LRBs0313/1
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2023 - 2024 LEGISLATURE
SENATE SUBSTITUTE AMENDMENT 1,
TO SENATE BILL 667
February 16, 2024 - Offered by Senator Knodl.
SB667-SSA1,1,2 1An Act to create subchapter XIII of chapter 701 [precedes 701.1301] of the
2statutes; relating to: domestic asset protection trusts.
Analysis by the Legislative Reference Bureau
2023 Senate Bill 667 creates a new chapter 669, stats., that governs a new type
of trust, called a legacy trust. This substitute amendment places all of the bill
language from 2023 Senate Bill 667 in a new subchapter of the Wisconsin Trust Code.
In addition, under the substitute amendment, if a person who creates a legacy trust
is married and transfers marital property to the legacy trust, the person must
provide to that person's spouse written notice of the transfer of the property at the
time of the transfer. For further information, see the analysis for 2023 Senate Bill
667.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB667-SSA1,1 3Section 1 . Subchapter XIII of chapter 701 [precedes 701.1301] of the statutes
4is created to read:
SB667-SSA1,1,5 5Chapter 701
SB667-SSA1,2,1
1subchapter xiii
SB667-SSA1,2,22 legacy trusts
SB667-SSA1,2,3 3701.1301 Definitions. In this subchapter:
SB667-SSA1,2,5 4(1) “Advisor" means a person who, under the terms of a legacy trust, is granted
5the power to do any of the following:
SB667-SSA1,2,66 (a) Remove or appoint a trustee of the legacy trust.
SB667-SSA1,2,87 (b) Direct, consent to, or disapprove a trustee's actual or proposed investment,
8distribution, or any other action related to assets of the legacy trust.
SB667-SSA1,2,10 9(2) “Asset" means property of a transferor but does not include any of the
10following:
SB667-SSA1,2,1111 (a) Property to the extent it is encumbered by a valid lien.
SB667-SSA1,2,1312 (b) Property to the extent it is generally exempt under nonbankruptcy law at
13the time of a qualified disposition.
SB667-SSA1,2,1714 (c) Property held as marital property with rights of survivorship to the extent
15that under the law governing the marital property at the time of a qualified
16disposition the property is not subject to process by a creditor holding a claim against
17only one spouse.
SB667-SSA1,2,2018 (d) Property transferred from a nonlegacy trust to a legacy trust to the extent
19that the property would not be subject to attachment under applicable
20nonbankruptcy law that governs the nonlegacy trust.
SB667-SSA1,2,23 21(3) “Claim" means a right to payment, whether or not the right is reduced to
22judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
23disputed, undisputed, legal, equitable, secured, or unsecured.
SB667-SSA1,2,25 24(4) “Creditor" means a person who has a claim against a transferor and
25includes any transferee of, assignee of, or successor to the claim.
SB667-SSA1,3,1
1(5) “Debt" means liability on a claim.
SB667-SSA1,3,5 2(6) “Disposition" means a transfer, conveyance, or assignment of a property
3interest, including a partial, contingent, undivided, or co-ownership property
4interest. “Disposition" includes an exercise of a general power of appointment that
5results in a transfer of property to a trustee but does not include any of the following:
SB667-SSA1,3,76 (a) The release or relinquishment of a property interest that is subject to a
7qualified disposition until the release or relinquishment.
SB667-SSA1,3,98 (b) The exercise of a special power of appointment that results in a transfer of
9property to a trustee.
SB667-SSA1,3,1010 (c) A disclaimer under s. 700.27 or 854.13.
SB667-SSA1,3,13 11(7) “Investment decision" means a decision regarding the retention, purchase,
12sale, exchange, tender, or other action affecting the ownership of or rights in an
13investment.
SB667-SSA1,3,15 14(8) “Legacy trust" means a trust created by a written instrument, the terms of
15which do all of the following:
SB667-SSA1,3,1816 (a) Appoint at least one qualified trustee to accept property that is the subject
17of a disposition, regardless of whether the terms of the trust also appoint a
18nonqualified trustee.
SB667-SSA1,3,2019 (b) Expressly designate the laws of this state to govern the meaning and effect
20of the terms of the trust, in whole or in part.
SB667-SSA1,3,2121 (c) Expressly provide that the trust is irrevocable.
SB667-SSA1,3,2322 (d) Include a spendthrift provision that applies to an interest of a beneficiary
23in trust property, including an interest of a transferor who is a beneficiary.
SB667-SSA1,3,24 24(9) “Lien" has the meaning given in s. 242.01 (8).
SB667-SSA1,3,25 25(10) “Nonlegacy trust" means a trust that is not a legacy trust.
SB667-SSA1,4,1
1(11) “Nonqualified trustee" means a trustee who is not a qualified trustee.
SB667-SSA1,4,3 2(12) “Qualified disposition" means a disposition by a transferor to any trustee
3of a legacy trust.
SB667-SSA1,4,5 4(13) “Qualified trustee" means a trustee who is not a transferor and to whom
5one of the following applies:
SB667-SSA1,4,76 (a) If the trustee is an individual, the individual resides and is domiciled in this
7state.
SB667-SSA1,4,108 (b) If the trustee is a trust company or a bank, the trust company or bank is
9organized under federal law, state law, or the laws of another state, and the trust
10company or bank maintains an office in this state.
SB667-SSA1,4,12 11(14) “Transferor" means a person who directly or indirectly makes a disposition
12to a legacy trust, including a settlor, as defined in s. 701.0103 (23).
SB667-SSA1,4,13 13(15) “Valid lien" has the meaning given in s. 242.01 (13).
SB667-SSA1,4,17 14701.1302 Applicability. (1) Unless the terms of a legacy trust provide
15otherwise, this subchapter governs the construction, operation, and enforcement in
16this state of a legacy trust, whether created in this state or any other state, if any of
17the following applies:
SB667-SSA1,4,1918 (a) Any of the land, rents, issues, or profits that are the subject of a qualified
19disposition are located in this state.
SB667-SSA1,4,2120 (b) Any portion of personal property, interest of money, or dividends of stock
21that is the subject of a qualified disposition is located in this state.
SB667-SSA1,4,2222 (c) The transferor's legal residence is in this state.
SB667-SSA1,4,2523 (d) A qualified trustee of the legacy trust has the power to maintain records and
24prepare income tax returns for the trust, and all or part of the administration of the
25trust is performed in this state.
SB667-SSA1,5,2
1(2) (a) If the transferor is married at the time of a qualified disposition, this
2subchapter applies to the following:
SB667-SSA1,5,43 1. Any of the transferor's individual property that is the subject of the qualified
4disposition.
SB667-SSA1,5,85 2. Any marital property that is the subject of the qualified disposition if the
6transferor's spouse at the time of the disposition was provided with notice of the
7qualified disposition as provided in par. (b) or executed a written consent to the
8qualified disposition after being provided the information set forth in the notice.
SB667-SSA1,5,109 (b) All of the following apply to a notice of a qualified disposition under this
10subchapter:
SB667-SSA1,5,1211 1. The notice shall contain the following language, in capital letters, at or near
12the top of the notice:
SB667-SSA1,5,1413 YOUR SPOUSE OR FORMER SPOUSE IS CREATING A PERMANENT
14TRUST INTO WHICH PROPERTY IS BEING TRANSFERRED.
SB667-SSA1,5,1815 YOUR RIGHTS TO THIS PROPERTY MAY BE AFFECTED DURING YOUR
16MARRIAGE, UPON DIVORCE (INCLUDING THE PAYMENT OF CHILD
17SUPPORT OR ALIMONY OR A DIVISION OR DISTRIBUTION OF PROPERTY IN
18A DIVORCE), OR AT THE DEATH OF YOUR SPOUSE OR FORMER SPOUSE.
SB667-SSA1,5,2019 YOU HAVE A VERY LIMITED PERIOD OF TIME TO OBJECT TO THE
20TRANSFER OF PROPERTY INTO THIS TRUST.
SB667-SSA1,5,2221 YOU MAY, UPON REQUEST TO THE TRUSTEE AT THE ADDRESS BELOW,
22BE FURNISHED A COPY OF THE TRUST DOCUMENT.
SB667-SSA1,5,2423 IF YOU HAVE ANY QUESTIONS, YOU SHOULD IMMEDIATELY SEEK
24INDEPENDENT LEGAL ADVICE.
SB667-SSA1,6,2
1IF YOU FAIL TO OBJECT WITHIN 30 DAYS, YOU WILL HAVE
2CONSENTED TO THE TRANSFER OF PROPERTY INTO THIS TRUST.
SB667-SSA1,6,33 .... (address)
SB667-SSA1,6,54 2. The notice shall contain a description of the property that is the subject of
5the qualified disposition.
SB667-SSA1,6,86 3. The notice may require that any person who is eligible to receive information
7under this subsection be bound by the duty of confidentiality that binds the trustee
8before receiving such information from the trustee.
SB667-SSA1,6,109 4. The notice shall be provided by the transferor, the transferor's agent, the
10trustee, or another fiduciary of the legacy trust.
SB667-SSA1,6,1511 (c) If a notice is provided under this subsection before the qualified disposition,
12the period to commence an action under s. 701.1306 (3) begins to run on the date the
13notice is provided. The period to commence an action to challenge a qualified
14disposition under this subsection and s. 701.1306 (3) may not exceed the period set
15forth in s. 893.425.
SB667-SSA1,6,19 16701.1303 Spendthrift provision; legacy trust. (1) Notwithstanding s.
17701.0502 (1), a spendthrift provision of a legacy trust is not invalid because a
18transferor or a person who is treated as a settlor under s. 701.0505 (2) is also a
19beneficiary of the legacy trust.
SB667-SSA1,7,2 20(2) Except as otherwise provided in this section, a spendthrift provision in a
21legacy trust restrains both voluntary and involuntary transfers of a transferor's
22interest in the legacy trust. A spendthrift provision in a legacy trust is enforceable
23under any applicable nonbankruptcy law within the meaning of 11 USC 541 (c) (2)
24regardless of whether the legacy trust instrument makes any reference to that
25enforceability. The terms of a legacy trust, including in a spendthrift provision, may

1provide for any other restraint of alienation that are permitted under the laws of this
2state.
SB667-SSA1,7,4 3(3) Section 701.0503 (2) does not apply to a spendthrift provision in a legacy
4trust.
SB667-SSA1,7,5 5(4) Section 701.0505 (1) (a) 2. does not apply to a legacy trust.
SB667-SSA1,7,8 6(5) Nothing in this section may deprive a beneficiary of any exemption right
7that the beneficiary has under any applicable law after the trust property is received
8by the beneficiary.
SB667-SSA1,7,12 9701.1304 Implied power to revoke or to transfer an interest in a legacy
10trust.
None of the following is considered to be, including in combination, a power
11to revoke a legacy trust or to voluntarily or involuntarily transfer an interest in the
12legacy trust:
SB667-SSA1,7,14 13(1) A transferor's power to veto a distribution of income or principal from the
14legacy trust.
SB667-SSA1,7,17 15(2) A special power of appointment, as defined in s. 702.02 (7), exercisable by
16a transferor by will or another written document that is effective during the lifetime
17of the transferor or upon the death of the transferor.
SB667-SSA1,7,19 18(3) The right of a transferor to receive income from the legacy trust in
19accordance with the terms of the legacy trust.
SB667-SSA1,7,25 20(4) That a transferor is a beneficiary of the legacy trust regardless of whether
21the trust qualifies as a charitable remainder annuity trust under 26 USC 664 (d) (1)
22or as a charitable remainder unitrust under 26 USC 664 (d) (2), even if the transferor
23has the right to release the transferor's retained interest, in whole or in part, in the
24charitable remainder annuity trust or charitable remainder unitrust at any time in
25favor of one or more of the remainder beneficiaries of the legacy trust.
SB667-SSA1,8,6
1(5) A transferor's annual receipt of a percentage of the value of the legacy trust
2assets, as determined in accordance with the terms of the trust, as long as the amount
3the transferor receives in a year is not more than the amount defined as the income
4of the legacy trust under 26 USC 643 (b) or, for any qualified retirement plan or
5eligible deferred compensation plan that is an asset of the legacy trust, the minimum
6required distribution, as defined in 26 USC 4974 (b).
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