AB490,155,7
1701.1123
(3) For each accounting period of a trust in which the trust receives
2a payment but no part of any payment is allocated to income under
par. (b) sub. (2),
3the trustee shall allocate to income that portion of the aggregate value of all
4payments received by the trustee in that accounting period that is equal to the
5amount of plan income that is attributable to the trust's interest in the plan from
6which payment is received for that accounting period. The trustee shall allocate the
7balance of any payments to principal.
AB490,269
8Section
269. 701.20 (18) (d) of the statutes is renumbered 701.1123 (5) and
9amended to read:
AB490,155,1310
701.1123
(5) If, to obtain an estate or gift tax marital deduction for an interest
11in a trust, a trustee must allocate more of a payment to income than provided for by
12this
subsection section, the trustee shall allocate to income the additional amount
13necessary to obtain the marital deduction.
AB490,270
14Section
270. 701.20 (18) (e) of the statutes is renumbered 701.1123 (6) and
15amended to read:
AB490,155,1716
701.1123
(6) This
subsection section does not apply to
payments a payment to
17which
sub. (19) s. 701.1124 applies.
AB490,271
18Section
271. 701.20 (19) of the statutes is renumbered 701.1124, and 701.1124
19(1), as renumbered, is amended to read:
AB490,156,420
701.1124
(1) In this
subsection section, "liquidating asset" means an asset
21whose value will diminish or terminate because the asset is expected to produce
22receipts for a period of limited duration. The term includes a leasehold, patent,
23copyright, royalty right, and right to receive payments during a period of more than
24one year under an arrangement that does not provide for the payment of interest on
25the unpaid balance. The term does not include a payment subject to
sub. (18) s.
1701.1123, resources subject to
sub. (20)
s. 701.1125, timber subject to
sub. (21) s.
2701.1126, an activity subject to
sub. (23) s. 701.1128, an asset subject to
sub. (24) s.
3701.1129, or any asset for which the trustee establishes a reserve for depreciation
4under
sub. (27) s. 701.1132.
AB490,272
5Section
272. 701.20 (20) of the statutes is renumbered 701.1125, and 701.1125
6(1) (intro.) and (d), (3) and (4), as renumbered, are amended to read:
AB490,156,97
701.1125
(1) (intro.) To the extent that a trustee accounts for receipts from an
8interest in minerals or other natural resources in accordance with this
subsection 9section, the trustee shall allocate them as follows:
AB490,156,1210
(d) If an amount is received from a working interest or any other interest not
11provided for in
subd. 1., 2. par. (a), (b), or
3. (c), 90 percent of the net amount received
12must be allocated to principal and the balance to income.
AB490,156,15
13(3) This
subsection section applies whether or not a decedent or donor was
14extracting minerals, water, or other natural resources before the interest became
15subject to the trust.
AB490,156,21
16(4) If a trust owns an interest in minerals, water, or other natural resources
17on May 17, 2005, the trustee may allocate receipts from the interest as provided in
18this
subsection section or in the manner used by the trustee before May 17, 2005.
19If the trust acquires an interest in minerals, water, or other natural resources after
20May 17, 2005, the trustee shall allocate receipts from the interest as provided in this
21subsection section.
AB490,273
22Section
273. 701.20 (21) (title) of the statutes is repealed.
AB490,274
23Section
274. 701.20 (21) of the statutes is renumbered 701.1126, and 701.1126
24(1) (intro.), (c) and (d), (2), (3) and (4), as renumbered, are amended to read:
AB490,157,3
1701.1126
(1) (intro.) To the extent that a trustee accounts for receipts from the
2sale of timber and related products in accordance with this
subsection section, the
3trustee shall allocate the net receipts:
AB490,157,74
(c) To income or principal or between income and principal if the net receipts
5are from the lease of timberland or from a contract to cut timber from land owned by
6a trust, by determining the amount of timber removed from the land under the lease
7or contract and applying the rules in
subds. 1. pars. (a) and
2. (b).
AB490,157,98
(d) To principal to the extent that advance payments, bonuses, and other
9payments are not allocated under
subd. 1., 2. par. (a), (b), or
3. (c).
AB490,157,11
10(2) In determining net receipts to be allocated under
par. (a) sub. (1), a trustee
11shall deduct and transfer to principal a reasonable amount for depletion.
AB490,157,13
12(3) This
subsection section applies whether or not a decedent or transferor was
13harvesting timber from the property before it became subject to the trust.
AB490,157,19
14(4) If a trust owns an interest in timberland on May 17, 2005, the trustee may
15allocate net receipts from the sale of timber and related products as provided in this
16subsection section or in the manner used by the trustee before May 17, 2005. If the
17trust acquires an interest in timberland after May 17, 2005, the trustee shall allocate
18net receipts from the sale of timber and related products as provided in this
19subsection section.
AB490,275
20Section
275. 701.20 (22) of the statutes is renumbered 701.1127 and amended
21to read:
AB490,158,6
22701.1127 Property not productive of income. (1) If a marital deduction
23is allowed for all or part of a trust whose assets consist substantially of property that
24does not provide the surviving spouse with sufficient income from or use of the trust
25assets, and if the amounts that the trustee transfers from principal to income under
1sub. (4) s. 701.1104 and distributes to the spouse from principal in accordance with
2the terms of the trust are insufficient to provide the spouse with the beneficial
3enjoyment required to obtain the marital deduction, the spouse may require the
4trustee to make property productive of income, convert property within a reasonable
5time, or exercise the power conferred by
sub. (4) (a)
s. 701.1104 (1). The trustee may
6decide which action or combination of actions to take.
AB490,158,9
7(2) In cases not governed by
par. (a)
sub. (1), proceeds from the sale or other
8disposition of an asset are principal without regard to the amount of income the asset
9produces during any accounting period.
AB490,276
10Section
276. 701.20 (23) of the statutes is renumbered 701.1128, and 701.1128
11(1) and (2), as renumbered, are amended to read:
AB490,158,1612
701.1128
(1) In this
subsection section, "derivative" means a contract or
13financial instrument or a combination of contracts and financial instruments that
14gives a trust the right or obligation to participate in some or all changes in the price
15of a tangible or intangible asset or group of assets, or changes in a rate, an index of
16prices or rates, or another market indicator for an asset or a group of assets.
AB490,158,19
17(2) To the extent that a trustee does not account under
sub. (12) s. 701.1117 for
18transactions in derivatives, the trustee shall allocate to principal receipts from and
19disbursements made in connection with those transactions.
AB490,277
20Section
277. 701.20 (24) of the statutes is renumbered 701.1129, and 701.1129
21(1), as renumbered, is amended to read:
AB490,159,322
701.1129
(1) In this
subsection section, "asset-backed security" means an asset
23whose value is based upon the right it gives the owner to receive distributions from
24the proceeds of financial assets that provide collateral for the security. The term
25includes an asset that gives the owner the right to receive from the collateral
1financial assets only the interest or other current return or only the proceeds other
2than interest or current return. The term does not include an asset to which
sub. (10) 3s. 701.1115 or
(18) 701.1123 applies.
AB490,278
4Section
278. 701.20 (25) of the statutes is renumbered 701.1130, and 701.1130
5(intro.), as renumbered, are amended to read:
AB490,159,8
6701.1130 Disbursements from income. (intro.) A trustee shall make the
7following disbursements from income to the extent that they are not disbursements
8specified in
sub. (5) (b) 2. s. 701.1110 (2) (b) or
3. (c):
AB490,279
9Section
279. 701.20 (26) of the statutes is renumbered 701.1131, and 701.1131
10(1) (a), (e) and (g), as renumbered, are amended to read:
AB490,159,1211
701.1131
(1) (a) The remaining one-half of the disbursements described in
sub.
12(25) (a) s. 701.1130 (1) and
(b)
(2).
AB490,159,1413
(e) Premiums paid on a policy of insurance not described in
sub. (25) (d) s.
14701.1130 (4) of which the trust is the owner and beneficiary.
AB490,159,2215
(g) Disbursements related to environmental matters, including reclamation,
16assessing environmental conditions, remedying and removing environmental
17contamination, monitoring remedial activities and the release of substances,
18preventing future releases of substances, collecting amounts from persons liable or
19potentially liable for the costs of those activities, penalties imposed under
20environmental
laws or regulations law and other payments made to comply with
21those laws or regulations environmental law, statutory or common law claims by 3rd
22parties, and defending claims based on environmental matters.
AB490,280
23Section
280. 701.20 (27) of the statutes is renumbered 701.1132, and 701.1132
24(1) and (2) (c), as renumbered, are amended to read:
AB490,160,3
1701.1132
(1) In this
subsection section, "depreciation" means a reduction in
2value due to wear, tear, decay, corrosion, or gradual obsolescence of a fixed asset
3having a useful life of more than one year.
AB490,160,5
4(2) (c) Under this
subsection section if the trustee is accounting under
sub. (12) 5s. 701.1117 for the business or activity in which the asset is used.
AB490,281
6Section
281. 701.20 (28) of the statutes is renumbered 701.1133, and 701.1133
7(1), (2) (intro.) and (e) and (3), as renumbered, are amended to read:
AB490,160,118
701.1133
(1) If a trustee makes or expects to make a principal disbursement
9described in this
subsection section, the trustee may transfer an appropriate amount
10from income to principal in one or more accounting periods to reimburse principal
11or to provide a reserve for future principal disbursements.
AB490,160,14
12(2) (intro.) Principal disbursements to which
par. (a) sub. (1) applies include the
13following, but only to the extent that the trustee has not been and does not expect
14to be reimbursed by a 3rd party:
AB490,160,1515
(e) Disbursements described in
sub. (26) (a) 7.
s. 701.1131 (1) (g).
AB490,160,18
16(3) If the asset whose ownership gives rise to the disbursements becomes
17subject to a successive income interest after an income interest ends, a trustee may
18continue to transfer amounts from income to principal as provided in
par. (a) sub. (1).
AB490,282
19Section
282. 701.20 (29) (title) of the statutes is renumbered 701.1134 (title).
AB490,283
20Section
283. 701.20 (29) (a) of the statutes is renumbered 701.1134 (1).
AB490,284
21Section
284. 701.20 (29) (b) of the statutes is renumbered 701.1134 (2).
AB490,285
22Section
285. 701.20 (29) (c) (intro.) of the statutes is renumbered 701.1134 (3)
23(intro.) and amended to read:
AB490,160,2524
701.1134
(3) (intro.) A tax required to be paid by a trustee on the trust's share
25of an entity's taxable income must be paid
proportionately as follows:
AB490,286
1Section
286. 701.20 (29) (c) 1. of the statutes is renumbered 701.1134 (3) (a)
2and amended to read:
AB490,161,43
701.1134
(3) (a) From income to the extent that receipts from the entity are
4allocated
only to income.
AB490,287
5Section
287. 701.20 (29) (c) 2. (intro.) and a. of the statutes are consolidated,
6renumbered 701.1134 (3) (b) and amended to read:
AB490,161,87
701.1134
(3) (b) From principal to the extent that
: 2. a. Receipts receipts from
8the entity are allocated
only to principal.
AB490,288
9Section
288. 701.20 (29) (c) 2. b. of the statutes is repealed.
AB490,289
10Section
289. 701.20 (29) (d) of the statutes is repealed.
AB490,290
11Section
290. 701.20 (30) of the statutes is renumbered 701.1135, and 701.1135
12(1) (a), as renumbered, is amended to read:
AB490,161,1413
701.1135
(1) (a) Elections and decisions, other than those described in
par. (b) 14sub. (2), that the fiduciary makes from time to time regarding tax matters.
AB490,291
15Section
291. 701.20 (31) of the statutes is repealed.
AB490,292
16Section
292. 701.21 of the statutes is renumbered 701.1136, and 701.1136 (1),
17(2) and (4), as renumbered, are amended to read:
AB490,161,2218
701.1136
(1) Distribution of income. Except as otherwise determined by the
19trustee or a court under s.
701.20 (4g) 701.1106 with respect to unitrust distributions,
20if a beneficiary is entitled to receive income from a trust, but the
creating trust 21instrument fails to specify how frequently it is to be paid, the trustee shall distribute
22at least annually the income to which such beneficiary is entitled.
AB490,161,24
23(2) Permitted accumulations. No provision directing or authorizing
24accumulation of
trust income
shall be
is invalid.
AB490,162,6
1(4) Disposition of accumulated income. Income not required to be distributed
2by the
creating trust instrument,
in the absence of a governing provision in the
3instrument, may
, in the trustee's discretion
, be held in reserve for future distribution
4as income or be added to principal subject to retransfer to income of the dollar amount
5originally transferred to principal
; but at. At the termination of the income interest,
6any undistributed income shall be distributed as principal.
AB490,293
7Section
293. 701.22 (title) of the statutes is repealed.
AB490,294
8Section
294. 701.22 of the statutes is renumbered 701.0417 (4) and amended
9to read:
AB490,162,2110
701.0417
(4) In case of a division of
a trust
assets into 2 or more trusts
or shares,
11any distribution or allocation of assets as an equivalent of a dollar amount fixed by
12formula or otherwise shall be made at current fair market values unless the
13governing trust instrument expressly provided that another value may be used. If
14the
governing trust instrument requires or permits a different value to be used, all
15assets property available for distribution, including cash, shall
, unless otherwise
16expressly provided, be
so distributed
so that the
assets property, including cash,
17distributed as such an equivalent will be is fairly representative of the net
18appreciation or depreciation in the value of the available property on the date or
19dates of distribution. A provision in the
governing
trust instrument that the trustee
20may fix values for purposes of distribution or allocation does not of itself constitute
21authorization to fix a value other than current fair market value.
AB490,295
22Section
295. 701.23 of the statutes is repealed.
AB490,296
23Section
296. 701.24 (title) of the statutes is renumbered 701.1205 (title).
AB490,297
24Section
297. 701.24 (1) of the statutes is renumbered 701.1205 (1) and
25amended to read:
AB490,163,9
1701.1205
(1) Except as otherwise provided in sub.
(3) (2) and
s. 701.19 (9) (a),
2ss. 701.01 to 701.19, 701.21, 701.22, and 701.23 are ss. 701.0602, 701.0813, and
3701.0903 (4), this chapter is applicable to a trust existing on
July 1, 1971 the effective
4date of this subsection .... [LRB inserts date], as well as a trust created after such
5date, and shall govern trustees acting under such trusts. If application of any
6provision of
ss. 701.01 to 701.19, 701.21, 701.22, and 701.23 this chapter to a trust
7in existence on
August 1, 1971 the effective date of this subsection .... [LRB inserts
8date], is unconstitutional, it shall not affect application of the provision to a trust
9created after that date.
AB490,298
10Section
298. 701.24 (2) of the statutes is renumbered 701.1205 (2) and
11amended to read:
AB490,163,2112
701.1205
(2) Section 701.20 Subchapter XI of this chapter applies to
every a 13trust or decedent's estate existing on
May 17, 2005
the effective date of this
14subsection .... [LRB inserts date], and to
every
a trust or decedent's estate created or
15coming into existence after that date, except as otherwise expressly provided in
s.
16701.20 subch. XI or by the decedent's will or the terms of the trust. With respect to
17a trust or decedent's estate existing on
May 17, 2005, s. 701.20 (5) to (30) the effective
18date of this subsection .... [LRB inserts date], ss. 701.1110 to 701.1135 shall apply at
19the beginning of the trust's or estate's first accounting period, as defined in s.
701.20 20701.1125 (2) (a), that begins on or after
May 17, 2005 the effective date of this
21subsection .... [LRB inserts date].
AB490,299
22Section
299. 701.24 (3) of the statutes is repealed.
AB490,300
23Section
300. 701.25 of the statutes is renumbered 701.1204.
AB490,301
24Section
301. 701.26 of the statutes is repealed.
AB490,302
25Section
302. 702.01 (intro.) of the statutes is renumbered 702.02 (intro.).
AB490,303
1Section
303. 702.01 (1) of the statutes is renumbered 702.02 (2) and amended
2to read:
AB490,164,43
702.02
(2) "Creating instrument" means the will, trust agreement
, or other
4document which creates or reserves the power
of appointment.
AB490,304
5Section
304. 702.01 (2) of the statutes is renumbered 702.02 (4) and amended
6to read:
AB490,164,97
702.02
(4) "Donor" means the person who creates or reserves the power
;
8"donee" means the person in whom the power is created or reserved; and "appointee"
9means the person to whom an interest is appointed of appointment.
AB490,305
10Section
305. 702.01 (3) of the statutes is renumbered 702.02 (5) and amended
11to read:
AB490,164,1812
702.02
(5) "General power
of appointment" means a power exercisable in favor
13of the donee, the donee's estate, the donee's creditors
, or the creditors of the donee's
14estate, whether or not it is
also exercisable in favor of others. A power to appoint to
15any person or a power
which of appointment that is not expressly restricted as to
16appointees may be exercised in favor of the donee or the donee's creditors if
17exercisable during lifetime, and in favor of the donee's estate or the creditors of the
18donee's estate if exercisable by will.
AB490,306
19Section
306. 702.01 (4) of the statutes is renumbered 702.02 (6) and amended
20to read:
AB490,165,521
702.02
(6) "Power
of appointment" means a power
of appointment over to
22appoint legal or equitable interests in real or personal property. A power of
23appointment is
a power created or reserved by a person having property subject to
24his or her disposition which enables the donee of the power
of appointment to
25designate, within such limits as may be prescribed, the transferees of the property
1or the shares or the interests in which it shall be received
; it. A power of appointment 2does not include a power of sale, a power of attorney, a power of revocation
, or a power
3exercisable by a trustee
or other, a directing party, as defined in s. 701.0103 (7),
4another fiduciary in his or her fiduciary capacity
, or a trust protector, as defined in
5s. 701.0103 (31).
AB490,307
6Section
307. 702.01 (5) of the statutes is renumbered 702.02 (7) and amended
7to read:
AB490,165,148
702.02
(7) "Special power
of appointment" means a power
of appointment 9exercisable only in favor of one or more persons not including the donee, the donee's
10estate, the donee's creditors or the creditors of the donee's estate and, when
11exercisable in favor of a class, so limited in size by description of the class that in the
12event of nonexercise of the power a court can make distribution to persons within the
13class if the donor has failed to provide for this contingency
that is not a general power
14of appointment.
AB490,308
15Section
308. 702.01 (6) of the statutes is repealed.
AB490,309
16Section
309. 702.02 (1) of the statutes is created to read:
AB490,165,1717
702.02
(1) "Appointee" means the person to whom an interest is appointed.
AB490,310
18Section
310. 702.02 (3) of the statutes is created to read:
AB490,165,2019
702.02
(3) "Donee" means the person in whom the power of appointment is
20created or reserved.
AB490,311
21Section
311. 702.03 of the statutes is amended to read: