This section applies to any fiduciary holding securities in its fiduciary capacity, and to any bank or trust company holding securities as a custodian, managing agent or custodian for a fiduciary, acting on December 4, 1975 or who after that date may act, regardless of the date of the agreement, instrument or court order by which appointed and regardless of whether or not the fiduciary, custodian, managing agent or custodian for a fiduciary owns capital stock of the clearing corporation in which the securities are deposited.
Premium on bond allowed as expense.
Any fiduciary required to give a suretyship obligation may include as a part of the expense of executing the trust the lawful premium paid a surety corporation for executing the obligation.
History: 1977 c. 339
; Stats. 1977 s. 112.07; 1977 c. 447
; Stats. 1977 s. 112.08.
Legislative Council Note, 1977: This provision is part of s. 204.11, repealed by this act. It has nothing to do with the law of insurance but deals solely with the proper conduct of fiduciaries. As such it belongs in ch. 112 and is transferred there without change. [Bill 258-S]
Surety, how discharged. 112.09(1)(1)
Any surety or the personal representative of any surety upon the bond of any trustee, guardian, receiver, executor, or other fiduciary, may be discharged from liability as provided in this section. On 5 days' notice to the principal in such bond, application may be made to the court where it is filed, or which has jurisdiction of such fiduciary or to any judge of such court for a discharge from liability as surety, and that such principal be required to account.
Notice of such application may be served personally within or without the state. If it shall satisfactorily appear to the court or the judge that personal service cannot be had with due diligence within the state, the notice may be served in such manner as the court or judge shall direct. Pending such application the principal may be restrained from acting, except to preserve the trust estate.
If at the time appointed the principal shall fail to file a new bond satisfactory to the court or judge, an order shall be made requiring the principal to file a new bond within 5 days. When such new bond shall be filed, the court or judge shall make an order requiring the principal to account for all of the principal's acts to and including the date of the order, and to file such account within a time fixed not exceeding 20 days; and shall discharge the surety making such application from liability for any act or default of the principal subsequent to the date of such order.
If the principal shall fail to file a new bond within the time specified, an order shall be made removing the principal from office, and requiring the principal to file the principal's account within 20 days. If the principal shall fail to file the principal's account as required, the surety may make and file such account; and upon settlement thereof and upon the trust fund or estate being found or made good and paid over or properly secured, credit shall be given for all commissions, costs, disbursements and allowances to which the principal would be entitled were the principal accounting.
The procedure for hearing, settling, and allowing the principal's account shall be according to the practice prescribed by ch. 862
for personal representatives. Upon the trust fund or estate being found or made good and paid over or properly secured, the surety shall be discharged from all liability. Upon demand by the principal, the discharged surety shall return the unearned part of the premium paid for the canceled bond.
Any such fiduciary may institute and conduct proceedings for the discharge of the fiduciary's surety and for the filing of a new bond; and the procedure shall in all respects conform substantially to the practice prescribed by this section in cases where the proceeding is instituted by a surety, and with like effect.
History: 1993 a. 486
; 2001 a. 102
; 2005 a. 155
; Stats. 2005 s. 112.09.
Uniform Prudent Management of Institutional Funds Act. 112.11(1)(1)
This section may be cited as the “Uniform Prudent Management of Institutional Funds Act."
“Charitable purpose" means the relief of poverty, the advancement of education or religion, the promotion of health, the promotion of a governmental purpose, or any other purpose, the achievement of which is beneficial to the community.
“Endowment fund" means an institutional fund or part thereof that, under the terms of a gift instrument, is not wholly expendable by the institution on a current basis. “Endowment fund" does not include assets that an institution designates as an endowment fund for its own use.
“Gift instrument" means a record or records, including an institutional solicitation, under which property is granted to, transferred to, or held by an institution as an institutional fund.
A person, other than an individual, organized and operated exclusively for charitable purposes.
A government or governmental subdivision, agency, or instrumentality, to the extent that it holds funds exclusively for a charitable purpose.
A trust that had both charitable and noncharitable interests, after all noncharitable interests have terminated.
“Institutional fund" means a fund held by an institution exclusively for charitable purposes, but does not include any of the following:
A fund in which a beneficiary that is not an institution has an interest, other than an interest that could arise upon violation or failure of the purposes of the fund.
“Person" means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, public corporation, government or governmental subdivision, agency, or instrumentality, or any other legal or commercial entity.
“Program-related asset" means an asset held by an institution primarily to accomplish a charitable purpose of the institution and not primarily for investment.
“Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
(3) Standard of conduct in managing and investing an institutional fund. 112.11(3)(a)
Subject to the intent of a donor expressed in a gift instrument, an institution, in managing and investing an institutional fund, shall consider the charitable purposes of the institution and the purposes of the institutional fund.
In addition to complying with the duty of loyalty imposed by law other than this section, each person responsible for managing and investing an institutional fund shall manage and invest the fund in good faith and with the care an ordinarily prudent person in a like position would exercise under similar circumstances.
In managing and investing an institutional fund, an institution:
May incur only costs that are appropriate and reasonable in relation to the assets, the purposes of the institution, and the skills available to the institution.
Shall make a reasonable effort to verify facts relevant to the management and investment of the fund.
An institution may pool 2 or more institutional funds for purposes of management and investment.
Except as otherwise provided by a gift instrument, the following rules apply:
In managing and investing an institutional fund, the following factors, if relevant, shall be considered:
The expected tax consequences, if any, of investment decisions or strategies.
The role that each investment or course of action plays within the overall investment portfolio of the fund.
The expected total return from income and the appreciation of investments.
The needs of the institution and the fund to make distributions and to preserve capital.
An asset's special relationship or special value, if any, to the charitable purposes of the institution.
Management and investment decisions about an individual asset shall not be made in isolation but rather in the context of the institutional fund's portfolio of investments as a whole and as a part of an overall investment strategy having risk and return objectives reasonably suited to the fund and to the institution.
Except as otherwise provided by law other than this section, an institution may invest in any kind of property or type of investment consistent with this section.
An institution shall diversify the investments of an institutional fund unless the institution reasonably determines that, because of special circumstances, the purposes of the fund are better served without diversification.
Within a reasonable time after receiving property, an institution shall make and carry out decisions concerning the retention or disposition of the property or to rebalance a portfolio, in order to bring the institutional fund into compliance with the purposes, terms, and distribution requirements of the institution as necessary to meet other circumstances of the institution and the requirements of this section.
A person that has special skills or expertise, or is selected in reliance upon the person's representation that the person has special skills or expertise, has a duty to use those skills or that expertise in managing and investing institutional funds.
(4) Appropriation for expenditure or accumulation of endowment fund; rules of construction. 112.11(4)(a)
Subject to the intent of a donor expressed in the gift instrument, an institution may appropriate for expenditure or accumulate so much of an endowment fund as the institution determines is prudent for the uses, benefits, purposes, and duration for which the endowment fund is established. Unless stated otherwise in the gift instrument, the assets in an endowment fund are donor-restricted assets until appropriated for expenditure by the institution. In making a determination to appropriate or accumulate, the institution shall act in good faith, with the care that an ordinarily prudent person in a like position would exercise under similar circumstances, and shall consider, if relevant, the following factors:
The duration and preservation of the endowment fund.
The purposes of the institution and the endowment fund.
The expected total return from income and the appreciation of investments.
To limit the authority to appropriate for expenditure or accumulate under par. (a)
, a gift instrument shall specifically state the limitation.
Terms in a gift instrument designating a gift as an endowment, or a direction or authorization in the gift instrument to use only “income," “interest," “dividends," or “rents, issues, or profits," or “to preserve the principal intact," or words of similar import:
Create an endowment fund of permanent duration, unless other language in the gift instrument limits the duration or purpose of the fund.
Do not otherwise limit the authority to appropriate for expenditure or accumulate under par. (a)
(5) Delegation of management and investment functions. 112.11(5)(a)(a)
Subject to any specific limitation set forth in a gift instrument or in law other than this section, an institution may delegate to an external agent the management and investment of an institutional fund to the extent that an institution could prudently delegate under the circumstances. An institution shall act in good faith, with the care that an ordinarily prudent person in a like position would exercise under similar circumstances, in all of the following:
Establishing the scope and terms of the delegation, consistent with the purposes of the institution and the institutional fund.
Periodically reviewing the agent's actions in order to monitor the agent's performance and compliance with the scope and terms of the delegation.
In performing a delegated function, an agent owes a duty to the institution to exercise reasonable care to comply with the scope and terms of the delegation.
An institution that complies with par. (a)
is not liable for the decisions or actions of an agent to which the function was delegated.
By accepting delegation of a management or investment function from an institution that is subject to the laws of this state, an agent submits to the jurisdiction of the courts of this state in all proceedings arising from or related to the delegation or the performance of the delegated function.
An institution may delegate management and investment functions to its committees, officers, or employees as authorized by law of this state other than this section.
(6) Release or modification of restrictions on management, investment, or purpose. 112.11(6)(a)
If the donor consents in a record, an institution may release or modify, in whole or in part, a restriction contained in a gift instrument on the management, investment, or purpose of an institutional fund. A release or modification may not allow a fund to be used for a purpose other than a charitable purpose of the institution.
The court, upon application of an institution, may modify a restriction contained in a gift instrument regarding the management or investment of an institutional fund if the restriction has become impracticable or wasteful, if it impairs the management or investment of the fund, or if, because of circumstances not anticipated by the donor, a modification of a restriction will further the purposes of the fund. The institution shall notify the attorney general of the application, and the attorney general shall be given an opportunity to be heard. To the extent practicable, any modification must be made in accordance with the donor's probable intention.
If a particular charitable purpose or a restriction contained in a gift instrument on the use of an institutional fund becomes unlawful, impracticable, impossible to achieve, or wasteful, the court, upon application of an institution, may modify the purpose of the fund or the restriction on the use of the fund in a manner consistent with the charitable purposes expressed in the gift instrument. The institution shall notify the attorney general of the application, and the attorney general shall be given an opportunity to be heard.
If an institution determines that a restriction contained in a gift instrument on the management, investment, or purpose of an institutional fund is unlawful, impracticable, impossible to achieve, or wasteful, the institution, 60 days after notification to the attorney general, may release or modify the restriction, in whole or part, if all of the following occur:
The institutional fund subject to the restriction has a total value of less than $75,000.
More than 20 years have elapsed since the fund was established.
The institution uses the property in a manner consistent with the charitable purposes expressed in the gift instrument.
(7) Reviewing compliance.
Compliance with this section is determined in light of the facts and circumstances existing at the time a decision is made or action is taken, and not by hindsight.
(8) Application to existing institutional funds.
This section applies to institutional funds existing on or established after August 4, 2009. As applied to institutional funds existing on August 4, 2009, this section governs only decisions made or actions taken on or after that date.
(9) Relation to federal Electronic Signatures in Global and National Commerce Act.
This section modifies, limits, and supersedes the federal Electronic Signatures in Global and National Commerce Act, 15 USC 7001
et seq., but does not modify, limit, or supersede section 101 of that act, 15 USC 7001
(a), or authorize electronic delivery of any of the notices described in section 103 of that act, 15 USC 7003
(10) Uniformity of application and construction.
In applying and construing this section, consideration shall be given to the need to promote uniformity of the law with respect to its subject matter among states that enact it.
History: 2009 a. 33