the permissible period is computed from the time the power of appointment is exercised if the power of appointment is a general power of appointment as defined in s. 702.01 (3) 702.02 (5) even if the general power of appointment is exercisable only by will; in. In the case of other powers of appointment the permissible period is computed from the time the power of appointment is created but facts at the time the power of appointment is exercised are considered in determining whether the power of alienation is suspended beyond a life or lives in being at the time of creation of the power of appointment plus 30 years.

SB384,46 Section 46. 700.27 (1) (d), (2) (a) 2. and (b), (4) (e), (5) (b), (7) (a) and (8) (a) of the statutes are amended to read:

SB384,25,12 700.27 (1) (d) "Power of appointment" has the meaning given in s. 702.01 (4) 702.02 (6).

SB384,25,20 (2) (a) 2. A person who is a recipient of property or beneficiary under an inter vivos governing instrument, donee of a power of appointment created by an inter vivos governing instrument, appointee under a power of appointment exercised by an inter vivos governing instrument, taker in default under a power of appointment created by an inter vivos governing instrument, or person succeeding to disclaimed property created by an inter vivos governing instrument may disclaim any property, including contingent or future interests or the right to receive discretionary distributions, by delivering a written instrument of disclaimer under this section.

SB384,26,2 (b) Partial disclaimer. Property transferred under an inter vivos governing instrument may be disclaimed in whole or in part, except that a partial disclaimer of property passing by an inter vivos governing instrument or by the exercise of a power of appointment may not be made if partial disclaimer is expressly prohibited by the inter vivos governing instrument or by the instrument exercising the power of appointment.

SB384,26,7 (4) (e) Interests arising by disclaimer. Notwithstanding pars. (a) and (b), a person whose interest in property arises by disclaimer or by default of exercise of a power of appointment created by an inter vivos governing instrument may disclaim at any time not later than 9 months after the day on which the prior instrument of disclaimer is delivered, or the date on which the donee's power of appointment lapses.

SB384,26,12 (5) (b) Delivery to trustee. If the trustee of any trust to which the interest or power of appointment relates does not receive the instrument of disclaimer under par. (a), a copy shall also be delivered to the trustee. Failure to deliver a copy of the instrument of disclaimer to the trustee within the time specified under sub. (4) does not affect the validity of any disclaimer.

SB384,26,25 (7) (a) In general. Subject to sub. (8), unless the inter vivos governing instrument provides otherwise, either expressly or as construed from extrinsic evidence, the disclaimed property devolves as if the disclaimant had died before the effective date of the transfer under the inter vivos governing instrument. If the disclaimed interest is a remainder contingent on surviving to the time of distribution, the disclaimed interest passes as if the disclaimant had died immediately before the time for distribution. If the disclaimant is an appointee under a power of appointment exercised by an inter vivos governing instrument, the disclaimed property devolves as if the disclaimant had died before the effective date of the exercise of the power of appointment. If the disclaimant is a taker in default under a power of appointment created by an inter vivos governing instrument, the disclaimed property devolves as if the disclaimant had predeceased the donee of the power of appointment.

SB384,27,10 (8) (a) Subsequent interest not held by disclaimant. Unless the inter vivos governing instrument provides otherwise, either expressly or as construed from extrinsic evidence, upon the disclaimer of a preceding interest, a subsequent interest not held by the disclaimant and limited to take effect in possession or enjoyment after the termination of the interest that is disclaimed accelerates to take effect as if the disclaimant had died immediately before the time when the disclaimed interest would have taken effect in possession or enjoyment or, if the disclaimant is an appointee under a power of appointment and that power of appointment has been exercised by a power of appointment, as if the disclaimant had died before the effective date of the exercise of the power of appointment.

SB384,47 Section 47. 701.01 of the statutes is repealed.

SB384,48 Section 48. Subchapter I (title) of chapter 701 [precedes 701.0101] of the statutes is created to read:

SB384,27,14 chapter 701

SB384,27,15 subchapter i

SB384,27,17 GENERAL PROVISIONS AND DEFINITIONS

SB384,49 Section 49. 701.0101 of the statutes is created to read:

SB384,27,19 701.0101 Short title. This chapter may be cited as the Wisconsin Trust Code.

SB384,50 Section 50. 701.0102 of the statutes is created to read:

SB384,27,24 701.0102 Scope. This chapter applies to express, charitable or noncharitable, and testamentary or living trusts, and any trust created pursuant to a statute, judgment, or decree that requires the trust to be administered in the manner of an express trust. This chapter does not apply to any of the following:

SB384,27,25 (1) A constructive or resulting trust.

SB384,28,1 (2) A guardianship.

SB384,28,2 (3) A conservatorship.

SB384,28,5 (4) A custodial arrangement made pursuant to the Uniform Transfers to Minors Act under ss. 54.854 to 54.898 or the Uniform Custodial Trust Act under ss. 54.950 to 54.988.

SB384,28,6 (5) A common trust or a collective investment fund.

SB384,28,7 (6) A trust created by a depository agreement with a financial institution.

SB384,28,11 (7) A trust made in connection with a business transaction, including a trust created under a bond indenture or collateral trust agreement or in connection with a structured finance transaction, a common law trust under s. 226.14, or a business trust.

SB384,28,12 (8) A voting trust.

SB384,28,14 (9)   A fund maintained pursuant to court order in conjunction with a bankruptcy proceeding, business liquidation, or class action lawsuit.

SB384,28,16 (10)   A trust that is part of an employee benefit arrangement or an individual retirement account.

SB384,28,18 (11)   A trust established under a qualified tuition savings program or education savings account.

SB384,28,21 (12)   A trust account maintained on behalf of a client or customer by a licensed service professional, including a trust account maintained by an attorney or by a real estate broker.

SB384,28,23 (13) Any other arrangement under which a person is a nominee or escrowee for another.

SB384,51 Section 51. 701.0103 of the statutes is created to read:

SB384,28,25 701.0103 Definitions. In this chapter:

SB384,29,2 (1) "Action," with respect to an act of a trustee, directing party, or trust protector, includes a failure to act.

SB384,29,5 (2) "Ascertainable standard" means a standard relating to an individual's health, education, support, or maintenance within the meaning of section 2041 (b) (1) (A) or 2514 (c) (1) of the Internal Revenue Code.

SB384,29,6 (3) "Beneficiary" means a person that satisfies any of the following:

SB384,29,7 (a) Has a present or future beneficial interest in a trust, vested or contingent.

SB384,29,9 (b) In a capacity other than that of trustee, trust protector, or a directing party, holds a power of appointment over trust property.

SB384,29,12 (4) "Charitable trust" means a trust, or portion of a trust, created for a charitable purpose described in s. 701.0405 (1). This subsection does not apply in s. 701.1201.

SB384,29,13 (5) "Conservator" means a person appointed by a court pursuant to s. 54.76.

SB384,29,17 (6) "Directed trust property" means all or any portion of the property of a trust that is invested or managed by a directing party or is invested or managed at the direction of a directing party and for which the trustee has no investment or management responsibility.

SB384,29,24 (7) "Directing party" means a person who, in a trust instrument or court order, is granted a power to direct a trustee's investment or distribution decisions or a power to make investment or distribution decisions regarding trust property and the power is granted to the person in a capacity other than as a trustee or a trust protector. For purposes of this subsection, a power of appointment is not a power to direct a trustee's investment or distribution decisions or a power to make investment or distribution decisions regarding trust property.

SB384,30,2 (8) "Environmental law" means a federal, state, or local law, rule, regulation, or ordinance relating to protection or remediation of the environment.

SB384,30,3 (9) "General power of appointment" has the meaning given in s. 702.02 (5).

SB384,30,5 (10) "Guardian of the estate" means a person appointed by a court under s. 54.10 as a guardian of the estate of a minor or adult individual.

SB384,30,7 (11) "Guardian of the person" means a person appointed by a court under s. 54.10 as a guardian of the person of a minor or adult individual.

SB384,30,10 (12) "Incapacitated" means unable to receive and evaluate information effectively or to communicate decisions to such an extent that the individual lacks the capacity to manage his or her decisions.

SB384,30,12 (13) "Individual with a disability" means an individual who meets one of the following tests:

SB384,30,15 (a) The individual receives social security, supplemental security income, or medical assistance benefits on the basis of being an individual who is disabled, as defined by the applicable program.

SB384,30,23 (b) The individual has a mental or physical impairment of a type and severity that would cause the individual to be considered an individual who is disabled for purposes of participating in the social security, supplemental security income, or medical assistance program, if the individual applied to be eligible for one of those programs based on disability, and if the individual's education, work record, and engagement in substantial gainful activity were disregarded. The fact that the individual is age 65 or older does not bar the individual from being considered an individual with a disability.

SB384,30,25 (14) "Interests of the beneficiaries" means the beneficial interests provided in the terms of a trust.

SB384,31,3 (15) "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended, or such subsequent federal revenue law as may be in effect from time to time.

SB384,31,5 (16) "Jurisdiction," with respect to a geographic area, includes a state or country.

SB384,31,9 (17) "Person" means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government; governmental subdivision, agency, or instrumentality; public corporation; or any other legal or commercial entity.

SB384,31,10 (18) "Power of appointment" has the meaning given in s. 702.02 (6).

SB384,31,12   (19) "Power of withdrawal" means a presently exercisable general power of appointment but does not include any of the following:

SB384,31,13 (a) A power exercisable by a trustee and limited by an ascertainable standard.

SB384,31,15 (b) A power exercisable by another person only upon consent of a trustee or of a person holding an adverse interest.

SB384,31,17 (20) "Property" means anything that may be the subject of ownership, whether real or personal or legal or equitable, or any interest therein.

SB384,31,19 (21) "Qualified beneficiary" means a beneficiary who, on the date on which the beneficiary's qualification is determined, satisfies any of the following:

SB384,31,20 (a) Is a distributee or permissible distributee of trust income or principal.

SB384,31,23 (b) Without considering the existence or exercise of a power of appointment, other than a power of appointment that has been irrevocably exercised and notice of the exercise has been given to the trustee, would be any of the following:

SB384,32,3 1. A distributee or permissible distributee of trust income or principal if the interests of the distributees described in par. (a) terminated on that date without causing the trust to terminate.

SB384,32,5 2. A distributee or permissible distributee of trust income or principal if the trust terminated on that date.

SB384,32,8 (22) "Revocable," as applied to a trust, means that the trust can be revoked by the settlor without the consent of the trustee or a person holding an adverse interest, regardless of whether the settlor is incapacitated.

SB384,32,13   (23) "Settlor" means a person, including a testator, who creates or contributes property to a trust. If more than one person creates or contributes property to a trust, each person is a settlor of the portion of the trust property attributable to that person's contribution except to the extent another person has the power to revoke the trust or withdraw that portion.

SB384,32,14 (24) "Special power of appointment " has the meaning given in s. 702.02 (7).

SB384,32,16 (25) "Spendthrift provision" means a term of a trust that restrains either or both of a voluntary or involuntary transfer of a beneficiary's interest.

SB384,32,20   (26) "State" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, any territory or insular possession subject to the jurisdiction of the United States, and an Indian tribe, band, or nation recognized by federal law or formally acknowledged by a state.

SB384,32,23 (27) "Terms of a trust" means the manifestation of the settlor's intent regarding a trust's provisions as expressed in the trust instrument or as may be established by other evidence that would be admissible in a judicial proceeding.

SB384,32,25 (28) "Trustee" includes an original, additional, and successor trustee, and a cotrustee.

SB384,33,5 (29) "Trust for an individual with a disability" means a trust that is established for the benefit of an individual with a disability of any age, if the assets of the trust would not be counted as resources of the individual with a disability for purposes of eligibility for medical assistance under subch. IV of ch. 49, if he or she applied for medical assistance and was otherwise eligible.

SB384,33,10 (30) "Trust instrument" means an instrument, including any amendments or modifications to the instrument under s. 701.0111 or subch. IV, that is executed by the settlor that contains terms of a trust or is created under a statute, judgment, or decree that orders property to be transferred to a trustee to be administered for the benefit of a beneficiary.

SB384,33,13 (31) "Trust protector" means a person who, in a trust instrument or court order, is granted a power, other than a power of appointment, in a capacity other than as a trustee or a directing party.

SB384,52 Section 52. 701.0104 of the statutes is created to read:

SB384,33,16 701.0104 Knowledge. (1) Subject to sub. (2), a person has knowledge of a fact if any of the following applies:

SB384,33,17 (a) The person has actual knowledge of the fact.

SB384,33,18 (b) The person has received a notice or notification of the fact.

SB384,33,20 (c) The person has reason to know the fact from all the facts and circumstances known to the person at the time in question.

SB384,34,6 (2) An organization that conducts activities through employees has notice or knowledge of a fact involving a trust only from the time the information was received by an employee having responsibility to act for the trust, or would have been received by the employee if the organization had exercised reasonable diligence. An organization exercises reasonable diligence if it maintains reasonable routines for communicating significant information to the employee having responsibility to act for the trust and there is reasonable compliance with the routines. Reasonable diligence does not require an employee of the organization to communicate information unless the communication is part of the individual's regular duties or the individual knows a matter involving the trust would be materially affected by the information.

SB384,53 Section 53. 701.0105 of the statutes is created to read:

SB384,34,11 701.0105 Default and mandatory rules. (1) Except as otherwise provided in the terms of the trust, this chapter governs the duties and powers of trustees, directing parties, and trust protectors; relations among trustees, directing parties, and trust protectors; and the rights and interests of a beneficiaries.

SB384,34,13 (2) The terms of a trust prevail over any provision of this chapter except for the following:

SB384,34,14 (a) The requirements for creating a trust.

SB384,34,17 (b) The duty of a trustee or a directing party to act in good faith and in accordance with the terms and purposes of a trust instrument and the interests of the beneficiaries.

SB384,34,19 (c) The requirement that a trust and its terms be for the benefit of its beneficiaries, and that the trust have a purpose that is lawful.

SB384,34,21 (d) The power of a court to modify or terminate a trust under ss. 701.0410 to 701.0416.

SB384,34,23 (e) The effect of a spendthrift provision and the rights of certain creditors and assignees to reach a trust as provided in ss. 701.0501 to 701.0508.