701.16(2)
(2) Bond. Prior to the issuance of letters of trust to an original testamentary trustee under
sub. (1) or to a successor or added testamentary trustee under
s. 701.17 (1), the court may require such trustee to give a bond in accordance with
ch. 878 and conditioned on the faithful performance of such trustee's duties. If a settlor directs that a trustee serve without bond, the court shall give effect to this direction unless it determines that a bond is required by a change in the trustee's personal circumstances since the execution of the settlor's will. If the court requires a bond, and the trustee named in the will fails to furnish the required bond within a reasonable period of time after receiving notice of the bond requirement, the court may remove the trustee named in the will and appoint a successor trustee under
s. 701.17. No bond shall be required of a trust company bank, state bank or national banking association which is authorized to exercise trust powers and which has complied with
s. 220.09 or
223.02, nor shall a bond be required of a religious, charitable or educational corporation or society.
701.16(3)
(3) Inventory. A testamentary trustee shall make and file a verified inventory of all property received from the settlor's personal representative or from any other source.
701.16(4)(a)(a) A testamentary trustee is required to make and file a verified account annually with the court, except as provided in
pars. (am) and
(b). If the trustee is accounting on a calendar-year basis, the court may not require the trustee to file the annual account prior to April 15. Production of securities and other assets for examination is not necessary upon the filing of an annual account unless the court determines such production is necessary to ascertain the correctness of an account filed for a particular trust. In the case of a testamentary charitable trust a copy of the annual account filed with the court shall be filed with the attorney general.
701.16(4)(am)
(am) The annual accounting requirements under
par. (a) do not apply to corporate trustees or to corporate cotrustees if those trustees or cotrustees agree, in their initial consent to act as trustees or cotrustees or in a subsequent filing with the register in probate for the county that has jurisdiction over the trust, to provide annual accounts to all persons interested, as defined in
s. 851.21, who request those accounts by writing to the trustee or cotrustee. Each request is effective until the requester withdraws it or is no longer a person interested. A corporate trustee or cotrustee may withdraw its agreement by notifying the appropriate register in probate of its intent to do so.
701.16(4)(b)
(b) Except in the case of a testamentary charitable trust, the court may dispense with the requirement of an annual accounting where, due to the size or nature of the trust property, the duration of the trust, the relationship of the trustee to the beneficiaries or other relevant factors, compliance with such requirement is unnecessary or unduly burdensome on the trustee. Whether or not an annual accounting is required a beneficiary may petition the court to require an accounting and the trustee may petition for approval of the trustee's accounts on a periodic basis.
701.16(4)(d)
(d) Notwithstanding
s. 879.47, trustees and cotrustees may submit to courts accounts in the format that they normally use for accounts submitted to beneficiaries under this subsection, if all of the information required by the court is included.
701.16(5)
(5) Final accounting. A verified final account is required upon the termination of a testamentary trust. Upon the petition of a surviving or successor trustee, a beneficiary, a personal representative of a deceased trustee or on its own motion, the court may order a verified account filed upon the death, resignation or removal of a testamentary trustee. The court may require such proof of the correctness of a final account as it considers necessary.
701.16(6)
(6) Discharge. No testamentary trustee or personal representative of a deceased trustee shall be discharged from further responsibility with respect to a testamentary trust until the court is satisfied upon notice and hearing that the requirements of this section have been met and it has received satisfactory proof that the trust property has been turned over to a successor or special trustee or, where the trust is terminated, distributed to the beneficiaries entitled to such property or turned over to a special trustee for distribution.
701.16 Cross-reference
Cross-reference: See s.
223.12 which contains requirements which must be met before a foreign corporate trustee is qualified to act in this state.
701.16 Annotation
See s. 701.23 (1), which provides for the discharge of a trustee when a testamentary trust is removed to another state.
701.16 Annotation
Even during a hearing on discharge, a trustee's duty to affirmatively represent the beneficiaries' interests by disclosing relevant information remains, and a breach of this duty leaves the discharge open to attack. Hammes v. First National Bank & Trust Co.
79 Wis. 2d 355,
255 N.W.2d 555 (1977).
701.16 Annotation
A trustee has a duty to the trust beneficiaries to ensure that the personal representative transfers all property to which the trust is entitled. Even when the same person acts as trustee and personal representative, the trustee has a duty to enforce claims the trust has against the personal representative. Old Republic Surety Co. v. Erlien,
190 Wis. 2d 400,
527 N.W.2d 389 (Ct. App. 1994).
701.17
701.17
Successor and added trustees. 701.17(1)
(1)
Appointment of successor or added trustee. If there is a vacancy in the office of trustee because of the death, resignation or removal of a trustee, the court may appoint a successor trustee unless the creating instrument names or provides an effective method for appointing a successor. Upon the death of a sole trustee, title to the trust property does not pass to the trustee's personal representative but to the successor named in or appointed pursuant to the terms of the creating instrument or, in the case of a successor or special trustee appointed by the court, as provided in
sub. (5). The court may in the exercise of a sound discretion appoint an additional trustee if necessary for the better administration of the trust, unless the creating instrument expressly prohibits such addition or provides an effective method for appointing an additional trustee. Subject to
s. 701.16 (2), a successor or added testamentary trustee shall be issued letters of trust, at that trustee's request.
701.17(2)
(2) Appointment of special trustee. If it appears necessary, the court may appoint a special trustee until a successor trustee can be appointed or, where a trust has terminated, to distribute the assets. A special trustee may be appointed without notice and may be removed whenever the court so orders. Such special trustee shall give such bond as the court requires and shall have the powers conferred by the order of appointment and set forth in any letters of trust issued the special trustee.
701.17(3)
(3) Powers of successor or added trustee. Unless expressly prohibited in the creating instrument, all powers conferred upon the trustee by such instrument attach to the office and are exercisable by the trustee holding the office.
701.17(4)
(4) Powers of cotrustees. If one of several trustees dies, resigns or is removed, the remaining trustees shall have all rights, title and powers of all the original trustees. If the creating instrument manifests an intent that a successor trustee be appointed to fill a vacancy, the remaining trustees may exercise the powers of all the original trustees until such time as a successor is appointed.
701.17(5)
(5) Vesting of title. A special or successor trustee is vested with the title of the original trustee and an added trustee becomes a joint tenant with the existing trustee in all trust property. The court may order a trustee who resigns, is removed or is joined by an added trustee to execute such documents transferring title to trust property as may be appropriate to facilitate administration of the trust or may itself transfer title.
701.17 History
History: 1971 c. 66;
1991 a. 316.
701.18
701.18
Resignation and removal of trustees. 701.18(1)
(1)
Resignation. A trustee may resign in accordance with the terms of the creating instrument or petition the court to accept the trustee's resignation and the court may, upon notice and hearing, discharge the trustee from further responsibility for the trust upon such terms and conditions as are necessary to protect the rights of the beneficiaries and any cotrustee. In no event shall a testamentary trustee be discharged from further responsibility except as provided in
s. 701.16 (6).
701.18(2)
(2) Removal. A trustee may be removed in accordance with the terms of the creating instrument or the court may, upon its own motion or upon a petition by a beneficiary or cotrustee, and upon notice and hearing, remove a trustee who fails to comply with the requirements of this chapter or a court order, or who is otherwise unsuitable to continue in office. In no event shall a testamentary trustee be discharged from further responsibility except as provided in
s. 701.16 (6).
701.18 History
History: 1971 c. 66;
1991 a. 316.
701.18 Annotation
Trustees of an employees' profit-sharing plan who are also beneficiaries may not be removed simply because other beneficiaries have lost confidence in them or because they personally benefit in a minor way from a denial of benefits to a participant. Zimmermann v. Brennan,
56 Wis. 2d 623,
202 N.W.2d 923 (1973).
701.18 Annotation
Although the will creating the trust provided that the trustee could resign without court approval, filing a petition for the appointment of a successor and approval of accounts invoked court jurisdiction and required the exercise of discretion regarding the trustee's resignation. Matter of Sherman B. Smith Family Trust,
167 Wis. 2d 196,
482 N.W.2d 118 (Ct. App. 1992).
701.18 Annotation
That this section allows removing a trustee for cause does not prevent removal of a trustee under s. 701.12 with the approval of the settlor and all beneficiaries, without showing cause. Weinberger v. Bowen,
2000 WI App 264,
240 Wis. 2d 55,
622 N.W.2d 471,
00-0903.
701.19
701.19
Powers of trustees. 701.19(1)(1)
Power to sell, mortgage or lease. In the absence of contrary or limiting provisions in the creating instrument, in the court order appointing a trustee or in a subsequent order, a trustee has complete power to sell, mortgage or lease trust property without notice, hearing or order. A trustee has no power to give warranties in a sale, mortgage or lease which are binding on the trustee personally. In this section "sale" includes an option or agreement to transfer for cash or on credit, exchange, partition or settlement of a title dispute; this definition is intended to broaden rather than limit the meaning of "sale". "Mortgage" means any agreement or arrangement in which trust property is used as security.
701.19(2)
(2) Court authorization of administrative action. 701.19(2)(a)(a) In the absence of contrary or limiting provisions in the creating instrument, in any case where it is for the best interests of the trust, on application of the trustee or other interested person, the court may upon notice and hearing authorize or require a trustee to sell, mortgage, lease or otherwise dispose of trust property upon such terms and conditions as the court deems just and proper.
701.19(2)(b)
(b) Despite contrary or limiting provisions in the creating instrument, upon application of a trustee or other interested person, a court may upon notice and hearing order the retention, investment, reinvestment, sale, mortgage, lease or other disposition of trust property if the court is satisfied that the original purpose of the settlor cannot be carried out, substantially performed or practically achieved for any reason existing at the inception of the trust or arising from any subsequent change in circumstances and the retention, investment, reinvestment, sale, mortgage, lease or other disposition of the property more nearly approximates the settlor's intention.
701.19(2)(c)
(c) Unless authorized in the creating instrument, a trustee may not be interested as a purchaser, mortgagee or lessee of trust property unless such purchase, mortgage or lease is made with the written consent of all beneficiaries or with the approval of the court upon notice and hearing. A representative of a beneficiary, under
s. 701.15, may give written consent for such beneficiary.
701.19(2)(d)
(d) A trustee may not sell individually owned assets to the trust unless the sale is authorized in the creating instrument, made with the written consent of all beneficiaries or made with the approval of the court upon notice and hearing.
701.19(3)
(3) When mandatory power deemed discretionary. If a creating instrument expressly or by implication directs a trustee to sell trust property and such property has not been sold for a period of 25 years after the creation of the trust, such direction to the trustee shall be deemed a discretionary power of sale.
701.19(4)
(4) Continuation of business by court order. 701.19(4)(am)(am) In the absence of contrary or limiting provisions in the creating instrument, the circuit court may, where it is in the best interests of the trust, order the trustee to continue any business of a deceased settlor. The order may be issued without notice and hearing, in the court's discretion and, in any case, may provide:
701.19(4)(am)1.
1. For conduct of the business solely by the trustee, jointly with one or more of the settlor's surviving partners or as a corporation or limited liability company to be formed by the trustee;
701.19(4)(am)2.
2. As between the trust and the trustee, the extent of liability of the trust and the extent of the personal liability of the trustee for obligations incurred in the continuation of the business;
701.19(4)(am)3.
3. As between beneficiaries, the extent to which liabilities incurred in the continuation of the business are to be chargeable solely to a part of the trust property set aside for use in the business or to the trust as a whole; and
701.19(4)(am)4.
4. For the period of time for which the business may be conducted and any other conditions, restrictions, regulations, requirements and authorizations as the court orders.
701.19(4)(e)
(e) Nothing in this subsection shall be construed as requiring a trustee to liquidate a business, including a business operated as a closely held corporation, when liquidating the business is not required by the creating instrument or other applicable law.
701.19(4m)
(4m) Continuation of business by direction of settlor. If the settlor directs retention of a business that is among the trust's assets in the trust document or by other written means, a trustee may retain that business during the settlor's lifetime without liability.
701.19(5)
(5) Formation of business entity. In the absence of contrary or limiting provisions in the creating instrument:
701.19(5)(a)
(a) The court may by order authorize a trustee to become a partner under
ch. 178 or
179 and transfer trust property to the partnership in return for a partnership interest.
701.19(5)(aL)
(aL) The court may by order authorize a trustee to become a member of a limited liability company under
ch. 183 and transfer trust property to the limited liability company in return for an ownership interest.
701.19(5)(b)
(b) The court may by order authorize a trustee to organize a corporation for any purpose permitted by
ch. 180, subscribe for shares of such corporation and transfer trust property to such corporation in payment for the shares subscribed.
701.19(5)(c)
(c) The court may by order authorize a trustee to form a corporation for any purpose permitted by
ch. 181.
701.19(5)(d)
(d) An order under this subsection may in the court's discretion be issued without notice and hearing.
701.19(6)
(6) Registration of securities in nominee. Unless prohibited in the creating instrument, a trustee may register securities in the name of a nominee.
701.19(7)
(7) Proxy voting of stock. Unless the creating instrument contains an express prohibition or specifies the manner in which the trustee is to vote stock in a corporation or certificates of beneficial interest in an investment trust, the trustee may vote such stock or certificates by general or limited proxy, with or without power of substitution.
701.19(8)
(8) Platting land. In the absence of contrary or limiting provisions in the creating instrument, the court may by order authorize a trustee to plat land which is part of the trust, either alone or together with other owners of such real estate. In such platting the trustee must comply with the same statutes, ordinances, rules and regulations which apply to a person who is platting the person's own land. The order under this subsection may in the court's discretion be issued without notice and hearing.
701.19(9)(a)(a) In the absence of contrary or limiting provisions in the creating instrument, any power vested in 3 or more trustees may be exercised by a majority. This paragraph shall not apply to living trusts created prior to July 1, 1971, or to testamentary trusts contained in wills executed or last republished prior to that date.
701.19(9)(b)
(b) A trustee who has not joined in exercising a power is not liable to an affected person for the consequences of the exercise unless the trustee has failed to discharge the trustee's duty to participate in the administration of the trust. A dissenting trustee is not liable for the consequences of an act in which the dissenting trustee joins at the direction of the majority of the trustees if the dissenting trustee's dissent is expressed in writing to the other trustees at or before the time of the joinder.
701.19(10)
(10) Restriction on exercise of powers. 701.19(10)(a)(a) Except as provided in
par. (c), a person may not exercise any of the following powers conferred upon him or her in his or her capacity as trustee:
701.19(10)(a)1.
1. The power to make discretionary distributions of trust principal or income if the distributions are to himself or herself or for the discharge of his or her legal obligations.
701.19(10)(a)2.
2. The power to make discretionary allocations of receipts or expenses as between principal and income if the allocations are in his or her favor.
701.19(10)(b)
(b) If a power under
par. (a) is conferred upon more than one person as trustee, a person who is not disqualified to act under
par. (a) may exercise the power for the benefit of the person who is disqualified to act, unless the creating instrument expressly provides otherwise. A special trustee appointed by a court may exercise a power under
par. (a) for the benefit of the disqualified person if no other trustee is qualified to exercise the power.
701.19(10)(c)1.
1. The person is also the settlor of the trust, and the trust may be revoked or amended by the settlor.
701.19(10)(c)2.
2. The terms of the creating instrument specifically limit the scope of the power to expenditures and distributions of income or principal on the basis of an ascertainable standard relating to the person's health, maintenance, support, or education such that the person would not be subject to tax under section
2041 or
2514 of the Internal Revenue Code as a result of having or exercising the power.
701.19(10)(c)3.
3. The person is the spouse, widow, or widower of the settlor of the trust, and a marital deduction has been allowed for federal gift or estate tax purposes with respect to the trust property that is subject to the power.
701.19(10)(c)4.
4. The creating instrument negates the application of
par. (a) with respect to the power or indicates that provisions that are similar to
par. (a) do not apply.
701.19(11)
(11) Protection of 3rd parties. With respect to a 3rd person dealing with a trustee or assisting a trustee in the conduct of a transaction, the existence of trust power and its proper exercise by the trustee may be assumed without inquiry. The 3rd person is not bound to inquire whether the trustee has power to act or is properly exercising the power; and a 3rd person, without actual knowledge that the trustee is exceeding the trustee's powers or improperly exercising them, is fully protected in dealing with the trustee as if the trustee possessed and properly exercised the powers the trustee purports to exercise. A 3rd person is not bound to assure the proper application of trust property paid or delivered to the trustee.
701.19 Cross-reference
Cross-reference: See s.
112.01, the Uniform Fiduciaries Act on protection of third parties.
701.19 Cross-reference
Cross-reference: See s.
112.02, which provides for suspending powers of a testamentary trustee in military service.
701.19 Cross-reference
Cross-reference: Chapter
881 and s.
223.055 contain limitations on investments by trustees.
701.19 Annotation
The loss of future profit to an estate through the disposal of a parcel is damage chargeable to the trustee or personal representative only if the parcel was not needed for liquidity. In re Estate of Meister,
71 Wis. 2d 581,
239 N.W.2d 52 (1976).
701.19 Annotation
Fiduciary and estate liability in contract and in tort. Dubis, 55 MLR 297.
701.20
701.20
Principal and income. 701.20(2)(a)
(a) "Accounting period" means a calendar year, unless a fiduciary selects another 12-month period, and includes a portion of a calendar year or other 12-month period that begins when an income interest begins or that ends when an income interest ends.
701.20(2)(b)
(b) "Beneficiary" means a person who has a beneficial interest in a trust or an estate and includes, in the case of a decedent's estate, an heir, a legatee, and a devisee and, in the case of a trust, an income beneficiary and a remainder beneficiary.
701.20(2)(c)
(c) "Fiduciary" means a personal representative or a trustee and includes an executor, administrator, successor personal representative, special administrator, and a person performing substantially the same function as any of those.
701.20(2)(d)
(d) "Income" means money or property that a fiduciary receives as current return from a principal asset. "Income" includes a portion of receipts from a sale, exchange, or liquidation of a principal asset, to the extent provided in
subs. (10) to
(24).
701.20(2)(e)
(e) "Income beneficiary" means a person to whom net income of a trust is or may be payable.
701.20(2)(f)
(f) "Income interest" means the right of an income beneficiary to receive all or part of net income, whether the terms of the trust require it to be distributed or authorize it to be distributed in the trustee's discretion.
701.20(2)(g)
(g) "Mandatory income interest" means the right of an income beneficiary to receive net income that the terms of the trust require the fiduciary to distribute.
701.20(2)(h)
(h) "Net income" means the total receipts allocated to income during an accounting period, minus the disbursements made from income during the period, plus or minus transfers under this section to or from income during the period.
701.20(2)(i)
(i) "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.
701.20(2)(j)
(j) "Principal" means property held in trust for distribution to a remainder beneficiary when the trust terminates or property held in trust in perpetuity.
701.20(2)(k)
(k) "Remainder beneficiary" means a person entitled to receive principal when an income interest ends.
701.20(2)(L)
(L) "Sui juris beneficiary" means a beneficiary not under a legal disability. The term includes all of the following:
