SB384: Bill Text

SB384,28,25 701.0103 Definitions. In this chapter:

SB384,29,2 (1) "Action," with respect to an act of a trustee, directing party, or trust protector, includes a failure to act.

SB384,29,5 (2) "Ascertainable standard" means a standard relating to an individual's health, education, support, or maintenance within the meaning of section 2041 (b) (1) (A) or 2514 (c) (1) of the Internal Revenue Code.

SB384,29,6 (3) "Beneficiary" means a person that satisfies any of the following:

SB384,29,7 (a) Has a present or future beneficial interest in a trust, vested or contingent.

SB384,29,9 (b) In a capacity other than that of trustee, trust protector, or a directing party, holds a power of appointment over trust property.

SB384,29,12 (4) "Charitable trust" means a trust, or portion of a trust, created for a charitable purpose described in s. 701.0405 (1). This subsection does not apply in s. 701.1201.

SB384,29,13 (5) "Conservator" means a person appointed by a court pursuant to s. 54.76.

SB384,29,17 (6) "Directed trust property" means all or any portion of the property of a trust that is invested or managed by a directing party or is invested or managed at the direction of a directing party and for which the trustee has no investment or management responsibility.

SB384,29,24 (7) "Directing party" means a person who, in a trust instrument or court order, is granted a power to direct a trustee's investment or distribution decisions or a power to make investment or distribution decisions regarding trust property and the power is granted to the person in a capacity other than as a trustee or a trust protector. For purposes of this subsection, a power of appointment is not a power to direct a trustee's investment or distribution decisions or a power to make investment or distribution decisions regarding trust property.

SB384,30,2 (8) "Environmental law" means a federal, state, or local law, rule, regulation, or ordinance relating to protection or remediation of the environment.

SB384,30,3 (9) "General power of appointment" has the meaning given in s. 702.02 (5).

SB384,30,5 (10) "Guardian of the estate" means a person appointed by a court under s. 54.10 as a guardian of the estate of a minor or adult individual.

SB384,30,7 (11) "Guardian of the person" means a person appointed by a court under s. 54.10 as a guardian of the person of a minor or adult individual.

SB384,30,10 (12) "Incapacitated" means unable to receive and evaluate information effectively or to communicate decisions to such an extent that the individual lacks the capacity to manage his or her decisions.

SB384,30,12 (13) "Individual with a disability" means an individual who meets one of the following tests:

SB384,30,15 (a) The individual receives social security, supplemental security income, or medical assistance benefits on the basis of being an individual who is disabled, as defined by the applicable program.

SB384,30,23 (b) The individual has a mental or physical impairment of a type and severity that would cause the individual to be considered an individual who is disabled for purposes of participating in the social security, supplemental security income, or medical assistance program, if the individual applied to be eligible for one of those programs based on disability, and if the individual's education, work record, and engagement in substantial gainful activity were disregarded. The fact that the individual is age 65 or older does not bar the individual from being considered an individual with a disability.

SB384,30,25 (14) "Interests of the beneficiaries" means the beneficial interests provided in the terms of a trust.

SB384,31,3 (15) "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended, or such subsequent federal revenue law as may be in effect from time to time.

SB384,31,5 (16) "Jurisdiction," with respect to a geographic area, includes a state or country.

SB384,31,9 (17) "Person" means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government; governmental subdivision, agency, or instrumentality; public corporation; or any other legal or commercial entity.

SB384,31,10 (18) "Power of appointment" has the meaning given in s. 702.02 (6).

SB384,31,12   (19) "Power of withdrawal" means a presently exercisable general power of appointment but does not include any of the following:

SB384,31,13 (a) A power exercisable by a trustee and limited by an ascertainable standard.

SB384,31,15 (b) A power exercisable by another person only upon consent of a trustee or of a person holding an adverse interest.

SB384,31,17 (20) "Property" means anything that may be the subject of ownership, whether real or personal or legal or equitable, or any interest therein.

SB384,31,19 (21) "Qualified beneficiary" means a beneficiary who, on the date on which the beneficiary's qualification is determined, satisfies any of the following:

SB384,31,20 (a) Is a distributee or permissible distributee of trust income or principal.

SB384,31,23 (b) Without considering the existence or exercise of a power of appointment, other than a power of appointment that has been irrevocably exercised and notice of the exercise has been given to the trustee, would be any of the following:

SB384,32,3 1. A distributee or permissible distributee of trust income or principal if the interests of the distributees described in par. (a) terminated on that date without causing the trust to terminate.

SB384,32,5 2. A distributee or permissible distributee of trust income or principal if the trust terminated on that date.

SB384,32,8 (22) "Revocable," as applied to a trust, means that the trust can be revoked by the settlor without the consent of the trustee or a person holding an adverse interest, regardless of whether the settlor is incapacitated.

SB384,32,13   (23) "Settlor" means a person, including a testator, who creates or contributes property to a trust. If more than one person creates or contributes property to a trust, each person is a settlor of the portion of the trust property attributable to that person's contribution except to the extent another person has the power to revoke the trust or withdraw that portion.

SB384,32,14 (24) "Special power of appointment " has the meaning given in s. 702.02 (7).

SB384,32,16 (25) "Spendthrift provision" means a term of a trust that restrains either or both of a voluntary or involuntary transfer of a beneficiary's interest.

SB384,32,20   (26) "State" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, any territory or insular possession subject to the jurisdiction of the United States, and an Indian tribe, band, or nation recognized by federal law or formally acknowledged by a state.

SB384,32,23 (27) "Terms of a trust" means the manifestation of the settlor's intent regarding a trust's provisions as expressed in the trust instrument or as may be established by other evidence that would be admissible in a judicial proceeding.

SB384,32,25 (28) "Trustee" includes an original, additional, and successor trustee, and a cotrustee.

SB384,33,5 (29) "Trust for an individual with a disability" means a trust that is established for the benefit of an individual with a disability of any age, if the assets of the trust would not be counted as resources of the individual with a disability for purposes of eligibility for medical assistance under subch. IV of ch. 49, if he or she applied for medical assistance and was otherwise eligible.

SB384,33,10 (30) "Trust instrument" means an instrument, including any amendments or modifications to the instrument under s. 701.0111 or subch. IV, that is executed by the settlor that contains terms of a trust or is created under a statute, judgment, or decree that orders property to be transferred to a trustee to be administered for the benefit of a beneficiary.

SB384,33,13 (31) "Trust protector" means a person who, in a trust instrument or court order, is granted a power, other than a power of appointment, in a capacity other than as a trustee or a directing party.

SB384,52 Section 52. 701.0104 of the statutes is created to read:

SB384,33,16 701.0104 Knowledge. (1) Subject to sub. (2), a person has knowledge of a fact if any of the following applies:

SB384,33,17 (a) The person has actual knowledge of the fact.

SB384,33,18 (b) The person has received a notice or notification of the fact.

SB384,33,20 (c) The person has reason to know the fact from all the facts and circumstances known to the person at the time in question.

SB384,34,6 (2) An organization that conducts activities through employees has notice or knowledge of a fact involving a trust only from the time the information was received by an employee having responsibility to act for the trust, or would have been received by the employee if the organization had exercised reasonable diligence. An organization exercises reasonable diligence if it maintains reasonable routines for communicating significant information to the employee having responsibility to act for the trust and there is reasonable compliance with the routines. Reasonable diligence does not require an employee of the organization to communicate information unless the communication is part of the individual's regular duties or the individual knows a matter involving the trust would be materially affected by the information.

SB384,53 Section 53. 701.0105 of the statutes is created to read:

SB384,34,11 701.0105 Default and mandatory rules. (1) Except as otherwise provided in the terms of the trust, this chapter governs the duties and powers of trustees, directing parties, and trust protectors; relations among trustees, directing parties, and trust protectors; and the rights and interests of a beneficiaries.

SB384,34,13 (2) The terms of a trust prevail over any provision of this chapter except for the following:

SB384,34,14 (a) The requirements for creating a trust.

SB384,34,17 (b) The duty of a trustee or a directing party to act in good faith and in accordance with the terms and purposes of a trust instrument and the interests of the beneficiaries.

SB384,34,19 (c) The requirement that a trust and its terms be for the benefit of its beneficiaries, and that the trust have a purpose that is lawful.

SB384,34,21 (d) The power of a court to modify or terminate a trust under ss. 701.0410 to 701.0416.

SB384,34,23 (e) The effect of a spendthrift provision and the rights of certain creditors and assignees to reach a trust as provided in ss. 701.0501 to 701.0508.

SB384,34,24 (f) The power of the court under s. 701.0702.

SB384,35,2 (g) The power of the court under s. 701.0708 (2) to adjust a trustee's, directing party's or trust protector's compensation specified in the terms of the trust.

SB384,35,3 (h) The effect of an exculpatory term under s. 701.1008.

SB384,35,5 (i) The rights under ss. 701.1010 to 701.1013 of a person other than a trustee or beneficiary.

SB384,35,6 (j) Periods of limitation for commencing a judicial proceeding.

SB384,35,8 (k) The power of the court to take such action and exercise such jurisdiction as may be necessary in the interests of justice.

SB384,35,10 (L) The jurisdiction of the court and venue for commencing a proceeding as provided in ss. 701.0202, 701.0203, and 701.0204.

SB384,35,12 (m) The jurisdiction of the court under ss. 701.0807 (4), 701.0808 (9), and 701.0818 (12).

SB384,35,15 (n) The legal capacity under s. 701.0818 (2) (c) in which a trust protector who is also serving as a trustee or a directing party must exercise any power granted to the trust protector.

SB384,54 Section 54. 701.0106 of the statutes is created to read:

SB384,35,19 701.0106 Common law of trusts; principles of equity. The common law of trusts and principles of equity supplement this chapter, except to the extent modified by this chapter or another statute of this state.

SB384,55 Section 55. 701.0107 of the statutes is created to read:

SB384,35,22 701.0107 Governing law. The meaning and effect of the terms of a trust are determined by one of the following:

SB384,35,23   (1) The law of the jurisdiction designated in the trust instrument.

SB384,35,25 (2) In the absence of a controlling designation in the terms of a trust, the law of the jurisdiction having the most significant relationship to the matter at issue.

SB384,56 Section 56. 701.0108 of the statutes is created to read:

SB384,36,3 701.0108 Principal place of administration. (1) The principal place of administration of a trust is determined by any of the following:

SB384,36,4 (a) The designation in the trust instrument if any of the following applies:

SB384,36,6 1. A trustee's usual place of business is located in the jurisdiction designated in the trust instrument.

SB384,36,7 2. A trustee is a resident of the jurisdiction designated in the trust instrument.

SB384,36,9 3. All or part of the administration of the trust occurs in the jurisdiction designated in the trust instrument.

SB384,36,11 4. The trust instrument designates the jurisdiction where the settlor is domiciled at the time the trust instrument is executed.

SB384,36,15 (b) If the principal place of administration is not validly designated in the trust instrument under par. (a), the jurisdiction where the trustee's usual place of business is located or, if the trustee has no place of business, the jurisdiction where the trustee's residence is located.

SB384,36,16 (c) The jurisdiction selected by the trustee under sub. (3).

SB384,37,5 (2) (a) If a corporate trustee is designated as the trustee of a trust and the corporate trustee has offices in multiple states and performs administrative functions for the trust in multiple states, the corporate trustee may designate the corporate trustee's usual place of business by providing notice to the qualified beneficiaries, trust protectors, and directing parties. The notice is valid and controlling if the corporate trustee has a connection to the jurisdiction designated in the notice, including an office where trustee services are performed and the actual performance of some administrative functions for that particular trust in that particular jurisdiction. The subsequent transfer of some of the administrative functions of the corporate trustee to another state or states does not transfer the usual place of business as long as the corporate trustee continues to maintain an office and perform some administrative functions in the jurisdiction designated in the notice and the corporate trustee does not transfer the principal place of administration pursuant to sub. (4).

SB384,37,7 (b) If there are cotrustees, the trustee's usual place of business is determined by any of the following:

SB384,37,9 1. If there is only one corporate trustee, the jurisdiction where the usual place of business of the corporate trustee is located.

SB384,37,12 2. The jurisdiction where the usual place of business or the residence of any of the cotrustees is located as agreed to by all of the cotrustees with notice to the qualified beneficiaries, trust protectors, and directing parties.

SB384,37,14 3. If the cotrustees cannot agree on a jurisdiction under subd. 2., and subd. 1. does not apply, by a court.

SB384,37,18 (3) Without precluding the right of the court to approve or disapprove a transfer and subject to sub. (5), a trustee may, but has no affirmative duty to, transfer a trust's principal place of administration to another state or to a jurisdiction outside of the United States.

SB384,37,22 (4) A trustee shall notify the qualified beneficiaries, trust protectors, and directing parties of a proposed transfer of a trust's principal place of administration not less than 30 days before initiating the transfer. The trustee shall include in the notice of proposed transfer all of the following:

SB384,37,24 (a) The name of the jurisdiction to which the principal place of administration is to be transferred.

SB384,38,2 (b) The mailing address, electronic mail address, if available, and telephone number at the new location at which the trustee can be contacted.