701.20(6)(c)4.
4. Any distribution of assets pursuant to a court decree or final administrative order by a government agency ordering distribution of the particular assets; or
701.20(6)(c)5.
5. Any distribution of securities other than shares of the distributing corporation on which no gain or loss is recognized for federal income tax purposes.
701.20(6)(d)
(d) Distributions made from ordinary income by a regulated investment company or by a trust qualifying and electing to be taxed under federal law as a real estate investment trust are income. All other distributions made by the company or trust, including distributions from capital gains, depreciation, or depletion, whether in the form of cash or an option to take new stock or cash or an option to purchase additional shares, are principal.
701.20(6)(e)
(e) Corporate distributions other than cash which are deemed income under this subsection may be distributed in kind, or the trustee may instead distribute its cash equivalent on the date of distribution by the corporation.
701.20(7)(a)(a) Except as provided in
par. (b), no provision may be made for amortization of premiums or for accumulation for discounts on bonds or other obligations for the payment of money. The proceeds of sale, redemption or other disposition of the bonds or obligations are principal.
701.20(7)(b)
(b) In the case of a bond or other stated obligation for the payment of money bearing no stated interest but payable or redeemable at maturity or at a future time at an amount in excess of the amount in consideration of which it was issued, the increment in value while held by the personal representative or trustee is income when realized.
701.20(8)
(8) Business and farming operations. If a trustee uses any part of the principal in the operation of a business, including an agricultural or farming operation, as a sole proprietor, partner or member of a limited liability company, the net profits and losses of the business shall be computed in accordance with generally accepted accounting principles for a comparable business.
701.20(8)(b)
(b) Net losses from a business do not reduce other trust income for the fiscal or calendar year during which they occur but shall be carried into subsequent fiscal or calendar years and reduce the net profits of the business for those years.
701.20(9)
(9) Disposition of natural resources. 701.20(9)(a)(a) If any part of the principal consists of a right to receive royalties, overriding or limited royalties, working interests, production payments, net profit interests, or other interests in minerals, oil, gas, stone, gravel, sand or other natural resources in, on or under land, the receipts from taking the natural resources from the land shall be allocated as follows:
701.20(9)(a)1.
1. If received as rent on a lease or extension payments on a lease, the receipts are income.
701.20(9)(a)2.
2. If received from a production payment, the receipts are income to the extent of any factor for interest or its equivalent provided in the governing instrument. There shall be allocated to principal the fraction of the balance of the receipts which the unrecovered cost of the production payment bears to the balance owed on the production payment, exclusive of any factor for interest or its equivalent. The receipts not allocated to principal are income.
701.20(9)(a)3.
3. If received as a royalty, overriding or limited royalty, or bonus, or from a working, net profit, or any other interest in minerals or other natural resources, receipts not provided for in
subds. 1. and
2. shall be apportioned on a yearly basis in accordance with this subdivision whether or not any natural resource was being taken from the land at the time the trust was established. There shall be added to principal as an allowance for depletion such portion of the gross receipts as shall be allowed as a deduction in computing taxable income for federal income tax purposes. The balance of the gross receipts, after payment therefrom of all expenses, direct and indirect, is income.
701.20(9)(b)
(b) If a trustee, on January 1, 1979, held an item of depletable property of a type specified in this subsection the trustee may continue to allocate receipts from the property in the manner used before January 1, 1979.
701.20(9)(c)
(c) This subsection does not apply to timber, water, soil, sod, dirt, peat, turf, mosses or interests in a partnership or limited liability company owning natural resources.
701.20(10)
(10) Timber, water, soil, sod, dirt, peat, turf, mosses or an interest in a partnership or limited liability company owning natural resources. If any part of the principal consists of an interest in timber, water, soil, sod, dirt, peat, turf, mosses or a partnership or limited liability company owning natural resources, the receipts shall be allocated in accordance with
sub. (2) (a) 3.
701.20(11)
(11) Other property subject to depletion. Except as provided in
subs. (9) and
(10), if the principal consists of property subject to depletion, including leaseholds, patents, copyrights, royalty rights and any rights to receive periodic payments under a contract or plan for deferred compensation or for the benefit of one or more of the employes of an employer, receipts shall be allocated in accordance with
sub. (2) (a) 3.
701.20(12)
(12) Charges against income and principal. 701.20(12)(a)(a) The following charges shall be made against income:
701.20(12)(a)2.
2. Ordinary expenses incurred in connection with the administration, management, or preservation of the trust property, including fees and expenses of attorneys, accountants, appraisers, investment counselors, custodians and agents, regularly recurring taxes assessed against any portion of the principal, all premiums on insurance other than life insurance, interest, maintenance, and ordinary repairs.
701.20(12)(a)3.
3. Any tax levied upon receipts defined as income under this section or the trust instrument and payable by the trustee.
701.20(12)(b)
(b) No allowance may be made for depreciation of any property held by the trustee unless the court directs otherwise.
701.20(12)(c)
(c) If charges against income are of unusual amount, the trustee may by means of reserves or other reasonable means charge them over a reasonable period of time and withhold from distribution sufficient sums to regularize distributions.
701.20(12)(d)
(d) The following charges shall be made against principal:
701.20(12)(d)2.
2. Charges not provided for in
par. (a), including fees and expenses of attorneys, accountants, appraisers, investment counselors, custodians and agents, the cost of investing and reinvesting principal, the payments on principal of an indebtedness including a mortgage amortized by periodic payments of principal, expenses for preparation of property for rental or sale, and attorney fees and other expenses in judicial proceedings unless the court directs otherwise.
701.20(12)(d)3.
3. Extraordinary repairs or expenses incurred in making a capital improvement to principal, including special assessments.
701.20(12)(d)4.
4. Any tax levied upon profit, gain, or other receipts allocated to principal notwithstanding denomination of the tax as an income or franchise tax by the taxing authority.
701.20(12)(d)5.
5. If a death tax or generation skipping transfer tax is levied in respect to a trust, any amount apportioned to the trust, or any beneficial interest in the trust.
701.20(12)(dm)
(dm) The following charges shall be made in equal portions against income and principal:
701.20(12)(dm)1.
1. The trustee's regular compensation, whether based on a percentage of principal or income.
701.20(12)(dm)2.
2. Special compensation of trustees, and trustee's compensation computed on principal as an acceptance, distribution, or termination fee.
701.20(12)(e)
(e) Regularly recurring charges payable from income shall be apportioned to the same extent and in the same manner that income is apportioned under
sub. (4).
701.21
701.21
Income payments and accumulations. 701.21(1)
(1)
Distribution of income. Where a beneficiary is entitled to receive income from a trust, but the creating 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.
701.21(2)
(2) Permitted accumulations. No provision directing or authorizing accumulation of trust income shall be invalid.
701.21(3)
(3) Charitable trust accumulations. A trust containing a direction or authorization to accumulate income from property devoted to a charitable purpose shall be subject to the general equitable supervision of the court with respect to any such accumulation of income, including its reasonableness, amount and duration.
701.21(4)
(4) Disposition of accumulated income. Income not required to be distributed by the creating 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 the termination of the income interest, any undistributed income shall be distributed as principal.
701.22
701.22
Distributions in kind by trustees; marital bequests. In case of a division of 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 instrument expressly provided that another value may be used. If the governing instrument requires or permits a different value to be used, all assets available for distribution, including cash, shall, unless otherwise expressly provided, be so distributed that the assets, including cash, distributed as such an equivalent will be 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 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.
701.22 Annotation
The valuation of assets for distribution is the current market value at the time of distribution. Estate of Naulin, 56 W (2d) 100, 201 NW (2d) 599.
701.23
701.23
Removal of trusts. 701.23(1)(1)
Removal to foreign jurisdiction. Unless the creating instrument contains an express prohibition or provides a method of removal, a circuit court having jurisdiction of a trust created by a will admitted to probate in such court may, upon petition of a trustee or a beneficiary with the consent of the trustee and after a hearing as to which notice has been given to the trustee and other interested persons, order removal of such trust to another state where the court finds that such removal is in accord with the express or implied intention of the settlor, would aid the efficient administration of the trust or is otherwise in the best interests of the beneficiaries. Such order may be conditioned on the appointment of a trustee in the state to which the trust is to be removed and shall be subject to such other terms and conditions as the court deems appropriate for protection of the trust property and the interests of the beneficiaries. Upon receipt of satisfactory proof of compliance with all terms and conditions of the order, the court may discharge the local trustee from further responsibility in the administration of the trust.
701.23(2)
(2) Removal to this state. Unless the creating instrument contains an express prohibition against removal or provides a method for removal, a court may, upon the petition of a foreign trustee or beneficiary with the consent of the trustee, appoint a local trustee to receive and administer trust property presently being administered in another state. The local trustee may be required to give bond conditioned on the faithful performance of his or her duties or to meet any other conditions required by a court in the other state before permitting removal of the trust to this state.
701.23 History
History: 1977 c. 449 s.
497;
1993 a. 486.
701.24
701.24
Applicability of ss. 701.01 to 701.23. Except as otherwise provided in
s. 701.19 (9) (a) and
(10),
ss. 701.01 to
701.23 are applicable to a trust existing on July 1, 1971, 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
701.23 to a trust in existence on August 1, 1971, is unconstitutional, it shall not affect application of the provision to a trust created after that date.
701.24 History
History: 1971 c. 66;
1977 c. 309.
701.27
701.27
Disclaimer of transfers under nontestamentary instruments. 701.27(1)(a)
(a) "Beneficiary under a nontestamentary instrument" includes any person who receives or might receive property or an interest in property under the terms or legal effect of a nontestamentary instrument.
701.27(1)(b)
(b) "Nontestamentary instrument" means any instrument other than a will which effectively controls the disposition of property or an interest in property. This term includes, without limitation, an inter vivos instrument exercising a power of appointment whether created by will or by nontestamentary instrument, life insurance policies and annuity contracts, inter vivos trusts, conveyances, contracts and choses in action.
701.27(2)(a)(a)
In general. A person who is a beneficiary under a nontestamentary instrument, person succeeding to a disclaimed interest created by a nontestamentary instrument, donee of a power created by nontestamentary instrument, appointee under a power exercised by nontestamentary instrument or taker in default under a power created by nontestamentary instrument, may disclaim any property or interest in property, including contingent or future interests or the right to receive discretionary distributions, by delivering a written instrument of disclaimer under this section.
701.27(2)(b)1.1. Upon the death of a joint tenant that occurs on or after June 7, 1996, a surviving joint tenant may disclaim any property or interest in property that would otherwise accrue to him or her by right of survivorship and that is the subject of the joint tenancy. A surviving joint tenant may disclaim the entire interest if he or she fulfills the requirements under section
2518 of the internal revenue code.
701.27(2)(b)2.
2. Any property or interest in property or portion of property or interest in property that is disclaimed under
subd. 1. shall become an asset in the decedent's probate estate.
701.27(2)(bm)
(bm)
Survivorship marital property. Upon the death of a spouse, the surviving spouse may disclaim the decedent spouse's interest in survivorship marital property.
701.27(2)(c)
(c)
Partial disclaimer. Property may be disclaimed in whole or in part, except that a partial disclaimer of property passing by nontestamentary instrument or by the exercise of a power may not be made if partial disclaimer is expressly prohibited by the instrument or by the instrument exercising the power.
701.27(2)(d)
(d)
Spendthrift provision. The right to disclaim exists notwithstanding any limitation on the interest of the disclaimant in the nature of a spendthrift provision or similar restriction.
701.27(2)(e)
(e)
After death. A person's right to disclaim survives the person's death and may be exercised by the person's personal representative or special administrator upon receiving approval from the court having jurisdiction of the person's estate after hearing upon notice to all interested persons if the personal representative or special administrator has not taken any action which would bar the right to disclaim under
sub. (7).
701.27(3)(a)2.
2. Declare the disclaimer and the extent of the disclaimer;
701.27(3)(b)
(b) Notwithstanding
par. (a), any disclaimer which meets the requirements of section
2518 of the internal revenue code, or any other provisions of federal law, constitutes an effective disclaimer under this section.
701.27(4)(a)(a)
Disclaiming a present interest. An instrument disclaiming a present interest shall be executed and delivered not later than 9 months after the effective date of the nontestamentary instrument, except that, for cause shown, the period may be extended by a court of competent jurisdiction, either within or after the 9-month period, for such additional time as the court deems just. The effective date of a revocable instrument or contract is the date on which the person having the power to revoke no longer has the power to revoke it or to transfer to himself, herself or another person the equitable ownership of the property or interest which is the subject of the disclaimer.
701.27(4)(b)
(b)
Disclaiming a future interest. An instrument disclaiming a future interest shall be executed and delivered not later than 9 months after the event that determines that the taker of the property or interest is finally ascertained and his or her interest indefeasibly fixed, except that, for cause shown, the period may be extended by a court of competent jurisdiction, either within or after the 9-month period, for such additional time as the court deems just.
701.27(4)(c)
(c)
Future right to income or profits. Notwithstanding
pars. (a) and
(b), an instrument disclaiming the future right to receive mandatory distributions of income or profits from any source may be executed and delivered at any time.
701.27(4)(d)
(d)
Persons under 21. Notwithstanding
pars. (a) and
(b), a person under 21 years of age may disclaim at any time not later than 9 months after the date on which the person attains 21 years of age.
701.27(4)(e)
(e)
Interests arising by disclaimer. Notwithstanding
pars. (a) and
(b), a person whose interest in property arises by disclaimer or by default of exercise of a power created by nontestamentary instrument may disclaim at any time not later than 9 months after the day on which the prior instrument of disclaimer is delivered, or the date of death of the donee of the power, as the case may be.
701.27(5)
(5) Delivery and filing of disclaimer. 701.27(5)(a)(a)
Delivery. In addition to any requirements imposed by the creating instrument, the instrument of disclaimer is effective only if, within the time specified under
sub. (4), it is delivered to and received by:
701.27(5)(a)1.
1. The transferor of the property or interest disclaimed, if living;
701.27(5)(a)2.
2. The personal representative or special administrator of the deceased transferor of the property; or
701.27(5)(b)
(b)
Delivery to trustee. If the trustee of any trust to which the interest or power relates does not receive the instrument of disclaimer under
par. (a), a copy shall also be delivered to the trustee.
701.27(5)(c)
(c)
Filing. When delivery is made to the personal representative or special administrator of a deceased transferor, a copy of the instrument of disclaimer shall be filed in the probate court having jurisdiction.
701.27(5)(d)
(d)
Failure to deliver or file. Failure to deliver a copy of the instrument of disclaimer to the trustee under
par. (b) or to file a copy in the probate court under
par. (c), within the time specified under
sub. (4), does not affect the validity of any disclaimer.
701.27(5)(e)
(e)
Recording. If real property or an interest in real property is disclaimed, a copy of the instrument of disclaimer may be recorded in the office of the register of deeds of the county in which the real estate is situated.
701.27(6)(a)(a)
Property not vested. The property or interest disclaimed under this section shall be deemed not to have been vested in, created in or transferred to the disclaimant.
701.27(6)(b)
(b)
Devolution. Unless the transferor of the property or donee of the power has otherwise provided, the property or interest disclaimed devolves as if the disclaimant had died before the effective date of the nontestamentary instrument; or if the disclaimant is an appointee under a power exercised by nontestamentary instrument, as if the disclaimant had died before the effective date of the exercise of the power; or if the disclaimant is a taker in default under a power created by nontestamentary instrument, as if the disclaimant had predeceased the donee of the power. A disclaimer relates back for all purposes to the effective date of the nontestamentary instrument; or if the disclaimant is an appointee under a power exercised by nontestamentary instrument, to the effective date of the exercise of the power; or if the disclaimant is a taker in default under a power created by nontestamentary instrument, to the last possible date for exercise of the power. A disclaimer of the future right to receive mandatory distributions of income or profits relates to the period stated in the disclaimer.
701.27(6)(c)
(c)
Future interest. Unless the instrument creating the future interest manifests a contrary intent, a future interest limited to take effect in possession or enjoyment after the termination of the interest which is disclaimed takes effect as if the disclaimant had died before the effective date of the nontestamentary instrument or, if the disclaimant is an appointee under a power exercised by nontestamentary instrument, as if the disclaimant had died before the effective date of the exercise of the power.
