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Ch. 701 Note NOTE: Chapter 701 is revised in its entirety effective 7-1-14 by 2013 Wis. Act 92. The complete revised chapter is published beginning after s. 701.26. The treatments of individual sections by Act 92 are indicated by notes contained in each section.
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.
Effective date note NOTE: This section is repealed eff. 7-1-14 by 2013 Wis. Act 92.
701.02 701.02 Purposes for which trusts may be created. A trust may be created for any lawful purpose.
Effective date note NOTE: This section is repealed eff. 7-1-14 by 2013 Wis. Act 92.
701.02 History History: 1993 a. 16, 437; 2013 a. 92.
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.
Effective date note NOTE: This section is repealed eff. 7-1-14 by 2013 Wis. Act 92.
701.03 History History: 1989 a. 231; 2013 a. 92.
701.03 Annotation When a trustee has the duty of paying taxes and insurance, the trust is an active one. Kinzer v. Bidwill, 55 Wis. 2d 749, 201 N.W.2d 9 (1972).
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 Wis. 2d 564, 550 N.W.2d 727 (Ct. App. 1996), 95-1303.
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.
Effective date note NOTE: This section is repealed eff. 7-1-14 by 2013 Wis. Act 92.
701.04 History History: 2013 a. 92.
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.
Effective date note NOTE: This section is repealed eff. 7-1-14 by 2013 Wis. Act 92.
701.05 History History: 1971 c. 66; 1991 a. 316; 2013 a. 92.
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.
Effective date note NOTE: Section 701.06 (title) and (1) are repealed eff. 7-1-14 by 2013 Wis. Act 92.
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.
Effective date note NOTE: Sub. (2) is repealed eff. 7-1-14 by 2013 Wis. Act 92.
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).
Effective date note NOTE: Sub. (3) is repealed eff. 7-1-14 by 2013 Wis. Act 92.
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.
Effective date note NOTE: Sub. (4) is renumbered to s. 701.0503 (1) and amended, eff. 7-1-14, by 2013 Wis. Act 92.
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, 49.345, or 301.12 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, 49.345, or 301.12, upon application by the appropriate state department or county official, the court may:
Effective date note NOTE: Sub. (5) (intro.) is renumbered to s. 701.0503 (2) (intro.) and amended, eff. 7-1-14, by 2013 Wis. Act 92.
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;
Effective date note NOTE: Par. (a) is renumbered to s. 701.0503 (2) (a) and amended, eff. 7-1-14, by 2013 Wis. Act 92.
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;
Effective date note NOTE: Par. (b) is renumbered to s. 701.0503 (2) (b) 1. and amended, eff. 7-1-14, by 2013 Wis. Act 92.
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.
Effective date note NOTE: Par. (c) is renumbered to s. 701.0503 (2) (b) 2. and amended, eff. 7-1-14, by 2013 Wis. Act 92.
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.
Effective date note NOTE: Sub. (5m) is renumbered to s. 701.0503 (3) and amended, eff. 7-1-14, by 2013 Wis. Act 92.
701.06(6) (6)Settlor as beneficiary.
701.06(6)(a)(a) 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.
Effective date note NOTE: Sub. (6) (title) and (a) are repealed eff. 7-1-14 by 2013 Wis. Act 92.
701.06(6)(b) (b) A beneficiary of a trust may not be considered a settlor solely because of a lapse, waiver, or release of any of the following:
701.06(6)(b)1. 1. A power described under par. (c).
701.06(6)(b)2. 2. The beneficiary's right to withdraw part of the trust property, to the extent that the value of the property affected by the lapse, waiver, or release in any year does not exceed the greater of the amount in:
701.06(6)(b)2.a. a. Section 2041 (b) (2) or 2514 (e), Internal Revenue Code of 1986.
701.06(6)(b)2.b. b. Section 2503 (b), Internal Revenue Code of 1986.
Effective date note NOTE: Par. (b) is renumbered to s. 701.0505 (2) (b) and amended, eff. 7-1-14, by 2013 Wis. Act 92.
701.06(6)(c) (c) A beneficiary of a trust is not a settlor, has not made a voluntary or involuntary transfer of the beneficiary's interest in the trust, or does not have the power to make a voluntary or involuntary transfer of the beneficiary's interest in the trust solely because the beneficiary holds or exercises, in any capacity, any of the following:
701.06(6)(c)1. 1. A presently exercisable power to consume, invade, appropriate, or distribute property to or for the benefit of the beneficiary if the power is any of the following:
701.06(6)(c)1.a. a. Exercisable only on consent of another person holding an interest adverse to the beneficiary's interest.
701.06(6)(c)1.b. b. Limited by an ascertainable standard, such as health, education, support, or maintenance of the beneficiary.
701.06(6)(c)2. 2. A presently exercisable power to appoint any property of the trust to or for the benefit of a person other than the beneficiary, a creditor of the beneficiary, the beneficiary's estate, or a creditor of the beneficiary's estate.
701.06(6)(c)3. 3. A testamentary power of appointment.
701.06(6)(c)4. 4. A presently exercisable right described in par. (b) 2.
Effective date note NOTE: Par. (c) is renumbered to s. 701.0505 (2) (c) and amended, eff. 7-1-14, by 2013 Wis. Act 92.
701.06(6)(d) (d) A beneficiary of a trust is not a settlor solely because the beneficiary is entitled to nondiscretionary distributions from the trust.
Effective date note NOTE: Par. (d) is renumbered to s. 701.0505 (2) (d) and amended, eff. 7-1-14, by 2013 Wis. Act 92.
701.06(7) (7)Subsequent modification of court's order. Any order entered by a court under sub. (4), (5) or (6) (a) is subject to modification upon application of an interested person.
Effective date note NOTE: Sub. (7) is renumbered to s. 701.0503 (4) and amended, eff. 7-1-14, by 2013 Wis. Act 92.
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) (a).
Effective date note NOTE: Sub. (8) is renumbered to s. 701.0503 (5) and amended, eff. 7-1-14, by 2013 Wis. Act 92.
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 that 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 Wis. 2d 532, 525 N.W.2d 261 (1995).
701.06 Annotation In not revealing that he was a trust beneficiary, a father failed to make proper financial disclosure at the time of a divorce as was required by s. 767.127. The rationale of Grohmann is applicable to both grantor and nongrantor trusts if there is an obligation to report that trust's income as one's own because it is the obligation to report the income that makes the income reachable for calculations of a child support obligation. Stevenson v. Stevenson, 2009 WI App 29, 316 Wis. 2d 442, 765 N.W.2d 811, 07-2143.
701.065 701.065 Debts of decedents.
701.065(1)(1) Limitations on claims.
701.065(1)(a)1.1. A trustee who has a duty or power to pay the debts of a decedent may publish in the county in which the decedent resided, as a class 3 notice, under ch. 985, a deadline for filing claims with the trustee. The deadline shall be the date that is 4 months after the date of the first insertion of the notice.
701.065(1)(a)2. 2. Except as provided in pars. (b) and (c), if the trustee satisfies the requirements for the publication of the notice under subd. 1., all claims, including claims of the state and any subdivision thereof, whether due or to become due, absolute or contingent, liquidated or unliquidated, are barred against the trustee, the trust property and any recipient of trust property unless filed with the trustee on or before the date specified in the notice under subd. 1.
701.065(1)(b) (b) Notwithstanding par. (a) 2., a claim that is not filed on or before the date specified in the notice under par. (a) 1. is not barred if any of the following apply:
701.065(1)(b)1. 1. The claim is a claim based on tort, on a marital property agreement that is subject to the time limitations under s. 766.58 (13) (b) or (c), on Wisconsin income, franchise, sales, withholding, gift, or death taxes, or on unemployment compensation contributions due or benefits overpaid; a claim for funeral or administrative expenses; a claim of this state under s. 46.27 (7g), 49.496, 49.682, or 49.849; or a claim of the United States.
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2011-12 Wisconsin Statutes updated though 2013 Wis. Act 200 and all Supreme Court Orders entered before April 18, 2014. Published and certified under s. 35.18. Changes effective after April 18, 2014 are designated by NOTES. (Published 4-18-14)