701.0418(3)(d)1. 1. The withdrawal rights were granted to the beneficiary in a manner designed to allow contributions subject to the withdrawal rights to qualify for the federal gift tax annual exclusion.
701.0418(3)(d)2. 2. The terms of the 2nd trust would impair gifts previously made to the first trust from qualifying for the federal gift tax annual exclusion under section 2503 of the Internal Revenue Code.
701.0418(3)(e) (e) The appointment of assets to the 2nd trust would violate a rule against perpetuities applicable to the first trust or suspend a trustee's power of alienation over assets of the first trust in a manner that would cause all or a portion of the 2nd trust to be void.
701.0418(3)(f) (f) The appointment of assets to the 2nd trust under sub. (2) would impair the essential purpose of a trust for an individual with a disability.
701.0418(4) (4)Permissible terms of 2nd trust.
701.0418(4)(a) (a) Subject to pars. (b) to (d) and subs. (2), (3), and (5), the trustee of the first trust may create a 2nd trust instrument that includes terms that are intended to achieve any purpose, including terms that are intended to do any of the following:
701.0418(4)(a)1. 1. Correct a drafting error in the first trust.
701.0418(4)(a)2. 2. Clarify potentially ambiguous terms contained in the first trust.
701.0418(4)(a)3. 3. Change the age of distribution to a beneficiary of the first trust.
701.0418(4)(a)4. 4. Extend the duration of the first trust.
701.0418(4)(a)5. 5. Protect a beneficiary of the first trust, including protecting the beneficiary from self-destructive behavior.
701.0418(4)(a)6. 6. Allow the trustee of the 2nd trust to transfer trust assets to a community trust. In this subdivision, “community trust" means a master trust that is established and managed by a nonprofit organization that maintains sub-accounts for individual beneficiaries that each satisfy the definition of a trust for an individual with a disability.
701.0418(4)(a)7. 7. Add or remove a spendthrift trust provision to the first trust.
701.0418(4)(a)8. 8. Modify investment provisions contained in the first trust, including those relating to permissible investments, use of investment advisors, or self-dealing transactions.
701.0418(4)(a)9. 9. Change a present or future trustee of the first trust, including by defining the method by which a trustee or cotrustee may be appointed or removed and replaced.
701.0418(4)(a)10. 10. Appoint a trust protector of the 2nd trust and define the powers of the trust protector.
701.0418(4)(a)11. 11. Appoint a directing party of the 2nd trust and define the powers of the directing party.
701.0418(4)(a)12. 12. Change the principal place of administration of the first trust.
701.0418(4)(a)13. 13. Change the governing law of the first trust.
701.0418(4)(a)14. 14. Allow for the division of the first trust into 2 or more trusts.
701.0418(4)(a)15. 15. Allow for the merger of the first trust with one or more trusts.
701.0418(4)(a)16. 16. Add or modify an exculpatory provision for a trustee, trust protector, or directing party.
701.0418(4)(a)17. 17. Obtain desirable tax treatment, as determined by the trustee of the first trust, or to avoid adverse tax consequences, as determined by the trustee of the first trust, including provisions relating to grantor trust status under sections 671 to 679 of the Internal Revenue Code.
701.0418(4)(a)18. 18. Modify a power in the first trust to invade income and principal.
701.0418(4)(a)19. 19. Modify or eliminate a general or special power of appointment in the first trust.
701.0418(4)(b) (b) The trust instrument of the 2nd trust may include terms granting a beneficiary a general or special power of appointment only if the trustee of the first trust has the absolute power to invade income and principal.
701.0418(4)(c)1.1. The trust instrument of the 2nd trust may include terms that are intended to change terms of the first trust that are applicable to a beneficiary who is an individual with a disability only if the purpose of the change is to allow the beneficiary to qualify or continue to be qualified to receive public assistance.
701.0418(4)(c)2. 2. Subdivision 1. applies regardless of whether the first trust includes specific or ascertainable standards for distribution.
701.0418(4)(d) (d) The trust instrument of the 2nd trust may include a term that adopts or expands an exculpatory provision relating to the trustee only if one of the following applies:
701.0418(4)(d)1. 1. Any trustee of the first trust who would benefit from the adoption of the term in the 2nd trust abstains from the consideration and adoption of the term and the trustees of the first trust who would not benefit from the adoption of the term adopt the trust instrument of the 2nd trust.
701.0418(4)(d)2. 2. A court approves the trust instrument of the 2nd trust.
701.0418(5) (5)Procedural matters.
701.0418(5)(a) (a) A trustee shall appoint assets to a 2nd trust under sub. (2) by an instrument in writing that is signed and acknowledged by the trustee and shall include the written instrument with the records of the first and 2nd trusts. A trustee may appoint assets to a 2nd trust under sub. (2) upon notice, without court approval, under the procedure described in par. (b), or with court approval, under the procedure described in par. (c).
701.0418(5)(b)1.1. If a trustee chooses to proceed without a court order, the trustee shall give notice of the manner in which the trustee intends to appoint assets to a 2nd trust under sub. (2) to all of the following:
701.0418(5)(b)1.a. a. The qualified beneficiaries of the first trust.
701.0418(5)(b)1.b. b. Each trust protector appointed under the terms of the first trust.
701.0418(5)(b)1.c. c. Each directing party appointed under the terms of the first trust.
701.0418(5)(b)1.d. d. The settlor of the first trust, if living.
701.0418(5)(b)2. 2. To satisfy the trustee's notice obligation under this paragraph, a trustee shall provide each person entitled to receive notice under subd. 1. all of the following:
701.0418(5)(b)2.a. a. A copy of the proposed written instrument under which the trustee will appoint assets to a 2nd trust.
701.0418(5)(b)2.b. b. The proposed effective date of the appointment.
701.0418(5)(b)2.c. c. A copy of the trust instrument of the first trust.
701.0418(5)(b)2.d. d. A copy of the trust instrument of the 2nd trust.
701.0418(5)(b)3. 3. A trustee may not appoint assets to the 2nd trust until 30 days after the trustee provides notice as required under this paragraph unless every person who is entitled to receive notice under subd. 1. waives the 30-day notice period by delivering a signed written instrument to the trustee. A person's waiver of the 30-day notice period does not constitute that person's consent to the trustee's appointment of assets to a 2nd trust.
701.0418(5)(b)4. 4. If a person entitled to receive notice under subd. 1. delivers a written objection to the trustee before the effective date of the appointment of assets to a 2nd trust, the trustee may not appoint the assets to a 2nd trust, as specified in the trustee's notice, without obtaining court approval under par. (c) unless the written objection is withdrawn.
701.0418(5)(b)5. 5. If the trustee does not receive a written objection from any person entitled to receive notice under subd. 1. before the effective date of the appointment of assets to the 2nd trust or all written objections to the proposed appointment of assets to the 2nd trust are withdrawn, the trustee may appoint the assets to a 2nd trust, as specified in the notice.
701.0418(5)(c)1.1. If a trustee chooses to proceed with court approval, including after receiving a written objection to a proposed appointment of assets, the trustee shall petition a court to approve a proposed appointment of assets to a 2nd trust under sub. (2). The trustee shall provide notice of the petition to all qualified beneficiaries of the first trust, each trust protector appointed under the first trust, each directing party appointed under the first trust, and to the settlor of the first trust, if living. The trustee shall include in the notice of the petition the proposed effective date of the appointment of assets to a 2nd trust. The trustee shall also provide to each person who is entitled to receive notice under this paragraph a copy of the proposed instrument under which the trustee will appoint assets to a 2nd trust, the proposed effective date of the appointment, a copy of the trust instrument of the first trust, and a copy of the trust instrument of the 2nd trust.
701.0418(5)(c)2. 2. If a person who is entitled to receive notice under subd. 1. files an objection with the court, in determining whether to grant or deny a petition under subd. 1., the court shall consider all of the following:
701.0418(5)(c)2.a. a. The purpose of the proposed appointment of assets under sub. (2).
701.0418(5)(c)2.b. b. The reasons for any objection made by a person entitled to receive notice under subd. 1.
701.0418(5)(c)2.c. c. Changes in circumstances that have occurred since the creation of the first trust.
701.0418(5)(c)2.d. d. Whether the appointment of assets under sub. (2) complies with the requirements of this section.
701.0418(5)(c)3. 3. If no person who is entitled to receive notice under subd. 1. files an objection with the court or any objection that has been filed with the court is withdrawn, the court shall enter an order approving the appointment of assets under sub. (2) as set forth in the trustee's notice unless the court determines that the appointment of assets does not comply with the requirements of this section.
701.0418(6) (6)Subsequently discovered assets.
701.0418(6)(a) (a) The appointment of all of the assets of the first trust in favor of the trustee of the 2nd trust includes subsequently discovered assets otherwise belonging to the first trust and assets paid to or acquired by the first trust subsequent to the appointment in favor of the 2nd trust.
701.0418(6)(b) (b) Except as otherwise provided by the trustee of the first trust, the appointment of part but not all of the assets of the first trust in favor of the 2nd trust does not include subsequently discovered assets belonging to the first trust or assets paid to or acquired by the first trust subsequent to the appointment in favor of the 2nd trust, which remain the assets of the first trust.
701.0418(7) (7)Liability.
701.0418(7)(a) (a) This section does not create or imply a duty on a trustee to appoint assets to a 2nd trust under sub. (2). A trustee that does not appoint assets to a 2nd trust under sub. (2) is not liable for the failure to do so.
701.0418(7)(b) (b) A trustee who appoints assets to a 2nd trust under sub. (2) is not liable to any beneficiary for any loss related to the appointment unless the trustee did not appoint the assets in good faith.
701.0418(8) (8)Miscellaneous provisions.
701.0418(8)(a) (a) The appointment of assets to a 2nd trust under sub. (2) is not an exercise of a general power of appointment.
701.0418(8)(b) (b) A trustee may appoint assets to a 2nd trust under sub. (2) even if the first trust includes a spendthrift clause or a provision that prohibits amendment or revocation of the trust.
701.0418(8)(c) (c) This section does not limit a trustee who has a power to invade principal to appoint property in further trust to the extent the power arises under the terms of the first trust or under any other section of this chapter or under another provision of law or under common law.
701.0418(8)(d) (d) The restriction relating to a trustee under sub. (3) (c) does not preclude a cotrustee who does not have a beneficial interest in the first trust from appointing assets to a 2nd trust under sub. (2) even if the terms of the first trust, applicable law, or other circumstances would otherwise require the majority or unanimous action of the trustees of the first trust.
701.0418(8)(e) (e) For purposes of this section, if beneficiaries of a first trust are defined as a class of persons, the class shall include any person who falls within the class of persons after the trustee appoints assets to the 2nd trust.
701.0418(8)(f) (f) Notwithstanding s. 701.0103 (23), a trustee of a first trust who appoints assets to a 2nd trust under sub. (2) or creates a 2nd trust instrument under sub. (4) is not the settlor of the 2nd trust.
701.0418(8)(g) (g) To the extent a directing party or trust protector has the power to invade the principal of a first trust, as described in sub. (2), this section applies to the directing party or trust protector as if the directing party or trust protector is a trustee.
701.0418 History History: 2013 a. 92.
701.0419 701.0419 Transfers to trusts.
701.0419(1)(1)Validity and effect. The order of execution of a 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 trust shall cause assets in such trust to be included in property administered as part of the testator's estate.
701.0419(2) (2)Governing terms. Property transferred or appointed by a will or by a beneficiary designation under an employee benefit plan, life insurance policy, or online tool, as defined in s. 711.03 (18), or other instrument permitting designation of a beneficiary to a trust, shall be administered in accordance with the terms of the trust as the terms of the trust may have been modified prior to the testator's or designator's death, even though the will, beneficiary designation, online tool, or other instrument was not reexecuted or republished after exercise of the power to modify, unless the will, beneficiary designation, online tool, or other instrument expressly provides otherwise.
701.0419(3) (3)Disposition when no existing trust. If at the death of a testator a trust has been completely revoked, or otherwise terminated, a provision in the testator's will purporting to transfer or appoint property to the trust shall have the following effect, unless the will provides otherwise:
701.0419(3)(a) (a) If the testator was a necessary party to the revocation or other termination of the trust, the provision in the testator's will shall be invalid.
701.0419(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 trust upon the terms of the trust instrument at the time the will was executed or as otherwise provided where sub. (2) is applicable.
701.0419 History History: 1971 c. 66; 1991 a. 316; 2013 a. 92 s. 132; Stats. 2013 s. 701.0419; 2015 a. 300.
subch. V of ch. 701 SUBCHAPTER V
CREDITOR'S CLAIMS; SPENDTHRIFT
AND DISCRETIONARY TRUSTS
701.0501 701.0501 Rights of beneficiary's creditor or assignee.
701.0501(1)(a) (a) To the extent a beneficiary's interest is not protected by a spendthrift provision, the court may authorize a judgment creditor or an assignee of the beneficiary to reach the beneficiary's interest by attachment of present or future distributions to or for the benefit of the beneficiary or other means. The court may limit the award to such relief as is appropriate under the circumstances.
701.0501(1)(b) (b) This subsection does not apply to a trust for an individual with a disability.
701.0501(2) (2)A trustee is not liable to any creditor of a beneficiary for any distributions made to or for the benefit of the beneficiary if any of the following applies:
701.0501(2)(a) (a) The beneficiary's interest is protected by a spendthrift provision.
701.0501(2)(b) (b) The trust is a trust for an individual with a disability.
701.0501 History History: 2013 a. 92.
701.0502 701.0502 Spendthrift provision.
Loading...
Loading...
2017-18 Wisconsin Statutes updated through 2019 Wis. Act 186 and through all Supreme Court and Controlled Substances Board Orders filed before and in effect on September 1, 2020. Published and certified under s. 35.18. Changes effective after September 1, 2020, are designated by NOTES. (Published 9-1-20)