SB384: Bill Text

SB384,121,23 (4) A provision of a trust instrument drafted or caused to be drafted by a trustee, directing party, or trust protector that modifies the application of this section in a manner favorable to the trustee, directing party, or trust protector and potentially detrimental to a beneficiary is invalid with respect to the trustee, directing party, or trust protector unless the trustee, directing party, or trust protector proves that the provision was fair under the circumstances existing at the time the trust instrument was signed and that the existence and contents of the provision were adequately communicated to the settlor.

SB384,165 Section 165. 701.1005 of the statutes is created to read:

SB384,122,4 701.1005 Limitation of action against trustee. (1) A beneficiary may not commence a proceeding against a trustee for breach of trust more than one year after the date on which the beneficiary or a representative of the beneficiary was sent a report that adequately disclosed the existence of a potential claim for breach of trust.

SB384,122,7 (2) A report adequately discloses the existence of a potential claim for breach of trust if it provides sufficient information so that the beneficiary or representative knows of the potential claim or should have inquired into its existence.

SB384,122,10 (3) If sub. (1) does not apply, a proceeding by a beneficiary against a trustee for breach of trust must be commenced within 5 years after the first to occur of the following:

SB384,122,11 (a) The removal, resignation, or death of the trustee.

SB384,122,12 (b) The termination of the beneficiary's interest in the trust.

SB384,122,13 (c) The termination of the trust.

SB384,122,15 (4) Subsections (1) and (3) do not apply to a claim for fraud. The time for asserting a claim for fraud is governed by applicable law.

SB384,166 Section 166. 701.1006 of the statutes is created to read:

SB384,122,20 701.1006 Reliance on trust instrument. A trustee who acts in reasonable reliance on the terms of the trust as expressed in the trust instrument is not liable to a beneficiary for a breach of trust to the extent the breach resulted from the reliance.

SB384,167 Section 167. 701.1007 of the statutes is created to read:

SB384,123,2 701.1007 Event affecting administration or distribution. If the happening of an event, including marriage, divorce, performance of educational requirements, or death, affects the administration or distribution of a trust, a trustee who has exercised reasonable care to ascertain the happening of the event is not liable for a loss resulting from the trustee's lack of knowledge.

SB384,168 Section 168. 701.1008 of the statutes is created to read:

SB384,123,6 701.1008 Exculpation of trustee. (1) A term of a trust relieving a trustee of liability for breach of trust is unenforceable to the extent that it does any of the following:

SB384,123,9 (a) Relieves the trustee of liability for breach of trust committed in bad faith or with reckless indifference to the purposes of the trust or the interests of a beneficiary.

SB384,123,11 (b) Was inserted as the result of an abuse by the trustee of a fiduciary or confidential relationship with the settlor.

SB384,123,16 (2) An exculpatory term drafted or caused to be drafted by the trustee is invalid as an abuse of a fiduciary or confidential relationship unless the trustee proves that the exculpatory term was fair under the circumstances existing at the time the trust instrument was signed and that the existence and contents of the exculpatory term were adequately communicated to the settlor.

SB384,169 Section 169. 701.1009 of the statutes is created to read:

SB384,123,21 701.1009 Beneficiary's consent, release, or ratification. A trustee is not liable to a beneficiary for breach of trust if the beneficiary consented to the conduct constituting the breach, released the trustee from liability for the breach, or ratified the transaction constituting the breach, unless any of the following applies:

SB384,123,23 (1) The consent, release, or ratification of the beneficiary was induced by improper conduct of the trustee.

SB384,124,3 (2) At the time of the consent, release, or ratification, the beneficiary did not have knowledge of the beneficiary's rights or of the material facts relating to the breach.

SB384,170 Section 170. 701.1010 of the statutes is created to read:

SB384,124,8 701.1010 Limitation on personal liability of trustee. (1) Except as otherwise provided in the contract, a trustee is not personally liable on a contract properly entered into in the trustee's fiduciary capacity in the course of administering the trust if the trustee in the contract disclosed the fiduciary capacity.

SB384,124,12 (2) A trustee is personally liable for torts committed in the course of administering a trust, or for obligations arising from ownership or control of trust property, including liability for violation of environmental law, only if the trustee is personally at fault.

SB384,171 Section 171. 701.1011 of the statutes is created to read:

SB384,124,18 701.1011 Interest as general partner. (1) Unless personal liability is imposed in the contract, a trustee who holds an interest as a general partner in a general or limited partnership is not personally liable on a contract entered into by the partnership after the trust's acquisition of the interest if the fiduciary capacity was disclosed in the contract.

SB384,124,21 (2) A trustee who holds an interest as a general partner is not personally liable for torts committed by the partnership or for obligations arising from ownership or control of the interest unless the trustee is personally at fault.

SB384,124,24 (3) If the trustee of a revocable trust holds an interest as a general partner, the settlor is personally liable for contracts and other obligations of the partnership as if the settlor were a general partner.

SB384,172 Section 172. 701.1012 of the statutes is created to read:

SB384,125,5 701.1012 Protection of person dealing with trustee. (1) A person other than a beneficiary who in good faith assists a trustee, or who in good faith and for value deals with a trustee, without knowledge that the trustee is exceeding or improperly exercising the trustee's powers is protected from liability as if the trustee properly exercised the power.

SB384,125,8 (2) A person other than a beneficiary who in good faith deals with a trustee is not required to inquire into the extent of the trustee's powers or the propriety of their exercise.

SB384,125,10 (3) A person who in good faith delivers assets to a trustee does not need to ensure their proper application.

SB384,125,14 (4) A person other than a beneficiary who in good faith assists a former trustee, or who in good faith and for value deals with a former trustee, without knowledge that the trusteeship has terminated is protected from liability as if the former trustee were still a trustee.

SB384,125,17 (5) Comparable protective provisions of other laws relating to commercial transactions or transfer of securities by fiduciaries prevail over the protection provided by this section.

SB384,173 Section 173. 701.1013 of the statutes is created to read:

SB384,125,21 701.1013 Certification of trust. (1) Instead of furnishing a copy of the trust instrument to a person other than a beneficiary, the trustee may furnish to the person a certification of trust containing the following information:

SB384,125,23 (a) That the trust exists and the date on which the trust instrument was executed.

SB384,125,24 (b) The identity of the settlor.

SB384,125,25 (c) The identity and address of the currently acting trustee.

SB384,126,1 (d) The powers of the trustee.

SB384,126,3 (e) The revocability or irrevocability of the trust and the identity of any person holding a power to revoke the trust.

SB384,126,6 (f) The authority of a cotrustee to sign or otherwise authenticate and whether all cotrustees or less than all cotrustees are required to sign or otherwise authenticate in order to exercise powers of the trustee.

SB384,126,7 (g) The manner in which title to trust property may be taken.

SB384,126,9 (2) A certification of trust may be signed or otherwise authenticated by any trustee.

SB384,126,12 (3) A trustee shall include in a certification of trust that the trust has not been revoked, modified, or amended in any manner that would cause the representations contained in the certification of trust to be incorrect.

SB384,126,14 (4) A certification of trust does not need to contain the dispositive terms of a trust.

SB384,126,18 (5) A recipient of a certification of trust may require the trustee to furnish copies of those excerpts from the original trust instrument and later amendments that designate the trustee and confer upon the trustee the power to act in the pending transaction.

SB384,126,24 (6) A person who acts in reliance upon a certification of trust without knowledge that the representations contained therein are incorrect is not liable to any person for so acting and may assume without inquiry the existence of the facts contained in the certification. Knowledge of the terms of the trust may not be inferred solely from the fact that a copy of all or part of the trust instrument is held by the person relying upon the certification.

SB384,127,3 (7) A person who in good faith enters into a transaction in reliance upon a certification of trust may enforce the transaction against the trust property as if the representations contained in the certification were correct.

SB384,127,8 (8) A person making a demand for copies of the trust instrument or excerpts from the trust instrument, other than those excerpts described in sub. (5), in addition to a certification of trust is liable for costs, expenses, reasonable attorney fees and damages if the court determines that the person did not act in good faith in demanding the copies.

SB384,127,10 (9) This section does not limit the right of a person to obtain a copy of the trust instrument in a judicial proceeding concerning the trust.

SB384,174 Section 174. 701.105 (title), (1), (2) and (3) of the statutes are renumbered 701.1201 (title), (1), (2) and (3), and 701.1201 (1), (2) and (3), as renumbered, are amended to read:

SB384,127,19 701.1201 (1) (a) In the administration of any trust which that is a private foundation, as defined in section 509 of the internal revenue code Internal Revenue Code, a charitable trust, as defined described in section 4947 (a) (1) of the internal revenue code Internal Revenue Code, or a split-interest trust as defined described in section 4947 (a) (2) of the internal revenue code Internal Revenue Code, all of the following acts shall be prohibited:

SB384,127,23 1. Engaging in any act of self-dealing, as defined in section 4941 (d) of the internal revenue code, which Internal Revenue Code, that would give rise to any liability for the tax imposed by section 4941 (a) of the internal revenue code Internal Revenue Code.

SB384,128,2 2. Retaining any excess business holdings, as defined in section 4943 (c) of the internal revenue code, which Internal Revenue Code, that would give rise to any liability for the tax imposed by section 4943 (a) of the internal revenue code Internal Revenue Code.

SB384,128,6 3. Making any investments which that would jeopardize the carrying out of any of the exempt purposes of the trust, within the meaning of section 4944 of the internal revenue code Internal Revenue Code, so as to give rise to any liability for the tax imposed by section 4944 (a) of the internal revenue code Internal Revenue Code.

SB384,128,10 4. Making any taxable expenditures, as defined in section 4945 (d) of the internal revenue code, which Internal Revenue Code, that would give rise to any liability for the tax imposed by section 4945 (a) of the internal revenue code Internal Revenue Code.

SB384,128,14 (b) This subsection shall does not apply either to those split-interest trusts or to amounts thereof which that are not subject to the prohibitions applicable to private foundations by reason of the provisions of section 4947 of the internal revenue code Internal Revenue Code.

SB384,128,21 (2) In the administration of any trust which that is a private foundation, as defined in section 509 of the internal revenue code Internal Revenue Code, or which that is a charitable trust, as defined described in section 4947 (a) (1) of the internal revenue code Internal Revenue Code, there shall be distributed, for the purposes specified in the trust instrument, for each taxable year, amounts at least sufficient to avoid liability for the tax imposed by section 4942 (a) of the internal revenue code Internal Revenue Code.

SB384,128,25 (3) Subsections (1) and (2) shall do not apply to any trust to the extent that a court of competent jurisdiction shall determine determines that such the application would be contrary to the terms of the instrument governing such trust and that the same may not properly be changed to conform to such subsections.

SB384,175 Section 175. 701.105 (4) of the statutes is repealed.

SB384,176 Section 176. 701.11 of the statutes is repealed.

SB384,177 Section 177. Subchapter XI (title) of chapter 701 [precedes 701.1101] of the statutes is created to read:

SB384,129,5 chapter 701

SB384,129,6 subchapter xi

SB384,129,7 uniform principal and income act

SB384,178 Section 178. 701.1101 of the statutes is created to read:

SB384,129,12 701.1101 Short title and scope. This subchapter may be cited as the Wisconsin Uniform Principal and Income Act. Subject to s. 701.1206 (2), this subchapter applies to a trust described in s. 701.0102 and an estate that is administered in this state.

SB384,179 Section 179. 701.1102 (intro.) of the statutes is created to read:

SB384,129,14 701.1102 Definitions. (intro.) In this subchapter:

SB384,180 Section 180. 701.1102 (1g) of the statutes is created to read:

SB384,129,17 701.1102 (1g) "Asset" has the meaning given for property under s. 701.0103 (20).

SB384,181 Section 181. 701.1106 (6) of the statutes is created to read:

SB384,129,20 701.1106 (6) Sections 701.0410 to 701.0418 do not apply to a conversion of a trust to a unitrust under this section.

SB384,182 Section 182. 701.1123 (1) of the statutes is created to read:

SB384,129,22 701.1123 (1) In this section:

SB384,130,2 (a) "Marital deduction trust" means a trust for which an election to qualify for a marital deduction under section 2056 (b) (7), 2056A (a) (3), or 2523 (f) of the Internal Revenue Code has been made or a trust that qualified for the marital deduction under other provisions of section 2056 or 2523 of the Internal Revenue Code.

SB384,130,4 (b) "Payment" means an amount of money or property received by a trustee that is any of the following:

SB384,130,8 1. Part of a series, or eligible to be part of a series, of distributions payable over a fixed number of years or during the life of one or more individuals because of services rendered or property transferred to the payer in exchange for the future distributions.

SB384,130,9 2. Distributed from a plan, regardless of the reason for the distribution.

SB384,130,14 (c) "Plan" means a contractual, custodial, trust, or other arrangement that provides for distributions to a trust. "Plan" includes a private or commercial annuity, an individual retirement account, a Roth individual retirement account, a qualified retirement plan such as a pension, profit-sharing, stock-bonus, or stock-ownership plan, or any nonqualified deferred compensation plan.

SB384,130,18 (e) "Separate account" means an account established or maintained under a plan under which income, gains, and losses, whether or not realized, from assets allocated to the account, are credited to or charged against the account without regard to other income, gains, or losses of the plan.

SB384,183 Section 183. 701.1123 (4) of the statutes is created to read:

SB384,131,2 701.1123 (4) (a) Notwithstanding sub. (3), a trustee of a marital deduction trust shall determine plan income for an accounting period as if the plan were a trust subject to this subchapter. If the trustee of a marital deduction trust cannot determine the plan income, the plan income is 4 percent of the total present value of the trust's income in the plan on the first day of the accounting period, based on reasonable actuarial assumptions as determined by the trustee of the marital deduction trust.

SB384,131,9 (b) Notwithstanding subs. (2) and (3), a trustee of a marital deduction trust shall allocate a payment from a plan to income to the extent of the plan income and distribute that amount to the surviving spouse. The trustee of the marital deduction trust shall allocate the balance of the payment to principal. Upon the request of the surviving spouse, the trustee of a marital deduction trust shall allocate principal to income to the extent the plan income exceeds payments made from the plan to the trust during the accounting period.

SB384,131,12 (c) Upon the request of the surviving spouse of the settlor, a trustee of a marital deduction trust shall demand that a person administering a plan distribute the plan income to the trust.

SB384,184 Section 184. 701.1126 (title) of the statutes is created to read:

SB384,131,14 701.1126 (title) Timber.