AB720: Bill Text

AB720,79,3 Chapter 861

AB720,79,6 Subchapter II Elective share in deferred marital property

AB720, s. 190 Section 190. 861.018 of the statutes is created to read:

AB720,79,8 861.018 Definitions. In this subchapter:

AB720,79,10 (1) "Augmented deferred marital property estate" means the property under s. 861.02 (2).

AB720,79,12 (2) "Deferred individual property" means any property that satisfies all of the following:

AB720,79,13 (a) Is not classified by ch. 766.

AB720,79,14 (b) Was brought to the marriage or acquired while the spouses were married.

AB720,79,16 (c) Would have been classified as individual property under ch. 766 if the property had been acquired when ch. 766 applied.

AB720,79,21 (3) "Nonadverse party" means a person who has a power relating to a trust or other property arrangement but who does not have a substantial beneficial interest that would be adversely affected by exercise or nonexercise of that power, except that "nonadverse party" does not include a person who has a general power of appointment over property, with respect to that property.

AB720,79,23 (4) "Power" includes a power to designate the beneficiary of a beneficiary designation.

AB720,79,25 (5) "Power of appointment" includes a power to designate the beneficiary of a beneficiary designation.

AB720,80,6 (6) "Presently exercisable general power of appointment" means a power of appointment under which, at the time in question, the decedent held a power to create a present or future interest in himself or herself, his or her creditors, his or her estate or creditors of his or her estate and a power to revoke or invade the principal of a trust or other property arrangement, whether or not the decedent had the capacity to exercise the power at the time.

AB720,80,8 (7) "Property" has the meaning given in s. 851.27 and includes values subject to a beneficiary designation.

AB720,80,10 (8) "Right to income" includes a right to payments under a commercial or private annuity, an annuity trust, a unitrust or a similar arrangement.

AB720,80,11 (9) "Transfer" includes, but is not limited to, the following:

AB720,80,13 (a) An exercise or release of a presently exercisable general power of appointment held by the decedent.

AB720,80,15 (b) A lapse at death of a presently exercisable general power of appointment held by the decedent.

AB720,80,16 (c) An exercise, release or lapse of either of the following:

AB720,80,18 1. A general power of appointment that the decedent created in himself or herself.

AB720,80,20 2. A power under s. 861.03 (3) that the decedent conferred on a nonadverse party.

AB720, s. 191 Section 191. 861.02 of the statutes is repealed and recreated to read:

AB720,80,24 861.02 Deferred marital property elective share. (1) Amount. The surviving spouse has the right to elect an amount equal to no more than 50% of the augmented deferred marital property estate as determined under sub. (2).

AB720,81,3 (2) Augmented deferred marital property estate. (a) If the presumption of marital property under s. 766.31 (2) is rebutted as to the classification of an asset or a portion thereof, the asset or portion is presumed to be deferred marital property.

AB720,81,8 (b) The augmented deferred marital property estate is the total value of the deferred marital property of the spouses, irrespective of where the property was acquired or where the property is currently located, including real property located in another jurisdiction. It includes all types of property that fall within any of the following categories:

AB720,81,10 1. Probate and nonprobate transfers of the decedent's deferred marital property under s. 861.03 (1) to (3).

AB720,81,12 2. Decedent's gifts of deferred marital property made during the 2 years before the decedent's death under s. 861.03 (4).

AB720,81,13 3. Deferred marital property of the surviving spouse under s. 861.04.

AB720,81,16 (3) Calculation of property interests. Exclusions from the augmented deferred marital property estate, valuation of included property and reduction for expenses and claims are governed by s. 861.05.

AB720,81,18 (4) Satisfaction. Satisfaction of the augmented deferred marital property elective share is governed by ss. 861.06, 861.07 and 861.11.

AB720,81,20 (5) Proceedings. Proceedings for the election are governed by ss. 861.08 and 861.09.

AB720,81,22 (6) Waiver. Waiver of the deferred marital property elective share is governed by s. 861.10.

AB720,82,2 (7) Applicability of election. (a) Unless the right has been waived under s. 861.10 or other limitations of this subchapter apply, the surviving spouse is eligible to make the election if at the time of the decedent's death the decedent is domiciled in this state.

AB720,82,5 (b) If a decedent who is not domiciled in this state owns real property in this state, the right of the surviving spouse to take an elective share in that property is governed by s. 861.20.

AB720,82,11 (8) Special provision if surviving spouse caused death of decedent. If the surviving spouse unlawfully and intentionally kills the decedent, as determined under s. 854.14 (5), the estate of the decedent shall have the right to elect no more than 50% of the augmented deferred marital property estate as determined under sub. (2). The court shall construe the provisions of ss. 861.03 to 861.11 as necessary to achieve the intent of this paragraph.

AB720, s. 192 Section 192. 861.03 of the statutes is repealed and recreated to read:

AB720,82,15 861.03 Augmented deferred marital property estate: decedent's probate property and nonprobate or other property transfers. Subject to s. 861.05, the augmented deferred marital property estate includes all of the following:

AB720,82,17 (1) Deferred marital property in decedent's probate estate. The value of deferred marital property in the decedent's probate estate.

AB720,82,21 (2) Deferred marital property passing nonprobate at decedent's death. The value of deferred marital property owned or owned in substance by the decedent immediately before death that passed outside probate at the decedent's death, including the following:

AB720,82,23 (a) The decedent's fractional interest in deferred marital property that was held by the decedent with the right of survivorship.

AB720,83,2 (b) The decedent's ownership interest in deferred marital property that was held by the decedent in a form payable or transferable on death, including deferred employment benefit plans, individual retirement accounts, annuities and transfers under s. 766.58 (3) (f), or in coownership with the right of survivorship.

AB720,83,7 (c) Deferred marital property in the form of proceeds of insurance on the life of the decedent, including accidental death benefits, that were payable at the decedent's death, if the decedent owned the insurance policy immediately before death or if the decedent alone and immediately before death held a presently exercisable general power of appointment over the policy or its proceeds.

AB720,83,11 (d) Deferred marital property over which the decedent alone, immediately before death, held a presently exercisable general power of appointment, to the extent that the property passed at the decedent's death by exercise, release, lapse, default or otherwise.

AB720,83,15 (3) Deferred marital property transferred with retained rights or benefits. (a) The augmented deferred marital property estate includes the value of any deferred marital property transferred by the decedent in which the decedent retained rights or benefits, including but not limited to the following:

AB720,83,19 1. Deferred marital property in which the decedent retained the right to possession, use, enjoyment or income and that was irrevocably transferred, to the extent that the decedent's right terminated at or continued beyond the decedent's death.

AB720,83,25 2. Deferred marital property in which the decedent retained the right, either alone or in conjunction with any person, to designate the persons who shall possess or enjoy the property or the income therefrom, to control the time at which designated persons shall possess or enjoy the property or income therefrom, or to alter or amend the terms of the transfer of the property, to the extent that the decedent's right terminated at or continued beyond the decedent's death.

AB720,84,7 3. Any transfer of deferred marital property, including transfer of an income interest, in which the decedent created a power of appointment, including the power to revoke or terminate the transfer or to consume, invade or dispose of the principal or income, if the power was exercisable by the decedent alone, by the decedent in conjunction with another person or by a nonadverse party, and if the power is for the benefit of the decedent, creditors of the decedent, the decedent's estate or creditors of the decedent's estate.

AB720,84,14 (b) The amount included under par. (a) 3. is the value of the property subject to the power of appointment if the power of appointment is over property, the value of the property that produces or produced the income if the power of appointment is over income or the power valued at the higher amount if the power of appointment is over both income and property. The value is limited by the extent to which the power of appointment was exercisable at the decedent's death or the property passed at the decedent's death by exercise, release, lapse, default or otherwise.

AB720,84,16 (4) Deferred marital property transferred within 2 years prior to death. (a) In this subsection, termination occurs:

AB720,84,19 1. With respect to a right or interest in property, when the right or interest terminates by the terms of the governing instrument or when the decedent transfers or relinquishes the right or interest.

AB720,84,21 2. With respect to a power of appointment over property, when the power terminates by exercise, release, lapse, default or otherwise.

AB720,84,23 3. With respect to a power of appointment under sub. (2) (d), when the power terminates by exercise or release.

AB720,85,3 (b) The augmented deferred marital property estate includes the value of any deferred marital property transferred by the decedent within the 2 years immediately preceding the decedent's death, including the following:

AB720,85,9 1. Deferred marital property that passed as a result of the termination of a right or interest in, or power of appointment over, property that would have been included in the augmented deferred marital property estate under subs. (2) (a), (b) or (d) or (3), if the right, interest or power had not terminated until the decedent's death. The amount included is the value of the property that would have been included if the property were valued at the time the right, interest or power terminated.

AB720,85,14 2. Transfers by the decedent of or relating to the deferred marital property component of an insurance policy on the life of the decedent, if the proceeds would have been included under sub. (2) (c) had the transfer not occurred. The amount included is the value of the insurance proceeds to the extent that they were payable at the decedent's death.

AB720,85,19 3. Any transfer of deferred marital property to the extent that it is not otherwise included in the augmented deferred marital property estate. The amount included is the value of the property at the time of the transfer, but only to the extent that the aggregate transfers to any one donee in either of the 2 years exceeded $10,000.

AB720, s. 193 Section 193. 861.04 of the statutes is created to read:

AB720,85,25 861.04 Augmented deferred marital property estate: surviving spouse's property and transfers to others. (1) Subject to s. 861.05, the augmented deferred marital property estate includes the value of any deferred marital property that would have been included under s. 861.03 had the surviving spouse been the decedent.

AB720,86,3 (2) Valuation of an interest under this section shall take into account the fact that the decedent predeceased the spouse. Subject to s. 861.05 (2), the surviving spouse shall be treated as having died on the date of the decedent's death.

AB720, s. 194 Section 194. 861.05 of the statutes is repealed and recreated to read:

AB720,86,7 861.05 Augmented deferred marital property estate: calculation of property interests. (1) Exclusions. The following are not included in the augmented deferred marital property estate:

AB720,86,9 (a) Transfers of deferred marital property to the extent that the decedent received full or partial consideration for the transfer in money or money's worth.

AB720,86,10 (b) Transfers under the U.S. social security system.

AB720,86,12 (c) Transfers of deferred marital property to persons other than the surviving spouse, with the written joinder or written consent of the surviving spouse.

AB720,86,14 (d) Transfers of deferred marital property to the surviving spouse under s. 861.33 or 861.41.

AB720,86,17 (2) Valuation. (a) Property included in the augmented deferred marital property estate under s. 861.03 (1), (2) (c) and (4) (b) 2. is valued as of the date of the decedent spouse's death.

AB720,86,19 (b) Property included under s. 861.03 (2) (a), (b) and (d) and (3) is valued immediately before the decedent spouse's death.

AB720,86,21 (c) Property included under s. 861.03 (4) (b) 1. is valued as of the date that the right, interest or power terminated.

AB720,86,23 (d) Property included under s. 861.03 (4) (b) 3. is valued as of the date of the transfer.

AB720,87,3 (e) If deferred marital property is commingled with other types of property but the deferred marital property component can be identified, only that component is valued.

AB720,87,9 (f) The value of property included in the augmented deferred marital property estate includes the commuted value of any present or future interest in deferred marital property and the commuted value of deferred marital property payable under any trust, life insurance settlement option, annuity contract, public or private pension, disability compensation, death benefit or retirement plan or any similar arrangement.

AB720,87,14 (3) Reduction for equitable proportion of expenses and enforceable claims. The value of deferred marital property included in the augmented deferred marital property estate under s. 861.03 or 861.04 shall be reduced by an equitable proportion of funeral and burial expenses, administrative expenses, other charges and fees and enforceable claims.

AB720,87,18 (4) Overlapping application; no double inclusion. If the same property could be included in the augmented deferred marital property estate under more than one provision of s. 861.03 or 861.04, the property is included only once, and it is included under the provision that yields the greatest value.

AB720, s. 195 Section 195. 861.06 of the statutes is created to read:

AB720,87,25 861.06 Satisfaction of deferred marital property elective share. (1) Definition. In this section, "property transferred to the surviving spouse" includes outright transfers that have been disclaimed by the surviving spouse. The term does not include transfers in trust that have been disclaimed by the surviving spouse, unless the surviving spouse had a general power of appointment over the property in the trust during his or her lifetime or an interest in the trust after the disclaimer.

AB720,88,3 (2) Initial satisfaction of deferred marital property elective share. If the surviving spouse makes the election under s. 861.02, the following categories of property are used first to satisfy the elective share amount:

AB720,88,5 (a) All property included in the augmented deferred marital property estate under s. 861.04.

AB720,88,7 (b) All marital, individual, deferred marital or deferred individual property, transferred to the surviving spouse:

AB720,88,11 1. From the decedent's probate estate, other than property transferred under s. 861.33 or 861.41, and other than property transferred to the surviving spouse under s. 861.31 or 861.35 except as ordered by the court under s. 861.31 (4) or 861.35 (4).

AB720,88,12 2. By nonprobate transfer at the decedent's death.

AB720,88,14 3. By operation of any state or federal law, other than transfers under the U.S. social security system.

AB720,88,16 4. By the decedent at any time during the decedent's life, except that the following shall be excluded:

AB720,88,18 a. The first $5,000 of the value of the gifts from the decedent to the surviving spouse each year.

AB720,88,22 b. Gifts received from the decedent that the surviving spouse can show were subsequently and gratuitously transferred in a manner that, had they been the deferred marital property of the surviving spouse, would not have been included in the augmented deferred marital property estate under s. 861.04.

AB720,89,2 (3) Unsatisfied balance. After the property under sub. (2) has been applied toward satisfaction of the deferred marital property elective share amount, the remainder of the elective share amount shall be satisfied proportionally from transfers to persons other than the surviving spouse of property included in the augmented deferred marital property estate under s. 861.03 (1), (2), (3) or (4) (b) 2.

AB720,89,7 (4) Remaining unsatisfied balance. After the property under subs. (2) and (3) has been applied toward satisfaction of the deferred marital property elective share amount, the remainder of the elective share amount shall be satisfied proportionally from transfers to persons other than the surviving spouse of property included in the augmented deferred marital property estate under s. 861.03 (4) (b) 1. or 3.

AB720,89,11 (5) Equitable adjustment of shares. If all or part of a prorated share under sub. (2), (3) or (4) is uncollectible, the court may increase the prorated liability of recipients described under the same or another of the 3 subsections if all of the following conditions are satisfied:

AB720,89,13 (a) The court finds that an equitable adjustment is necessary to avoid hardship for the surviving spouse.

AB720,89,15 (b) No recipient or donee of a recipient is liable for an amount greater than the value of the deferred marital property subject to the election that was received.