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Effective date note NOTE: This section is repealed eff. 7-1-14 by 2013 Wis.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Effective date note NOTE: This section is repealed eff. 7-1-14 by 2013 Wis.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Effective date note NOTE: Section 701.06 (title) and (1) are repealed eff. 7-1-14 by 2013 Wis.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.
701.065(1)(b)2. 2. All of the following circumstances exist:
701.065(1)(b)2.a. a. On or before the date specified in the notice under par. (a) 1., the trustee knew, or in the exercise of reasonable diligence should have known, of the existence of the potential claim and of the identity and mailing address of the potential claimant.
701.065(1)(b)2.b. b. At least 30 days before the date specified in the notice under par. (a) 1., the trustee had not given notice to the potential claimant of the final day for filing his or her claim.
701.065(1)(b)2.c. c. At least 30 days before the date specified in the notice under par. (a) 1., the claimant did not have actual knowledge of the date on which the claim would be barred.
701.065(1)(c) (c) If an action is pending against a decedent at the time of his or her death and the action survives, the plaintiff in that action may serve a notice of substitution of party defendant on the trustee and file proof of service of notice in the court. Filing of proof of service on or before the deadline for filing a claim under par. (a) 1. gives the plaintiff the same rights against the trust as the filing of a claim. A judgment in any such action constitutes an adjudication for or against the trust.
701.065(2) (2)Effect of statute of limitations. A trustee shall not pay a claim that was barred by a statute of limitations at the time of the decedent's death. A claim not barred by a statute of limitations at the time of the decedent's death shall not be barred thereafter by a statute of limitations if the claim is filed with the trustee on or before the deadline for filing a claim under sub. (1) (a) 1.
701.065(3) (3)Claims of creditors without notice.
701.065(3)(a)(a) A claim not barred by sub. (1) (a) 2. because of the operation of sub. (1) (b) 2. may be enforced against trust property only as provided in this subsection.
701.065(3)(b) (b) The claimant shall file the claim with the trustee within one year after the decedent's death and within 30 days after the earlier of the following:
701.065(3)(b)1. 1. The date that the trustee gives notice to the potential claimant of the deadline for filing a claim under sub. (1) (a) 1.
701.065(3)(b)2. 2. The date that the claimant first acquires actual knowledge of the deadline for filing a claim under sub. (1) (a) 1.
701.065(3)(c) (c) The claimant shall have the burden of establishing by the greater weight of the credible evidence that all of the circumstances under sub. (1) (b) 2. existed.
701.065(3)(d) (d) This subsection does not extend the time for commencement of a claim beyond the time provided by any statute of limitations applicable to that claim.
701.065(4) (4)Satisfaction of claim from other property. Failure of a claimant timely to file a claim as provided in this section does not bar the claimant from satisfying the claim, if not otherwise barred, from property other than trust property.
Effective date note NOTE: This section is renumbered to s. 701.0508 and amended eff. 7-1-14 by 2013 Wis. Act 92.
701.065 History History: 1997 a. 188; 1999 a. 9; 2013 a. 20, 92.
701.07 701.07 Living trusts.
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 employee 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 employee 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, employee benefit plan, life insurance policy or otherwise; or
701.07(1)(c) (c) The principal consists of assets of nominal value.
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2011-12 Wisconsin Statutes updated though 2013 Wis. Act 200 and all Supreme Court Orders entered before April 11, 2014. Published and certified under s. 35.18. Changes effective after April 11, 2014 are designated by NOTES. (Published 4-11-14)