2003 - 2004 LEGISLATURE
February 24, 2004 - Introduced by Senators Schultz and Risser, cosponsored by
Representatives Grothman and Cullen. Referred to Committee on
Agriculture, Financial Institutions and Insurance.
SB492,1,4 1An Act to amend 36.29 (1), 40.82 (2), 66.0603 (1m) (b), 881.02 and 881.06; and
2to repeal and recreate 881.01 of the statutes; relating to: regulating the
3investments of personal representatives, trustees, conservators, and guardians
4of the estate.
Analysis by the Legislative Reference Bureau
Under current law, personal representatives, guardians of the estate, and
fiduciaries are bound by the prudent person rule, which requires them to invest the
assets of their trusts and estates conservatively. For example, no more than 50
percent of the assets may consist of common stocks. This bill replaces the prudent
person rule with the Uniform Prudent Investor Act, which sets general standards for
fiduciaries, allows them greater flexibility in choosing investments, specifies that
their work is to be judged on the basis of the performance of all their investments,
allows them to delegate investment decisions, and requires them to consider the tax
consequences of investments. These changes affect state and local deferred
compensation plans, the State Historical Society's funds that are invested by the
Investment Board, municipal cemetery funds, employee welfare funds, wards'
estates, care funds, and preneed trust funds. The bill also adds conservators to the
types of fiduciaries to which the Uniform Prudent Investor Act applies. A

conservator is appointed by a court to manage the property or income of a person who
is competent and who has requested that the conservator be appointed.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB492, s. 1 1Section 1. 36.29 (1) of the statutes is amended to read:
SB492,3,32 36.29 (1) All gifts, grants, and bequests for the benefit or advantage of the
3system or any of its institutions, departments, or facilities or to provide any means
4of instruction, illustration, or knowledge in connection therewith, whether made to
5trustees or otherwise, shall be valid notwithstanding any other provision of this
6chapter except as otherwise provided in this subsection and shall be executed and
7enforced according to the provisions of the instrument making the same, including
8all provisions and directions in any such instrument for accumulation of the income
9of any fund or rents and profits of any real estate without being subject to the
10limitations and restrictions provided by law in other cases; but no such income
11accumulation shall be allowed to produce a fund more than 20 times as great as that
12originally given. When such gifts, grants or bequests include common stocks or other
13investments which are not authorized by ch. 881, the board may continue to hold
14such common stocks or other investments and exchange, invest or reinvest the funds
15of such gift, grant or bequest in similar types of investments without being subject
16to the limitations and restrictions provided by law in other cases.
No such
17investment of the funds of such gifts, grants, or bequests shall knowingly be made
18in any company, corporation, subsidiary, or affiliate which that practices or condones
19through its actions discrimination on the basis of race, religion, color, creed, or sex.
20Except as otherwise provided in this section, the board may invest not to exceed 85%
21of trust funds held and administered by the board in common stocks , the limitation

1of 50% in s. 881.01 (2) to the contrary notwithstanding
. This subsection does not
2apply to a gift, grant, or bequest that the board declines to accept or that the board
3is not authorized to accept under this section.
SB492, s. 2 4Section 2. 40.82 (2) of the statutes is amended to read:
SB492,3,115 40.82 (2) Compensation which that is withheld under a deferred compensation
6plan contract between an employer and an employee may be invested by the
7employer or a person other than the employer who is authorized by contract to
8administer the funds. The employer may determine the types of investments in
9which the deferred compensation funds may be invested. The deferred compensation
10funds may be invested and reinvested in the same manner provided for investments
11under s. 881.01 (1).
SB492, s. 3 12Section 3. 66.0603 (1m) (b) of the statutes is amended to read:
SB492,3,2313 66.0603 (1m) (b) A town, city, or village may invest surplus funds in any bonds
14or securities issued under the authority of the municipality, whether the bonds or
15securities create a general municipality liability or a liability of the property owners
16of the municipality for special improvements, and may sell or hypothecate the bonds
17or securities. Funds of an employer, as defined by s. 40.02 (28), in a deferred
18compensation plan may also be invested and reinvested in the same manner
19authorized for investments under s. 881.01 (1). Funds of any school district
20operating under ch. 119, held in trust for pension plans intended to qualify under
21section 401 (a) of the Internal Revenue Code, other than funds held in the public
22employee trust fund, may be invested and reinvested in the same manner as is
23authorized for investments under s. 881.01.
SB492, s. 4 24Section 4. 881.01 of the statutes is repealed and recreated to read:
SB492,3,25 25881.01 Uniform prudent investor act. (1) Definition. In this section:
1(a) "Beneficiary," with respect to a guardianship of the estate, means a ward
2for whom a guardian of the estate has been appointed and, with respect to a
3conservator, means a person for whose estate a conservator has been appointed.
SB492,4,54 (b) "Fiduciary" means personal representative, trustee, conservator, or
5guardian of the estate.
SB492,4,9 6(2) Prudent investor rule. (a) Except as provided in s. 112.10 and except as
7otherwise provided in par. (b), a fiduciary who invests and manages assets owes a
8duty to the beneficiaries to comply with the prudent investor rule set forth in this
SB492,4,1310 (b) The prudent investor rule, a default rule, may be expanded, restricted,
11eliminated, or otherwise altered by the provisions of a will, trust, or court order. A
12fiduciary is not liable to a beneficiary to the extent that the fiduciary acted in
13reasonable reliance on the provisions of the will, trust, or court order.
SB492,4,18 14(3) Standard of care; portfolio strategy; risk and return objectives. (a) A
15fiduciary shall invest and manage assets as a prudent investor would, by considering
16the purposes, terms, distribution requirements, and other circumstances of the
17estate, trust, conservatorship, or guardianship. In satisfying this standard, the
18fiduciary shall exercise reasonable care, skill, and caution.
SB492,4,2219 (b) A fiduciary's investment and management decisions about individual assets
20shall be evaluated, not in isolation but in the context of the portfolio as a whole and
21as a part of an overall investment strategy having risk and return objectives
22reasonably suited to the estate, trust, conservatorship, or guardianship.
SB492,4,2523 (c) Among circumstances that a fiduciary shall consider in investing and
24managing assets are those of the following that are relevant to the estate, trust,
25conservatorship, or guardianship or its beneficiaries:
11. General economic conditions.
SB492,5,22 2. The possible effect of inflation or deflation.
SB492,5,33 3. The expected tax consequences of investment decisions or strategies.
SB492,5,64 4. The role that each investment or course of action plays within the overall
5portfolio, which may include financial assets, interests in closely held enterprises,
6tangible and intangible personal property, and real property.
SB492,5,77 5. The expected total return from income and the appreciation of capital.
SB492,5,88 6. Other resources of the beneficiaries.
SB492,5,109 7. Needs for liquidity, regularity of income, and preservation or appreciation
10of capital.
SB492,5,1211 8. An asset's special relationship or special value to the purposes of the estate,
12trust, conservatorship, or guardianship or to one or more of the beneficiaries.
SB492,5,1413 (d) A fiduciary shall make a reasonable effort to verify facts relevant to the
14investment and management of assets.
SB492,5,1615 (e) A fiduciary may invest in any kind of property or type of investment
16consistent with the standards of this section.
SB492,5,1917 (f) A fiduciary who has special skills or expertise, or who is named fiduciary in
18reliance upon the fiduciary's representation that the fiduciary has special skills or
19expertise, has a duty to use those special skills or expertise.
SB492,5,23 20(4) Diversification. A fiduciary shall diversify investments unless the
21fiduciary reasonably determines that, because of special circumstances, the
22purposes of the estate, trust, conservatorship, or guardianship are better served
23without diversifying.
SB492,6,4 24(5) Duties at inception. Within a reasonable time after accepting a fiduciary
25appointment or receiving assets, a fiduciary shall review the assets and make and

1implement decisions concerning the retention and disposition of assets, in order to
2bring the portfolio into compliance with the purposes, terms, distribution
3requirements, and other circumstances of the estate, trust, conservatorship, or
4guardianship and with the requirements of this section.
SB492,6,6 5(6) Loyalty. A fiduciary shall invest and manage the assets solely in the
6interest of the beneficiaries.
SB492,6,9 7(7) Impartiality. If an estate, trust, conservatorship, or guardianship has 2 or
8more beneficiaries, the fiduciary shall act impartially in investing and managing the
9assets, taking into account the differences between the interests of the beneficiaries.
SB492,6,12 10(8) Investment costs. In investing and managing assets, a fiduciary may incur
11only costs that are appropriate and reasonable in relation to the assets, the purposes
12of the estate, trust, conservatorship, or guardianship, and the skills of the fiduciary.
SB492,6,15 13(9) Reviewing compliance. Compliance with the prudent investor rule is
14determined in light of the facts and circumstances existing at the time of a fiduciary's
15decision or action and not by hindsight.
SB492,6,19 16(10) Delegation of investment and management functions. (a) A fiduciary
17may delegate investment and management functions that a prudent fiduciary of
18similar skills could properly delegate under the circumstances. The fiduciary shall
19exercise reasonable care, skill, and caution in all of the following:
SB492,6,2020 1. Selecting an agent.
SB492,6,2221 2. Establishing the scope and terms of the delegation, consistent with the
22purposes and terms of the estate, trust, conservatorship, or guardianship.
SB492,6,2423 3. Periodically reviewing the agent's actions to monitor the agent's performance
24and compliance with the terms of the delegation.
1(b) In performing a delegated function, an agent owes a duty to the estate, trust,
2conservatorship, or guardianship to exercise reasonable care to comply with the
3terms of the delegation.
SB492,7,64 (c) A fiduciary who complies with the requirements of par. (a) is not liable to
5the beneficiaries or to the estate, trust, conservatorship, or guardianship for the
6decisions or actions of the agent to whom a function was delegated.
SB492,7,97 (d) By accepting the delegation of a function from the fiduciary of an estate,
8trust, conservatorship, or guardianship that is subject to the law of this state, an
9agent submits to the jurisdiction of the courts of this state.