Chapter 854

854.04(5)(b) (b) An individual who has a surviving ancestor who is an issue of the designated person is not allocated a share.

854.04(6) (6) Contrary intent. If the transfer is made under a governing instrument and the person who executed the governing instrument had an intent contrary to any provision in this section, then that provision is not applicable to the transfer. Extrinsic evidence may be used to construe the intent.

854.04 History History: 1997 a. 188; 2005 a. 216.

854.04 Annotation A will clause providing for “equal shares to the then living issue of donor’s three daughter-beneficiaries in this trust, and/or the then living issue of any deceased issue of donor’s three daughter-beneficiaries, by right of representation” required distribution per capita among the grandchildren and by representation among their children. In re Bowler Trust, 56 Wis. 2d 171, 201 N.W.2d 573 (1972).

854.04 Note NOTE: The preceding case was decided prior to the adoption of 1997 Wis. Act 188, which made extensive revisions to the Wisconsin Probate Code.

854.05 854.05 No exoneration of encumbered property.

854.05(1) (1) Definitions. In this section:

854.05(1)(a) (a) “Debt” includes accrued interest on the debt.

854.05(1)(b) (b) “Encumbrance” includes mortgages, liens, pledges and other security agreements that are encumbrances on property.

854.05(2) (2) Generally.

854.05(2)(a) (a) Except as provided in sub. (5), all property that is specifically transferred by a governing instrument shall be assigned to the transferee without exoneration of a debt that is secured by an encumbrance on the property.

854.05(2)(b) (b) If the debt that is secured by the encumbrance on the property is paid in whole or in part out of other assets, the specifically transferred property shall be assigned to the transferee only if any of the following applies:

854.05(2)(b)1. 1. The transferee contributes to the person or entity that held the assets that were used to pay the debt an amount equal to the amount that was paid.

854.05(2)(b)2. 2. The person or entity secures the amount described in subd. 1. through a new encumbrance on the property.

854.05(3) (3) Joint tenancy; survivorship marital property. Except as provided in sub. (5), if all or part of a debt that is secured by an encumbrance on property in which the decedent at the time of death had an interest as a joint tenant or as a holder of survivorship marital property is paid out of other assets as the result of a claim being allowed, the person or entity that makes the payment is subrogated to all rights that the claimant had against the property.

854.05(4) (4) Insurance. Except as provided in sub. (5), if all or part of a debt that is secured by an encumbrance on the proceeds payable under a life insurance policy in which the decedent was the named insured is paid out of other assets as the result of a claim being allowed, the person or entity that makes the payment is subrogated to all rights that the claimant had against the proceeds.

854.05(5) (5) Contrary intent.

854.05(5)(a) (a) If the person who executed the governing instrument had an intent contrary to any provision in this section, then that provision is not applicable to the transfer. Extrinsic evidence may be used to construe the intent.

854.05(5)(b) (b) A general directive to pay debts does not give rise to a presumption of exoneration.

854.05 History History: 1997 a. 188; 2005 a. 216.

854.06 854.06 Predeceased transferee.

854.06(1) (1) Definitions. In this section:

854.06(1)(a) (a) “Provision in a governing instrument” includes all of the following:

854.06(1)(a)1. 1. A gift to an individual whether or not the individual is alive at the time of the execution of the instrument.

854.06(1)(a)2. 2. A share in a class gift only if a member of the class dies after the execution of the instrument.

854.06(1)(a)3. 3. An appointment by the decedent under any power of appointment, unless the issue who would take under this section could not have been appointees under the terms of the power.

854.06(1)(c) (c) “Stepchild” means a child of the decedent’s surviving, deceased or former spouse, and not of the decedent.

854.06(2) (2) Scope of coverage. This section applies to revocable provisions in a governing instrument executed by the decedent that provide for an outright transfer upon the death of the decedent to any of the following persons:

854.06(2)(a) (a) A grandparent of the decedent, or issue of a grandparent, subject to s. 854.21.

854.06(2)(b) (b) A stepchild of the decedent, subject to s. 854.15.

854.06(3) (3) Substitute gift to issue of covered transferee. Subject to sub. (4), if a transferee under a provision described in sub. (2) does not survive the decedent but has issue who do survive, the issue of the transferee take the transfer per stirpes, as provided in s. 854.04 (1).

854.06(4) (4) Contrary intent.

854.06(4)(a) (a) Subsection (3) does not apply if any of the following applies:

854.06(4)(a)1. 1. The governing instrument provides that a transfer to a predeceased beneficiary lapses.

854.06(4)(a)2. 2. The governing instrument designates one or more persons, classes, or groups of people as contingent transferees, in which case those transferees take in preference to those under sub. (3). But if none of the contingent transferees survives, sub. (3) applies to the first group in the sequence of contingent transferees that has one or more transferees specified in sub. (2) who left surviving issue.

854.06(4)(bm) (bm) If the person who executed the governing instrument had an intent contrary to any provision in this section, then that provision is not applicable to the transfer. Extrinsic evidence may be used to construe the intent.

854.06 History History: 1997 a. 188; 2005 a. 216.

854.06 Annotation A will clause providing that if any beneficiary dies within 5 months of the testator, the deceased beneficiary’s share is to be treated as if the beneficiary predeceased the testator, served to pass a deceased beneficiary’s share to her children under the anti-lapse statute. Firehammer v. Marchant, 224 Wis. 2d 673, 591 N.W.2d 898 (Ct. App. 1999), 98-0586.

854.07 854.07 Failed transfer and residue.

854.07(1) (1) Except as provided in sub. (4) and s. 854.06, if an attempted transfer under a governing instrument fails, the attempted transfer becomes part of the residue of the governing instrument. This subsection does not apply if the attempted transfer is itself a residuary transfer.

854.07(2) (2) Except as provided in sub. (4) and s. 854.06, if the residue of a governing instrument is to be transferred to 2 or more persons, the share of a residuary transferee that fails passes to the other residuary transferees in proportion to the interest of each in the remaining part of the residue.

854.07(3) (3) If a governing instrument other than a will does not effectively dispose of an asset that is governed by the instrument, that asset shall be paid or distributed to the transferor’s probate estate.

854.07(4) (4) If the person who executed the governing instrument had an intent contrary to any provision in this section, then that provision is inapplicable to the transfer. Extrinsic evidence may be used to construe the intent.

854.07 History History: 1997 a. 188; 2005 a. 216.

854.07 Annotation Under a will leaving “my homestead which I occupy at the time of my death” to a son, the home in which the testator lived when the will is executed should be awarded to the son even though the testator became ill and was confined to a nursing home for a year prior to his death and the home was rented. Estate of Gotthart, 56 Wis. 2d 563, 202 N.W.2d 397 (1972).

854.07 Annotation The testator’s spouse inherited the residue when a purported residuary clause made only specific and general bequests and did not make a dispositive provision for distribution of the residue. To read into a will a gift by implication, it is necessary to first find a positive, disposing intent based on a contingency that did not occur. Then it is possible, if the facts warrant it, to imply the same intent concerning the contingency which did occur but which was not accounted for in the will. In Matter of Estate of McWilliams, 78 Wis. 2d 328, 254 N.W.2d 277 (1977).

854.07 Note NOTE: The preceding cases were decided prior to the adoption of 1997 Wis. Act 188, which made extensive revisions to the Wisconsin Probate Code.

854.08 854.08 Nonademption of specific gifts in certain cases.

854.08(1) (1) Abrogation of common law. The common law doctrine of ademption by extinction, as it might otherwise apply to the situations governed by this section, is abolished.

854.08(2) (2) Proceeds of sale.

854.08(2)(a) (a) Subject to sub. (6), if property that is the subject of a specific gift is sold by the person who executed the governing instrument within 2 years of the person’s death, the specific beneficiary has the right to the following amounts if available under the governing instrument:

854.08(2)(a)1. 1. Any balance of the purchase price unpaid at the time of death, including any security interest in the property and interest accruing before death, together with the incidents of the specific gift.

854.08(2)(a)2. 2. A general pecuniary transfer equivalent to the amount of the purchase price paid to, or for the benefit of, the person within one year of the seller’s death.

854.08(2)(b) (b) Acceptance of a promissory note of the purchaser or a 3rd party is not considered payment, but payment on the note is payment on the purchase price; and for purposes of this section property is considered sold as of the date when a valid contract of sale is made. Sale by an agent of the person who executed the governing instrument or by a trustee under a revocable living trust created by the person is a sale by the person for purposes of this section.

854.08(3) (3) Proceeds of insurance on property. Subject to sub. (6), if insured property that is the subject of a specific gift is destroyed, damaged, lost, stolen or otherwise subject to any casualty compensable by insurance, the specific beneficiary has the right to the following amounts, if available under the governing instrument, reduced by any amount expended or incurred to restore or repair the property:

854.08(3)(a) (a) Any insurance proceeds paid with respect to the property after the decedent’s death, together with the incidents of the specific gift.

854.08(3)(b) (b) A general pecuniary transfer equivalent to any insurance proceeds paid to, or for the benefit of, the decedent within one year of the decedent’s death.

854.08(4) (4) Condemnation award.

854.08(4)(a) (a) Subject to sub. (6), if property that is the subject of a specific gift is taken by condemnation prior to the death of the person who executed the governing instrument, the specific beneficiary has the right to the following amounts if available under the governing instrument:

854.08(4)(a)1. 1. Any amount of the condemnation award unpaid at the time of death.

854.08(4)(a)2. 2. A general pecuniary transfer equivalent to the amount of an award paid to, or for the benefit of, the person who executed the governing instrument within one year of that person’s death.

854.08(4)(b) (b) In the event of an appeal in a condemnation proceeding, the award is, for purposes of this section, limited to the amount established on the appeal. Acceptance of an agreed price or a jurisdictional offer is a sale under sub. (2).

854.08(5) (5) Property under guardianship, conservatorship, or power of attorney.

854.08(5)(a) (a) In this subsection, “agent” means an agent under a durable power of attorney, as defined in s. 244.02 (3).

854.08(5)(b) (b) Subject to pars. (c) and (d) and sub. (6), if property that is the subject of a specific gift is sold or mortgaged by a guardian, conservator, or agent of the person who executed the governing instrument, or if a condemnation award or insurance proceeds are paid to a guardian, conservator, or agent, the specific beneficiary has the right to a general pecuniary transfer equivalent to the proceeds of the sale, mortgage, condemnation award, or insurance proceeds, reduced by any amount expended or incurred to restore or repair the property or to reduce the indebtedness on the mortgage, if the funds are available under the governing instrument.

854.08(5)(c) (c) Paragraph (b) does not apply with respect to a guardian or conservator if, subsequent to the sale, mortgage, award, or receipt of insurance proceeds, the person who executed the governing instrument is adjudicated competent and survives such adjudication for a period of one year; but in such event the rights of the specific beneficiary shall be determined as though the proceeds were paid to the owner under sub. (2), (3), or (4).

854.08(5)(d) (d) Paragraph (b) does not apply with respect to an agent if the person who executed the governing instrument is competent at the time of the sale, mortgage, award, or receipt of insurance proceeds but in such event the rights of the specific beneficiary shall be determined as though the proceeds were paid to the owner under sub. (2), (3), or (4).

854.08(6) (6) Limitations.

854.08(6)(ag) (ag) This section is inapplicable if the person who executed the governing instrument gives property during the person’s lifetime to the specific beneficiary with the intent of satisfying the specific gift and the requirement under s. 854.09 (1) is satisfied.

854.08(6)(ar) (ar) If the person who executed the governing instrument had an intent contrary to any provision in this section, then that provision is inapplicable to the transfer. Extrinsic evidence may be used to construe the intent.

854.08(6)(b) (b) If part of the property that is the subject of the specific gift is destroyed, damaged, sold or condemned, the specific gift of any remaining interest in the property is not affected by this section; but this section applies to the part affected by the destruction, damage, sale or condemnation.

854.08(6)(c) (c) The amount that the specific beneficiary receives under subs. (2) to (5) is reduced by any expenses of the sale, by the expenses of collection of the proceeds of insurance, sale, or condemnation award and by any amount by which the income tax of the decedent or the decedent’s estate is increased because of items covered by this section. Expenses include legal fees paid or incurred.

854.08 History History: 1997 a. 188; 2005 a. 216, 387; 2009 a. 319.

854.09 854.09 Advancement; satisfaction.

854.09(1) (1) A gift that the decedent made during his or her lifetime, including an incomplete gift that became complete on the decedent’s death, is treated as a full or partial satisfaction of a transfer at death to an heir under s. 852.01 (1) or a transferee under a governing instrument executed by the decedent only if at least one of the following applies:

854.09(1)(a) (a) The governing instrument, if any, either expressly or as construed from extrinsic evidence, provides that the gift be taken into account.

854.09(1)(b) (b) The decedent declared in a document, either expressly or as construed from extrinsic evidence, that the gift is in satisfaction of, or an advance against, what the transferee would receive at the decedent’s death, whether or not the document was contemporaneous with the gift.

854.09(1)(c) (c) The transferee acknowledged in writing before or after the decedent’s death, either expressly or as construed from extrinsic evidence, that the gift is in satisfaction of, or an advance against, what the transferee would receive at the decedent’s death.

854.09(2) (2) For partial satisfaction, property given during life is valued as of the time that the transferee came into possession or enjoyment of the property or at the death of the person who executed the governing instrument, whichever occurs first.

854.09(3) (3) If the transferee fails to survive the person who executed the governing instrument and his or her issue take a substitute transfer under intestacy or under a governing instrument, the issue receive the same transfer that the named transferee would have received had the transferee survived, unless the transferor declared otherwise in a document, either expressly or as construed from extrinsic evidence.

854.09 History History: 1997 a. 188; 2005 a. 216.

854.10 854.10 Choice of law. The meaning and legal effect of a governing instrument are determined by the local law of the state selected by the transferor in the governing instrument, unless the application of that law is contrary to s. 861.02 or 861.31 or any other public policy of this state otherwise applicable to the disposition.

854.10 History History: 1997 a. 188.

854.11 854.11 Gift of securities.

854.11(1) (1) Definition. In this section, “securities” includes all of the following:

854.11(1)(a) (a) Any note, stock, treasury stock, bond, debenture, evidence of indebtedness, collateral trust certificate, transferable share or voting trust certificate.

854.11(1)(b) (b) Any certificate of interest or participation in an oil, gas or mining title or lease or in payments out of production under such a title or lease.

854.11(1)(c) (c) Any interest or instrument commonly known as a security.

854.11(1)(d) (d) Any certificate of interest or participation in, any temporary or interim certificate, receipt or certificate of deposit for, or any warrant or right to subscribe to or purchase, any of the instruments or interests specified in pars. (a) to (c).