701.01(8)
(8) Trustee. "Trustee" means a person holding in trust title to or holding in trust a power over property. "Trustee" includes an original, added or successor trustee.
701.01 Annotation
See note to 801.05, citing Norton v. Bridges, 712 F (2d) 1156 (1983).
701.02
701.02
Purposes for which trusts may be created. A trust may be created for any lawful purpose.
701.02 History
History: 1993 a. 16,
437.
701.02 Cross-reference
Cross-reference: See s.
701.10 (1) which lists the purposes for which a charitable trust may be created.
701.02 Annotation
Advantages of the revocable trust estate plan. Keydel, 1975 WBB No. 3.
701.03
701.03
Passive trusts abolished. Except as provided in
s. 706.08 (4), every trust, to the extent it is private and passive, vests no title or power in the trustee, but the beneficiary takes a title corresponding in extent to the beneficial interest given the beneficiary. A trust is passive if the title or power given the trustee is merely nominal and the creating instrument neither expressly nor by implication from its terms imposes active management duties on the trustee.
701.03 History
History: 1989 a. 231.
701.03 Annotation
When a trustee has the duty of paying taxes and insurance, the trust is an active one. Kinzer v. Bidwill, 55 W (2d) 749, 201 NW (2d) 9.
701.03 Annotation
This statute does not apply to living trusts. Section 701.07 which provides that a living trust cannot be deemed passive controls. McMahon v. Standard Bank & Trust Co. 202 W (2d) 565, 550 NW (2d) 727 (Ct. App. 1996).
701.04
701.04
Purchase money resulting trusts abolished. 701.04(1)(1) If title to property is transferred to one person and all or part of the purchase price is furnished by another, the latter may not enforce a purchase money resulting trust.
701.04(2)
(2) Creditors of the person furnishing all or part of the purchase price may enforce a resulting trust, in proportion to the amount of purchase price furnished, to the extent necessary to satisfy their demands, unless an intent to defraud creditors is disproved.
701.04(3)
(3) Nothing in this section shall affect the right to enforce a valid express trust or to establish a constructive trust based on fraud, undue influence, breach of confidential relationship or other appropriate grounds.
701.05
701.05
Title of trustee; interest of beneficiaries. 701.05(1)(1) Unless the creating instrument expressly limits the trustee to a lesser title or to a power, the trustee takes all title of the settlor or other transferor and holds such title subject to the trustee's fiduciary duties as trustee.
701.05(2)
(2) If a trustee of a private trust has title to the trust property, a beneficiary has both a right to have the trustee perform the trustee's fiduciary duties and an equitable interest, present or future, in the trust property. If a trustee of a private trust holds only a power over property, a beneficiary has a right to have such trustee perform the trustee's fiduciary duties.
701.05(3)
(3) In a private or charitable trust where the trustee takes all title of the settlor or other transferor and holds such title subject to the trustee's fiduciary duties as trustee, any interest expressly retained by the settlor or not effectively disposed of to others remains in the settlor, or the settlor's successors in interest, as an equitable reversionary interest and to this extent the settlor, or the settlor's successors, are beneficiaries of the trust. In a private trust where the trustee takes all title of the settlor or other transferor and holds such title subject to the trustee's fiduciary duties as trustee, any interest, present or future, created by the settlor in any other person is an equitable interest and such person is a beneficiary of the trust.
701.05 History
History: 1971 c. 66;
1991 a. 316.
701.06
701.06
Spendthrift provisions and rights of creditors of beneficiaries. 701.06(1)(1)
Income beneficiaries. A settlor may expressly provide in the creating instrument that the interest in income of a beneficiary other than the settlor is not subject to voluntary or involuntary alienation. The income interest of such a beneficiary cannot be assigned and is exempt from claims against the beneficiary until paid over to the beneficiary pursuant to the terms of the trust.
701.06(2)
(2) Principal beneficiaries. A settlor may expressly provide in the creating instrument that the interest in principal of a beneficiary other than the settlor is not subject to voluntary or involuntary alienation. The interest in principal of such a beneficiary cannot be assigned and is exempt from claims against the beneficiary, but a judgment creditor, after any payments of principal have become due or payable to the beneficiary pursuant to the terms of the trust, may apply to the court for an order directing the trustee to satisfy the judgment out of any such payments and the court in its discretion may issue an order for payment of part or all of the judgment.
701.06(3)
(3) Disclaimer or renunciation not an assignment. A disclaimer or renunciation by a beneficiary of part or all of his or her interest under a trust shall not be considered an assignment under
sub. (1) or
(2).
701.06(4)
(4) Claims for child support. Notwithstanding any provision in the creating instrument or
subs. (1) and
(2), upon application of a person having a valid order directing a beneficiary to make payment for support of the beneficiary's child, the court may:
701.06(4)(a)
(a) If the beneficiary is entitled to receive income or principal under the trust, order the trustee to satisfy part or all of the claim out of part or all of payments of income or principal as they are due, presently or in the future;
701.06(4)(b)
(b) In the case of a beneficiary under a discretionary trust, order the trustee to satisfy part or all of the claim out of part or all of future payments of income or principal which are to be made pursuant to the exercise of the trustee's discretion in favor of such beneficiary.
701.06(5)
(5) Claims for public support. Notwithstanding any provision in the creating instrument or
subs. (1) and
(2), if the settlor is legally obligated to pay for the public support of a beneficiary under
s. 46.10 or
301.12 or the beneficiary is legally obligated to pay for the beneficiary's public support or that furnished the beneficiary's spouse or minor child under
s. 46.10 or
301.12, upon application by the appropriate state department or county official, the court may:
701.06(5)(a)
(a) If such beneficiary is entitled to receive income or principal under the trust, order the trustee to satisfy part or all of the liability out of part or all of payments of income or principal as they are due, presently or in the future;
701.06(5)(b)
(b) Except as otherwise provided in
par. (c), in the case of a beneficiary under a discretionary trust, order the trustee to satisfy part or all of the liability out of part or all of future payments of income or principal which are to be made pursuant to the exercise of the trustee's discretion in favor of such beneficiary;
701.06(5)(c)
(c) In the case of a beneficiary under a discretionary trust who is a settlor or a spouse or minor child of the settlor, order the trustee to satisfy part or all of the liability without regard to whether the trustee has then exercised or may thereafter exercise the trustee's discretion in favor of the beneficiary.
701.06(5m)
(5m) Trust for disabled individual. Subsection (5) does not apply to any trust that is established for the benefit of an individual who has a disability which has continued or can be expected to continue indefinitely, substantially impairs the individual from adequately providing for his or her own care or custody, and constitutes a substantial handicap to the afflicted individual if the trust does not result in ineligibility for public assistance under
ch. 49. A trustee of a trust which is exempt from claims for public support under this subsection shall notify the county department under
s. 46.215 or
46.22 in the county where the disabled beneficiary resides of the existence of the trust.
701.06(6)
(6) Settlor as beneficiary. Notwithstanding any provision in the creating instrument and in addition to the remedies available under
subs. (4) and
(5) where the settlor is a beneficiary, upon application of a judgment creditor of the settlor, the court may, if the terms of the instrument require or authorize the trustee to make payments of income or principal to or for the benefit of the settlor, order the trustee to satisfy part or all of the judgment out of part or all of the payments of income or principal as they are due, presently or in the future, or which are payable in the trustee's discretion, to the extent in either case of the settlor's proportionate contribution to the trust.
701.06(7)
(7) Subsequent modification of court's order. Any order entered by a court under
sub. (4),
(5) or
(6) is subject to modification upon application of an interested person.
701.06(8)
(8) Exempt assets. Assets of a trust, to the extent they are exempt from claims of creditors under other statutes, shall not be subject to
sub. (4),
(5) or
(6).
701.06 Cross-reference
Cross-reference: See s.
701.07 (3) which deals with creditors' rights where a settlor retains powers over a living trust.
701.06 Annotation
Trust income which is income to the beneficiary under federal tax law is subject to a child support order regardless of whether a distribution is made to the beneficiary. Grohmann v. Grohmann, 189 W (2d) 532, 525 NW (2d) 261 (1995).
701.065
701.065
Debts of decedents. 701.065(1)(a)1.1. A trustee who has a duty or power to pay the debts of a decedent may publish in the county in which the decedent resided, as a class 3 notice, under
ch. 985, a deadline for filing claims with the trustee. The deadline shall be the date that is 4 months after the date of the first insertion of the notice.
701.065(1)(a)2.
2. Except as provided in
pars. (b) and
(c), if the trustee satisfies the requirements for the publication of the notice under
subd. 1., all claims, including claims of the state and any subdivision thereof, whether due or to become due, absolute or contingent, liquidated or unliquidated, are barred against the trustee, the trust property and any recipient of trust property unless filed with the trustee on or before the date specified in the notice under
subd. 1.
701.065(1)(b)
(b) Notwithstanding
par. (a) 2., a claim that is not filed on or before the date specified in the notice under
par. (a) 1. is not barred if any of the following apply:
701.065(1)(b)1.
1. The claim is a claim based on tort, on a marital property agreement that is subject to the time limitations under
s. 766.58 (13) (b) or
(c), on Wisconsin income, franchise, sales, withholding, gift or death taxes, or on unemployment compensation contributions due or benefits overpaid, a claim for funeral or administrative expenses, a claim of this state under
s. 46.27 (7g),
49.496 or
49.682 or a claim of the United States.
701.065(1)(b)2.a.
a. On or before the date specified in the notice under
par. (a) 1., the trustee knew, or in the exercise of reasonable diligence should have known, of the existence of the potential claim and of the identity and mailing address of the potential claimant.
701.065(1)(b)2.b.
b. At least 30 days before the date specified in the notice under
par. (a) 1., the trustee had not given notice to the potential claimant of the final day for filing his or her claim.
701.065(1)(b)2.c.
c. At least 30 days before the date specified in the notice under
par. (a) 1., the claimant did not have actual knowledge of the date on which the claim would be barred.
701.065(1)(c)
(c) If an action is pending against a decedent at the time of his or her death and the action survives, the plaintiff in that action may serve a notice of substitution of party defendant on the trustee and file proof of service of notice in the court. Filing of proof of service on or before the deadline for filing a claim under
par. (a) 1. gives the plaintiff the same rights against the trust as the filing of a claim. A judgment in any such action constitutes an adjudication for or against the trust.
701.065(2)
(2) Effect of statute of limitations. A trustee shall not pay a claim that was barred by a statute of limitations at the time of the decedent's death. A claim not barred by a statute of limitations at the time of the decedent's death shall not be barred thereafter by a statute of limitations if the claim is filed with the trustee on or before the deadline for filing a claim under
sub. (1) (a) 1.
701.065(3)
(3) Claims of creditors without notice. 701.065(3)(a)(a) A claim not barred by
sub. (1) (a) 2. because of the operation of
sub. (1) (b) 2. may be enforced against trust property only as provided in this subsection.
701.065(3)(b)
(b) The claimant shall file the claim with the trustee within one year after the decedent's death and within 30 days after the earlier of the following:
701.065(3)(b)1.
1. The date that the trustee gives notice to the potential claimant of the deadline for filing a claim under
sub. (1) (a) 1.
701.065(3)(b)2.
2. The date that the claimant first acquires actual knowledge of the deadline for filing a claim under
sub. (1) (a) 1.
701.065(3)(c)
(c) The claimant shall have the burden of establishing by the greater weight of the credible evidence that all of the circumstances under
sub. (1) (b) 2. existed.
701.065(3)(d)
(d) This subsection does not extend the time for commencement of a claim beyond the time provided by any statute of limitations applicable to that claim.
701.065(4)
(4) Satisfaction of claim from other property. Failure of a claimant timely to file a claim as provided in this section does not bar the claimant from satisfying the claim, if not otherwise barred, from property other than trust property.
701.065 History
History: 1997 a. 188.
701.07(1)(1)
Validity. A living trust, otherwise valid, shall not be held invalid as an attempted testamentary disposition, a passive trust under
s. 701.03, or a trust lacking a sufficient principal because:
701.07(1)(a)
(a) It contains any or all of the following powers, whether exercisable by the settlor, another person or both:
701.07(1)(a)1.
1. To revoke, modify or terminate the trust in whole or in part;
701.07(1)(a)2.
2. To exercise a power or option over property in the trust or over interests made payable to the trust under an employe benefit plan, life insurance policy, or otherwise;
701.07(1)(a)3.
3. To direct, during the lifetime of the settlor or another, the person to whom or on whose behalf the income or principal shall be paid or applied;
701.07(1)(a)4.
4. To control the administration of the trust in whole or in part;
701.07(1)(a)5.
5. To add property or cause additional employe benefits, life insurance, or other interests to be made payable to the trust at any time.
701.07(1)(b)
(b) The principal consists of a designation of the trustee as a primary or direct, secondary or contingent beneficiary under a will, employe benefit plan, life insurance policy or otherwise; or
701.07(1)(c)
(c) The principal consists of assets of nominal value.
701.07(2)
(2) Eligibility to receive assets. A living trust shall be eligible to receive property from any source.
701.07(3)
(3) Creditors' rights. If a settlor retains a power to revoke, modify or terminate which is exercisable in the settlor's favor, except when such power is exercisable only in conjunction with a person having a substantial adverse interest, the trust property to the extent it is subject to such power is also subject to the claim of a creditor of the settlor. This subsection shall not apply to trust property to the extent it is exempt from claims of creditors under other statutes.
701.07 Cross-reference
Cross-reference: See s.
701.06 (6) which deals with creditors' rights where the settlor is a beneficiary of the trust.
701.07 Annotation
Section 701.03 which prohibits passive trusts does not apply to living trusts. This statute which provides that a living trust cannot be deemed passive controls. McMahon v. Standard Bank & Trust Co. 202 W (2d) 565, 550 NW (2d) 727 (Ct. App. 1996).
701.07 Annotation
Understanding Living Trusts. Moschella. Wis. Law. March 1992.
701.07 Annotation
Informing the Public About Living Trusts. Twohig. Wis. Law. March 1992.
701.08
701.08
Transfers to living trusts. 701.08(1)
(1)
Validity and effect. The order of execution of a living trust instrument and a will or other instrument purporting to transfer or appoint property to the trust evidenced by the trust instrument shall be disregarded in determining the validity of the transfer or appointment. No reference in any will to a living trust shall cause assets in such trust to be included in property administered as part of the testator's estate; nor shall it cause the trust or any portion thereof to be treated as a testamentary trust.
701.08(2)
(2) Governing terms. Property transferred or appointed by a will or by a beneficiary designation under an employe benefit plan, life insurance policy or other instrument permitting designation of a beneficiary to a living trust, the terms of which the testator or designator was the sole holder of a power to modify, shall be administered in accordance with the terms of the trust as they may have been modified prior to the testator's or designator's death, even though the will or beneficiary designation was not reexecuted or republished after exercise of the power to modify, unless the will or beneficiary designation expressly provides otherwise. Such property transferred or appointed to a living trust, which is subject to a power of modification requiring action or consent of a person other than the testator or designator, shall be administered in accordance with the terms of the trust instrument as they exist at the execution of the will or beneficiary designation, unless expressly otherwise provided. If the will or beneficiary designation expressly provides that the property shall be administered in accordance with the terms of the trust instrument as they may be modified thereafter, the will or beneficiary designation need not be reexecuted or republished after exercise of the power to modify.
701.08(3)
(3) Disposition when no existing living trust. If at the death of a testator a living trust has been completely revoked, or otherwise terminated, a provision in the testator's will purporting to transfer or appoint property to such trust shall have the following effect, unless the will provides otherwise:
701.08(3)(a)
(a) If the testator was a necessary party to the revocation or other termination of such trust, the provision in the testator's will shall be invalid;
701.08(3)(b)
(b) If the testator was not a necessary party to the revocation or other termination of such trust, the provision in the testator's will shall be deemed to create a testamentary trust upon the terms of the living trust instrument at the time the will was executed or as otherwise provided where
sub. (2) is applicable.
701.08 History
History: 1971 c. 66;
1991 a. 316.
701.09
701.09
Transfers to testamentary trusts. 701.09(1)
(1)
Testamentary transfer to trust of another. A transfer or appointment by will shall not be held invalid because it is made to a trust created, or to be created, under the will of another person if the will of such other person was executed, or was last modified with respect to the terms of such trust, prior to the death of the person making the transfer or appointment and such other person's will is admitted to probate prior to, or within 2 years after, the death of the person making the transfer or appointment. Property included in such a transfer or appointment shall not be considered property subject to administration as part of the other person's estate but shall pass directly to that other person's testamentary trustee, be added to the designated trust and administered as a part thereof.
701.09(2)
(2) Invalid testamentary transfer. If such a transfer or appointment by will is not accepted by the testamentary trustee of such other person or if no will of such other person which meets the conditions specified in
sub. (1) is admitted to probate within the period therein limited, and if the will containing such transfer or appointment by will makes no alternative disposition of the assets, the will shall be construed as creating a trust upon the terms contained in the documents constituting the will of such other person as of the date of death of the person making the transfer or appointment by will.
701.09(3)
(3) Life insurance proceeds transferred to trust of insured. A trustee named or to be named in the will of an insured person may be designated beneficiary of an insurance policy on the life of the insured if the designation is made in accordance with the terms of the policy. After admission of the insured's will to probate and issuance of letters to such trustee, the insurance proceeds shall be paid to the trustee to be administered in accordance with the terms of the trust as they exist at the death of the insured, and the proceeds may be commingled with other assets passing to the trust. Insurance proceeds paid to a testamentary trustee because of his or her designation as life insurance beneficiary shall not be subject to death tax to any greater extent than if the proceeds were payable to a beneficiary other than the insured's estate. The proceeds shall be inventoried for tax purposes only and shall not be subject to taxes, debts or charges enforceable against the estate or otherwise considered assets of the insured's estate to any greater extent than if the proceeds were payable to a beneficiary other than the insured's estate.
701.09(4)
(4) Employe benefits transferred to trust of employe. A trustee named or to be named in the will of an employe covered by any employe benefit plan or contract described in
s. 815.18 (3) (j) or any annuity or insurance contract purchased by an employer that is a religious, scientific, educational, benevolent or other corporation or association not organized or conducted for pecuniary profit may be designated payee of any benefits payable after the death of the employe if the designation is made in accordance with the terms of the plan or contract. After admission of the employe's will to probate and issuance of letters to the trustee, the death benefits shall be paid to the trustee to be administered in accordance with the terms of the trust as they exist at the death of the employe, and the benefits may be commingled with other assets passing to the trust. Death benefits paid to a testamentary trustee because of his or her designation as payee are not subject to the death tax to any greater extent than if the benefits were payable to a beneficiary other than the employe's estate. The benefits shall be inventoried for tax purposes only and are not subject to taxes, debts or charges enforceable against the estate or otherwise considered assets of the employe's estate to any greater extent than if the benefits were payable to a beneficiary other than the employe's estate.
