SB384,151,21
19(2) Money or other property received from the sale, exchange, liquidation, or
20change in form of a principal asset, including realized profit, subject to
subs. (10) ss.
21701.1115 to
(24) 701.1129.
SB384,151,24
22(3) Amounts recovered from 3rd parties to reimburse the trust because of
23disbursements described in
sub. (26) (a) 7. s. 701.1131 (1) (g) or for other reasons to
24the extent not based on the loss of income.
SB384,151,25
25(6) Other receipts as provided in
subs. (17) ss. 701.1122 to
(24) 701.1129.
SB384,260
1Section
260. 701.20 (14) of the statutes is renumbered 701.1119 and amended
2to read:
SB384,152,10
3701.1119 Rental property. To the extent that a trustee accounts for receipts
4from rental property in accordance with this
subsection section, the trustee shall
5allocate to income an amount received as rent of real or personal property, including
6an amount received for cancellation or renewal of a lease. An amount received as a
7refundable deposit, including a security deposit or a deposit that is to be applied as
8rent for future periods, must be added to principal and held subject to the terms of
9the lease and is not available for distribution to a beneficiary until the trustee's
10contractual obligations have been satisfied with respect to that amount.
SB384,261
11Section
261. 701.20 (15) of the statutes is renumbered 701.1120, and 701.1120
12(3), as renumbered, is amended to read:
SB384,152,1513
701.1120
(3) This
subsection section does not apply to an obligation to which
14sub. (18), (19), (20), (21), (23) s. 701.1123, 701.1124, 701.1125, 701.1126, 701.1128, or
15(24) 701.1129 applies.
SB384,262
16Section
262. 701.20 (16) of the statutes is renumbered 701.1121 and amended
17to read:
SB384,152,24
18701.1121 Insurance policies and similar contracts. (1) Except as
19provided in
par. (b) sub. (2), a trustee shall allocate to principal the proceeds of a life
20insurance policy or other contract in which the trust or its trustee is named as
21beneficiary, including a contract that insures the trust or its trustee against loss for
22damage to, destruction of, or loss of title to, a trust asset. The trustee shall allocate
23dividends on an insurance policy to income if the premiums on the policy are paid
24from income, and to principal if the premiums are paid from principal.
SB384,153,3
1(2) A trustee shall allocate to income proceeds of a contract that insures the
2trustee against loss of occupancy or other use by an income beneficiary, loss of
3income, or, subject to
sub. (12) s. 701.1117, loss of profits from a business.
SB384,153,5
4(3) This
subsection section does not apply to a contract to which
sub. (18)
s.
5701.1123 applies.
SB384,263
6Section
263. 701.20 (17) of the statutes is renumbered 701.1122, and 701.1122
7(intro.), as renumbered, is amended to read:
SB384,153,16
8701.1122 Insubstantial allocations not required. (intro.) If a trustee
9determines that an allocation between principal and income required by
sub. (15) (b),
10(18), (19), (20), (21) s. 701.1120 (2), 701.1123, 701.1124, 701.1125, 701.1126, or
(24) 11701.1129 is insubstantial, the trustee may allocate the entire amount to principal
12unless one of the circumstances described in
sub. (4) (c) s. 701.1104 (3) applies to the
13allocation. This power may be exercised by a cotrustee in the circumstances
14described in
sub. (4) (d) s. 701.1104 (4) and may be released for the reasons and in
15the manner described in
sub. (4) (e) s. 701.1104 (5). An allocation is presumed to be
16insubstantial if:
SB384,264
17Section
264. 701.20 (18) (title) of the statutes is renumbered 701.1123 (title).
SB384,265
18Section
265. 701.20 (18) (a) of the statutes is repealed.
SB384,266
19Section
266. 701.20 (18) (b) of the statutes is renumbered 701.1123 (2) and
20amended to read:
SB384,154,221
701.1123
(2) To the extent that a payment is characterized as interest
or, a
22dividend
, or a payment made in lieu of interest or a dividend, a trustee shall allocate
23it the payment to income. The trustee shall allocate to principal the balance of the
24payment and any other payment received in the same accounting period that is not
1characterized as interest, a dividend, or
an equivalent a payment
in lieu of interest
2or a dividend.
SB384,267
3Section
267. 701.20 (18) (c) 1. of the statutes is renumbered 701.1123 (1) (d)
4and amended to read:
SB384,154,65
701.1123
(1) (d)
In this paragraph "plan "Plan income" means any of the
6following:
SB384,154,177
1. With respect to payments received from a plan that maintains separate
8accounts
or funds for its participants or account holders,
such as defined contribution
9retirement plans, individual retirement accounts, Roth individual retirement
10accounts, and some types of deferred compensation plans, either the amount of the
11plan separate account
or fund held for the benefit of the trust that, if the
plan 12separate account
or fund were a trust, would be allocated to income
under pars. (b)
13and (d) for that accounting period, or 4 percent of the value of the plan account
or fund 14on the first day of the accounting period. The trustee shall
, in his or her discretion, 15choose the method of determining "plan income" under this
subd. 1. a. subdivision,
16and may change the method of determining "plan income" under this
subd. 1. a. 17subdivision for any subsequent accounting period.
SB384,154,2318
2. With respect to payments received from a plan that does not maintain
19separate accounts
or funds for its participants or account holders,
such as defined
20benefit retirement plans and some types of deferred compensation plans, 4 percent
21of the total present value of the trust's interest in the plan as of the first day of the
22accounting period, based on reasonable actuarial assumptions as determined by the
23trustee.
SB384,268
24Section
268. 701.20 (18) (c) 2. of the statutes is renumbered 701.1123 (3) and
25amended to read:
SB384,155,7
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.
SB384,269
8Section
269. 701.20 (18) (d) of the statutes is renumbered 701.1123 (5) and
9amended to read:
SB384,155,1310
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.
SB384,270
14Section
270. 701.20 (18) (e) of the statutes is renumbered 701.1123 (6) and
15amended to read:
SB384,155,1716
701.1123
(6) This
subsection section does not apply to
payments a payment to
17which
sub. (19) s. 701.1124 applies.
SB384,271
18Section
271. 701.20 (19) of the statutes is renumbered 701.1124, and 701.1124
19(1), as renumbered, is amended to read:
SB384,156,420
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.
SB384,272
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:
SB384,156,97
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:
SB384,156,1210
(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.
SB384,156,15
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.
SB384,156,21
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.
SB384,273
22Section
273. 701.20 (21) (title) of the statutes is repealed.
SB384,274
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:
SB384,157,3
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:
SB384,157,74
(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).
SB384,157,98
(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).
SB384,157,11
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.
SB384,157,13
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.
SB384,157,19
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.
SB384,275
20Section
275. 701.20 (22) of the statutes is renumbered 701.1127 and amended
21to read:
SB384,158,6
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.
SB384,158,9
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.
SB384,276
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:
SB384,158,1612
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.
SB384,158,19
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.
SB384,277
20Section
277. 701.20 (24) of the statutes is renumbered 701.1129, and 701.1129
21(1), as renumbered, is amended to read:
SB384,159,322
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.
SB384,278
4Section
278. 701.20 (25) of the statutes is renumbered 701.1130, and 701.1130
5(intro.), as renumbered, are amended to read:
SB384,159,8
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):
SB384,279
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:
SB384,159,1211
701.1131
(1) (a) The remaining one-half of the disbursements described in
sub.
12(25) (a) s. 701.1130 (1) and
(b)
(2).
SB384,159,1413
(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.
SB384,159,2215
(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.
SB384,280
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:
SB384,160,3
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.
SB384,160,5
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.
SB384,281
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:
SB384,160,118
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.
SB384,160,14
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:
SB384,160,1515
(e) Disbursements described in
sub. (26) (a) 7.
s. 701.1131 (1) (g).
SB384,160,18
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).
SB384,282
19Section
282. 701.20 (29) (title) of the statutes is renumbered 701.1134 (title).
SB384,283
20Section
283. 701.20 (29) (a) of the statutes is renumbered 701.1134 (1).
SB384,284
21Section
284. 701.20 (29) (b) of the statutes is renumbered 701.1134 (2).
SB384,285
22Section
285. 701.20 (29) (c) (intro.) of the statutes is renumbered 701.1134 (3)
23(intro.) and amended to read:
SB384,160,2524
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:
SB384,286
1Section
286. 701.20 (29) (c) 1. of the statutes is renumbered 701.1134 (3) (a)
2and amended to read:
SB384,161,43
701.1134
(3) (a) From income to the extent that receipts from the entity are
4allocated
only to income.
SB384,287
5Section
287. 701.20 (29) (c) 2. (intro.) and a. of the statutes are consolidated,
6renumbered 701.1134 (3) (b) and amended to read:
SB384,161,87
701.1134
(3) (b) From principal to the extent that
: 2. a. Receipts receipts from
8the entity are allocated
only to principal.
SB384,288
9Section
288. 701.20 (29) (c) 2. b. of the statutes is repealed.
SB384,289
10Section
289. 701.20 (29) (d) of the statutes is repealed.
SB384,290
11Section
290. 701.20 (30) of the statutes is renumbered 701.1135, and 701.1135
12(1) (a), as renumbered, is amended to read:
SB384,161,1413
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.
SB384,291
15Section
291. 701.20 (31) of the statutes is repealed.
SB384,292
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:
SB384,161,2218
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.
SB384,161,24
23(2) Permitted accumulations. No provision directing or authorizing
24accumulation of
trust income
shall be
is invalid.
SB384,162,6
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.
SB384,293
7Section
293. 701.22 (title) of the statutes is repealed.
SB384,294
8Section
294. 701.22 of the statutes is renumbered 701.0417 (4) and amended
9to read:
SB384,162,2110
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.
SB384,295
22Section
295. 701.23 of the statutes is repealed.
SB384,296
23Section
296. 701.24 (title) of the statutes is renumbered 701.1205 (title).
SB384,297
24Section
297. 701.24 (1) of the statutes is renumbered 701.1205 (1) and
25amended to read:
SB384,163,9
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.