AB490: Bill Text

AB490,52,9 701.0407 Evidence of oral trust. Except as required by a statute other than this chapter, a trust does not need to be evidenced by a trust instrument, but the creation of an oral trust and its terms may be established only by clear and convincing evidence.

AB490,82 Section 82. 701.0408 of the statutes is created to read:

AB490,52,15 701.0408 Trust for care of animal. (1) A trust may be created to provide for the care of an animal alive during the settlor's lifetime. The trust terminates upon the death of the animal or, if the trust was created to provide for the care of more than one animal alive during the settlor's lifetime, upon the death of the last surviving animal.

AB490,52,20 (2) A trust authorized by this section may be enforced by a person appointed in the terms of the trust or, if no person is so appointed, by a person appointed by the court. A person having an interest in the welfare of the animal may request the court to appoint a person to enforce the trust or to remove a person appointed under this subsection.

AB490,52,25 (3) Property of a trust authorized by this section may be applied only to its intended use, except to the extent the court determines that the value of the trust property exceeds the amount required for the intended use. Property not required for the intended use must be distributed to the settlor, if then living, otherwise to the settlor's successors in interest.

AB490,83 Section 83. 701.0409 of the statutes is created to read:

AB490,53,4 701.0409 Noncharitable trust without ascertainable beneficiary. Except as otherwise provided in s. 701.0408 or by another statute, the following rules apply:

AB490,53,7 (1) A trust may be created for a noncharitable purpose without a definite or definitely ascertainable beneficiary or for a noncharitable but otherwise valid purpose to be selected by the trustee.

AB490,53,12 (2) A trust may be created for maintaining, keeping in repair, and preserving any grave, tomb, monument, gravestone, or any cemetery. Any cemetery authority under s. 157.061 (2) may receive property in trust for any of the purposes specified in this subsection and apply the income from the trust to the purpose stated in the trust instrument.

AB490,53,16 (3) A trust authorized by this section may be enforced by a trust protector with the power to enforce the trust. If there is not a trust protector with the power to enforce the trust, a court may appoint a trust protector with the power to enforce the trust under s. 701.0818.

AB490,53,21 (4) Property of a trust authorized by this section may be applied only to its intended use, except to the extent the court determines that the value of the trust property exceeds the amount required for the intended use. Property not required for the intended use must be distributed to the settlor, if then living, otherwise to the settlor's successors in interest.

AB490,84 Section 84. 701.0410 of the statutes is created to read:

AB490,54,2 701.0410 Modification or termination of trust; proceedings for approval or disapproval. (1) In addition to the methods of termination prescribed by ss. 701.0411 to 701.0414, a trust terminates to the extent the trust is revoked or expires pursuant to its terms, no purpose of the trust remains to be achieved, or the purposes of the trust have become unlawful or impossible to achieve.

AB490,54,10 (2) A proceeding to approve or disapprove a proposed modification or termination under ss. 701.0411 to 701.0416, or a proposed trust combination or division under s. 701.0417, may be commenced by a trustee or beneficiary, and a proceeding to approve or disapprove a proposed modification or termination under s. 701.0411 may be commenced by the settlor. The settlor of a charitable trust may maintain a proceeding to modify the trust under s. 701.0413. A trustee does not have standing to oppose a proposed modification or termination commenced under s. 701.0411 (1).

AB490,54,19 (3) A trustee may not be compelled by a modification or termination under this section or under ss. 701.0411 to 701.0416 to make distributions to or for any beneficiary of a trust for an individual with a disability or to terminate the trust, during the lifetime of the individual with a disability. A court may modify the terms of a trust for an individual with a disability with retroactive effect or reform the terms of such trust to achieve the settlor's objective or, if because of circumstances not anticipated by the settlor, to otherwise further the purposes of the trust so that it does not result in trust property being countable as resources or income of the individual with a disability for purposes of public assistance.

AB490,85 Section 85. 701.0411 of the statutes is created to read:

AB490,55,4 701.0411 Modification or termination of noncharitable irrevocable trust by consent. (1) A noncharitable irrevocable trust may be modified or terminated, with or without court approval, upon consent of the settlor and all beneficiaries, even if the modification or termination is inconsistent with a material purpose of the trust. A settlor's power to consent to a trust's modification or termination may be exercised by a representative under s. 701.0303 only if the representative is specifically authorized to consent to a trust's modification or termination under a power of attorney, the terms of the trust, or by a court under a guardianship or conservatorship.

AB490,55,7 (2) (a) A noncharitable irrevocable trust may be terminated upon consent of all of the beneficiaries if the court concludes that continuance of the trust is not necessary to achieve any material purpose of the trust.

AB490,55,10 (b) A noncharitable irrevocable trust may be modified upon consent of all of the beneficiaries if the court concludes that modification is not inconsistent with a material purpose of the trust.

AB490,55,12 (3) A spendthrift provision in the terms of the trust is not presumed to constitute a material purpose of the trust.

AB490,55,14 (4) A court may not compel a beneficiary to consent to a modification or termination to satisfy a creditor of the beneficiary.

AB490,55,16 (5) Upon termination of a trust under sub. (1) or (2), the trustee shall distribute the trust property as agreed by the beneficiaries.

AB490,55,19 (6) If not all of the beneficiaries consent to a proposed modification or termination of the trust under sub. (1) or (2), the modification or termination may be approved by the court if the court is satisfied that all of the following apply:

AB490,55,21 (a) If all of the beneficiaries had consented, the trust could have been modified or terminated under this section.

AB490,55,23 (b) The interests of a beneficiary who does not consent will be adequately protected.

AB490,56,2 (7) A party proposing to modify or terminate a trust under sub. (1) or (2) shall give notice of the proposed modification or termination to the settlor, if living, the trustee, each trust protector, each directing party, and each beneficiary at least 30 days before the proposed effective date of the modification or termination.

AB490,86 Section 86. 701.0412 of the statutes is created to read:

AB490,56,9 701.0412 Modification or termination because of unanticipated circumstances or inability to administer trust effectively. (1) The court may modify the administrative or dispositive terms of a trust or terminate the trust if, because of circumstances not anticipated by the settlor, modification or termination will further the purposes of the trust. To the extent practicable, the court shall make the modification in accordance with the settlor's probable intention.

AB490,56,12 (2) The court may modify the administrative terms of a trust if continuation of the trust on its existing terms would be impracticable or wasteful or impair the trust's administration.

AB490,56,14 (3) Upon termination of a trust under this section, the trustee shall distribute the trust property in a manner consistent with the purposes of the trust.

AB490,56,17 (4) A party petitioning the court for action under this section shall give notice of the proceeding to the settlor, if living, the trustee, each trust protector, each directing party, and the qualified beneficiaries.

AB490,87 Section 87. 701.0413 of the statutes is created to read:

AB490,56,21 701.0413 Cy pres. (1) The purpose of this section is to broaden the power of the courts to make charitable gifts more effective. The court shall liberally apply the cy pres doctrine.

AB490,56,23 (2) Except as provided in sub. (3), if a particular charitable purpose becomes unlawful, impracticable, impossible to achieve, or wasteful, all of the following apply:

AB490,56,24 (a) The trust does not fail, in whole or in part.

AB490,57,2 (b) The trust property does not revert to the settlor or the settlor's successors in interest.

AB490,57,12 (c) The court may apply the cy pres doctrine to modify or terminate the trust by directing that the trust property be applied or distributed, in whole or in part, in a manner consistent with the settlor's charitable purposes. In determining the alternative plan for disposition of the property under this paragraph, the court shall take into account current and future community needs in the general field of charity within which the original charitable purpose falls, other charitable interests of the settlor, the amount of principal and income available under the trust, and other relevant factors. A person with standing to enforce the terms of a charitable trust under s. 701.0405 (3) has standing to commence a proceeding under this paragraph. The attorney general is a necessary party in all proceedings under this paragraph.

AB490,57,17 (3) A provision in the terms of a charitable trust that would result in distribution of the trust property to a noncharitable beneficiary prevails over the power of the court under sub. (2) to apply the cy pres doctrine to modify or terminate the trust only if, when the provision takes effect, the trust property is to revert to the settlor and the settlor is still living.

AB490,57,21 (4) A party petitioning the court for action under this section shall give notice to the settlor, if living, the trustee, each trust protector, each directing party, the qualified beneficiaries, and any person with standing to enforce the terms of a charitable trust under s. 701.0405 (3).

AB490,88 Section 88. 701.0414 of the statutes is created to read:

AB490,57,24 701.0414 Modification or termination of uneconomic trust. (1) In this section:

AB490,58,4 (a) "Adjustment reference number" means the consumer price index for all urban consumers, as published by the United States bureau of labor statistics, in effect on January 1 of the year in which an adjustment is to be made in accordance with sub. (3).

AB490,58,7 (b) "Base reference number" means the consumer price index for all urban consumers, as published by the United States bureau of labor statistics, in effect on January 1 of the base year.

AB490,58,9 (c) "Base year" means the year in which this paragraph takes effect .... [LRB inserts date].

AB490,58,14 (2) After notice to the settlor, if living, each trust protector, each directing party, and the qualified beneficiaries, the trustee of a trust consisting of trust property having a total value less than $100,000 or a revised applicable figure, as determined under sub. (3), may terminate the trust if the trustee concludes that the value of the trust property is insufficient to justify the cost of administration.

AB490,58,18 (3) The dollar amount specified in sub. (2) shall be adjusted to a revised applicable figure on the 5th anniversary of the effective date of this subsection .... [LRB inserts date], and every 5 years thereafter. The revised applicable figure shall be determined as follows:

AB490,58,21 (a) Calculate the percentage change between the base reference number and the adjustment reference number for the year in which the adjustment is being made.

AB490,58,23 (b) 1. If the percentage change determined in par. (a) is a positive number, determine the revised applicable figure as follows:

AB490,58,25 a. Multiply $100,000 by the percentage change determined in par. (a), expressed as a decimal.

AB490,59,1 b. Round the product under subd. 1. a. to the nearest $1,000.

AB490,59,2 c. Add the value determined under subd. 1. b. to $100,000.

AB490,59,4 2. If the percentage change determined in par. (a) is a negative number, determine the revised applicable figure as follows:

AB490,59,6 a. Multiply $100,000 by the absolute value of the percentage change determined in par. (a), expressed as a decimal.

AB490,59,7 b. Round the product under subd. 2. a. to the nearest $1,000.

AB490,59,8 c. Subtract the value determined under subd. 2. b. from $100,000.

AB490,59,12 (4) The court may modify or terminate a trust or remove the trustee and appoint a different trustee if it determines that the value of the trust property is insufficient to justify the cost of administration even if the trust property has a total value in excess of the amount described in sub. (2).

AB490,59,14 (5) Upon termination of a trust under this section, the trustee shall distribute the trust property in a manner consistent with the purposes of the trust.

AB490,59,15 (6) This section does not apply to an easement for conservation or preservation.

AB490,59,18 (7) A party petitioning the court for action under this section shall give notice of the proceeding to the settlor, if living, the trustee, each trust protector, each directing party, and the qualified beneficiaries.

AB490,89 Section 89. 701.0415 of the statutes is created to read:

AB490,60,2 701.0415 Reformation to correct mistakes. The court may reform the terms of a trust, even if unambiguous, to conform the terms to the settlor's intent if it is proved by clear and convincing evidence that both the settlor's intent and the terms of the trust were affected by a mistake of fact or law, whether in expression or inducement. A party petitioning the court for action under this section shall give notice of the proceeding to the settlor, if living, the trustee, each trust protector, each directing party, and the qualified beneficiaries.

AB490,90 Section 90. 701.0416 of the statutes is created to read:

AB490,60,9 701.0416 Modification to achieve settlor's tax objectives. To achieve the settlor's tax objectives, the court may modify the terms of a trust in a manner that is not contrary to the settlor's probable intent. The court may provide that the modification has retroactive effect. A party petitioning the court for action under this section shall give notice of the proceeding to the settlor, if living, the trustee, each trust protector, each directing party, and the qualified beneficiaries.

AB490,91 Section 91. 701.0417 of the statutes is created to read:

AB490,60,14 701.0417 Combination and division of trusts. (1) After notice to each trust protector, each directing party, and the qualified beneficiaries, a trustee may do any of the following if the result does not impair rights of any beneficiary or adversely affect achievement of any trust purposes:

AB490,60,15 (a) Combine 2 or more trusts into a single trust.

AB490,60,16 (b) Divide a trust into 2 or more separate trusts.

AB490,60,23 (2) Subject to the terms of the trust, the trustee may take into consideration differences in federal tax attributes and other pertinent factors in administering the trust property of any separate account or trust, in making applicable tax elections, and in making distributions. A separate trust created by severance under sub. (1) (b) is treated as a separate trust for all purposes from the date on which the severance is effective. The effective date of the severance may be retroactive to a date before the date on which the trustee exercises the power.

AB490,60,25 (3) If a trustee combines 2 or more trusts into a single trust, the trustee shall identify which trust is the surviving trust.

AB490,92 Section 92. 701.0418 of the statutes is created to read:

AB490,61,3 701.0418 Trustee's power to appoint assets to new trust. (1) Definitions. In this section:

AB490,61,8 (a) "Absolute power" means a power to invade trust assets for the benefit of a beneficiary that is not limited by a specific or ascertainable standard, whether or not the term "absolute" is used in the trust instrument. "Absolute power" includes a power to invade trust assets for the best interests, welfare, comfort, or happiness of a beneficiary.

AB490,61,10 (b) "First trust" means the trust from which assets are or may be appointed under sub. (2).

AB490,61,12 (c) "Second trust" means the trust or trusts to which assets are or may be appointed under sub. (2).

AB490,61,18 (2) Power to appoint. (a) Except as otherwise provided in this subsection and in subs. (3) and (5), a trustee who has the power to invade the principal of a first trust for the benefit of a beneficiary who is eligible to receive or entitled to the income of the first trust or entitled to an annuity or unitrust payment from the first trust may exercise the power by appointing part or all of the assets of the first trust in favor of a trustee of a 2nd trust if all of the following apply:

AB490,61,20 1. The appointment of assets does not reduce any fixed income, annuity, or unitrust interest of a beneficiary.

AB490,62,2 2. If the trustee's power to invade income or principal of the first trust is limited by a specific or ascertainable standard, the appointment of assets does not result in the trustee of the 2nd trust or any other person having a power to invade the income or principal of the 2nd trust that is broader than the trustee's power to invade income or principal of the first trust. This subdivision does not apply if the 2nd trust is a trust for an individual with a disability.

AB490,62,3 3. One of the following applies:

AB490,62,5 a. The beneficiaries of the first trust are the same as the beneficiaries of the 2nd trust.

AB490,62,7 b. If the first trust grants the trustee the absolute power to invade principal, the 2nd trust includes only all or some of the beneficiaries of the first trust.

AB490,62,10 (b) Paragraph (a) applies to a trustee whether or not the trustee has an absolute power to invade principal and whether or not there is a current need to invade principal under the terms of the first trust.

AB490,62,12 (3) Limitations on exercise of power. A trustee may not appoint assets to a 2nd trust under sub. (2) if any of the following applies:

AB490,62,15 (a) The trust instrument creating the first trust expressly prohibits the trustee from appointing assets of the first trust to a 2nd trust by reference to this section or by using the term "decanting."

AB490,62,18 (b) A contribution to the first trust qualified for a marital or charitable deduction for federal income, gift, or estate tax purposes under the Internal Revenue Code and one of the following applies:

AB490,62,21 1. The 2nd trust contains a provision that, if included in the first trust, would have prevented the first trust from qualifying for the deduction or would have reduced the amount of the deduction.

AB490,62,24 2. The 2nd trust does not contain a provision that was contained in the first trust that, if omitted from the first trust, would have prevented the first trust from qualifying for the deduction or would have reduced the amount of the deduction.

AB490,63,4 (c)   The trustee has a beneficial interest in the first trust unless the 2nd trust is a trust for an individual with a disability, the trustee's only beneficial interest in the first trust is as a remainder beneficiary, and the trustee's beneficial interest in the 2nd trust is not greater than the trustee's beneficial interest in the first trust.

AB490,63,6 (d)   The appointment of assets to a 2nd trust would impair currently exercisable withdrawal rights of a beneficiary of the first trust and one of the following applies:

AB490,63,9 1. The withdrawal rights were granted to the beneficiary in a manner designed to allow contributions subject to the withdrawal rights to qualify for the federal gift tax annual exclusion.