SB93-SSA1,9,3
1b. Eligible to receive, if no powers of appointment were exercised, income from
2the trust if the interest of all of those eligible to receive income under subd. 3. a. were
3to terminate immediately before the giving of notice.
SB93-SSA1,9,54 c. A recipient, if no powers of appointment were exercised, of a distribution of
5principal if the trust were to terminate immediately before the giving of the notice.
SB93-SSA1,9,76 4. States that it is given in accordance with this subsection and discloses the
7following information:
SB93-SSA1,9,88 a. The identification of the trustee.
SB93-SSA1,9,99 b. A description of the proposed action.
SB93-SSA1,9,1110 c. The time within which a beneficiary may object to the proposed action, which
11shall be at least 30 days after the giving of the notice.
SB93-SSA1,9,1312 d. The effective date of the proposed action if no objection is received from any
13beneficiary within the time specified in subd. 4. c.
SB93-SSA1,9,1614 (c) If a trustee gives notice of a proposed action under this subsection, the
15trustee is not required to give notice to a sui juris beneficiary who consents to the
16proposed action in writing at any time before or after the proposed action is taken.
SB93-SSA1,9,1817 (d) A sui juris beneficiary may object to the proposed action by giving a written
18objection to the trustee within the time specified in the notice under par. (b) 4. c.
SB93-SSA1,9,2219 (e) A trustee may decide not to take a proposed action after the trustee receives
20a written objection to the proposed action or at any other time for any other reason.
21In that case, the trustee shall give written notice to the sui juris beneficiaries of the
22decision not to take the proposed action.
SB93-SSA1,9,2523 (f) If a trustee receives a written objection to a proposed action within the time
24specified in the notice under par. (b) 4. c., either the trustee or the beneficiary making
25the written objection may petition the court to have the proposed action approved,

1modified, or prohibited. In the court proceeding, the beneficiary objecting to the
2proposed action has the burden of proving that the proposed action should be
3modified or prohibited. A beneficiary who did not make the written objection may
4oppose the proposed action in the court proceeding.
SB93-SSA1,10,65 (g) For purposes of this subsection, a proposed action under sub. (4) includes
6a course of action or a decision not to take action under sub. (4).
SB93-SSA1,10,8 7(4g) Conversion to unitrust. (a) Subject to par. (d), a trust may be converted
8to a unitrust in any of the following ways:
SB93-SSA1,10,109 1. By the trustee, at his or her own discretion or at the request of a beneficiary,
10if all of the following apply:
SB93-SSA1,10,1211 a. The trustee determines that the conversion will enable the trustee to better
12carry out the purposes of the trust.
SB93-SSA1,10,1613 b. The trustee provides notice in the same manner as provided in sub. (4c) (b)
14of the trustee's intention to convert the trust to a unitrust, and the notice advises how
15the unitrust will operate, including the fixed percentage under par. (c) 1. and any
16other initial determinations under par. (c) 4. that the trustee intends to follow.
SB93-SSA1,10,1817 c. There is at least one sui juris beneficiary under sub. (4c) (b) 3. a. and at least
18one other sui juris beneficiary under sub. (4c) (b) 3. b. or c.
SB93-SSA1,10,2019 d. Every sui juris beneficiary consents to the conversion to a unitrust in a
20writing delivered to the trustee.
SB93-SSA1,10,2221 e. The terms of the trust describe the amount that may or must be distributed
22by referring to the trust income.
SB93-SSA1,10,2423 2. By a court on the petition of the trustee or a beneficiary, if all of the following
24apply:
SB93-SSA1,11,4
1a. The trustee or beneficiary has provided notice under sub. (4c) of the intention
2to request the court to convert the trust to a unitrust, and the notice advises how the
3unitrust will operate, including the fixed percentage under par. (c) 1. and any other
4initial determinations under par. (c) 4. that will be requested.
SB93-SSA1,11,65 b. The court determines that the conversion to a unitrust will enable the trustee
6to better carry out the purposes of the trust.
SB93-SSA1,11,87 (b) In deciding whether to convert the trust to a unitrust under par. (a) 1., the
8trustee shall consider all relevant factors under sub. (4) (b) 1. to 9.
SB93-SSA1,11,169 (c) 1. If a trust is converted to a unitrust under this subsection by the trustee
10or a court, notwithstanding sub. (3) (a) 1. and 4. and s. 701.21 (4) the trustee shall
11make distributions in accordance with the creating instrument, except that any
12reference in the creating instrument to "income" means a fixed percentage of the net
13fair market value of the unitrust's assets, whether such assets otherwise would be
14considered income or principal under this section, averaged over a preceding period
15determined by the trustee, which is at least 3 years but not more than 5 years, or the
16period since the original trust was created, whichever is less.
SB93-SSA1,11,2117 2. a. Subject to subd. 2. b., if the trust is converted to a unitrust under par. (a)
181., the trustee shall determine the fixed percentage to be applied under subd. 1., and
19the notice under par. (a) 1. b. must state the fixed percentage. If the trust is converted
20to a unitrust under par. (a) 2., the court shall determine the fixed percentage to be
21applied under subd. 1.
SB93-SSA1,11,2322 b. Any fixed percentage under subd. 1. that is determined by a trustee may not
23be less than 3 percent nor more than 5 percent.
SB93-SSA1,12,3
13. After a trust is converted to a unitrust, the trustee may, subject to the notice
2requirement under sub. (4c) and with the consent of every sui juris beneficiary, do
3any of the following:
SB93-SSA1,12,54 a. Convert the unitrust back to the original trust under the creating
5instrument.
SB93-SSA1,12,66 b. Change the fixed percentage under subd. 1., subject to subd. 2. b.
SB93-SSA1,12,87 4. After a trust is converted to a unitrust, a trustee may determine or change
8any of the following:
SB93-SSA1,12,99 a. The frequency of distributions during the year.
SB93-SSA1,12,1110 b. Standards for prorating a distribution for a short year in which a
11beneficiary's right to payments commences or ceases.
SB93-SSA1,12,1312 c. The effect on the valuation of the unitrust's assets of other payments from,
13or contributions to, the unitrust.
SB93-SSA1,12,1414 d. How, and how frequently, to value the unitrust's assets.
SB93-SSA1,12,1515 e. The valuation dates to use.
SB93-SSA1,12,1716 f. Whether to omit from the calculation of the value of the unitrust's assets
17unitrust property occupied by or in the possession of a beneficiary.
SB93-SSA1,12,1918 g. The averaging under subd. 1. to a different preceding period, which is at least
193 years but not more than 5 years.
SB93-SSA1,12,2020 h. Any other matters necessary for the proper functioning of the unitrust.
SB93-SSA1,12,2221 5. The trustee may not deduct from a unitrust distribution expenses that would
22be deducted from income if the trust were not a unitrust.
SB93-SSA1,12,2523 6. Unless otherwise provided by the creating instrument, the unitrust
24distribution is considered to have been paid from the following sources in the order
25of priority:
SB93-SSA1,13,1
1a. Net income, determined as if the trust were not a unitrust.
SB93-SSA1,13,32 b. Ordinary income for federal income tax purposes that is not net income
3under subd. 6. a.
SB93-SSA1,13,44 c. Net realized short-term capital gains for federal income tax purposes.
SB93-SSA1,13,55 d. Net realized long-term capital gain for federal income tax purposes.
SB93-SSA1,13,66 e. Principal.
SB93-SSA1,13,87 7. A court may, on the petition of the trustee or a beneficiary, do any of the
8following:
SB93-SSA1,13,109 a. Change the fixed percentage that was determined under subd. 2. by the
10trustee or by a prior court order.
SB93-SSA1,13,1211 b. If necessary to preserve a tax benefit, provide for a distribution of net income,
12determined as if the trust were not a unitrust, that exceeds the unitrust distribution.
SB93-SSA1,13,1413 c. Average the valuation of the unitrust's assets over a period other than that
14specified in subd. 1.
SB93-SSA1,13,1615 d. Require the unitrust to be converted back to the original trust under the
16creating instrument.
SB93-SSA1,13,1917 8. Conversion to a unitrust under this subsection does not affect a provision in
18the creating instrument that directs or authorizes the trustee to distribute principal
19or that authorizes a beneficiary to withdraw a portion or all of the principal.
SB93-SSA1,13,2120 (d) 1. A trust may not be converted under this subsection to a unitrust if any
21of the following applies:
SB93-SSA1,13,2222 a. The creating instrument specifically prohibits the conversion.
SB93-SSA1,13,2423 b. Payment of the unitrust distribution will change the amount payable to a
24beneficiary as a fixed annuity or a fixed fraction of the value of the trust assets.
SB93-SSA1,14,4
1c. The unitrust distribution will be made from any amount that is permanently
2set aside for charitable purposes under the creating instrument and for which an
3estate or gift tax charitable deduction has been taken, unless both income and
4principal are so set aside.
SB93-SSA1,14,75 d. Converting to a unitrust will cause an individual to be treated as the owner
6of all or part of the trust for income tax purposes and the individual would not be
7treated as the owner if the trust were not converted.
SB93-SSA1,14,118 e. Converting to a unitrust will cause all or a part of the trust assets to be
9subject to estate or gift tax with respect to an individual and the trust assets would
10not be subject to estate or gift tax with respect to the individual if the trust were not
11converted.
SB93-SSA1,14,1312 f. Converting to a unitrust will result in the disallowance of an estate or gift tax
13marital deduction that would be allowed if the trust were not converted.
SB93-SSA1,14,1414 g. A trustee is a beneficiary of the trust.
SB93-SSA1,14,1915 2. Notwithstanding subd. 1., if a trust may not be converted to a unitrust solely
16because subd. 1. g. applies to a trustee, a cotrustee, if any, to whom subd. 1. g. does
17not apply may convert the trust to a unitrust under par. (a) 1., unless prohibited by
18the creating instrument, or a court may convert the trust to a unitrust under par. (a)
192. on the petition of a trustee or beneficiary.
SB93-SSA1,14,2520 (e) A trustee may release the power conferred by par. (a) 1. if the trustee is
21uncertain about whether possessing or exercising the power will cause a result
22described in par. (d) 1. b. to f. or if the trustee determines that possessing or exercising
23the power will or may deprive the trust of a tax benefit or impose a tax burden not
24described in par. (d) 1. The release may be permanent or for a specified period,
25including a period measured by the life of an individual.
SB93-SSA1,15,6
1(4j) Express unitrusts. (a) In this subsection "express unitrust" means any
2trust that by its governing instrument requires the distribution at least annually of
3a unitrust amount equal to a fixed percentage of the net fair market value of the
4trust's assets, valued at least annually, other than a trust solely for charitable
5purposes or a charitable split-interest trust under section 664 (d) or 170 (f) (2) (B)
6of the Internal Revenue Code.
SB93-SSA1,15,77 (b) The following apply to an express unitrust:
SB93-SSA1,15,128 1. To the extent not otherwise provided for in the governing instrument, the
9unitrust amount of not less than 3 percent nor more than 5 percent may be
10determined by reference to the net fair market value of the trust's assets averaged
11over a preceding period determined by the trustee, which is at least 3 years but not
12more than 5 years.
SB93-SSA1,15,1513 2. Distribution of such a fixed percentage unitrust amount of not less than 3
14percent nor more than 5 percent is a distribution of all of the income of the unitrust
15and is an income interest.
SB93-SSA1,15,1716 3. Such a distribution of a fixed percentage of not less than 3 percent nor more
17than 5 percent is a reasonable apportionment of the total return of the trust.
SB93-SSA1,15,2218 4. A trust that provides for a fixed annual percentage payout in excess of 5
19percent per year of the net fair market value of the trust is considered to be a 5
20percent express unitrust, paying out all of the income of the unitrust, and to have
21paid out principal of the trust to the extent that the fixed percentage payout exceeds
225 percent per year.
SB93-SSA1,16,223 5. The governing instrument may grant discretion to the trustee to adopt a
24consistent practice of treating capital gains as part of the unitrust distribution, to the

1extent that the unitrust distribution exceeds the income determined as if the trust
2were not a unitrust, or it may specify the ordering of such classes of income.
SB93-SSA1,16,53 6. Unless the terms of the trust specifically provide otherwise, a distribution
4of the unitrust amount is considered to have been made from the following sources
5in the following order of priority:
SB93-SSA1,16,66 a. Net income determined as if the trust were not a unitrust.
SB93-SSA1,16,87 b. Ordinary income for federal income tax purposes that is not net income
8under subd. 6. a.
SB93-SSA1,16,99 c. Net realized short-term capital gains for federal income tax purposes.
SB93-SSA1,16,1010 d. Net realized long-term capital gains for federal income tax purposes.
SB93-SSA1,16,1111 e. Principal.
SB93-SSA1,16,1512 7. The trust document may provide that assets used by the trust beneficiary,
13such as a residence or tangible personal property, may be excluded from the net fair
14market value for computing the unitrust amount. Such use may be considered
15equivalent to the income or unitrust amount.
SB93-SSA1,16,1716 8. In the absence of contrary provisions in the governing document of an
17express unitrust, the provisions of sub. (4g) (c) 1., 4., and 5. apply.
SB93-SSA1,16,23 18(4k) Power to treat capital gains as part of a distribution. Unless prohibited
19by the governing instrument, a trustee may cause gains from the sale or exchange
20of trust assets, as determined for federal income tax purposes, to be taxed for federal
21income tax purposes as part of a distribution of income that has been increased by
22an adjustment from principal to income under sub. (4), of a unitrust distribution, of
23a fixed annuity distribution, or of a principal distribution to a beneficiary.
SB93-SSA1,17,4 24(4m) Judicial review of discretionary power. (a) Nothing in this section
25creates a duty to make an adjustment under sub. (4) or to convert a trust to a unitrust

1under sub. (4g). Unless it determines that the decision to make an adjustment or to
2convert to a unitrust was an abuse of the fiduciary's discretion, a court may not grant
3relief from any decision a fiduciary makes regarding the exercise of a discretionary
4power conferred by sub. (4) or (4g).
SB93-SSA1,17,95 (am) An action taken under sub. (4) or (4g) is not an abuse of a fiduciary's
6discretion if the fiduciary gave written notice of the proposed action under sub. (4c)
7and did not receive a timely written objection to the notice. It is not an abuse of
8discretion not to exercise the power to adjust under sub. (4) or to convert under sub.
9(4g).
SB93-SSA1,17,1210 (b) A fiduciary's decision is not an abuse of discretion merely because the court
11would have exercised the power in a different manner or would not have exercised
12the power.
SB93-SSA1,17,1613 (c) If the court determines that a fiduciary has abused the fiduciary's discretion,
14the remedy shall be to restore the income and remainder beneficiaries to the
15positions that they would have occupied had the discretion not been abused,
16according to the following rules:
SB93-SSA1,17,2117 1. To the extent that the abuse of discretion has resulted in no distribution to
18a beneficiary or in a distribution that is too small, the court shall order the fiduciary
19to distribute from the trust to the beneficiary an amount that the court determines
20will restore the beneficiary, in whole or in part, to the beneficiary's appropriate
21position.
SB93-SSA1,18,222 2. To the extent that the abuse of discretion has resulted in a distribution to a
23beneficiary that is too large, the court shall place the beneficiaries, the trust, or both,
24in whole or in part, in their appropriate positions by ordering the fiduciary to
25withhold an amount from one or more future distributions to the beneficiary who

1received the distribution that was too large or by ordering that beneficiary to return
2some or all of the distribution to the trust.
SB93-SSA1,18,73 3. To the extent that the court is unable, after applying subds. 1. and 2., to place
4the beneficiaries, the trust, or both in the positions that they would have occupied
5had the discretion not been abused, the court may order the fiduciary to pay an
6appropriate amount from its own funds to one or more of the beneficiaries, the trust,
7or both.
SB93-SSA1,18,178 (d) Upon petition by the fiduciary, the court having jurisdiction over a trust
9shall determine whether a proposed exercise or nonexercise by the fiduciary of a
10discretionary power conferred under this section will result in an abuse of the
11fiduciary's discretion. The petition must describe the proposed exercise or
12nonexercise of the power and contain sufficient information to inform the
13beneficiaries of the reasons for the proposal, the facts upon which the fiduciary relies,
14and an explanation of how the income and remainder beneficiaries will be affected
15by the proposed exercise or nonexercise of the power. A beneficiary who challenges
16the proposed exercise or nonexercise of the power has the burden of establishing that
17it will result in an abuse of discretion.
SB93-SSA1,18,19 18(5) Determination and distribution of net income. In the case of an estate of
19a decedent or after an income interest in a trust ends, the following rules apply:
SB93-SSA1,18,2420 (a) A fiduciary of an estate or of a terminating income interest shall determine
21the amount of net income and net principal receipts received from property
22specifically given to a beneficiary under the rules in subs. (7) to (30) that apply to
23trustees and the rules in par. (e). The fiduciary shall distribute the net income and
24net principal receipts to the beneficiary who is to receive the specific property.
SB93-SSA1,19,3
1(b) A fiduciary shall determine the remaining net income of a decedent's estate
2or a terminating income interest under the rules in subs. (7) to (30) that apply to
3trustees and by:
SB93-SSA1,19,54 1. Including in net income all income from property used to discharge
5liabilities.
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