AB490,56,17 15(4) A party petitioning the court for action under this section shall give notice
16of the proceeding to the settlor, if living, the trustee, each trust protector, each
17directing party, and the qualified beneficiaries.
AB490,87 18Section 87. 701.0413 of the statutes is created to read:
AB490,56,21 19701.0413 Cy pres. (1) The purpose of this section is to broaden the power of
20the courts to make charitable gifts more effective. The court shall liberally apply the
21cy pres doctrine.
AB490,56,23 22(2) Except as provided in sub. (3), if a particular charitable purpose becomes
23unlawful, impracticable, impossible to achieve, or wasteful, all of the following apply:
AB490,56,2424 (a) The trust does not fail, in whole or in part.
AB490,57,2
1(b) The trust property does not revert to the settlor or the settlor's successors
2in interest.
AB490,57,123 (c) The court may apply the cy pres doctrine to modify or terminate the trust
4by directing that the trust property be applied or distributed, in whole or in part, in
5a manner consistent with the settlor's charitable purposes. In determining the
6alternative plan for disposition of the property under this paragraph, the court shall
7take into account current and future community needs in the general field of charity
8within which the original charitable purpose falls, other charitable interests of the
9settlor, the amount of principal and income available under the trust, and other
10relevant factors. A person with standing to enforce the terms of a charitable trust
11under s. 701.0405 (3) has standing to commence a proceeding under this paragraph.
12The attorney general is a necessary party in all proceedings under this paragraph.
AB490,57,17 13(3) A provision in the terms of a charitable trust that would result in
14distribution of the trust property to a noncharitable beneficiary prevails over the
15power of the court under sub. (2) to apply the cy pres doctrine to modify or terminate
16the trust only if, when the provision takes effect, the trust property is to revert to the
17settlor and the settlor is still living.
AB490,57,21 18(4) A party petitioning the court for action under this section shall give notice
19to the settlor, if living, the trustee, each trust protector, each directing party, the
20qualified beneficiaries, and any person with standing to enforce the terms of a
21charitable trust under s. 701.0405 (3).
AB490,88 22Section 88. 701.0414 of the statutes is created to read:
AB490,57,24 23701.0414 Modification or termination of uneconomic trust. (1) In this
24section:
AB490,58,4
1(a) "Adjustment reference number" means the consumer price index for all
2urban consumers, as published by the United States bureau of labor statistics, in
3effect on January 1 of the year in which an adjustment is to be made in accordance
4with sub. (3).
AB490,58,75 (b) "Base reference number" means the consumer price index for all urban
6consumers, as published by the United States bureau of labor statistics, in effect on
7January 1 of the base year.
AB490,58,98 (c) "Base year" means the year in which this paragraph takes effect .... [LRB
9inserts date].
AB490,58,14 10(2) After notice to the settlor, if living, each trust protector, each directing party,
11and the qualified beneficiaries, the trustee of a trust consisting of trust property
12having a total value less than $100,000 or a revised applicable figure, as determined
13under sub. (3), may terminate the trust if the trustee concludes that the value of the
14trust property is insufficient to justify the cost of administration.
AB490,58,18 15(3) The dollar amount specified in sub. (2) shall be adjusted to a revised
16applicable figure on the 5th anniversary of the effective date of this subsection ....
17[LRB inserts date], and every 5 years thereafter. The revised applicable figure shall
18be determined as follows:
AB490,58,2119 (a) Calculate the percentage change between the base reference number and
20the adjustment reference number for the year in which the adjustment is being
21made.
AB490,58,2322 (b) 1. If the percentage change determined in par. (a) is a positive number,
23determine the revised applicable figure as follows:
AB490,58,2524 a. Multiply $100,000 by the percentage change determined in par. (a),
25expressed as a decimal.
AB490,59,1
1b. Round the product under subd. 1. a. to the nearest $1,000.
AB490,59,22 c. Add the value determined under subd. 1. b. to $100,000.
AB490,59,43 2. If the percentage change determined in par. (a) is a negative number,
4determine the revised applicable figure as follows:
AB490,59,65 a. Multiply $100,000 by the absolute value of the percentage change
6determined in par. (a), expressed as a decimal.
AB490,59,77 b. Round the product under subd. 2. a. to the nearest $1,000.
AB490,59,88 c. Subtract the value determined under subd. 2. b. from $100,000.
AB490,59,12 9(4) The court may modify or terminate a trust or remove the trustee and
10appoint a different trustee if it determines that the value of the trust property is
11insufficient to justify the cost of administration even if the trust property has a total
12value in excess of the amount described in sub. (2).
AB490,59,14 13(5) Upon termination of a trust under this section, the trustee shall distribute
14the trust property in a manner consistent with the purposes of the trust.
AB490,59,15 15(6) This section does not apply to an easement for conservation or preservation.
AB490,59,18 16(7) A party petitioning the court for action under this section shall give notice
17of the proceeding to the settlor, if living, the trustee, each trust protector, each
18directing party, and the qualified beneficiaries.
AB490,89 19Section 89. 701.0415 of the statutes is created to read:
AB490,60,2 20701.0415 Reformation to correct mistakes. The court may reform the
21terms of a trust, even if unambiguous, to conform the terms to the settlor's intent if
22it is proved by clear and convincing evidence that both the settlor's intent and the
23terms of the trust were affected by a mistake of fact or law, whether in expression or
24inducement. A party petitioning the court for action under this section shall give

1notice of the proceeding to the settlor, if living, the trustee, each trust protector, each
2directing party, and the qualified beneficiaries.
AB490,90 3Section 90. 701.0416 of the statutes is created to read:
AB490,60,9 4701.0416 Modification to achieve settlor's tax objectives. To achieve the
5settlor's tax objectives, the court may modify the terms of a trust in a manner that
6is not contrary to the settlor's probable intent. The court may provide that the
7modification has retroactive effect. A party petitioning the court for action under this
8section shall give notice of the proceeding to the settlor, if living, the trustee, each
9trust protector, each directing party, and the qualified beneficiaries.
AB490,91 10Section 91. 701.0417 of the statutes is created to read:
AB490,60,14 11701.0417 Combination and division of trusts. (1) After notice to each trust
12protector, each directing party, and the qualified beneficiaries, a trustee may do any
13of the following if the result does not impair rights of any beneficiary or adversely
14affect achievement of any trust purposes:
AB490,60,1515 (a) Combine 2 or more trusts into a single trust.
AB490,60,1616 (b) Divide a trust into 2 or more separate trusts.
AB490,60,23 17(2) Subject to the terms of the trust, the trustee may take into consideration
18differences in federal tax attributes and other pertinent factors in administering the
19trust property of any separate account or trust, in making applicable tax elections,
20and in making distributions. A separate trust created by severance under sub. (1)
21(b) is treated as a separate trust for all purposes from the date on which the severance
22is effective. The effective date of the severance may be retroactive to a date before
23the date on which the trustee exercises the power.
AB490,60,25 24(3) If a trustee combines 2 or more trusts into a single trust, the trustee shall
25identify which trust is the surviving trust.
AB490,92
1Section 92. 701.0418 of the statutes is created to read:
AB490,61,3 2701.0418 Trustee's power to appoint assets to new trust. (1) Definitions.
3In this section:
AB490,61,84 (a) "Absolute power" means a power to invade trust assets for the benefit of a
5beneficiary that is not limited by a specific or ascertainable standard, whether or not
6the term "absolute" is used in the trust instrument. "Absolute power" includes a
7power to invade trust assets for the best interests, welfare, comfort, or happiness of
8a beneficiary.
AB490,61,109 (b) "First trust" means the trust from which assets are or may be appointed
10under sub. (2).
AB490,61,1211 (c) "Second trust" means the trust or trusts to which assets are or may be
12appointed under sub. (2).
AB490,61,18 13(2) Power to appoint. (a) Except as otherwise provided in this subsection and
14in subs. (3) and (5), a trustee who has the power to invade the principal of a first trust
15for the benefit of a beneficiary who is eligible to receive or entitled to the income of
16the first trust or entitled to an annuity or unitrust payment from the first trust may
17exercise the power by appointing part or all of the assets of the first trust in favor of
18a trustee of a 2nd trust if all of the following apply:
AB490,61,2019 1. The appointment of assets does not reduce any fixed income, annuity, or
20unitrust interest of a beneficiary.
AB490,62,221 2. If the trustee's power to invade income or principal of the first trust is limited
22by a specific or ascertainable standard, the appointment of assets does not result in
23the trustee of the 2nd trust or any other person having a power to invade the income
24or principal of the 2nd trust that is broader than the trustee's power to invade income

1or principal of the first trust. This subdivision does not apply if the 2nd trust is a trust
2for an individual with a disability.
AB490,62,33 3. One of the following applies:
AB490,62,54 a. The beneficiaries of the first trust are the same as the beneficiaries of the 2nd
5trust.
AB490,62,76 b. If the first trust grants the trustee the absolute power to invade principal,
7the 2nd trust includes only all or some of the beneficiaries of the first trust.
AB490,62,108 (b) Paragraph (a) applies to a trustee whether or not the trustee has an absolute
9power to invade principal and whether or not there is a current need to invade
10principal under the terms of the first trust.
AB490,62,12 11(3) Limitations on exercise of power. A trustee may not appoint assets to a
122nd trust under sub. (2) if any of the following applies:
AB490,62,1513 (a) The trust instrument creating the first trust expressly prohibits the trustee
14from appointing assets of the first trust to a 2nd trust by reference to this section or
15by using the term "decanting."
AB490,62,1816 (b) A contribution to the first trust qualified for a marital or charitable
17deduction for federal income, gift, or estate tax purposes under the Internal Revenue
18Code and one of the following applies:
AB490,62,2119 1. The 2nd trust contains a provision that, if included in the first trust, would
20have prevented the first trust from qualifying for the deduction or would have
21reduced the amount of the deduction.
AB490,62,2422 2. The 2nd trust does not contain a provision that was contained in the first
23trust that, if omitted from the first trust, would have prevented the first trust from
24qualifying for the deduction or would have reduced the amount of the deduction.
AB490,63,4
1(c)   The trustee has a beneficial interest in the first trust unless the 2nd trust
2is a trust for an individual with a disability, the trustee's only beneficial interest in
3the first trust is as a remainder beneficiary, and the trustee's beneficial interest in
4the 2nd trust is not greater than the trustee's beneficial interest in the first trust.
AB490,63,65 (d)   The appointment of assets to a 2nd trust would impair currently exercisable
6withdrawal rights of a beneficiary of the first trust and one of the following applies:
AB490,63,97 1. The withdrawal rights were granted to the beneficiary in a manner designed
8to allow contributions subject to the withdrawal rights to qualify for the federal gift
9tax annual exclusion.
AB490,63,1210 2. The terms of the 2nd trust would impair gifts previously made to the first
11trust from qualifying for the federal gift tax annual exclusion under section 2503 of
12the Internal Revenue Code.
AB490,63,1613 (e)   The appointment of assets to the 2nd trust would violate a rule against
14perpetuities applicable to the first trust or suspend a trustee's power of alienation
15over assets of the first trust in a manner that would cause all or a portion of the 2nd
16trust to be void.
AB490,63,1817 (f) The appointment of assets to the 2nd trust under sub. (2) would impair the
18essential purpose of a trust for an individual with a disability.
AB490,63,22 19(4) Permissible terms of 2nd trust. (a) Subject to pars. (b) to (d) and subs. (2),
20(3), and (5), the trustee of the first trust may create a 2nd trust instrument that
21includes terms that are intended to achieve any purpose, including terms that are
22intended to do any of the following:
AB490,63,2323 1. Correct a drafting error in the first trust.
AB490,63,2424 2. Clarify potentially ambiguous terms contained in the first trust.
AB490,63,2525 3. Change the age of distribution to a beneficiary of the first trust.
AB490,64,1
14. Extend the duration of the first trust.
AB490,64,32 5. Protect a beneficiary of the first trust, including protecting the beneficiary
3from self-destructive behavior.
AB490,64,84 6. Allow the trustee of the 2nd trust to transfer trust assets to a community
5trust. In this subdivision, "community trust" means a master trust that is
6established and managed by a nonprofit organization that maintains sub-accounts
7for individual beneficiaries that each satisfy the definition of a trust for an individual
8with a disability.
AB490,64,99 7. Add or remove a spendthrift trust provision to the first trust.
AB490,64,1210 8. Modify investment provisions contained in the first trust, including those
11relating to permissible investments, use of investment advisors, or self-dealing
12transactions.
AB490,64,1513 9. Change a present or future trustee of the first trust, including by defining
14the method by which a trustee or cotrustee may be appointed or removed and
15replaced.
AB490,64,1716 10. Appoint a trust protector of the 2nd trust and define the powers of the trust
17protector.
AB490,64,1918 11. Appoint a directing party of the 2nd trust and define the powers of the
19directing party.
AB490,64,2020 12. Change the principal place of administration of the first trust.
AB490,64,2121 13. Change the governing law of the first trust.
AB490,64,2222 14. Allow for the division of the first trust into 2 or more trusts.
AB490,64,2323 15. Allow for the merger of the first trust with one or more trusts.
AB490,64,2524 16. Add or modify an exculpatory provision for a trustee, trust protector, or
25directing party.
AB490,65,4
117. Obtain desirable tax treatment, as determined by the trustee of the first
2trust, or to avoid adverse tax consequences, as determined by the trustee of the first
3trust, including provisions relating to grantor trust status under sections 671 to 679
4of the Internal Revenue Code.
AB490,65,55 18. Modify a power in the first trust to invade income and principal.
AB490,65,76 19. Modify or eliminate a general or special power of appointment in the first
7trust.
AB490,65,108 (b) The trust instrument of the 2nd trust may include terms granting a
9beneficiary a general or special power of appointment only if the trustee of the first
10trust has the absolute power to invade income and principal.
AB490,65,1411 (c) 1. The trust instrument of the 2nd trust may include terms that are intended
12to change terms of the first trust that are applicable to a beneficiary who is an
13individual with a disability only if the purpose of the change is to allow the
14beneficiary to qualify or continue to be qualified to receive public assistance.
AB490,65,1615 2. Subdivision 1. applies regardless of whether the first trust includes specific
16or ascertainable standards for distribution.
AB490,65,1917 (d) The trust instrument of the 2nd trust may include a term that adopts or
18expands an exculpatory provision relating to the trustee only if one of the following
19applies:
AB490,65,2320 1. Any trustee of the first trust who would benefit from the adoption of the term
21in the 2nd trust abstains from the consideration and adoption of the term and the
22trustees of the first trust who would not benefit from the adoption of the term adopt
23the trust instrument of the 2nd trust.
AB490,65,2424 2. A court approves the trust instrument of the 2nd trust.
AB490,66,6
1(5) Procedural matters. (a) A trustee shall appoint assets to a 2nd trust under
2sub. (2) by an instrument in writing that is signed and acknowledged by the trustee
3and shall include the written instrument with the records of the first and 2nd trusts.
4A trustee may appoint assets to a 2nd trust under sub. (2) upon notice, without court
5approval, under the procedure described in par. (b), or with court approval, under the
6procedure described in par. (c).
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