AB490,114,21 19701.0901 Application of the Wisconsin Prudent Investor Act. Except as
20provided in this subchapter, the investment management of the property of a trust
21is governed by ch. 881.

AB490,114,24 23701.0902 Directed trust property. (1) A directing party who has power over
24directed trust property shall do all of the following:

1(a) Direct the trustee on the retention, purchase, sale, exchange, tender,
2encumbrance, or any other investment transaction of the directed trust property and
3the investment and reinvestment of principal and income.

AB490,115,54 (b) Direct the trustee with respect to the management, control, and voting
5powers, including voting proxies, of the directed trust property.

AB490,115,96 (c) Select and determine reasonable compensation of one or more outside
7investment advisors, managers, consultants, or counselors, which may include the
8trustee, and delegate investment authority to them pursuant to the investment
9delegation provisions under s. 881.01 (10).

AB490,115,1210 (d) Determine the frequency of and methodology for valuing directed trust
11property and provide the value of property for which there is no readily available
12daily market value.

AB490,115,14 13(2) A trustee who has no power over directed trust property does not have a
14duty to do any of the following with respect to the directed trust property:

AB490,115,1515 (a) Prepare or review investment policy statements.

AB490,115,1616 (b) Perform investment or suitability reviews, inquiries, or investigations.

AB490,115,1817 (c) Determine or verify the value of directed trust property for which there is
18no readily available daily market value.

AB490,115,1919 (d) Monitor the conduct or investment performance of the directing party.

AB490,116,2 21701.0903 Nonapplication of prudent investor rule to life insurance
22contracts owned by trusts. (1) Notwithstanding s. 881.01, if a principal purpose
23of a trust is to hold a life insurance contract or to purchase a life insurance contract
24from contributions made to the trust, the trustee does not have a duty to determine
25whether the life insurance contract is or remains a proper investment of the trust.

1For purposes of this subsection, determining whether a life insurance contact is or
2remains a proper investment includes all of the following:

AB490,116,43 (a) Investigating the financial strength or changes in the financial strength of
4the life insurance company maintaining the life insurance contract.

AB490,116,65 (b) Determining whether to exercise any policy option, right, or privilege
6available under the life insurance contract.

AB490,116,87 (c) Diversifying the life insurance contract relative to any other life insurance
8contracts or any other assets of the trust.

AB490,116,109 (d) Inquiring about or investigating the health or financial condition of an
10insured.

AB490,116,1311 (e) Preventing the lapse of a life insurance contract if the trust does not receive
12contributions or hold other readily marketable assets to pay the life insurance
13contract premiums.

AB490,116,15 14(2) A trustee is not liable for a loss that arises because the trustee did not take
15an action specified in sub. (1).

AB490,116,21 16(3) This section does not apply to a life insurance contract that is purchased
17from an affiliate of the trustee or to a life insurance contract from which the trustee
18or an affiliate receives a commission, unless the power to purchase the life insurance
19contract has been delegated to another person and that other person made the
20decision to purchase the life insurance contract from or through the trustee or an
21affiliate.

AB490,116,25 22(4) This section does not apply to a trust that was executed before the effective
23date of this subsection .... [LRB inserts date], unless the trustee notifies the qualified
24beneficiaries that the trustee elects to be governed by this section and provides the
25qualified beneficiaries with a copy of this section.

AB490,117,3

1(5) Subject to sub. (4), this section applies to a life insurance contract acquired,
2retained, or owned by a trustee before, on, or after the effective date of this subsection
3.... [LRB inserts date].

AB490,160 5Section 160. Subchapter X (title) of chapter 701 [precedes 701.1001] of the
6statutes is created to read: