701.02 Purposes for which trusts may be created.
701.03 Passive trusts abolished.
701.04 Purchase money resulting trusts abolished.
701.05 Title of trustee; interest of beneficiaries.
701.06 Spendthrift provisions and rights of creditors of beneficiaries.
701.08 Transfers to living trusts.
701.09 Transfers to testamentary trusts.
701.10 Charitable trusts.
701.105 Private foundations.
701.11 Honorary trusts; cemetery trusts.
701.12 Revocation, modification and termination of trusts with consent of settlor.
701.13 Modification and termination of trusts by court action.
701.14 Circuit court procedure in trust proceedings.
701.15 Representation of others.
701.16 Testamentary trustees.
701.17 Successor and added trustees.
701.18 Resignation and removal of trustees.
701.19 Powers of trustees.
701.20 Principal and income.
701.21 Income payments and accumulations.
701.22 Distributions in kind by trustees; marital bequests.
701.23 Removal of trusts.
701.24 Applicability of ss.
701.01 to
701.23.
701.27 Disclaimer of transfers under nontestamentary instruments.
701.01
701.01
Definitions. As used in this chapter, unless the context indicates otherwise:
701.01(1)
(1) Beneficiary. "Beneficiary" means a person who has a beneficial interest in a trust.
701.01(2)
(2) Charitable and private trust. To the extent that trust income or principal presently or in the future must be used by the trustee exclusively for a charitable purpose as defined in
s. 701.10 (1), the trust is a "charitable trust"; any other trust is a "private trust", provided it is for the benefit of a person sufficiently identifiable to enforce the trust.
701.01(3)
(3) Court. "Court" means the court having jurisdiction.
701.01(4)
(4) Property. "Property" means an interest in real or personal property.
701.01(5)
(5) Settlor. "Settlor" means a person who directly or indirectly creates a living or testamentary trust or adds property to an existing trust.
701.01(6)
(6) Testamentary and living trust. "Testamentary trust" means a trust subject to the continuing jurisdiction of the court assigned to exercise probate jurisdiction; "living trust" means any other trust, including a testamentary trust removed to this state from another state.
701.01(7)
(7) Trust. "Trust" means an express living or testamentary, private or charitable trust in property which arises as a result of a manifestation of intention to create it.
701.01(8)
(8) Trustee. "Trustee" means a person holding in trust title to or holding in trust a power over property. "Trustee" includes an original, added or successor trustee.
701.01 Annotation
See note to 801.05, citing Norton v. Bridges, 712 F (2d) 1156 (1983).
701.02
701.02
Purposes for which trusts may be created. A trust may be created for any lawful purpose.
701.02 History
History: 1993 a. 16,
437.
701.02 Cross-reference
Cross-reference: See s.
701.10 (1) which lists the purposes for which a charitable trust may be created.
701.02 Annotation
Advantages of the revocable trust estate plan. Keydel, 1975 WBB No. 3.
701.03
701.03
Passive trusts abolished. Except as provided in
s. 706.08 (4), every trust, to the extent it is private and passive, vests no title or power in the trustee, but the beneficiary takes a title corresponding in extent to the beneficial interest given the beneficiary. A trust is passive if the title or power given the trustee is merely nominal and the creating instrument neither expressly nor by implication from its terms imposes active management duties on the trustee.
701.03 History
History: 1989 a. 231.
701.03 Annotation
When a trustee has the duty of paying taxes and insurance, the trust is an active one. Kinzer v. Bidwill, 55 W (2d) 749, 201 NW (2d) 9.
701.03 Annotation
This statute does not apply to living trusts. Section 701.07 which provides that a living trust cannot be deemed passive controls. McMahon v. Standard Bank & Trust Co. 202 W (2d) 565, 550 NW (2d) 727 (Ct. App. 1996).
701.04
701.04
Purchase money resulting trusts abolished. 701.04(1)(1) If title to property is transferred to one person and all or part of the purchase price is furnished by another, the latter may not enforce a purchase money resulting trust.
701.04(2)
(2) Creditors of the person furnishing all or part of the purchase price may enforce a resulting trust, in proportion to the amount of purchase price furnished, to the extent necessary to satisfy their demands, unless an intent to defraud creditors is disproved.
701.04(3)
(3) Nothing in this section shall affect the right to enforce a valid express trust or to establish a constructive trust based on fraud, undue influence, breach of confidential relationship or other appropriate grounds.
701.05
701.05
Title of trustee; interest of beneficiaries. 701.05(1)(1) Unless the creating instrument expressly limits the trustee to a lesser title or to a power, the trustee takes all title of the settlor or other transferor and holds such title subject to the trustee's fiduciary duties as trustee.
701.05(2)
(2) If a trustee of a private trust has title to the trust property, a beneficiary has both a right to have the trustee perform the trustee's fiduciary duties and an equitable interest, present or future, in the trust property. If a trustee of a private trust holds only a power over property, a beneficiary has a right to have such trustee perform the trustee's fiduciary duties.
701.05(3)
(3) In a private or charitable trust where the trustee takes all title of the settlor or other transferor and holds such title subject to the trustee's fiduciary duties as trustee, any interest expressly retained by the settlor or not effectively disposed of to others remains in the settlor, or the settlor's successors in interest, as an equitable reversionary interest and to this extent the settlor, or the settlor's successors, are beneficiaries of the trust. In a private trust where the trustee takes all title of the settlor or other transferor and holds such title subject to the trustee's fiduciary duties as trustee, any interest, present or future, created by the settlor in any other person is an equitable interest and such person is a beneficiary of the trust.
701.05 History
History: 1971 c. 66;
1991 a. 316.
701.06
701.06
Spendthrift provisions and rights of creditors of beneficiaries. 701.06(1)(1)
Income beneficiaries. A settlor may expressly provide in the creating instrument that the interest in income of a beneficiary other than the settlor is not subject to voluntary or involuntary alienation. The income interest of such a beneficiary cannot be assigned and is exempt from claims against the beneficiary until paid over to the beneficiary pursuant to the terms of the trust.
701.06(2)
(2) Principal beneficiaries. A settlor may expressly provide in the creating instrument that the interest in principal of a beneficiary other than the settlor is not subject to voluntary or involuntary alienation. The interest in principal of such a beneficiary cannot be assigned and is exempt from claims against the beneficiary, but a judgment creditor, after any payments of principal have become due or payable to the beneficiary pursuant to the terms of the trust, may apply to the court for an order directing the trustee to satisfy the judgment out of any such payments and the court in its discretion may issue an order for payment of part or all of the judgment.
701.06(3)
(3) Disclaimer or renunciation not an assignment. A disclaimer or renunciation by a beneficiary of part or all of his or her interest under a trust shall not be considered an assignment under
sub. (1) or
(2).
701.06(4)
(4) Claims for child support. Notwithstanding any provision in the creating instrument or
subs. (1) and
(2), upon application of a person having a valid order directing a beneficiary to make payment for support of the beneficiary's child, the court may:
701.06(4)(a)
(a) If the beneficiary is entitled to receive income or principal under the trust, order the trustee to satisfy part or all of the claim out of part or all of payments of income or principal as they are due, presently or in the future;
701.06(4)(b)
(b) In the case of a beneficiary under a discretionary trust, order the trustee to satisfy part or all of the claim out of part or all of future payments of income or principal which are to be made pursuant to the exercise of the trustee's discretion in favor of such beneficiary.
701.06(5)
(5) Claims for public support. Notwithstanding any provision in the creating instrument or
subs. (1) and
(2), if the settlor is legally obligated to pay for the public support of a beneficiary under
s. 46.10 or the beneficiary is legally obligated to pay for the beneficiary's public support or that furnished the beneficiary's spouse or minor child under
s. 46.10, upon application by the appropriate state department or county official, the court may:
701.06(5)(a)
(a) If such beneficiary is entitled to receive income or principal under the trust, order the trustee to satisfy part or all of the liability out of part or all of payments of income or principal as they are due, presently or in the future;
701.06(5)(b)
(b) Except as otherwise provided in
par. (c), in the case of a beneficiary under a discretionary trust, order the trustee to satisfy part or all of the liability out of part or all of future payments of income or principal which are to be made pursuant to the exercise of the trustee's discretion in favor of such beneficiary;
701.06(5)(c)
(c) In the case of a beneficiary under a discretionary trust who is a settlor or a spouse or minor child of the settlor, order the trustee to satisfy part or all of the liability without regard to whether the trustee has then exercised or may thereafter exercise the trustee's discretion in favor of the beneficiary.
701.06(5m)
(5m) Trust for disabled individual. Subsection (5) does not apply to any trust that is established for the benefit of an individual who has a disability which has continued or can be expected to continue indefinitely, substantially impairs the individual from adequately providing for his or her own care or custody, and constitutes a substantial handicap to the afflicted individual if the trust does not result in ineligibility for public assistance under
ch. 49. A trustee of a trust which is exempt from claims for public support under this subsection shall notify the county department under
s. 46.215 or
46.22 in the county where the disabled beneficiary resides of the existence of the trust.
701.06(6)
(6) Settlor as beneficiary. Notwithstanding any provision in the creating instrument and in addition to the remedies available under
subs. (4) and
(5) where the settlor is a beneficiary, upon application of a judgment creditor of the settlor, the court may, if the terms of the instrument require or authorize the trustee to make payments of income or principal to or for the benefit of the settlor, order the trustee to satisfy part or all of the judgment out of part or all of the payments of income or principal as they are due, presently or in the future, or which are payable in the trustee's discretion, to the extent in either case of the settlor's proportionate contribution to the trust.
701.06(7)
(7) Subsequent modification of court's order. Any order entered by a court under
sub. (4),
(5) or
(6) is subject to modification upon application of an interested person.
701.06(8)
(8) Exempt assets. Assets of a trust, to the extent they are exempt from claims of creditors under other statutes, shall not be subject to
sub. (4),
(5) or
(6).
701.06 Cross-reference
Cross-reference: See s.
701.07 (3) which deals with creditors' rights where a settlor retains powers over a living trust.
701.06 Annotation
Trust income which is income to the beneficiary under federal tax law is subject to a child support order regardless of whether a distribution is made to the beneficiary. Grohmann v. Grohmann, 189 W (2d) 532, 525 NW (2d) 261 (1995).
701.07(1)(1)
Validity. A living trust, otherwise valid, shall not be held invalid as an attempted testamentary disposition, a passive trust under
s. 701.03, or a trust lacking a sufficient principal because:
701.07(1)(a)
(a) It contains any or all of the following powers, whether exercisable by the settlor, another person or both:
701.07(1)(a)1.
1. To revoke, modify or terminate the trust in whole or in part;
701.07(1)(a)2.
2. To exercise a power or option over property in the trust or over interests made payable to the trust under an employe benefit plan, life insurance policy, or otherwise;
701.07(1)(a)3.
3. To direct, during the lifetime of the settlor or another, the person to whom or on whose behalf the income or principal shall be paid or applied;
701.07(1)(a)4.
4. To control the administration of the trust in whole or in part;
701.07(1)(a)5.
5. To add property or cause additional employe benefits, life insurance, or other interests to be made payable to the trust at any time.
701.07(1)(b)
(b) The principal consists of a designation of the trustee as a primary or direct, secondary or contingent beneficiary under a will, employe benefit plan, life insurance policy or otherwise; or
701.07(1)(c)
(c) The principal consists of assets of nominal value.
701.07(2)
(2) Eligibility to receive assets. A living trust shall be eligible to receive property from any source.
701.07(3)
(3) Creditors' rights. If a settlor retains a power to revoke, modify or terminate which is exercisable in the settlor's favor, except when such power is exercisable only in conjunction with a person having a substantial adverse interest, the trust property to the extent it is subject to such power is also subject to the claim of a creditor of the settlor. This subsection shall not apply to trust property to the extent it is exempt from claims of creditors under other statutes.
701.07 Cross-reference
Cross-reference: See s.
701.06 (6) which deals with creditors' rights where the settlor is a beneficiary of the trust.
701.07 Annotation
Section 701.03 which prohibits passive trusts does not apply to living trusts. This statute which provides that a living trust cannot be deemed passive controls. McMahon v. Standard Bank & Trust Co. 202 W (2d) 565, 550 NW (2d) 727 (Ct. App. 1996).
701.07 Annotation
Understanding Living Trusts. Moschella. Wis. Law. March 1992.
