SB384,212 18Section 212. 701.20 (2) (h) of the statutes is renumbered 701.1102 (7) and
19amended to read:
SB384,135,2320 701.1102 (7) "Net income" means the total receipts allocated to income during
21an accounting period, minus the disbursements made from income during the period,
22plus or minus transfers under this section subchapter to or from income during the
23period.
SB384,213 24Section 213. 701.20 (2) (i) of the statutes is repealed.
SB384,214 25Section 214. 701.20 (2) (j) of the statutes is renumbered 701.1102 (8).
SB384,215
1Section 215. 701.20 (2) (k) of the statutes is renumbered 701.1102 (9) and
2amended to read:
SB384,136,53 701.1102 (9) "Remainder beneficiary" means a person entitled to receive
4principal when an income interest ends
who is a beneficiary under s. 701.0103 (21)
5(b)
.
SB384,216 6Section 216. 701.20 (2) (L), (m) and (n) of the statutes are repealed.
SB384,217 7Section 217. 701.20 (3) of the statutes is renumbered 701.1103, and 701.1103
8(1) and (2), as renumbered, are amended to read:
SB384,136,119 701.1103 (1) In allocating receipts and disbursements to income or principal
10or between income and principal, and with respect to any matter within the scope of
11subs. (5) ss. 701.1110 to (9) 701.1114, a fiduciary:
SB384,136,1312 (a) Shall first administer a trust or estate in accordance with the terms of the
13trust or the will, even if there is a different provision in this section subchapter.
SB384,136,1714 (b) May administer a trust or estate by the exercise of a discretionary power
15of administration given to the fiduciary by the terms of the trust or the will, even if
16the exercise of the power produces a result different from a result required or
17permitted by this section subchapter.
SB384,136,2018 (c) Shall administer a trust or estate in accordance with this section subchapter
19if the terms of the trust or the will do not contain a different provision or do not give
20the fiduciary a discretionary power of administration.
SB384,136,2321 (d) Shall add a receipt or charge a disbursement to principal to the extent that
22the terms of the trust and this section subchapter do not provide a rule for allocating
23the receipt or disbursement to principal or income or between principal and income.
SB384,137,6 24(2) In exercising the power to adjust under sub. (4) (a) s. 701.1104 (1) or a
25discretionary power of administration regarding a matter within the scope of this

1section subchapter, whether granted by the terms of a trust, a will, or this section
2subchapter, a fiduciary shall administer a trust or estate impartially, based on what
3is fair and reasonable to all of the beneficiaries, except to the extent that the terms
4of the trust or the will clearly manifest an intention that the fiduciary shall or may
5favor one or more of the beneficiaries. A determination in accordance with this
6section subchapter is presumed to be fair and reasonable to all of the beneficiaries.
SB384,218 7Section 218. 701.20 (4) of the statutes is renumbered 701.1104, and 701.1104
8(1), (2) (intro.), (3) (h) and (i), (4), (5) and (6) as renumbered, are amended to read:
SB384,137,149 701.1104 (1) A trustee may adjust between principal and income to the extent
10the trustee considers necessary if the trustee invests and manages trust assets as a
11prudent investor, the terms of the trust describe the amount that may or must be
12distributed to a beneficiary by referring to the trust's income, and the trustee
13determines, after applying the rules in sub. (3) (a) s. 701.1103 (1), that the trustee
14is unable to comply with sub. (3) (b) s. 701.1103 (2).
SB384,137,17 15(2) (intro.) In deciding whether and to what extent to exercise the power
16conferred by par. (a) sub. (1), a trustee shall consider all factors relevant to the trust
17and its beneficiaries, including the following factors to the extent they are relevant:
SB384,137,18 18(3) (h) If the trust has been converted under sub. (4g) s. 701.1106 to a unitrust.
SB384,137,1919 (i) If the trust is an express unitrust, as defined in sub. (4j) (a) s. 701.1107 (1).
SB384,137,23 20(4) If par. (c) 5., 6. sub. (3) (e), (f), or 7. (g) applies to a trustee and there is more
21than one trustee, a cotrustee to whom the provision does not apply may make the
22adjustment unless the terms of the trust do not permit the exercise of the power by
23that cotrustee.
SB384,138,6 24(5) A trustee may release the entire power conferred by par. (a) sub. (1) or may
25release only the power to adjust from income to principal or the power to adjust from

1principal to income if the trustee is uncertain about whether possessing or exercising
2the power will cause a result described in par. (c) 1. sub. (3) (a) to 6. (f) or if the trustee
3determines that possessing or exercising the power will or may deprive the trust of
4a tax benefit or impose a tax burden not described in par. (c) sub. (3). The release may
5be permanent or for a specified period, including a period measured by the life of an
6individual.
SB384,138,10 7(6) Terms of a trust that limit the power of a trustee to make an adjustment
8between principal and income do not affect the application of this subsection unless
9it is clear from the terms of the trust that the terms are intended to deny the trustee
10the power of adjustment conferred by par. (a) sub. (1).
SB384,219 11Section 219. 701.20 (4c) (title) of the statutes is renumbered 701.1105 (title).
SB384,220 12Section 220. 701.20 (4c) (b) (intro.) of the statutes is renumbered 701.1105 (1)
13(intro.) and amended to read:
SB384,138,1614 701.1105 (1) (intro.) A trustee may, but is not required to, obtain approval of
15a proposed action under sub. (4) (a) s. 701.1104 (1) by providing a written notice that
16complies with all of the following:
SB384,221 17Section 221. 701.20 (4c) (b) 1. of the statutes is renumbered 701.1105 (1) (a).
SB384,222 18Section 222. 701.20 (4c) (b) 2. of the statutes is renumbered 701.1105 (1) (b).
SB384,223 19Section 223. 701.20 (4c) (b) 3. (intro.) of the statutes is renumbered 701.1105
20(1) (c) and amended to read:
SB384,138,2221 701.1105 (1) (c) Is given to all sui juris qualified beneficiaries who are any of
22the following:
.
SB384,224 23Section 224. 701.20 (4c) (b) 3. a., b. and c. of the statutes are repealed.
SB384,225 24Section 225. 701.20 (4c) (b) 4. of the statutes is renumbered 701.1105 (1) (d),
25and 701.1105 (1) (d) (intro.) and 4., as renumbered, are amended to read:
SB384,139,2
1701.1105 (1) (d) (intro.) States that it is given in accordance with this subsection
2section and discloses the following information:
SB384,139,43 4. The effective date of the proposed action if no objection is received from any
4beneficiary within the time specified in subd. 4. c. 3.
SB384,226 5Section 226. 701.20 (4c) (c) of the statutes is renumbered 701.1105 (2) and
6amended to read:
SB384,139,107 701.1105 (2) If a trustee gives notice of a proposed action under this subsection
8section, the trustee is not required to give notice to a sui juris qualified beneficiary
9who consents to the proposed action in writing at any time before or after the
10proposed action is taken.
SB384,227 11Section 227. 701.20 (4c) (d) of the statutes is renumbered 701.1105 (3) and
12amended to read:
SB384,139,1513 701.1105 (3) A sui juris qualified beneficiary may object to the proposed action
14by giving a written objection to the trustee within the time specified in the notice
15under par. (b) 4. c. sub. (1) (d) 3.
SB384,228 16Section 228. 701.20 (4c) (e) of the statutes is renumbered 701.1105 (4) and
17amended to read:
SB384,139,2118 701.1105 (4) A trustee may decide not to take a proposed action after the
19trustee receives a written objection to the proposed action or at any other time for any
20other reason. In that case, the trustee shall give written notice to the sui juris
21qualified beneficiaries of the decision not to take the proposed action.
SB384,229 22Section 229. 701.20 (4c) (f) of the statutes is renumbered 701.1105 (5) and
23amended to read:
SB384,140,624 701.1105 (5) If a trustee receives a written objection to a proposed action within
25the time specified in the notice under par. (b) 4. c. sub. (1) (d) 3., either the trustee

1or the qualified beneficiary making the written objection may petition the court to
2have the proposed action approved, modified, or prohibited. In the court proceeding,
3the qualified beneficiary objecting to the proposed action has the burden of proving
4that the proposed action should be modified or prohibited. A qualified beneficiary
5who did not make the written objection may oppose the proposed action in the court
6proceeding.
SB384,230 7Section 230. 701.20 (4c) (g) of the statutes is renumbered 701.1105 (6) and
8amended to read:
SB384,140,119 701.1105 (6) For purposes of this subsection section, a proposed action under
10sub. (4) s. 701.1104 includes a course of action or a decision not to take action under
11sub. (4) s. 701.1104.
SB384,231 12Section 231. 701.20 (4g) (title) of the statutes is renumbered 701.1106 (title).
SB384,232 13Section 232. 701.20 (4g) (a) (intro.) of the statutes is renumbered 701.1106 (1)
14(intro.) and amended to read:
SB384,140,1615 701.1106 (1) (intro.) Subject to par. (d) sub. (4), a trust may be converted to a
16unitrust in any of the following ways:
SB384,233 17Section 233. 701.20 (4g) (a) 1. (intro.) of the statutes is renumbered 701.1106
18(1) (a) (intro.) and amended to read:
SB384,140,2019 701.1106 (1) (a) (intro.) By the trustee, at his or her own discretion or at the
20request of a qualified beneficiary, if all of the following apply:
SB384,234 21Section 234. 701.20 (4g) (a) 1. a. of the statutes is renumbered 701.1106 (1)
22(a) 1.
SB384,235 23Section 235. 701.20 (4g) (a) 1. b. of the statutes is renumbered 701.1106 (1)
24(a) 2. and amended to read:
SB384,141,5
1701.1106 (1) (a) 2. The trustee provides notice in the same manner as provided
2in sub. (4c) (b) s. 701.1105 (1) of the trustee's intention to convert the trust to a
3unitrust, and the notice advises how the unitrust will operate, including the fixed
4percentage under par. (c) 1. sub. (3) (a) and any other initial determinations under
5par. (c) 4. sub. (3) (d) that the trustee intends to follow.
SB384,236 6Section 236. 701.20 (4g) (a) 1. c. of the statutes is repealed.
SB384,237 7Section 237. 701.20 (4g) (a) 1. d. of the statutes is renumbered 701.1106 (1)
8(a) 3. and amended to read:
SB384,141,109 701.1106 (1) (a) 3. Every sui juris qualified beneficiary consents to the
10conversion to a unitrust in a writing delivered to the trustee.
SB384,238 11Section 238. 701.20 (4g) (a) 1. e. of the statutes is renumbered 701.1106 (1) (a)
124.
SB384,239 13Section 239. 701.20 (4g) (a) 2. (intro.) of the statutes is renumbered 701.1106
14(1) (b) (intro.) and amended to read:
SB384,141,1615 701.1106 (1) (b) (intro.) By a court on the petition of the trustee or a qualified
16beneficiary, if all of the following apply:
SB384,240 17Section 240. 701.20 (4g) (a) 2. a. of the statutes is renumbered 701.1106 (1)
18(b) 1. and amended to read:
SB384,141,2319 701.1106 (1) (b) 1. The trustee or qualified beneficiary has provided notice
20under sub. (4c) s. 701.1105 of the intention to request the court to convert the trust
21to a unitrust, and the notice advises how the unitrust will operate, including the fixed
22percentage under par. (c) 1. sub. (3) (a) and any other initial determinations under
23par. (c) 4. sub. (3) (d) that will be requested.
SB384,241 24Section 241. 701.20 (4g) (a) 2. b. of the statutes is renumbered 701.1106 (1)
25(b) 2.
SB384,242
1Section 242. 701.20 (4g) (b), (c), (d) and (e) of the statutes are renumbered
2701.1106 (2), (3), (4) and (5), and 701.1106 (2), (3) (a), (b), (c), (d) 7., (f) (intro.) and 2.,
3(g) (intro.), 1. and 3. and (h), (4) (a) (intro.) and 1. and (b) and (5), as renumbered, are
4amended to read:
SB384,142,85 701.1106 (2) In deciding whether to convert the trust to a unitrust under par.
6(a) 1.
sub. (1) (a) and in determining the fixed percentage under sub. (3) (b) 1., the
7trustee shall consider all relevant factors under sub. (4) (b) 1. to 9. s. 701.1104 (2) (a)
8to (i).
SB384,142,17 9(3) (a) If a trust is converted to a unitrust under this subsection section by the
10trustee or a court, notwithstanding sub. (3) (a) 1. s. 701.1103 (1) (a) and 4. (d) and
11s. 701.21 701.1136 (4) the trustee shall make distributions in accordance with the
12creating trust instrument, except that any reference in the creating trust instrument
13to "income" means a fixed percentage of the net fair market value of the unitrust's
14assets, whether such assets otherwise would be considered income or principal under
15this section subchapter, averaged over a preceding period determined by the trustee,
16which is at least 3 years but not more than 5 years, or the period since the original
17trust was created, whichever is less.
SB384,142,2218 (b) 1. Subject to subd. 2. b., if the trust is converted to a unitrust under par. (a)
191.
sub. (1) (a), the trustee shall determine the fixed percentage to be applied under
20subd. 1. par. (a), and the notice under par. (a) 1. b. sub. (1) (a) 2. must state the fixed
21percentage. If the trust is converted to a unitrust under par. (a) 2. sub. (1) (b), the
22court shall determine the fixed percentage to be applied under subd. 1. par. (a).
SB384,142,2423 2. Any fixed percentage under subd. 1. par. (a) that is determined by a trustee
24may not be less than 3 percent nor more than 5 percent.
SB384,143,3
1(c) After a trust is converted to a unitrust, the trustee may, subject to the notice
2requirement under sub. (4c) s. 701.1105 and with the consent of every sui juris
3qualified beneficiary, do any of the following:
SB384,143,54 1. Convert the unitrust back to the original trust under the creating trust
5instrument.
SB384,143,76 2. Change the fixed percentage under subd. 1. par. (a), subject to subd. 2. b. par.
7(b) 2.
SB384,143,98 (d) 7. The averaging under subd. 1. par. (a) to a different preceding period,
9which is at least 3 years but not more than 5 years.
SB384,143,1210 (f) (intro.) Unless otherwise provided by the creating trust instrument, the
11unitrust distribution is considered to have been paid from the following sources in
12the order of priority:
SB384,143,1413 2. Ordinary income for federal income tax purposes that is not net income
14under subd. 6. a. 1.
SB384,143,1615 (g) (intro.) A court may, on the petition of the trustee or a qualified beneficiary,
16do any of the following:
SB384,143,1817 1. Change the fixed percentage that was determined under subd. 2. par. (b) by
18the trustee or by a prior court order.
SB384,143,2019 3. Average the valuation of the unitrust's assets over a period other than that
20specified in subd. 1. par. (a).
SB384,143,2421 (h) Conversion to a unitrust under this subsection section does not affect a
22provision in the creating trust instrument that directs or authorizes the trustee to
23distribute principal or that authorizes a beneficiary to withdraw a portion or all of
24the principal.
SB384,144,2
1(4) (a) (intro.) A trust may not be converted under this subsection section to a
2unitrust if any of the following applies:
SB384,144,33 1. The creating trust instrument specifically prohibits the conversion.
SB384,144,94 (b) Notwithstanding subd. 1. par. (a), if a trust may not be converted to a
5unitrust solely because subd. 1. g. par. (a) 7. applies to a trustee, a cotrustee, if any,
6to whom subd. 1. g. par. (a) 7. does not apply may convert the trust to a unitrust under
7par. (a) 1. sub. (1) (a), unless prohibited by the creating instrument, or a court may
8convert the trust to a unitrust under par. (a) 2. sub. (1) (b) on the petition of a trustee
9or qualified beneficiary.
SB384,144,16 10(5) A trustee may release the power conferred by par. (a) 1. sub. (1) (a) if the
11trustee is uncertain about whether possessing or exercising the power will cause a
12result described in par. (d) 1. b. sub. (4) (a) 2. to f. 6. or if the trustee determines that
13possessing or exercising the power will or may deprive the trust of a tax benefit or
14impose a tax burden not described in par. (d) 1. sub. (4) (a). The release may be
15permanent or for a specified period, including a period measured by the life of an
16individual.
SB384,243 17Section 243. 701.20 (4j) of the statutes is renumbered 701.1107, and 701.1107
18(1) and (2) (a), (e), (f) 2., (g) and (h), as renumbered, are amended to read:
SB384,144,2419 701.1107 (1) In this subsection section, "express unitrust" means any trust that
20by its governing trust instrument requires the distribution at least annually of a
21unitrust amount equal to a fixed percentage of the net fair market value of the trust's
22assets, valued at least annually, other than a trust solely for charitable purposes or
23a charitable split-interest trust under section 664 (d) or 170 (f) (2) (B) of the Internal
24Revenue Code.
SB384,145,5
1(2) (a) To the extent not otherwise provided for in the governing trust
2instrument, the unitrust amount of not less than 3 percent nor more than 5 percent
3may be determined by reference to the net fair market value of the trust's assets
4averaged over a preceding period determined by the trustee, which is at least 3 years
5but not more than 5 years.
SB384,145,96 (e) The governing trust instrument may grant discretion to the trustee to adopt
7a consistent practice of treating capital gains as part of the unitrust distribution, to
8the extent that the unitrust distribution exceeds the income determined as if the
9trust were not a unitrust, or it may specify the ordering of such classes of income.
SB384,145,1110 (f) 2. Ordinary income for federal income tax purposes that is not net income
11under subd. 6. a. 1.
SB384,145,1512 (g) The trust document instrument may provide that assets used by the trust
13beneficiary, such as a residence or tangible personal property, may be excluded from
14the net fair market value for computing the unitrust amount. Such use may be
15considered equivalent to the income or unitrust amount.
SB384,145,1816 (h) In the absence of contrary provisions in the governing document trust
17instrument
of an express unitrust, the provisions of sub. (4g) (c) 1., 4. s. 701.1106 (3)
18(a), (d)
, and 5. (e) apply.
SB384,244 19Section 244. 701.20 (4k) of the statutes is renumbered 701.1108 and amended
20to read:
SB384,146,2 21701.1108 Power to treat capital gains as part of a distribution. Unless
22prohibited by the governing instrument will or trust instrument, a trustee fiduciary
23may cause gains from the sale or exchange of estate or trust assets property, as
24determined for federal income tax purposes, to be taxed for federal income tax
25purposes as part of a distribution of income that has been increased by an adjustment

1from principal to income under sub. (4) s. 701.1104, of a unitrust distribution, of a
2fixed annuity distribution, or of a principal distribution to a beneficiary.
SB384,245 3Section 245. 701.20 (4m) (title) of the statutes is renumbered 701.1109 (title).
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