(2) Right to disclaim. (a) In general. 1. In this paragraph, "person" includes a person who is unborn or whose identity is unascertained.
2. A person who is a recipient of property or beneficiary under an inter vivos governing instrument, donee of a power created by an inter vivos governing instrument, appointee under a power exercised by an inter vivos governing instrument, taker in default under a power 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.
(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 may not be made if partial disclaimer is expressly prohibited by the inter vivos governing instrument or by the instrument exercising the power.
(c) Spendthrift provision. The right to disclaim exists notwithstanding any limitation on the interest of the disclaimant in the nature of a spendthrift provision or similar restriction.
(d) Disclaimer by a guardian or conservator. A guardian of the estate or a conservator appointed under ch. 880 may disclaim on behalf of his or her ward, with court approval, if the ward is entitled to disclaim under this section.
(e) Disclaimer by an agent under power of attorney. An agent under a power of attorney may disclaim on behalf of the person who granted the power of attorney if all of the following apply:
1. The person who granted the power of attorney is entitled to disclaim under this section.
2. The power of attorney specifically grants the power to disclaim.
(f) Disclaimer by trustee. The trustee of a trust named as a recipient of property under an inter vivos governing instrument may disclaim that property on behalf of the trust if the trust authorizes disclaimer by the trustee. If the trust does not authorize disclaimer by the trustee, the trustee's power to disclaim is subject to the approval of the court.
(g) After death. A person's right to disclaim survives the person's death and may be exercised by the person's personal representative or special administrator upon receiving approval from the court having jurisdiction of the person's estate after hearing upon notice to all persons interested in the disclaimed property, if the personal representative or special administrator has not taken any action that would bar the right to disclaim under sub. (9).
(h) Disclaimers of transfers at death. A person who is a recipient of property under a governing instrument, as defined in s. 854.01 (2), may disclaim the property as provided in s. 854.13.
(3) Instrument of disclaimer. The instrument of disclaimer must meet the provisions of subs. (4) and (5) and s. 854.13 (3) (a) to (c).
(4) Time for effective disclaimer. (a) Present interest. An instrument disclaiming a present interest shall be executed and delivered not later than 9 months after the effective date of the transfer under the inter vivos governing instrument. For cause shown, the period may be extended by a court of competent jurisdiction, either within or after the 9-month period, for such additional time as the court considers just.
(b) Future interest. An instrument disclaiming a future interest shall be executed and delivered not later than 9 months after the event that determines that the taker of the property is finally ascertained and his or her interest indefeasibly fixed. For cause shown, the period may be extended by a court of competent jurisdiction, either within or after the 9-month period, for such additional time as the court considers just.
(c) Future right to income or principal. Notwithstanding pars. (a) and (b), an instrument disclaiming the future right to receive discretionary or mandatory distributions of income or principal from any source may be executed and delivered at any time.
(d) Persons under 21. Notwithstanding pars. (a) and (b), a person under 21 years of age may disclaim at any time not later than 9 months after the date on which the person attains 21 years of age.
(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 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 lapses.
(5) Delivery and filing of disclaimer. (a) Delivery. In addition to any requirements imposed by the inter vivos governing instrument, the instrument of disclaimer is effective only if, within the time specified under sub. (4), it is delivered to and received by any of the following:
1. The transferor of the property disclaimed.
2. The transferor's legal representative.
3. The holder of legal title to the property.
(b) Delivery to trustee. If the trustee of any trust to which the interest or power 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.
(c) Recording. If real property or an interest in real property is disclaimed, a copy of the instrument of disclaimer may be recorded in the office of the register of deeds of the county in which the real estate is situated.
(6) Property not vested. The property disclaimed under this section shall be considered not to have been vested in, created in, or transferred to the disclaimant.
(7) Devolution. (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 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. If the disclaimant is a taker in default under a power created by an inter vivos governing instrument, the disclaimed property devolves as if the disclaimant had predeceased the donee of the power.
(b) Devolution to issue of the disclaimants. Unless the inter vivos governing instrument provides otherwise, either expressly or as construed from extrinsic evidence, if, by law or under the inter vivos governing instrument, the issue of the disclaimant would share in the disclaimed interest by any method of representation had the disclaimant died before the time the disclaimed interest would have taken effect in possession or enjoyment, the disclaimed interest passes only to the issue of the disclaimant who survive when the disclaimed interest takes effect in possession or enjoyment.
(c) Disclaimer of a devisable future interest. 1. In this paragraph, "devisable future interest" is a future interest that can be passed under the will of the person who holds the future interest.
2. If the disclaimed interest is a devisable future interest under the law governing the transfer, then the disclaimed interest devolves as if it were a nondevisable future interest.
(8) Acceleration of subsequent interests when preceding interest is disclaimed. (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 exercised by a power of appointment, as if the disclaimant had died before the effective date of the exercise of the power.
(b) Subsequent interest 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 held by the disclaimant does not accelerate.
(9) Bar. Actions that bar disclaimer are as provided in s. 854.13 (11g).
(10) Effect of disclaimer or waiver. The effect of the disclaimer on the disclaimant and any successors in interest is as provided in s. 854.13 (11p).
(11) Nonexclusiveness of remedy. (a) This section does not affect the right of a person to waive, release, disclaim, or renounce property under any other statute or the common law, or as provided in the creating instrument.
(b) Any disclaimer that meets the requirements of section
2518 of the Internal Revenue Code, or the requirements of any other federal law relating to disclaimers, constitutes an effective disclaimer under this section or s. 854.13.
(12) Construction of effective date. In this section, the effective date of a transfer under an inter vivos governing instrument is the date on which the transfer is a completed gift for federal gift tax purposes.
216,10
Section
10. 701.06 (6) of the statutes is renumbered 701.06 (6) (a).
216,11
Section
11. 701.06 (6) (b), (c) and (d) of the statutes are created to read:
701.06 (6) (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:
1. A power described under par. (c).
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:
a. Section 2041 (b) (2) or 2514 (e), Internal Revenue Code of 1986.
b. Section 2503 (b), Internal Revenue Code of 1986.
(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:
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:
a. Exercisable only on consent of another person holding an interest adverse to the beneficiary's interest.
b. Limited by an ascertainable standard, such as health, education, support, or maintenance of the beneficiary.
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.
3. A testamentary power of appointment.
4. A presently exercisable right described in par. (b) 2.
(d) A beneficiary of a trust is not a settlor solely because the beneficiary is entitled to nondiscretionary distributions from the trust.
216,12
Section
12. 701.06 (7) of the statutes is amended to read:
701.06 (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.
216,13
Section
13. 701.06 (8) of the statutes is amended to read:
701.06 (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).
216,14
Section
14. 701.115 (1) of the statutes is renumbered 701.115 (1) (b).
216,15
Section
15. 701.115 (1) (a) of the statutes is created to read:
701.115 (1) (a) In par. (b), "revocable trust" means a trust that the grantor, at the time of death, was alone empowered to change or revoke, by law or under the instrument creating the trust, regardless of whether the grantor then had the capacity to exercise the power.
216,16
Section
16. 701.115 (2) of the statutes is amended to read:
701.115 (2) Survivorship under sub. (1) (b) is governed by s. 854.03.
216,17
Section
17. 701.115 (3) of the statutes is amended to read:
701.115 (3) The rights of the issue of a predeceasing beneficiary under sub. (1) (b) are governed by s. 854.06.
216,18
Section
18. 701.19 (10) of the statutes is repealed and recreated to read:
701.19 (10) Restriction on exercise of powers. (a) Except as provided in par. (c), a person may not exercise any of the following powers conferred upon him or her in his or her capacity as trustee:
1. The power to make discretionary distributions of trust principal or income if the distributions are to himself or herself or for the discharge of his or her legal obligations.
2. The power to make discretionary allocations of receipts or expenses as between principal and income if the allocations are in his or her favor.
(b) If a power under par. (a) is conferred upon more than one person as trustee, a person who is not disqualified to act under par. (a) may exercise the power for the benefit of the person who is disqualified to act, unless the creating instrument expressly provides otherwise. A special trustee appointed by a court may exercise a power under par. (a) for the benefit of the disqualified person if no other trustee is qualified to exercise the power.
(c) Paragraph (a) does not apply if any of the following applies:
1. The person is also the settlor of the trust, and the trust may be revoked or amended by the settlor.
2. The terms of the creating instrument specifically limit the scope of the power to expenditures and distributions of income or principal on the basis of an ascertainable standard relating to the person's health, maintenance, support, or education such that the person would not be subject to tax under section
2041 or
2514 of the Internal Revenue Code as a result of having or exercising the power.
3. The person is the spouse, widow, or widower of the settlor of the trust, and a marital deduction has been allowed for federal gift or estate tax purposes with respect to the trust property that is subject to the power.
4. The creating instrument negates the application of par. (a) with respect to the power or indicates that provisions that are similar to par. (a) do not apply.
(d) Section 701.24 (3) governs the applicability of this statute.
701.20 (5) (c) A fiduciary shall distribute to a beneficiary, including a trustee, who receives a pecuniary amount not determined by a pecuniary formula interest at the legal rate set forth in s. 138.04 on any unpaid portion of the pecuniary amount for the period commencing one year after the decedent's death or after the income interest in the trust ends. The interest under this paragraph shall be distributed from net income determined under par. (b) or from principal to the extent that net income is insufficient. For purposes of this paragraph, the deferred marital property elective share amount elected by a surviving spouse under s. 861.02 (1) is a bequest of a specific amount of money not determined by a pecuniary formula.
701.24 (title) Applicability of ss. 701.01 to 701.23. (1) Except as otherwise provided in sub. (3) and s. 701.19 (9) (a) and (10), ss. 701.01 to 701.19, 701.21, 701.22, and 701.23 are applicable to a trust existing on July 1, 1971, as well as a trust created after such date, and shall govern trustees acting under such trusts. If application of any provision of ss. 701.01 to 701.19, 701.21, 701.22 , and 701.23 to a trust in existence on August 1, 1971, is unconstitutional, it shall not affect application of the provision to a trust created after that date.
216,21
Section
21. 701.24 (3) of the statutes is created to read:
701.24 (3) Sections 701.06 (6) (b), (c), and (d) and 701.19 (10) are applicable to a trust existing on the effective date of this subsection .... [revisor inserts date], as well as a trust created after that date, and shall govern trustees acting under such trusts. If application of any provision of s. 701.06 (6) (b), (c), or (d) or 701.19 (10) to a trust in existence on the effective date of this subsection .... [revisor inserts date], is unconstitutional, it shall not affect application of the provision to a trust created after that date.
216,22
Section
22. 701.26 (title) of the statutes is amended to read:
701.26 (title) Disclaimers of nonprobate transfers at death.
216,23
Section
23. 701.26 of the statutes is renumbered 701.26 (1) and amended to read:
701.26 (1) A person recipient may disclaim, under s. 854.13, any of the following:
(a) An All or part of an interest in a joint tenancy, upon the death of another joint tenant.
(b) An All or part of an interest in survivorship marital property, upon the death of the other spouse.
(c) An All or part of an interest that is created by a nontestamentary instrument and transferred at death, upon the death that causes the transfer.
216,24
Section
24. 701.26 (1) (d) of the statutes is created to read:
701.26 (1) (d) All or part of any other interest transferred under a governing instrument, as defined in s. 854.01 (2).
216,25
Section
25. 701.26 (2) of the statutes is created to read:
701.26 (2) A recipient may disclaim, under s. 700.27, all or part of any interest transferred under an inter vivos governing instrument, as defined in s. 700.27 (1) (c).
