SB384: Bill Text

SB384,160,14 (2) (intro.) Principal disbursements to which par. (a) sub. (1) applies include the following, but only to the extent that the trustee has not been and does not expect to be reimbursed by a 3rd party:

SB384,160,15 (e) Disbursements described in sub. (26) (a) 7. s. 701.1131 (1) (g).

SB384,160,18 (3) If the asset whose ownership gives rise to the disbursements becomes subject to a successive income interest after an income interest ends, a trustee may continue to transfer amounts from income to principal as provided in par. (a) sub. (1).

SB384,282 Section 282. 701.20 (29) (title) of the statutes is renumbered 701.1134 (title).

SB384,283 Section 283. 701.20 (29) (a) of the statutes is renumbered 701.1134 (1).

SB384,284 Section 284. 701.20 (29) (b) of the statutes is renumbered 701.1134 (2).

SB384,285 Section 285. 701.20 (29) (c) (intro.) of the statutes is renumbered 701.1134 (3) (intro.) and amended to read:

SB384,160,25 701.1134 (3) (intro.) A tax required to be paid by a trustee on the trust's share of an entity's taxable income must be paid proportionately as follows:

SB384,286 Section 286. 701.20 (29) (c) 1. of the statutes is renumbered 701.1134 (3) (a) and amended to read:

SB384,161,4 701.1134 (3) (a) From income to the extent that receipts from the entity are allocated only to income.

SB384,287 Section 287. 701.20 (29) (c) 2. (intro.) and a. of the statutes are consolidated, renumbered 701.1134 (3) (b) and amended to read:

SB384,161,8 701.1134 (3) (b) From principal to the extent that : 2. a. Receipts receipts from the entity are allocated only to principal.

SB384,288 Section 288. 701.20 (29) (c) 2. b. of the statutes is repealed.

SB384,289 Section 289. 701.20 (29) (d) of the statutes is repealed.

SB384,290 Section 290. 701.20 (30) of the statutes is renumbered 701.1135, and 701.1135 (1) (a), as renumbered, is amended to read:

SB384,161,14 701.1135 (1) (a) Elections and decisions, other than those described in par. (b) sub. (2), that the fiduciary makes from time to time regarding tax matters.

SB384,291 Section 291. 701.20 (31) of the statutes is repealed.

SB384,292 Section 292. 701.21 of the statutes is renumbered 701.1136, and 701.1136 (1), (2) and (4), as renumbered, are amended to read:

SB384,161,22 701.1136 (1) Distribution of income. Except as otherwise determined by the trustee or a court under s. 701.20 (4g) 701.1106 with respect to unitrust distributions, if a beneficiary is entitled to receive income from a trust, but the creating trust instrument fails to specify how frequently it is to be paid, the trustee shall distribute at least annually the income to which such beneficiary is entitled.

SB384,161,24 (2) Permitted accumulations. No provision directing or authorizing accumulation of trust income shall be is invalid.

SB384,162,6 (4) Disposition of accumulated income. Income not required to be distributed by the creating trust instrument, in the absence of a governing provision in the instrument, may, in the trustee's discretion, be held in reserve for future distribution as income or be added to principal subject to retransfer to income of the dollar amount originally transferred to principal; but at. At the termination of the income interest, any undistributed income shall be distributed as principal.

SB384,293 Section 293. 701.22 (title) of the statutes is repealed.

SB384,294 Section 294. 701.22 of the statutes is renumbered 701.0417 (4) and amended to read:

SB384,162,21 701.0417 (4) In case of a division of a trust assets into 2 or more trusts or shares, any distribution or allocation of assets as an equivalent of a dollar amount fixed by formula or otherwise shall be made at current fair market values unless the governing trust instrument expressly provided that another value may be used. If the governing trust instrument requires or permits a different value to be used, all assets property available for distribution, including cash, shall, unless otherwise expressly provided, be so distributed so that the assets property, including cash, distributed as such an equivalent will be is fairly representative of the net appreciation or depreciation in the value of the available property on the date or dates of distribution. A provision in the governing trust instrument that the trustee may fix values for purposes of distribution or allocation does not of itself constitute authorization to fix a value other than current fair market value.

SB384,295 Section 295. 701.23 of the statutes is repealed.

SB384,296 Section 296. 701.24 (title) of the statutes is renumbered 701.1205 (title).

SB384,297 Section 297. 701.24 (1) of the statutes is renumbered 701.1205 (1) and amended to read:

SB384,163,9 701.1205 (1) Except as otherwise provided in sub. (3) (2) and s. 701.19 (9) (a), ss. 701.01 to 701.19, 701.21, 701.22, and 701.23 are ss. 701.0602, 701.0813, and 701.0903 (4), this chapter is applicable to a trust existing on July 1, 1971 the effective date of this subsection .... [LRB inserts date], as well as a trust created after such date, and shall govern trustees acting under such trusts. If application of any provision of ss. 701.01 to 701.19, 701.21, 701.22, and 701.23 this chapter to a trust in existence on August 1, 1971 the effective date of this subsection .... [LRB inserts date], is unconstitutional, it shall not affect application of the provision to a trust created after that date.

SB384,298 Section 298. 701.24 (2) of the statutes is renumbered 701.1205 (2) and amended to read:

SB384,163,21 701.1205 (2) Section 701.20 Subchapter XI of this chapter applies to every a trust or decedent's estate existing on May 17, 2005 the effective date of this subsection .... [LRB inserts date], and to every a trust or decedent's estate created or coming into existence after that date, except as otherwise expressly provided in s. 701.20 subch. XI or by the decedent's will or the terms of the trust. With respect to a trust or decedent's estate existing on May 17, 2005, s. 701.20 (5) to (30) the effective date of this subsection .... [LRB inserts date], ss. 701.1110 to 701.1135 shall apply at the beginning of the trust's or estate's first accounting period, as defined in s. 701.20 701.1125 (2) (a), that begins on or after May 17, 2005 the effective date of this subsection .... [LRB inserts date].

SB384,299 Section 299. 701.24 (3) of the statutes is repealed.

SB384,300 Section 300. 701.25 of the statutes is renumbered 701.1204.

SB384,301 Section 301. 701.26 of the statutes is repealed.

SB384,302 Section 302. 702.01 (intro.) of the statutes is renumbered 702.02 (intro.).

SB384,303 Section 303. 702.01 (1) of the statutes is renumbered 702.02 (2) and amended to read:

SB384,164,4 702.02 (2) "Creating instrument" means the will, trust agreement, or other document which creates or reserves the power of appointment.

SB384,304 Section 304. 702.01 (2) of the statutes is renumbered 702.02 (4) and amended to read:

SB384,164,9 702.02 (4) "Donor" means the person who creates or reserves the power; "donee" means the person in whom the power is created or reserved; and "appointee" means the person to whom an interest is appointed of appointment.

SB384,305 Section 305. 702.01 (3) of the statutes is renumbered 702.02 (5) and amended to read:

SB384,164,18 702.02 (5) "General power of appointment" means a power exercisable in favor of the donee, the donee's estate, the donee's creditors, or the creditors of the donee's estate, whether or not it is also exercisable in favor of others. A power to appoint to any person or a power which of appointment that is not expressly restricted as to appointees may be exercised in favor of the donee or the donee's creditors if exercisable during lifetime, and in favor of the donee's estate or the creditors of the donee's estate if exercisable by will.

SB384,306 Section 306. 702.01 (4) of the statutes is renumbered 702.02 (6) and amended to read:

SB384,165,5 702.02 (6) "Power of appointment" means a power of appointment over to appoint legal or equitable interests in real or personal property. A power of appointment is a power created or reserved by a person having property subject to his or her disposition which enables the donee of the power of appointment to designate, within such limits as may be prescribed, the transferees of the property or the shares or the interests in which it shall be received ; it. A power of appointment does not include a power of sale, a power of attorney, a power of revocation, or a power exercisable by a trustee or other, a directing party, as defined in s. 701.0103 (7), another fiduciary in his or her fiduciary capacity, or a trust protector, as defined in s. 701.0103 (31).

SB384,307 Section 307. 702.01 (5) of the statutes is renumbered 702.02 (7) and amended to read:

SB384,165,14 702.02 (7) "Special power of appointment" means a power of appointment exercisable only in favor of one or more persons not including the donee, the donee's estate, the donee's creditors or the creditors of the donee's estate and, when exercisable in favor of a class, so limited in size by description of the class that in the event of nonexercise of the power a court can make distribution to persons within the class if the donor has failed to provide for this contingency that is not a general power of appointment.

SB384,308 Section 308. 702.01 (6) of the statutes is repealed.

SB384,309 Section 309. 702.02 (1) of the statutes is created to read:

SB384,165,17 702.02 (1) "Appointee" means the person to whom an interest is appointed.

SB384,310 Section 310. 702.02 (3) of the statutes is created to read:

SB384,165,20 702.02 (3) "Donee" means the person in whom the power of appointment is created or reserved.

SB384,311 Section 311. 702.03 of the statutes is amended to read:

SB384,166,5 702.03 Manifestation of intent to exercise powers a power of appointment. (1) Unless the person who executed it had a contrary intention, if a governing creating instrument, as defined in s. 854.01 (2), or an inter vivos governing instrument, as defined in s. 700.27 (1) (c), creates a power of appointment that expressly requires that the power of appointment be exercised by any type of reference to the power of appointment or its source, the donor's intention in requiring the reference is presumed to be to prevent an inadvertent exercise of the power of appointment. Extrinsic evidence, as defined in s. 854.01 (1), may be used to construe the intent.

SB384,166,19 (2) In the case of other powers, an of appointment, a creating instrument manifests an intent to exercise the power of appointment if the creating instrument purports to transfer an interest in the appointive property which the donee would have no power to transfer except by virtue of the power of appointment, even though the power of appointment is not recited or referred to in the creating instrument, or if the creating instrument either expressly or by necessary implication from its wording interpreted in light of the circumstances surrounding its drafting and execution manifests an intent to exercise the power of appointment. If there is a general power of appointment exercisable by will with no gift in default in the creating instrument, a residuary clause or other general language in the donee's will purporting to dispose of all of the donee's estate or property operates to exercise the power of appointment in favor of the donee's estate, but in all other cases such a clause or language does not in itself manifest an intent to exercise a power of appointment exercisable by will.

SB384,312 Section 312. 702.05 of the statutes is amended to read:

SB384,166,24 702.05 Exercise of powers a power of appointment. (1) Capacity to exercise a power of appointment. A power of appointment can be exercised only by a person who would have the capacity to transfer the property covered by the power of appointment.

SB384,167,8 (2) Kind of instrument and formalities of execution. A donee can exercise a power of appointment only by an instrument which meets the intent of the donor as to kind of instrument and formalities of execution. If the power of appointment is exercisable by will, this means a will executed with the formalities necessary for a valid will. A written instrument signed by the donee is sufficient if the donor fails to require any additional formalities or fails to indicate a will, but if the power of appointment is to appoint interests in land, it can be exercised only by an instrument executed with sufficient formalities for that purpose.

SB384,167,16 (3) Consent of 3rd persons. When the consent of the donor or of any other person is required by the donor for the exercise of a power of appointment, such consent must be expressed in the creating instrument exercising the power of appointment or in a separate written instrument, signed in either case by the persons whose consent is required. If any person whose consent is required dies or becomes legally incapable of consenting, the power of appointment may be exercised by the donee without the consent of that person unless the donor has manifested a contrary intent in the creating instrument creating the power.

SB384,167,22 (4) Power of appointment vested in 2 or more donees. Unless the donor manifests a contrary intent, when a power of appointment is vested in 2 or more persons, all must unite in its exercise, but if one or more of the donees dies, becomes incapable of exercising the power of appointment, or renounces, releases, or disclaims the power of appointment, the power of appointment may be exercised by the others.

SB384,313 Section 313. 702.05 (5) of the statutes is created to read:

SB384,168,4 702.05 (5) Presumption of nonexercise of a power of appointment. A personal representative, trustee, or other fiduciary who holds property subject to a power of appointment may administer that property as if the power of appointment was not exercised if the personal representative, trustee, or other fiduciary has no notice of the existence of any of the following within 6 months after the death of the donee of the power of appointment:

SB384,168,6 (a) A document purporting to be a will of the donee of the power of appointment if the power of appointment is exercisable by a will.

SB384,168,8 (b) Some other documentation of the donee purporting to exercise the power of appointment if the power of appointment is exercisable other than by a will.

SB384,314 Section 314. 702.07 of the statutes is amended to read:

SB384,168,15 702.07 Powers Power of appointment to be construed as exclusive. The donee of any power of appointment may appoint the whole or any part of the appointive assets to any one or more of the permissible appointees and exclude others, except to the extent that the donor specifies either a minimum share or amount to be appointed to each permissible appointee or to designated appointees, or a maximum share or amount appointable to any one or more appointees.

SB384,315 Section 315. 702.08 of the statutes is amended to read:

SB384,168,19 702.08 Disclaimer of powers a power of appointment. The donee of any power of appointment may disclaim all or part of the power of appointment as provided under s. 700.27 or 854.13.

SB384,316 Section 316. 702.09 (title), (1) and (3) (a), (b) and (c) of the statutes are amended to read:

SB384,168,25 702.09 (title) Release of powers a power of appointment. (1) Except as Unless the creating instrument expressly provides that the power of appointment cannot be released or expressly restricts the time, manner, or scope of release, the donee of any power of appointment may do any of the following:

SB384,169,1 (a) At any time completely release the donee's power; of appointment.

SB384,169,3 (b) At any time or times release the donee's power of appointment in any one or more of the following respects:

SB384,169,4 1. As to the whole or any part of the property which is subject thereto ;.

SB384,169,6 2. As to any one or more persons or objects, or classes of persons or objects, in whose favor such power of appointment is exercisable ;.

SB384,169,8 3. So as to limit in any other respect the extent to or manner in which it the power of appointment may be exercised.

SB384,169,9 (3) (a) Delivery to any person specified in the creating instrument;.

SB384,169,12 (b) Delivery to a trustee or to one of several trustees of the property to which the power of appointment relates, or filing with the court having jurisdiction over the trust;.

SB384,169,14 (c) Delivery to any person, other than the donee, who could be adversely affected by an exercise of the power; or of appointment.

SB384,317 Section 317. 702.11 of the statutes is amended to read:

SB384,169,19 702.11 Irrevocability of creation, exercise and release of powers a power of appointment. The creation, exercise or release of a power of appointment is irrevocable unless the power to revoke is reserved in the creation, exercise or release of the power of appointment.

SB384,318 Section 318. 702.13 (title), (1) (intro.), (a), (b) and (c) and (2) of the statutes are amended to read:

SB384,169,25 702.13 (title) Recording instruments relating to powers a power of appointment. (1) (intro.) Any of the following instruments relating to powers a power of appointment is entitled to be recorded as a conveyance upon compliance with s. 706.05 (1):

SB384,170,1 (a) An instrument, other than a will, exercising a power ; of appointment.

SB384,170,2 (b) An instrument expressing consent to exercise;.

SB384,170,3 (c) A disclaimer;.

SB384,170,5 (2) If a power of appointment is exercised by a will, a certified copy of the will and of the certificate of probate thereof may be recorded.

SB384,319 Section 319. 702.15 (intro.), (1) and (2) of the statutes are amended to read:

SB384,170,10 702.15 Disposition when a special power of appointment is unexercised. (intro.) If the donee of a special power of appointment fails to exercise effectively the special power of appointment, the interests which might have been appointed under the special power of appointment pass in one of the following ways:

SB384,170,12 (1) If the creating instrument contains an express gift in default, then in accordance with the terms of such gift;.

SB384,170,18 (2) If the creating instrument contains no express gift in default and does not clearly indicate that the permissible appointees are to take only if the donee exercises the special power of appointment, then to the permissible appointees equally, but if the special power of appointment is to appoint among a class such as "relatives," "issue," or "heirs," then to those persons who would have taken had there been an express gift to the described class; or.

SB384,320 Section 320. 702.15 (3) of the statutes is renumbered 702.15 (3) (a) and amended to read:

SB384,170,24 702.15 (3) (a) If Except as provided in par. (b), if the creating instrument contains no express gift in default and clearly indicates that the permissible appointees are to take only if the donee exercises the special power of appointment, then by reversion to the donor or the donor's estate. But if