701.0503 Exceptions to spendthrift provision. (1) CLAIMS FOR CHILD SUPPORT. Notwithstanding s. 701.0502, upon application of a person having a valid order directing a beneficiary to make payment for support of the beneficiary’s child, the court may do any of the following: (a) If the beneficiary is entitled to receive income or principal under the trust, order the trustee to satisfy part or all of the claim out of part or all of payments of income or principal as they are due, presently or in the future; (b) If a beneficiary may receive income or principal at the trustee’s discretion under the trust, order the trustee to satisfy part or all of the claim out of part or all of future payments of income or principal that are made pursuant to the exercise of the trustee’s discretion in favor of such beneficiary. (2) CLAIMS FOR PUBLIC SUPPORT. Notwithstanding s. 701.0502 and except as provided in sub. (3), if the settlor is legally obligated to pay for the public support of a beneficiary under s. 46.10, 49.345, or 301.12 or the beneficiary is legally obligated to pay for the beneficiary’s public support or for support furnished to the beneficiary’s spouse or minor child under s. 46.10, 49.345, or 301.12, upon application by the appropriate state department or county official, the court may do any of the following: (a) If the beneficiary is entitled to receive income or principal under the trust, order the trustee to satisfy part or all of the liability out of part or all of payments of income or principal as they are due, presently or in the future;
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(b) 1. Except as provided in subd. 2., if the beneficiary may receive income or principal at the trustee’s discretion under the trust, order the trustee to satisfy part or all of the liability out of part or all of future payments of income or principal which are to be made pursuant to the exercise of the trustee’s discretion in favor of the beneficiary. 2. In the case of a beneficiary who may receive income or principal of the trust at the trustee’s discretion and who is a settlor or a spouse or minor child of the settlor, order the trustee to satisfy part or all of the liability without regard to whether the trustee has then exercised or may thereafter exercise the trustee’s discretion in favor of the beneficiary. (3) TRUST FOR AN INDIVIDUAL WITH A DISABILITY. Subsection (2) does not apply to any trust for an individual with a disability. (4) SUBSEQUENT MODIFICATION OF COURT’S ORDER. Any order entered by a court under sub. (1) or (2) may be modified upon application of an interested person. (5) EXEMPT ASSETS. Assets of a trust that are exempt from claims of creditors under other statutes are not subject to sub. (1) or (2). History: 2013 a. 92 ss. 97, 103 to 107, 111, 112; Stats. 2013 s. 701.0503. Trust income that is income to the beneficiary under federal tax law is subject to a child support order regardless of whether a distribution is made to the beneficiary. Grohmann v. Grohmann, 189 Wis. 2d 532, 525 N.W.2d 261 (1995). In not revealing that he was a trust beneficiary, a father failed to make proper financial disclosure at the time of a divorce as was required by s. 767.127. The rationale of Grohmann, 189 Wis. 2d 532 (1995), is applicable to both grantor and nongrantor trusts if there is an obligation to report that trust’s income as one’s own because it is the obligation to report the income that makes the income reachable for calculations of a child support obligation. Stevenson v. Stevenson, 2009 WI App 29, 316 Wis. 2d 442, 765 N.W.2d 811, 07-2143.
701.0504 Discretionary trusts; effect of standard. (1) For purposes of this subchapter, and except as provided in sub. (3), a beneficiary’s interest in a trust that is subject to the trustee’s discretion does not constitute an interest in property or an enforceable right even if the discretion is expressed in the form of a standard of distribution or the beneficiary is then serving as sole trustee or cotrustee. (2) Except as provided in this subchapter, a creditor or other claimant may not attach present or future distributions from a beneficiary’s interest in property or an enforceable right, obtain an order from a court forcing the judicial sale of the interest or compelling the trustee to make distributions, or reach the interest or right by any other means, even if the trustee has abused the trustee’s discretion. (3) Subsections (1) and (2) do not apply if a beneficiary is acting as sole trustee of a trust for his or her benefit and his or her discretion to make distributions to himself or herself is not limited by an ascertainable standard or the consent of a party holding an adverse interest to the beneficiary. (4) (a) Except as provided in par. (b), this section does not limit the right of a beneficiary to maintain a judicial proceeding against a trustee for an abuse of discretion or failure to comply with a standard for distribution. (b) The right of a beneficiary described in par. (a) may not be exercised by a creditor. History: 2013 a. 92.
701.0505 Creditor’s claim against settlor. (1) (a) Whether or not the terms of a trust include a spendthrift provision and except as provided in par. (b), the following rules apply to claims of a settlor’s creditors: 1. During the lifetime of the settlor, the property of a revocable trust is subject to claims of the settlor’s creditors. 2. With respect to an irrevocable trust that is not a trust for an individual with a disability, upon application of a judgment cred-
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itor of the settlor, the court may, if the trust instrument requires or authorizes the trustee to make payments of income or principal to or for the settlor, order the trustee to satisfy part or all of the judgment out of part or all of the payments of income or principal as they are due, presently or in the future, or which are payable in the trustee’s discretion. A settlor’s right to receive reimbursement for income taxation arising from grantor trust treatment of the trust pursuant to sections 671 to 679 of the Internal Revenue Code is not considered a right to income or principal for purposes of this section. If a trust has more than one settlor, the amount the judgment creditor of a particular settlor may reach may not exceed the settlor’s interest in the trust. 3. After the death of a settlor, and subject to the settlor’s right to direct the source from which liabilities will be paid, the property of a trust that was revocable at the settlor’s death is subject to claims of the settlor’s creditors, costs of administration of the settlor’s estate, the expenses of the settlor’s funeral and disposal of remains, and statutory allowances to a surviving spouse and children to the extent the settlor’s probate estate is inadequate to satisfy those claims, costs, expenses, and allowances. (b) Assets of a trust that are exempt from claims of creditors under other statutes are not subject to par. (a). (2) For purposes of this subchapter, all of the following apply: (a) During the period the power may be exercised, the holder of a power of withdrawal is treated in the same manner as the settlor of a revocable trust to the extent of the property subject to the power. (b) A beneficiary of a trust may not be considered a settlor solely because of a lapse, waiver, or release of any of the following: 1. A power described under par. (c). 2. The beneficiary’s right to withdraw part of the trust property, to the extent that the value of the property affected by the lapse, waiver, or release in any year does not exceed the greater of the following: a. The amount referenced in section 2041 (b) (2) or 2514 (e) of the Internal Revenue Code. b. The amount referenced in section 2503 (b) of the Internal Revenue Code for each individual other than the beneficiary who makes a transfer to the trust or who is deemed to make a transfer to the trust pursuant to an election to split gifts under section 2513 (a) of the Internal Revenue Code. (c) A beneficiary of a trust is not a settlor, has not made a voluntary or involuntary transfer of the beneficiary’s interest in the trust, and does not have the power to make a voluntary or involuntary transfer of the beneficiary’s interest in the trust solely because the beneficiary holds, exercises, or allows in any capacity, any of the following: 1. A presently exercisable power to consume, invade, appropriate, or distribute property to or for the benefit of the beneficiary if the power is any of the following: a. Exercisable only with the consent of another person holding an interest adverse to the beneficiary’s interest. b. Limited by an ascertainable standard of the beneficiary. 2. A presently exercisable power to appoint any property of the trust to or for the benefit of a person other than the beneficiary, a creditor of the beneficiary, the beneficiary’s estate, or a creditor of the beneficiary’s estate. 3. A testamentary power of appointment. 4. A presently exercisable right described in sub. (2) (b). (d) A beneficiary of a trust is not a settlor solely because the beneficiary is entitled to nondiscretionary distributions from the trust.
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(e) 1. Contributions to the following trusts are not considered to have been contributed by the settlor: a. An irrevocable marital trust that is treated as qualified terminable interest property under section 2523 (f) of the Internal Revenue Code if after the death of the settlor’s spouse the settlor is a beneficiary of the trust or an irrevocable trust that receives property from the trust. b. An irrevocable marital trust that is treated as a general power of appointment trust under section 2523 (e) of the Internal Revenue Code if after the death of the settlor’s spouse the settlor is a beneficiary of the trust or an irrevocable trust that receives property from the trust. c. An irrevocable trust for the settlor’s spouse if after the death of the settlor’s spouse the settlor is a beneficiary of the trust or an irrevocable trust that receives property from the trust. d. An irrevocable trust for the benefit of a person, the settlor of which is the person’s spouse, regardless of whether or when the person was the settlor of an irrevocable trust for the benefit of that spouse. e. An irrevocable trust for the benefit of a person to the extent that the property of the trust was subject to a general power of appointment in another person. 2. A person who would otherwise be treated as a settlor of a trust described in subd. 1. a. to e. is not treated as a settlor of the trust. 3. For purposes of this paragraph, notwithstanding s. 701.0103 (3), “beneficiary” means a person who satisfies s. 701.0103 (3) (a) or (b) and who is designated in a trust instrument or through the exercise of a nongeneral or general power of appointment. (3) Any order entered by a court under this section is subject to modification upon application of an interested person. History: 2013 a. 92 ss. 99, 108 to 110; 2023 a. 127.
701.0506 Overdue distribution. (1) In this section, “mandatory distribution” means a distribution of income or principal that the trustee is required to make to a beneficiary under the terms of the trust, including a distribution upon termination of the trust. “Mandatory distribution” does not include a distribution subject to the exercise of the trustee’s discretion even if any of the following applies: (a) The discretion is expressed in the form of a standard of distribution. (b) The terms of the trust authorizing a distribution couple language of discretion with language of direction. (2) Whether or not a trust contains a spendthrift provision, a creditor or assignee of a beneficiary may reach a mandatory distribution of income or principal, including a distribution upon termination of the trust, if the trustee has not made the distribution to the beneficiary within a reasonable time after the designated distribution date. History: 2013 a. 92.
701.0507 Personal obligations of trustee. Trust property is not subject to personal obligations of the trustee, even if the trustee becomes insolvent or bankrupt. History: 2013 a. 92.
701.0508 Debts of deceased settlor. (1) DEADLINE ON CLAIMS. A claimant must assert a claim for payment of a debt of a deceased settlor within the time for such claims under applicable law. For purposes of this section, a debt incurred by a trustee of a revocable trust before the death of a settlor of the revocable trust shall be treated in the same manner as a debt of the settlor. A trustee of a trust that was revocable at the settlor’s death may
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shorten the time period and set a deadline for filing claims with the trustee by doing any of the following: (a) Publishing a legal notice as a class 3 notice under ch. 985 in the county in which the deceased settlor resided. The legal notice shall identify the name, address, and any other contact information of the trustee or other person with whom claims must be filed. The deadline for a claim by any claimant who is not known by the trustee shall be the earlier of the date that is 4 months after the date of the first insertion of the legal notice or, if sub. (6) is applicable, the deadline prescribed under s. 859.01. (b) Giving notice to a potential claimant. The notice shall include a copy of the legal notice, if published, and shall identify the name, address, and any other contact information of the trustee or other person with whom claims must be filed and shall state that any claim by the potential claimant must be filed not later than the date that is 30 days from the date notice is given to the potential claimant or the deadline specified in the legal notice. If a legal notice has not been published, the deadline shall be 4 months from the date the trustee provides notice to the potential claimant. (c) Publishing a legal notice and not giving a separate notice to a potential claimant who is known to the trustee. The deadline for a claim when a legal notice has been published but notice is not given to a known potential claimant is the later of the date that is one year from the date of the settlor’s death or the deadline specified in the legal notice. (2) EXCEPTIONS TO DEADLINES ON CLAIMS. A claim that is not filed on or before an applicable deadline specified under sub. (1) is not barred if the claim is a claim based on tort, a marital property agreement that is subject to the time limitations under s. 766.58 (13) (b) or (c), Wisconsin income, franchise, sales, withholding, gift, or death taxes, unemployment compensation contributions due or benefits overpaid, funeral or administrative expenses, a claim of this state under s. 46.27 (7g), 2017 stats., or s. 49.496, 49.682, or 49.849, or a claim of the United States. (3) FILING OF CLAIMS. (a) A claim is considered filed if the claimant provides notice of the claim to the trustee or other person with whom claims must be filed as prescribed under sub. (1) (a) or (b). (b) A claim is considered filed if the deceased settlor is subject to a probate proceeding in this state and a claim is filed with the court under ch. 859. (c) If an action is pending against a deceased settlor at the time of the settlor’s death and the action survives, the plaintiff in that action may serve a notice of substitution of party defendant on the trustee and file proof of service of notice in the court. Filing of proof of service on or before the deadline for filing a claim under sub. (1) gives the plaintiff the same rights against the trust as the filing of a claim. (4) EFFECT OF STATUTE OF LIMITATIONS. (a) A claim that was barred by a statute of limitations at the time of the deceased settlor’s death is barred and the claimant may not pursue a claim against the trustee, the trust property, or recipients with respect to trust property. (b) A claim not barred by a statute of limitations at the time of the settlor’s death shall not be barred thereafter by a statute of limitations if the claim is filed on or before the deadline for filing a claim under sub. (1). (c) A claim that is not filed or is filed after the deadline for filing a claim under sub. (1) is barred and the claimant may not pursue a claim against the trustee, the trust property, or recipients with respect to trust property. (d) The deadlines established under sub. (1) do not extend the time for commencement of a claim beyond the time provided by any statute of limitations applicable to that claim.
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(5) SATISFACTION OF CLAIM FROM OTHER PROPERTY. Failure of a claimant timely to file a claim as provided in this section does not bar the claimant from satisfying the claim, if not otherwise barred, from property other than trust property. (6) COORDINATION WITH PROBATE. If a legal notice has been published with respect to the estate of a deceased settlor who died domiciled in this state, property of a trust that was revocable at the settlor’s death shall be treated as property of the estate solely for purposes of administering claims under ch. 859. The trustee shall be subject to the jurisdiction of the court in which the estate administration is pending. A personal representative, as defined in s. 851.23, shall provide notice to the trustee regarding claims filed against the estate. A claim barred under ch. 859 may not be satisfied from property of a trust that was revocable at the settlor’s death. The trustee and qualified beneficiaries shall have standing to file an objection, offset, or counterclaim with respect to claims filed against the estate. Nothing in this subsection causes property of the trust that otherwise would be exempt from claims to be subject to claims filed against the settlor’s estate. If the trust is not referenced in a deceased settlor’s will, the trustee of a trust that was revocable at the settlor’s death shall provide notice to a personal representative of the settlor’s estate, if any, of the existence of such trust. History: 1997 a. 188; 1999 a. 9; 2013 a. 20; 2013 a. 92 ss. 118, 119; Stats. 2013 s. 701.0508; 2019 a. 9; 2021 a. 239 s. 74; 2023 a. 127.
701.0509 Procedures for claims for debts of a deceased settlor; revocable trusts. (1) SCOPE OF APPLICABILITY. The procedures under this section apply only to claims against a trust that was revocable by the settlor until the settlor’s death. (2) FORM AND VERIFICATION OF CLAIMS; TRUSTEE RESPONSE TO CLAIMS. (a) General requirements. A claim shall be in writing, shall describe the nature and amount of the claim, if ascertainable, shall identify the name, address, and any other contact information of the claimant, and shall be sworn to by the claimant or a person on the claimant’s behalf that the amount is justly due, or if not yet due, when it will or may become due, that no payments have been made on the claim that are not credited, and that there are no offsets to the knowledge of the affiant, except as stated in the claim. (b) Requirements when claim founded on written instrument. If a claim is founded on a written instrument that is available, the original instrument or a copy of the original instrument shall be attached to the claim. (c) Trustee response to a claim. A trustee does not need to respond to a claim until after the expiration of the deadline for filing a claim against the trust under s. 701.0508. Within 30 days after the later of the receipt of the claim or 30 days after the expiration of the deadline, the trustee shall make a good faith determination of whether the claim is valid, absolute, contingent, or invalid, or whether the trustee will object to the claim, and the trustee shall inform the claimant of the determination. If the trustee decides to object to the claim, the claim may be compromised as provided in sub. (10) or contested as provided under sub. (11). If the trustee determines the claim is invalid, the claimant may object to that determination under sub. (11). If the trustee fails to respond within the applicable period, the claim shall be presumed valid and the claimant may seek enforcement under sub. (11). (3) CLAIMS NOT DUE. If a claim will become due at some future time, the trustee may, or the court with respect to a contested claim may order the trustee to, do any of the following: (a) Pay the claim in full. (b) Pay the claim at the present value and in the same manner as in the case of an absolute claim that has been allowed.
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(c) Retain sufficient funds to satisfy the claim upon maturity. (d) Obtain a bond to be given by the distributees for payment in satisfaction of the claim and order the trust to be administered as if the claim had not been filed. (4) SECURED CLAIMS. (a) When a claimant holds any security for a claim, the security shall be described in the written claim given to the trustee. The security is sufficiently described if the security document is described by date and by the recording or filing data. (b) Payment of the claim shall be made on the basis of one of the following: 1. If the creditor surrenders the security, the full amount of the claim. 2. If the creditor realizes on the security before receiving payment, upon the full amount of the claim allowed less the fair value of the security. (5) CONTINGENT CLAIMS. If the amount or validity of a claim cannot be determined until some time in the future, the claim is a contingent claim regardless of whether the claim is based on an event that occurred in the past or on an event that may occur in the future. Except for claims of the type not required to be filed under s. 701.0508 (2), contingent claims must be filed with the trustee as provided under sub. (2). If the trustee determines the claim to be valid subject to the contingency, the determination shall state the nature of the contingency. If the trustee determines the claim to be valid and absolute before distribution of the trust, the claim shall be paid in the same manner as absolute claims of the same class. In all other cases the trustee, or the court in the case of a contested claim, may provide for the payment of contingent claims in any of the following methods: (a) The claimant and trustee may determine, by agreement, arbitration, or compromise, the value of the claim, according to its probable present worth, and it shall be paid in the same manner as a valid and absolute claim. (b) The trustee may, or the court may order the trustee to, in the case of a contested claim, make distribution of the trust but retain sufficient funds to pay the claim if and when the same becomes absolute. For this purpose, the trust may not be required to remain intact longer than 2 years after distribution of the remainder of the trust has been made, and if the claim has not become absolute within that time, distribution shall be made to the distributees of the retained funds, after paying any costs and expenses accruing during such period, but the distributees shall be liable to the claimant to the extent provided in sub. (6), if the contingent claim thereafter becomes absolute. When distribution is so made to distributees, the trustee or the court may require the distributees to give bond for the satisfaction of their liability to the contingent claimant. (c) The trustee may require, or the court, in the case of a contested claim, may order, distribution of the trust as though the contingent claim did not exist, but the distributees shall be liable to the claimant as limited by sub. (7), if the contingent claim thereafter becomes absolute. The trustee or the court may require the distributees to give bond for the satisfaction of their liability to the contingent claimant. (d) Any other method the trustee determines or the court, in the case of a contested claim, orders. (6) PAYMENT OF CONTINGENT CLAIMS BY DISTRIBUTEES. If a contingent claim is filed and the trustee determines the claim to be valid subject to the contingency and all of the assets of the trust, including the fund set apart for the payment of the claim, have been distributed, the claimant may recover on the claim against those distributees, or the persons who furnish bond for the distributees, whose distributive shares have been increased by reason of the fact that the amount of the claim as finally deter-
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mined was not paid prior to final distribution, if a proceeding for the claim is commenced in court within 6 months after the claim becomes absolute. A distributee or the person who furnishes bond for the distributee shall not be liable for an amount exceeding that person’s proportionate share of the trust subject to the claim, nor for an amount greater than the value of the property that that person received from the trust, the value to be determined as of the time of distribution to the distributee. (7) PRIORITY OF PAYMENT OF CLAIMS AND ALLOWANCES. (a) Classes and priority. At the time a claim is determined to be valid, the claim shall be classified in one of the categories under subds. 1. to 8. The trustee shall pay an absolute claim if the trustee reasonably believes the assets of the trust are sufficient to pay the claim. If the applicable assets of the trust are insufficient to pay the claim in full, the trustee shall make payment in the following order: 1. Costs and expenses of administration. 2. Reasonable funeral and burial expenses. 3. Provisions for the family of the deceased settlor under ss. 861.31, 861.33, and 861.35, which sections are incorporated by reference and applied as if the trust is an estate. 4. Reasonable and necessary expenses of the last illness of the deceased settlor, including compensation of persons attending the deceased settlor. 5. All debts, charges, or taxes owing to the United States, this state, or a governmental subdivision or municipality of this state. 6. Wages, including pension, welfare, and vacation benefits, due to employees that have been earned within 3 months before the date of the death of the deceased settlor, not to exceed $300 in value to each employee. 7. Property assigned to the surviving spouse or surviving domestic partner under s. 861.41, which section is incorporated by reference and applied as if the trust is an estate. 8. All other claims allowed. (b) No preference within classes. Preference shall not be given in the payment of any claim over any other claim of the same class, nor shall a claim due and payable be entitled to a preference over a claim not due. (8) EXECUTION AND LEVIES PROHIBITED. Garnishment, attachment, or execution shall not issue against, nor shall any levy be made against, any property of the trust under any judgment or cause of action against a deceased settlor or the trustee, but this subsection shall not be construed to prevent the enforcement of mortgages, pledges, liens, or other security agreements upon real or personal property in an appropriate proceeding. (9) QUALIFIED BENEFICIARIES AND CLAIMANTS MAY BE INFORMED OF CLAIMS. After the deadline for filing a claim against the trust under s. 701.0508, any qualified beneficiary or claimant may make a written request to the trustee for a statement listing all claims that have been filed against the trust. The statement provided by the trustee shall show each claim, the name of the claimant, a brief description of the basis of the claim, the amount claimed, and the trustee’s determination of whether the claim is valid, absolute, contingent, or invalid, or whether the trustee will object to the claim in whole or in part. The trustee shall provide notice of the statement to the requester, including any representative under subch. III within 5 business days of the receipt of the request. The requester shall, within 5 business days of receiving notice of the statement from the trustee, inform the trustee whether the requester agrees or objects to the trustee’s determination on whether to allow the claim in whole or in part or whether to object to the claim. Failure on the part of any party to comply with this subsection does not affect the jurisdiction of the court to intervene in the administration of the claim.
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(10) COMPROMISE OF CLAIMS. When a claim against a trust has been filed and payment of the claim is pending, the claimant and trustee may, if it appears to be in the best interest of the trust, compromise the claim, whether due or not due, absolute or contingent, or liquidated or unliquidated. If an objection to the claim has been filed by a qualified beneficiary or another claimant, no compromise of the claim may be made without the consent of the objector. (11) CONTEST AND ENFORCEMENT OF CLAIMS; COURT PROCEDURE. (a) Initiation. Any person may initiate a court proceeding to contest or enforce a claim, object to denial of a claim, or assert an offset or counterclaim, including the trustee, a qualified beneficiary or representative under subch. III on behalf of a qualified beneficiary, or a claimant. Such persons may initiate the court proceeding by petitioning the court to exercise jurisdiction over the claim and any objection, offset, or counterclaim. The petition shall be served upon or mailed to each person who has standing to object to the claim and filed with the court within 60 days after the trustee’s response or failure to respond to the claim under sub. (2) (c), or, in the case of an objection by a qualified beneficiary or representative of the qualified beneficiary or another potential claimant, within 30 days after the copy of the claim was mailed to or served upon the objector. The trustee shall not be obligated to assert any offset or counterclaim in court and may, if the trustee deems it to be in the best interest of the trust, assert the offset or counterclaim in any separate action otherwise authorized by law outside the court proceedings. Any offset or counterclaim so asserted shall be deemed denied by the original claimant. (b) Procedure. If any claim, offset, or counterclaim is contested, the court may require the issues to be made definite, fix a date for pretrial conference, and direct the manner in which pleadings, if any, shall be exchanged. The court shall set a time for trial upon its own motion or upon the motion of any party. (12) PROMPT JUDGMENT. The hearing on any contested claim, offset, or counterclaim may be adjourned from time to time, but the hearing shall be concluded as soon as practicable. (13) JUDGMENT ON CLAIMS. The court shall enter a judgment on contested claims and any offsets and counterclaims asserted, stating how much was allowed for or against the trust in each case. The judgment shall set a date by which payment shall be made. If the balance as to any claimant is in favor of the trust, the payment of the claim may be enforced as with any other judgment. (14) DELAY OF PAYMENT OF CLAIMS WHEN FUNDS ARE INSUFFICIENT. If it appears at any time that the trust is or may be insolvent, that there are insufficient funds on hand for payment of claims in full, or that there is other good cause for delaying payment, the trustee shall provide notice of the delay to the claimants and any other person with standing to object and may petition the court for any order that the trustee deems necessary. (15) CLAIMANT’S ACTION FOR PROPERTY FRAUDULENTLY TRANSFERRED BY DECEASED SETTLOR. Whenever there is reason to believe that the assets of the trust may be insufficient to pay the deceased settlor’s debts, and the deceased settlor transferred any property with intent to defraud the deceased settlor’s creditors or to avoid any duty, or executed conveyances void as against creditors, any claimant whose claim has been allowed may, on behalf of all, bring an action to reach any property and subject it to sale. The claimant’s action shall not be brought to trial until the insufficiency of the assets of the trust is ascertained. If it is found likely that the assets may be insufficient, the action shall be brought to trial. If the action is tried, any property that ought to be subjected to the payment of the debts of the deceased settlor shall be sold in the action and the net proceeds used to pay such
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debts and to reimburse the claimant for the reasonable expenses and attorney fees incurred by the claimant in such action, as approved by the court. (16) ENCUMBERED ASSETS; PAYMENT OF DEBT. (a) Rights of secured claimants not affected. Nothing in this subchapter shall affect or prevent any action or proceeding to enforce any mortgage, pledge, lien, or other security agreement against property of the trust. (b) Payment. When any property in the trust is encumbered by mortgage, pledge, lien, or other security agreement, the trustee may pay the encumbrance or any part of the encumbrance, renew or extend any obligation secured by the encumbrance, or may convey or transfer the encumbered assets to the creditor in satisfaction of the claimant’s lien, in whole or in part, whether or not the holder of the encumbrance has filed a claim. (17) TORT CLAIMS. (a) Filed within time limited. If a claim based on a cause of action in tort or for contribution resulting from a cause of action in tort is filed on or before the deadline for filing a claim under s. 701.0508, the claimant will receive the same protection in regard to payment as a claimant who has filed a required claim. (b) Not filed within time limited. A cause of action against a deceased settlor in tort or for contribution resulting from a cause of action in tort is not defeated by failure to file the claim or commence or continue an action against the trustee on or before the deadline for filing a claim under s. 701.0508 against a trust, but the failure to file the claim with the trustee relieves the trustee of all responsibility to protect the rights of the claimant, and the claimant shall not be granted any of the protections under sub. (5). If the claim is determined to be valid and absolute through court-approved settlement or adjudication and a certified copy of the settlement or judgment is filed with the trustee and there are sufficient funds in the trust to pay the claim, the claim shall be paid prior to the distribution of the trust. After the trust has been distributed or if there are not sufficient funds in the trust, a claimant whose claim has been determined to be valid and absolute through court-approved settlement or through adjudication may proceed against the distributees, but no distributee may be liable for an amount greater than that allowed under sub. (6). (18) PAYMENT OF UNFILED CLAIMS. A trustee may pay a debt of a deceased settlor prior to the expiration of the deadline for filing claims under s. 701.0508 whether or not a claim is filed if the trustee reasonably believes that the debt is owed and that the assets of the trust are sufficient to satisfy all of the deceased settlor’s debts. (19) LAST ILLNESS AND FUNERAL EXPENSE OF DECEASED SPOUSE. The reasonable expense of the last illness and funeral may, if properly presented, be paid by the trustee of a deceased settlor’s trust and, if so paid, shall be recognized as valid expenditures even though the surviving spouse of the deceased settlor could have been held liable for the expense. History: 2023 a. 127.
SUBCHAPTER VI REVOCABLE TRUSTS 701.0601 Capacity of settlor of revocable trust. The capacity required to create, amend, revoke, or add property to a revocable trust, or to direct the actions of the trustee of a revocable trust, is the same as that required to make a will. History: 2013 a. 92.
701.0602 Revocation or amendment of revocable trust. (1) Unless the terms of a trust expressly provide that the trust is irrevocable, there is a rebuttable presumption that the set-
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tlor may revoke or amend the trust. This subsection does not apply to a trust created under an instrument executed before July 1, 2014. (2) If a revocable trust is created or funded by more than one settlor, all of the following apply: (a) To the extent the trust consists of marital or community property, the trust may be revoked by either spouse acting alone but may be amended only by joint action of both spouses. (b) To the extent the trust consists of property other than marital or community property, each settlor may revoke or amend the trust with regard to the portion of the trust property attributable to that settlor’s contribution. (c) Upon the revocation or amendment of the trust by fewer than all of the settlors, the trustee shall promptly notify the other settlors of the revocation or amendment. (3) A settlor may revoke or amend a revocable trust by substantial compliance with a method provided in the terms of the trust, or, if the terms of the trust do not provide a method, by any of the following means: (am) A later will or codicil that expressly refers to the trust or specifically devises property that would otherwise have passed according to the terms of the trust. (bm) Any other method manifesting clear and convincing evidence of the settlor’s intent. (4) Upon revocation of a revocable trust, the trustee shall transfer the trust property to the settlor or as the settlor directs. However, with respect to marital or community property, the trustee shall transfer the property to both spouses as marital or community property or as both spouses direct. (5) A settlor’s powers with respect to revocation, amendment, or distribution of trust property may be exercised by an agent under a power of attorney only to the extent expressly authorized by the terms of the power of attorney. (6) A guardian of the estate or a conservator of the settlor may exercise a settlor’s powers with respect to revocation, amendment, or distribution of trust property only with the approval of the court supervising the guardianship or conservatorship. (7) A trustee who does not know that a trust has been revoked or amended is not liable for distributions made and other actions taken on the assumption that the trust had not been amended or revoked, or for distributions made pursuant to sub. (5). History: 2013 a. 92; 2023 a. 127.
701.0603 Settlor’s powers; powers of withdrawal. (1) While a trust is revocable, the rights of the beneficiaries are subject to the control of, and the duties of the trustee, a directing party, and a trust protector are owed exclusively to, the settlor. (2) If a revocable trust has more than one settlor, the duties of the trustee, a directing party, and a trust protector are owed to all of the settlors. (3) During the period in which a power of withdrawal may be exercised, the holder of the power has the rights of a settlor of a revocable trust under this section to the extent of the property subject to the power. History: 2013 a. 92.
701.0604 Limitation on action contesting validity of revocable trust; distribution of trust property. (1) A person must commence a judicial proceeding to contest the validity of a trust that was revocable immediately before the settlor’s death within the earlier of the following: (a) One year after the settlor’s death. (b) Four months after the trustee sent the person a copy of the trust instrument and a notice informing the person of the trust’s existence, of the trustee’s name and address, and of the time al-
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lowed for commencing a proceeding. Except as provided in s. 701.0813 (2), a trustee is not liable to any person for not providing the information described in this paragraph. (2) Upon the death of the settlor of a trust that was revocable immediately before the settlor’s death, the trustee may proceed to distribute the trust property in accordance with the terms of the trust. The trustee is not subject to liability for doing so unless one of the following applies: (a) The trustee knows of a pending judicial proceeding contesting the validity of the trust. (b) A potential contestant has notified the trustee of a possible judicial proceeding to contest the trust and a judicial proceeding is commenced within 60 days after the contestant sent the notification. (3) A beneficiary of a trust that is determined to have been invalid is liable to return any distribution received. History: 2013 a. 92.
701.0605 Future interests in trust. Subject to s. 701.1204, unless a contrary intention is found, if a person has a future interest in property under a revocable trust and, under the terms of the trust, the person has the right to possession and enjoyment of the property at the settlor’s death, the right to possession and enjoyment is contingent on the person surviving the settlor. Extrinsic evidence may be used to show contrary intent. History: 2023 a. 127.
SUBCHAPTER VII OFFICE OF TRUSTEE 701.0701 Accepting or declining trusteeship. (1) Except as provided in sub. (3), a person designated as trustee accepts the trusteeship by doing any of the following: (a) Substantially complying with a method of acceptance provided in the terms of the trust. (b) If the terms of the trust do not provide a method or the method provided in the terms is not expressly made exclusive, by accepting delivery of the trust property, exercising powers or performing duties as trustee, or otherwise indicating acceptance of the trusteeship. (2) A person designated as trustee who has not yet accepted the trusteeship may decline the trusteeship. A designated trustee who does not accept the trusteeship within a reasonable time after knowing of the designation is considered to have rejected the trusteeship. (3) A person designated as trustee, without accepting the trusteeship, may do any of the following: (a) Act to preserve the trust property if, within a reasonable time after acting, the person sends a declination of the trusteeship in writing to the settlor or, if the settlor is dead or incapacitated, to the designated cotrustee, or, if none, to the successor trustee, or, if none, to a distributee or a permissible distributee of the trust. (b) Inspect or investigate trust property to determine potential liability under environmental or other law or for any other purpose. History: 2013 a. 92.
701.0702 Trustee’s bond. (1) A trustee shall give bond to secure performance of the trustee’s duties only if the court finds that a bond is needed to protect the interests of the beneficiaries or is required by the terms of the trust and the court has not dispensed with the requirement. (2) The court may specify the amount of a bond, its liabili-
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ties, and whether sureties are necessary. The court may modify or terminate a bond at any time. (3) A court may not require a bond from a trust company bank, state bank, or national bank that is authorized to exercise trust powers and that has complied with s. 220.09 or 223.02. History: 2013 a. 92; 2023 a. 127.
701.0703 Cotrustees. (1) Cotrustees may act only by majority decision. (2) If a vacancy occurs in a cotrusteeship, as provided under s. 701.0704, a majority of the remaining cotrustees may act for the trust. (3) A cotrustee shall participate in the performance of a trustee’s function unless the cotrustee is unavailable to perform the function because of absence, illness, disqualification under other law, or the cotrustee is otherwise temporarily incapacitated or the cotrustee has properly delegated the performance of the function to another trustee. (4) If a cotrustee is unavailable to perform duties because of absence, illness, disqualification under other law, or the cotrustee is otherwise temporarily incapacitated, and prompt action is necessary to achieve the purposes of the trust or to avoid injury to the trust property, the remaining cotrustee or a majority of the remaining cotrustees may act for the trust. (5) A trustee may delegate to a cotrustee a function unless the delegation is expressly prohibited by the terms of the trust. Unless a delegation is irrevocable, a trustee may revoke a delegation previously made. (6) Except as provided in sub. (7), a trustee who does not join in an action of another trustee is not liable for the action. (7) Each trustee shall exercise reasonable care to do all of the following: (a) Prevent a cotrustee from committing a material breach of trust. (b) Compel a cotrustee to redress a material breach of trust. (8) A dissenting trustee who joins in an action at the direction of the majority of the trustees and who notified all cotrustees of the dissent at or before the time of the action is not liable for the action unless the action is a material breach of trust. History: 2013 a. 92.
701.0704 Vacancy in trusteeship; appointment of successor. (1) A vacancy in a trusteeship exists if any of the following occurs: (a) A person designated as trustee declines the trusteeship. (b) A person designated as trustee cannot be identified or does not exist. (c) A trustee resigns. (d) A trustee is disqualified or removed. (e) A trustee dies. (f) A guardian or conservator is appointed for an individual serving as trustee. (g) Any other event occurs resulting in no person acting as trustee. (2) If one or more cotrustees remain in office, a vacancy in a trusteeship does not need to be filled. A vacancy in a trusteeship shall be filled if the trust has no remaining trustee. (3) A vacancy in a trusteeship that is required to be filled shall be filled in the following order of priority: (a) By a person designated in the terms of the trust to act as successor trustee. (b) By a person appointed by unanimous agreement of the qualified beneficiaries, except that, if the trust is a trust for an individual with a disability, the person appointed under this para-
May 22, 2026, are designated by NOTES. (Published 5-22-26)
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graph may not be the individual with a disability, his or her spouse, or a relative of the individual with a disability who is legally responsible for his or her support. (c) By a person appointed by the court. (4) Whether or not a vacancy in a trusteeship exists or is required to be filled, the court may appoint an additional trustee, directing party, or trust protector whenever the court considers the appointment necessary for the administration of the trust. History: 2013 a. 92; 2023 a. 127.
701.0705 Resignation of trustee. (1) A trustee may resign in any of the following manners: (a) Upon at least 30 days’ notice to the qualified beneficiaries, the settlor, if living, each cotrustee, each trust protector, and each directing party. (b) With the approval of the court. (2) In approving a resignation, the court may issue orders and impose conditions reasonably necessary for the protection of the trust property. (3) Any liability of a resigning trustee or of any sureties on the trustee’s bond for acts or omissions of the trustee is not discharged or affected by the trustee’s resignation. History: 2013 a. 92.
701.0706 Removal of trustee. (1) The settlor, a cotrustee, or a qualified beneficiary may request the court to remove a trustee, or a trustee may be removed by the court on its own initiative. (2) The court may remove a trustee if any of the following applies: (a) The trustee has committed a material breach of trust. (b) A lack of cooperation among cotrustees substantially impairs the administration of the trust. (c) Removal of the trustee is appropriate because of unfitness, unwillingness, or persistent failure of the trustee to administer the trust effectively. (d) There has been a substantial change of circumstances or removal is requested by all of the qualified beneficiaries, the removal is not inconsistent with a material purpose of the trust, and a suitable cotrustee or successor trustee is available. (3) Pending a final decision on a request to remove a trustee, or in lieu of or in addition to removing a trustee, the court may order such appropriate relief under s. 701.1001 (2) as may be necessary to protect the trust property or the interests of the beneficiaries. History: 2013 a. 92; 2023 a. 127.
701.0707 Delivery of property by former trustee. (1) Unless a cotrustee remains in office or the court otherwise orders, and until the trust property is delivered to a successor trustee or other person entitled to it, a trustee who has resigned or been removed has the duties of a trustee and the powers necessary to protect the trust property. (2) A trustee who has resigned or been removed shall proceed within a reasonable time to deliver the trust property within the trustee’s possession to the cotrustee, successor trustee, or other person entitled to it, subject to the right of the trustee to retain a reasonable reserve for the payment of debts, expenses, and taxes. History: 2013 a. 92; 2023 a. 127.
701.0708 Compensation of trustee. (1) If the terms of a trust do not specify the trustee’s compensation, a trustee is entitled to compensation that is reasonable under the circumstances. (2) If the terms of a trust specify the trustee’s compensation or refer to another ascertainable source for determining that compensation, the trustee is entitled to be compensated as specified,
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but the court may allow more or less compensation if any of the following applies: (a) The duties of the trustee are substantially different from those contemplated when the trust was created. (b) The compensation specified by the terms of the trust would be unreasonably low or high. (3) If the trustee has rendered other services in connection with the administration of the trust, the trustee may receive reasonable compensation for the other services rendered, in addition to reasonable compensation as trustee. History: 2013 a. 92.
701.0709 Reimbursement of expenses. (1) A trustee is entitled to be reimbursed out of the trust property, with interest as appropriate, for all of the following: (a) Expenses that were properly incurred in the administration of the trust. (b) To the extent necessary to prevent unjust enrichment of the trust, expenses that were not properly incurred in the administration of the trust. (2) An advance by the trustee of money for the protection of the trust gives rise to a lien against trust property to secure reimbursement with reasonable interest. History: 2013 a. 92.
701.0710 Title of trust property. A settlor or transferor may effectively transfer property to a trust by placing legal title of the property in the name of the trustee, which shall include any successor trustee regardless of whether a successor trustee is referenced in the transfer document. A transfer that places legal title in the name of the trust itself places legal title in the name of the trustee. History: 2013 a. 92.
SUBCHAPTER VIII DUTIES AND POWERS OF TRUSTEES, DIRECTING PARTIES, AND TRUST PROTECTORS 701.0801 Duty to administer trust. Upon acceptance of a trusteeship, the trustee shall administer the trust in good faith, in accordance with its terms and purposes and the interests of the beneficiaries, and in accordance with this chapter. History: 2013 a. 92.
701.0802 Duty of loyalty. (1) A trustee shall administer the trust solely in the interests of the beneficiaries. (2) Subject to the rights of persons dealing with or assisting the trustee as provided in s. 701.1012, a sale, encumbrance, or other transaction that involves the investment or management of trust property and is entered into by the trustee for the trustee’s own personal account or that is otherwise affected by a conflict between the trustee’s fiduciary and personal interests is voidable by a beneficiary affected by the transaction unless any of the following applies: (a) The transaction was authorized by the terms of the trust. (b) The transaction was approved by the court. (c) The beneficiary did not commence a judicial proceeding within the time allowed by s. 701.1005. (d) The beneficiary consented to the trustee’s conduct, ratified the transaction, or released the trustee in compliance with s. 701.1009. (e) The transaction involves a contract entered into or claim acquired by the trustee before the person became trustee. (3) A sale, encumbrance, or other transaction involving the
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investment or management of trust property is presumed to be affected by a conflict between personal and fiduciary interests if it is entered into by the trustee with any of the following: (a) The trustee’s spouse. (b) The trustee’s descendants, siblings, parents, or their spouses. (c) An agent or attorney of the trustee. (d) A corporation or other person or enterprise in which the trustee, or a person that owns a significant interest in the trustee, has an interest that might affect the trustee’s best judgment. (4) A transaction not concerning trust property in which the trustee engages in the trustee’s individual capacity involves a conflict between personal and fiduciary interests if the transaction concerns an opportunity properly belonging to the trust. (5) (a) An investment by a trustee in securities of an investment company or investment trust to which the trustee, or its affiliate, provides services in a capacity other than as trustee is not presumed to be affected by a conflict between personal and fiduciary interests if the investment otherwise complies with the prudent investor rule in s. 881.01. In addition to receiving compensation for acting as trustee, the trustee may be compensated by the investment company or investment trust for providing those services out of fees charged to the trust. If the trustee receives compensation from the investment company or investment trust for providing investment advisory or investment management services, the trustee shall at least annually notify the persons entitled to receive a copy of the trustee’s report under s. 701.0813 (3) of the rate and method by which that compensation was determined. (b) A trust company acting in any fiduciary capacity with respect to a trust may purchase any service or product, including insurance or securities underwritten or otherwise distributed by the trust company or by an affiliate, through or directly from the trust company or an affiliate of a syndicate or selling group that includes the trust company of an affiliate, provided the purchase otherwise complies with the prudent investor rule in s. 881.01 and with s. 881.015. Compensation for the service or product must be reasonable and not prohibited by the instrument governing the fiduciary relationship. The compensation for the service or product may be in addition to the compensation that the trust company is otherwise entitled to receive. (6) In voting shares of stock or in exercising powers of control over similar interests in other forms of enterprise, the trustee shall act in the best interests of the beneficiaries. If the trust is the sole owner of a corporation or other form of enterprise, the trustee shall elect or appoint directors or other managers who will manage the corporation or enterprise in the best interests of the beneficiaries. (7) This section does not preclude the following transactions, if fair to the beneficiaries: (a) An agreement between a trustee and a beneficiary relating to the appointment or compensation of the trustee. (b) Payment of reasonable compensation to the trustee. (c) A transaction between a trust and another trust, a decedent’s estate, a guardianship of the estate, a conservatorship, or a custodianship of which the trustee is a fiduciary or in which a beneficiary has an interest. (d) A deposit of trust money in a regulated financial-service institution operated by the trustee. (e) An advance by the trustee of money for the protection of the trust. (8) The court may appoint a trustee, trust protector, or directing party to make a decision with respect to any proposed transaction that might violate this section if entered into by the trustee. (9) A trustee is not liable for releasing information, including
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a copy of all or any portion of the trust instrument, to any deceased settlor’s heir-at-law or other person indicating that the person is not a beneficiary of the trust if the trustee reasonably believes that doing so will not harm the beneficiaries of the trust and that doing so will reduce the likelihood of litigation involving the trust. History: 2013 a. 92; 2023 a. 127.
701.0803 Impartiality. If a trust has 2 or more beneficiaries, the trustee shall act impartially in investing, managing, and distributing the trust property, giving due regard to the beneficiaries’ respective interests and the purposes and terms of the trust. History: 2013 a. 92.
701.0804 Prudent administration. A trustee shall administer the trust as a prudent person would, by considering the purposes, terms, distributional requirements, and other circumstances of the trust. In satisfying this standard, the trustee shall exercise reasonable care, skill, and caution. History: 2013 a. 92.
701.0805 Costs of administration. In administering a trust, the trustee may incur only costs that are reasonable in relation to the trust property, the purposes of the trust, the skills of the trustee, and the complexity of the trust administration. History: 2013 a. 92.
701.0806 Trustee’s skills. A trustee who has special skills or expertise, or is named trustee in reliance upon the trustee’s representation that the trustee has special skills or expertise, shall use those special skills or expertise. History: 2013 a. 92.
701.0807 Delegation by trustee. (1) A trustee may delegate duties and powers that a prudent trustee of comparable skills could properly delegate under the circumstances. The trustee shall exercise reasonable care, skill, and caution in each of the following: (a) Selecting an agent. (b) Establishing the scope and terms of the delegation, consistent with the purposes and terms of the trust. (c) Periodically reviewing the agent’s actions in order to monitor the agent’s performance and compliance with the terms of the delegation. (2) In performing a delegated function, an agent owes a duty to the trust to exercise reasonable care to comply with the terms of the delegation. (3) A trustee who complies with sub. (1) is not liable to the beneficiaries or to the trust for an action of the agent to whom the function was delegated. (4) By accepting a delegation of powers or duties from the trustee of a trust that is subject to the law of this state, an agent submits to the jurisdiction of the courts of this state even if the terms of the delegation provide for a different jurisdiction or venue. (5) This section does not apply to a trustee’s delegation of investment and management functions. A trustee’s delegation of investment and management functions is governed by s. 881.01 (10). History: 2013 a. 92.
701.0808 Powers to direct; directing parties. (1) While a trust is revocable, the trustee may follow a direction of the settlor that is contrary to the terms of the trust. (2) A settlor in a trust instrument, a court in a trust instrument or court order, or interested persons in a nonjudicial settlement agreement may appoint a directing party to direct the trustee on
May 22, 2026, are designated by NOTES. (Published 5-22-26)
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investment or distribution decisions or to make investment or distribution decisions regarding directed trust property. If a trustee acts in accordance with the direction of a directing party or fails to act due to lack of direction from a directing party, the trustee is not liable for any loss resulting directly or indirectly from any action taken or omitted with respect to the direction or lack of direction except for acts or omissions that are a result of the trustee’s willful misconduct. (3) A trustee does not have a duty to do any of the following: (a) Provide advice to, consult with, monitor, or evaluate a directing party’s conduct. (b) Inform or warn a beneficiary, a 3rd party, or a directing party that the trustee disagrees with any of the directing party’s actions or directions. (c) Prevent a directing party from giving a direction or taking any action. (d) Compel a directing party to redress the directing party’s actions or directions. (4) The administrative actions of a trustee related to matters within the scope of a directing party’s power, including confirming that the directing party’s directions have been carried out and recording and reporting actions taken pursuant to the directing party’s direction, do not constitute either monitoring the directing party’s actions or participating in the actions of the directing party. (5) A directing party is a fiduciary and is required to act in good faith with regard to the terms of the trust and the interests of the beneficiaries. A directing party is liable for any loss that results from a breach of any of the directing party’s fiduciary duties. (6) (a) A directing party may request information about the trust from the trustee and, if the requested information is related to a power granted to the directing party, the trustee shall provide the requested information to the directing party. If a trustee is bound by any confidentiality restrictions with respect to information requested by a directing party, the trustee may require that the directing party agree to be bound by the confidentiality restrictions before delivering such information to the directing party. A trustee is not liable to any beneficiary for any loss or damages resulting from the trustee providing information to the directing party that is related to the power granted to the directing party. (b) Except as otherwise provided in this chapter, a trustee does not have a duty to provide any information to the directing party that the directing party does not request. (7) A trustee shall, in accordance with s. 701.1004, pay or reimburse a directing party for attorney fees and costs to defend any claim made against the directing party. (8) Sections 701.0701, 701.0708, 701.0709, 701.1001 to 701.1003, and 701.1005 to 701.1010 apply to a directing party as if the directing party was a trustee. (9) A person who accepts an appointment as a directing party of a trust submits to the jurisdiction of the courts of this state, as provided in s. 701.0202 (1). History: 2013 a. 92, 151.
701.0809 Control and protection of trust property. A trustee shall take reasonable steps to take control of and protect the trust property. History: 2013 a. 92.
701.0810 Record keeping and identification of trust property. (1) A trustee shall keep adequate records of the administration of the trust.
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(2) A trustee shall keep trust property separate from the trustee’s own property. (3) Except as otherwise provided in sub. (4), a trustee shall cause the trust property to be designated so that the interest of the trust, to the extent feasible, appears in records maintained by a party other than a trustee or beneficiary. (4) If the trustee maintains records clearly indicating the respective interests, a trustee may invest as a whole the property of 2 or more separate trusts. History: 2013 a. 92.
701.0811 Enforcement and defense of claims. A trustee shall take reasonable steps to enforce claims of the trust known to the trustee and to defend claims against the trust known to the trustee. History: 2013 a. 92.
701.0812 Collecting trust property; duties of successor trustees. (1) A trustee shall take reasonable steps to compel a former trustee or other person to deliver trust property to the trustee, and to redress a breach of trust known to the trustee to have been committed by a trustee or former trustee, or a trust protector or former trust protector. (2) A successor trustee does not have a duty to examine the accounts of a former trustee. History: 2013 a. 92.
701.0813 Duty to inform and report. (1) A trustee shall keep the current beneficiaries and presumptive remainder beneficiaries who so request, reasonably informed about the administration of the trust. Unless unreasonable under the circumstances, a trustee shall promptly respond to a qualified beneficiary’s request for information related to the administration of the trust. (2) A trustee shall do all of the following: (a) Upon the request of a qualified beneficiary for a copy of the trust instrument, promptly furnish to the qualified beneficiary either a copy of the portions of the trust instrument relating to the interest of the qualified beneficiary or a copy of the trust instrument or, upon the request of a settlor for a copy of the trust instrument, promptly furnish to the settlor a copy of the trust instrument. (b) Within a reasonable period of time after accepting a trusteeship, notify the qualified beneficiaries of the acceptance and of the trustee’s name, address, and telephone number. (c) Within a reasonable period of time after the date on which the trustee acquires knowledge of the creation of an irrevocable trust, or the date on which the trustee acquires knowledge that a formerly revocable trust has become irrevocable, whether by the death of the settlor or otherwise, notify the qualified beneficiaries of all of the following: 1. The trust’s existence. 2. The identity of the settlor or settlors. 3. The name, address, and telephone number of each directing party and trust protector. 4. The right to request a copy of the documentation referred to in par. (a). 5. The right to request information under sub. (1). 6. The right to a trustee’s report as provided in sub. (3). (d) Notify the current beneficiaries and presumptive remainder beneficiaries who so request, of any change in the method or rate of the trustee’s compensation. (e) Upon receiving a petition to the court for action under ss. 701.0411 to 701.0416 that does not identify each trust protector and each directing party of the trust, notify the petitioning party
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of the identity of each trust protector and directing party, including the name, address, and telephone number of each trust protector and directing party, who is serving at the time the petition is filed. (3) (a) Subject to par. (c), at least annually and upon the termination of a trust, a trustee shall send to the current beneficiaries and to presumptive remainder beneficiaries who request it, all of the following: 1. A report of the trust property, liabilities, receipts, and disbursements, including the source and amount of the trustee’s compensation. 2. A listing of the trust assets and, if feasible, their respective market values. (b) Subject to par. (c), upon a vacancy in a trusteeship, unless a cotrustee remains in office, the former trustee shall send a report containing the information described under par. (a) 1. to the qualified beneficiaries. A personal representative or guardian may send the qualified beneficiaries a report containing the information described in par. (a) 1. on behalf of a deceased or incapacitated trustee. (c) A trustee may limit the report to a qualified beneficiary of a specific dollar amount or specific property to information that relates to the specific dollar amount or specific property. (4) A qualified beneficiary may waive the right to a trustee’s report or other information otherwise required to be furnished under this section. A qualified beneficiary, with respect to future reports and other information, may withdraw a waiver previously given. (5) Subsections (2) (b), (c), and (d) and (3) do not apply to a trustee who accepts a trusteeship before July 1, 2014, to an irrevocable trust created before July 1, 2014, or to a revocable trust that becomes irrevocable before July 1, 2014. (6) The trustee has no duty to provide information about the administration of the trust to the settlor, but the trustee may provide such information if the trustee chooses to do so. (7) The trust instrument may expand, restrict, eliminate, or otherwise vary the right of a beneficiary or class of beneficiaries to be informed of the beneficiary’s interest in a trust or to receive any or all information concerning the trust, and may do so for any period of time, including for the lifetime of a beneficiary or a class of beneficiaries. If there is no current acting representative of such a beneficiary or class of beneficiaries in accordance with the trust instrument, and a provision to appoint such a representative is not provided for in the trust instrument, the trustee may appoint a representative for a beneficiary or class of beneficiaries whose rights to information have been restricted or eliminated by the trust instrument. History: 2013 a. 92; 2023 a. 127.
701.0814 Discretionary powers; tax savings. (1) Notwithstanding the breadth of discretion granted to a trustee in the terms of the trust, including the use of such terms as “absolute,” “sole,” or “uncontrolled,” the trustee shall exercise a discretionary power in good faith and in accordance with the terms and purposes of the trust and the interests of the beneficiaries. A court may not determine that a trustee abused its discretion merely because the court would have exercised the discretion in a different manner or would not have exercised the discretion. (2) Subject to sub. (4), and unless the terms of the trust expressly indicate that a provision of this subsection does not apply, all of the following apply: (a) A person other than a settlor who is a beneficiary and a trustee, directing party, or trust protector of a trust that confers on the trustee, directing party, or trust protector a power to make discretionary distributions to or for the trustee’s, directing party’s, or
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trust protector’s personal benefit may exercise the power only in accordance with an ascertainable standard. (b) A trustee, directing party, or trust protector may not exercise a power to make discretionary distributions to satisfy a legal obligation of support that the trustee, directing party, or trust protector personally owes another person. (3) A power whose exercise is limited or prohibited by sub. (2) may be exercised by a majority of the remaining trustees, directing parties, or trust protectors whose exercise of the power is not so limited or prohibited. If the power of all trustees, directing parties, or trust protectors is so limited or prohibited, the court may appoint a trustee, directing party, or trust protector with authority to exercise the power. (4) Subsection (2) does not apply to any of the following: (a) A power held by the settlor’s spouse who is the trustee, directing party, or trust protector of a trust for which a marital deduction, as defined in section 2056 (b) (5) or 2523 (e) of the Internal Revenue Code, was previously allowed. (b) A trust during a period when the trust may be revoked or amended by its settlor. (c) A trust if contributions to the trust qualify for the annual exclusion under section 2503 (c) of the Internal Revenue Code. History: 2013 a. 92.
701.0815 General powers of trustee. (1) A trustee, without authorization by the court, may exercise the following powers: (a) Powers conferred by the terms of the trust. (b) Except as limited by the terms of the trust, all of the following powers: 1. All powers over the trust property that an unmarried, competent owner has over individually owned property. 2. Any other powers appropriate to achieve the proper investment, management, and distribution of the trust property. 3. Any other powers conferred by this chapter. (2) The exercise of a power is subject to the fiduciary duties prescribed by this chapter. (3) A trustee has no power to give warranties in a sale, mortgage, or lease that are binding on the trustee personally. History: 2013 a. 92; 2023 a. 127.
701.0816 Specific powers of trustee. Without limiting the authority conferred by s. 701.0815, a trustee may do all of the following: (1) Collect trust property and accept or reject additions to the trust property from a settlor or any other person. (2) Acquire or sell property, for cash or on credit, at public or private sale. (3) Exchange, partition, or otherwise change the character of trust property. (4) Deposit trust money in an account in a regulated financial-service institution. (5) Borrow money, with or without security, and mortgage or pledge trust property for a period within or extending beyond the duration of the trust. (6) With respect to an interest in a proprietorship, partnership, limited liability company, business trust, corporation, or other form of business or enterprise, continue the business or other enterprise and take any action that may be taken by shareholders, members, or property owners, including merging, dissolving, or otherwise changing the form of business organization or contributing additional capital. (7) With respect to a stock or other security, exercise the
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rights of an absolute owner, including the right to do any of the following: (a) Vote, or give proxies to vote, with or without power of substitution, or enter into or continue a voting trust agreement. (b) Hold a stock or other security in the name of a nominee or in other form without disclosure of the trust so that title may pass by delivery. (c) Pay calls, assessments, and other sums chargeable or accruing against the stock or other security, and sell or exercise stock subscription or conversion rights. (d) Deposit the stock or other security with a depository or other regulated financial-service institution. (8) With respect to an interest in real property, construct, or make ordinary or extraordinary repairs to, alterations to, or improvements in, buildings or other structures, demolish improvements, raze existing or erect new party walls or buildings, subdivide or develop land, dedicate land to public use or grant public or private easements, and make or vacate plats and adjust boundaries. (9) Enter into a lease for any purpose as lessor or lessee, including a lease or other arrangement for exploration and removal of natural resources, with or without the option to purchase or renew, for a period within or extending beyond the duration of the trust. (10) Grant an option involving a sale, lease, or other disposition of trust property or acquire an option for the acquisition of property, including an option exercisable beyond the duration of the trust, and exercise an option so acquired. (11) Insure the property of the trust against damage or loss and insure the trustee, the trustee’s agents, any directing party, any trust protector, and the beneficiaries against liability arising from the administration of the trust. (12) Abandon or decline to administer property of no value or of insufficient value to justify its collection or continued administration. (13) With respect to possible liability for violation of environmental law, do any of the following: (a) Inspect or investigate property the trustee holds or has been asked to hold, or property owned or operated by an organization in which the trustee holds or has been asked to hold an interest, for the purpose of determining the application of environmental law with respect to the property. (b) Take action to prevent, abate, or otherwise remedy any actual or potential violation of any environmental law affecting property held directly or indirectly by the trustee, whether taken before or after the assertion of a claim or the initiation of governmental enforcement. (c) Decline to accept property into trust or disclaim any power with respect to property that is or may be burdened with liability for violation of environmental law. (d) Compromise claims against the trust that may be asserted for an alleged violation of environmental law. (e) Pay the expense of any inspection, review, abatement, or remedial action to comply with environmental law. (14) Pay or contest any claim, settle a claim by or against the trust, and release, in whole or in part, a claim belonging to the trust. (15) Pay taxes; assessments; compensation of the trustee, a directing party, a trust protector, and employees and agents of the trust; and other expenses incurred in the administration of the trust. (16) Exercise elections with respect to federal, state, and local taxes.
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701.0816
(17) Select a mode of payment under any employee benefit or retirement plan, annuity, or life insurance payable to the trustee, exercise rights thereunder, including exercise of the right to indemnification for expenses and against liabilities, and take appropriate action to collect the proceeds. (18) Make loans out of trust property, including loans to a beneficiary on terms and conditions the trustee considers to be fair and reasonable under the circumstances. The trustee has a lien on future distributions for repayment of loans under this subsection. (19) Pledge trust property to guarantee loans made by others to the beneficiary. (20) Appoint a trustee to act in another jurisdiction with respect to trust property located in the other jurisdiction, confer upon the appointed trustee all of the powers and duties of the appointing trustee, require that the appointed trustee furnish security, and remove any trustee so appointed. (21) Pay an amount distributable to a beneficiary who is under a legal disability or who the trustee reasonably believes is incapacitated, by paying it directly to the beneficiary, applying it for the beneficiary’s benefit, or by doing any of the following: (a) Paying the amount to the beneficiary’s conservator or the beneficiary’s guardian of the estate. (b) Paying the amount to the beneficiary’s custodian under the Uniform Transfers to Minors Act under ss. 54.854 to 54.898 or the Uniform Custodial Trust Act under ss. 54.950 to 54.988, and, for that purpose, creating a custodianship or custodial trust. (c) If the trustee does not know of a conservator, guardian of the estate, custodian, or custodial trustee, paying the amount to an adult relative or other person having legal or physical care or custody of the beneficiary or to the guardian of the person of the beneficiary, to be expended on the beneficiary’s behalf. (d) Managing the amount as a separate fund on the beneficiary’s behalf, subject to the beneficiary’s continuing right to withdraw the distribution. (22) On distribution of trust property or the division or termination of a trust, make distributions in divided or undivided interests, allocate particular assets in proportionate or disproportionate shares, value the trust property for those purposes, and adjust for resulting differences in valuation. (23) Resolve a dispute concerning the interpretation of the trust or its administration by mediation, arbitration, or other procedure for alternative dispute resolution. (24) Prosecute or defend an action, claim, or judicial proceeding in any jurisdiction to protect trust property or the trustee, a directing party, or a trust protector in the performance of the trustee’s, directing party’s or trust protector’s duties. (25) Sign and deliver contracts and other instruments that are useful to achieve or facilitate the exercise of the trustee’s, directing party’s or trust protector’s powers. (26) On termination of the trust, exercise the powers appropriate to wind up the administration of the trust and distribute the trust property to the persons entitled to it. (27) Create or fund a plan under section 529 of the Internal Revenue Code, or other college savings vehicle, for a beneficiary’s benefit. (28) Obtain digital property, as provided under s. 711.07. (29) Fund a trust or account that meets the requirements under 42 USC 1396p (d) (4) (A) or (C) for the benefit of an individual with a disability. (30) Fund an account that is part of an ABLE program under section 529A of the Internal Revenue Code for a beneficiary’s benefit. History: 2013 a. 92; 2015 a. 300; 2023 a. 127.
May 22, 2026, are designated by NOTES. (Published 5-22-26)
701.0817
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701.0817 Distribution upon termination. (1) Upon termination or partial termination of a trust, the trustee may send a proposal for distribution to the beneficiaries of the trust. The right of any beneficiary to whom the proposal is sent to object to the proposed distribution terminates if the beneficiary does not notify the trustee of an objection within 30 days after the proposal was sent but only if the proposal informed the beneficiary of the right to object and of the time allowed for objection. (2) Upon the occurrence of an event terminating or partially terminating a trust, the trustee shall proceed within a reasonable time to distribute the trust property to the persons entitled to it, subject to the right of the trustee to retain a reasonable reserve for the payment of debts, expenses, and taxes. (3) A release by a beneficiary of a trustee from liability for breach of trust is invalid to the extent any of the following applies: (a) The release was induced by improper conduct of the trustee. (b) The beneficiary, at the time of the release, did not know of the beneficiary’s rights or have a reasonable opportunity to know of the material facts relating to the breach. History: 2013 a. 92; 2023 a. 127.
701.0818 Trust protectors. (1) APPOINTMENT. A settlor in a trust instrument, a court in a trust instrument or court order, or interested persons in a nonjudicial settlement agreement may provide for the appointment of a trust protector, whether referred to as a trust protector, another title, or no title. A trust protector has only the powers granted to the trust protector in the trust instrument, court order, or nonjudicial settlement agreement. (2) TRUST PROTECTOR POWERS; LEGAL CAPACITY. (a) A settlor in a trust instrument, a court in a trust instrument or court order, or interested persons in a nonjudicial settlement agreement may specify the legal capacity in which a particular power is exercisable by a trust protector and whether a power granted to the trust protector in a capacity other than a fiduciary capacity must be exercised in good faith. (b) If the settlor, court, or interested persons do not specify the legal capacity in which a particular power is exercisable by the trust protector, all of the following apply: 1. The power is exercisable in a fiduciary capacity if it is a power to do any of the following: a. Interpret or enforce the terms of the trust at the request of the trustee. b. Review and approve the trustee’s reports or accounting. c. Resolve disputes between the trustee or a directing party and a beneficiary. d. Consent to or veto distributions to a beneficiary. e. Consent to or veto investment actions. 2. If it is not a power described in subd. 1. a. to e., the power is exercisable in a nonfiduciary capacity, including a power to do any of the following: a. Modify or amend the trust instrument to respond to opportunities related to, or changes in, restraints on alienation or other state laws restricting the terms of a trust, the distribution of trust property, or the administration of the trust. b. Modify or amend the trust instrument to achieve a different tax status or to respond to changes in federal or state law. c. Change the principal place of administration, the tax situs of the trust, or the governing law of the trust. d. Eliminate or modify the interests of a beneficiary, add a new beneficiary or class of beneficiaries, or select a beneficiary from an indefinite class.
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e. Modify the terms of a power of appointment granted under the trust. f. Remove, replace, or appoint a trustee, trust protector, or directing party or a successor trustee, trust protector, or directing party. g. Terminate the trust. h. Exercise a decanting power under subch. XIII or direct an authorized fiduciary, as defined in s. 701.1302 (1), to exercise a decanting power under subch. XIII. i. Advise the trustee on matters concerning a beneficiary, including whether to provide information to a beneficiary under s. 701.0813. j. Correct errors or ambiguities in the terms of the trust that might otherwise require court construction or defeat the settlor’s intent. 3. Notwithstanding subds. 1. and 2., a trust protector who is also the settlor may exercise any power granted to the trust protector in the trust protector’s personal interests. 4. Notwithstanding subd. 2., a trust protector who is also a qualified beneficiary may exercise any power granted to the trust protector that is exercisable in a nonfiduciary capacity in the trust protector’s personal interests. (c) Notwithstanding pars. (a) and (b) and any provision in the trust instrument to the contrary, a trust protector who is also serving as the trustee or a directing party shall exercise any power granted to the trust protector in a fiduciary capacity. (3) TRUST PROTECTOR DUTIES. (a) If a power is exercisable in a fiduciary capacity, the trust protector shall act in good faith and shall exercise the power in a manner that is consistent with the terms and purposes of the trust instrument, court order, or nonjudicial settlement agreement and the interests of the beneficiaries. (b) If a power is exercisable in a nonfiduciary capacity, the trust protector shall act in good faith unless the trust instrument, court order, or nonjudicial settlement agreement provides otherwise. (c) A trust protector does not have a duty to exercise its powers, to monitor the conduct of the trustee or a directing party, or to monitor changes in the law or circumstances of the beneficiaries. (4) LIABILITY. A trust protector is liable for any loss that results from a breach of the trust protector’s duties, except as follows: (a) If the trust protector is also the settlor, the trust protector is not liable for any loss that results from a breach of the trust protector’s duties. (b) If the trust protector is also a qualified beneficiary, the trust protector is not liable for any loss that results from a breach of the trust protector’s duties for a power that is exercised in a nonfiduciary capacity. (5) RESIGNATION AND RELEASE OF POWERS. A trust protector may resign or release a power granted to the trust protector by giving written notice to the trustee and to any successor trust protector. (6) PROHIBITED ACTIONS. A trust protector may not exercise a power granted to the trust protector to do any of the following: (a) Except as provided in sub. (2) (b) 3. and 4., create or expand any beneficial interest, power of appointment, right of withdrawal, or right to receive trust property as a result of the exercise of a power of appointment if the creation or expansion would benefit the trust protector, the trust protector’s estate, the trust protector’s creditors, or creditors of the trust protector’s estate. (b) Modify or amend a trust to do any of the following: 1. Remove a requirement pursuant to 42 USC 1396p (d) (4)
May 22, 2026, are designated by NOTES. (Published 5-22-26)
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to pay back a governmental entity for benefits provided to the permissible beneficiary at the death of that beneficiary. 2. Reduce or eliminate an income interest of an income beneficiary of any of the following trusts: a. A trust for which a marital deduction has been taken for federal or state estate tax purposes under section 2056, 2056A, or 2523 of the Internal Revenue Code or any comparable provision of applicable state law, during the life of the settlor’s spouse. b. A charitable remainder trust under section 664 of the Internal Revenue Code, during the life of the noncharitable beneficiary. c. A trust in which the settlor has a qualified interest under section 2702 (b) of the Internal Revenue Code, during any period in which the settlor is a beneficiary. d. A trust for which an election as a qualified Subchapter S Trust under section 1361(d) of the Internal Revenue Code is in place. (c) Modify any beneficial interest in a trust that qualified for a marital deduction or charitable deduction from federal or state estate tax in a manner that would have caused the trust not to qualify for the deduction. (7) SETTLOR RIGHTS. A trust protector is not subject to the direction of the settlor and the settlor may not bring a cause of action against the trust protector. A trust protector may consider a settlor’s goals, objectives, and philosophies in establishing the trust and the trust’s structure when exercising the powers granted to the trust protector and may do so regardless of whether the settlor is deceased. (8) DUTIES OF A TRUSTEE AND A DIRECTING PARTY. (a) A trustee and a directing party shall act in accordance with a trust protector’s exercise of a power granted to the trust protector. A trustee and a directing party are not liable for acting in accordance with the trust protector’s exercise of a power granted to the trust protector unless the attempted exercise is manifestly contrary to the power granted to the trust protector or the trustee or the directing party knows that the attempted exercise would constitute a serious breach of a duty that the trust protector owes to the beneficiaries of the trust. (b) A trustee and a directing party do not have a duty to monitor the conduct of the trust protector, provide advice to or consult with the trust protector, or communicate with, warn, or apprise any beneficiary concerning instances in which the trustee or the directing party would or might have exercised the trustee’s or the directing party’s discretion in a manner different from the manner in which the trust protector exercised its discretion. (9) RIGHT TO INFORMATION. (a) A trust protector may request information about the trust from the trustee and, if the requested information is related to a power granted to the trust protector, the trustee shall provide the requested information to the trust protector. If a trustee is bound by any confidentiality restrictions with respect to information requested by a trust protector, the trustee may require that the trust protector agree to be bound by the confidentiality restrictions before delivering such information to the trust protector. A trustee is not liable to any beneficiary for any loss or damages resulting from the trustee providing information to the trust protector that is related to the power granted to the trust protector. (b) Except as otherwise provided in this chapter, a trustee does not have to provide any information to the trust protector that the trust protector does not request. (10) PAYMENT OR REIMBURSEMENT OF ATTORNEY FEES AND COSTS. A trustee shall, in accordance with s. 701.1004, pay or reimburse a trust protector for attorney fees and costs to defend any claim made against the trust protector.
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701.0902
(11) APPLICATION OF OTHER SECTIONS TO TRUST PROTECSections 701.0701, 701.0708, 701.0709, 701.1001 to 701.1003, and 701.1005 to 701.1010 apply to a trust protector as if the trust protector is the trustee. (12) JURISDICTION. A person who accepts an appointment as a trust protector of a trust submits to the jurisdiction of the courts of this state, as provided in s. 701.0202 (1). TORS.
History: 2013 a. 92; 2023 a. 127.
701.0819 Marital deduction transfers. (1) For purposes of this section, “marital deduction transfer” means a lifetime or testamentary transfer of property that is intended to qualify for the marital deduction as indicated by the terms of the trust. (2) In interpreting, construing, or administering a trust instrument, absent a clear expression of intent by the settlor to the contrary, a trustee shall apply the following presumptions that may only be rebutted by clear and convincing evidence: (a) The settlor intended to take advantage of tax deductions, exemptions, exclusions, and credits. (b) The settlor intended that any transfer made to a spouse outright and free of trust qualify for the gift or estate tax marital deduction and is a marital deduction transfer. (c) If the trust instrument refers to a trust as a marital trust, qualified terminable interest property trust, or spousal trust, or refers to qualified terminable interest property, section 2044, 2056, 2056A, or 2523 of the Internal Revenue Code, or a similar provision of applicable state law, the settlor intended that the trust and property passing to the trust qualify for the applicable gift or estate tax marital deduction and that the transfer qualifies for the marital deduction for federal and state gift or estate tax purposes. (3) If a trust receives a marital deduction transfer, the trust instrument shall be construed to comply with the marital deduction provisions of the Internal Revenue Code. (4) If a trust receives a marital deduction transfer, the trustee has all the powers, duties, and discretionary authority necessary to comply with the marital deduction provisions of the Internal Revenue Code. The trustee may not take any action or have any power that may impair the availability of the marital deduction, but this does not require the trustee to make the election under either section 2056 (b) (7), 2056A (a) (3), or 2523 (f) of the Internal Revenue Code. History: 2013 a. 92.
SUBCHAPTER IX INVESTMENT MANAGEMENT OF TRUSTS 701.0901 Application of the Wisconsin Prudent Investor Act. Except as provided in this subchapter, the investment management of the property of a trust is governed by ch. 881. History: 2013 a. 92.
701.0902 Directed trust property. (1) A directing party who has power over directed trust property shall do all of the following: (a) Direct the trustee on the retention, purchase, sale, exchange, tender, encumbrance, or any other investment transaction of the directed trust property and the investment and reinvestment of principal and income. (b) Direct the trustee with respect to the management, control, and voting powers, including voting proxies, of the directed trust property. (c) Select and determine reasonable compensation of one or more outside investment advisors, managers, consultants, or
May 22, 2026, are designated by NOTES. (Published 5-22-26)
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counselors, which may include the trustee, and delegate investment authority to them pursuant to the investment delegation provisions under s. 881.01 (10). (d) Determine the frequency of and methodology for valuing directed trust property and provide the value of property for which there is no readily available daily market value. (2) A trustee who has no power over directed trust property does not have a duty to do any of the following with respect to the directed trust property: (a) Prepare or review investment policy statements. (b) Perform investment or suitability reviews, inquiries, or investigations. (c) Determine or verify the value of directed trust property for which there is no readily available daily market value. (d) Monitor the conduct or investment performance of the directing party.
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(d) Order a trustee to account. (e) Appoint an additional trustee, a directing party, or a trust protector having the duties and authority ordered by the court, including, in the case of an additional trustee, the authority to take possession of the trust property and administer the trust. (f) Suspend the trustee. (g) Remove the trustee as provided in s. 701.0706. (h) Reduce the compensation of or deny compensation to the trustee. (i) Subject to s. 701.1012, void an act of the trustee, impose a lien or a constructive trust on trust property, or trace trust property wrongfully disposed of and order recovery of the property or its proceeds. (j) Order any other appropriate relief, whether provided elsewhere in this chapter, available at common law, or under equity principles. History: 2013 a. 92.
History: 2013 a. 92.
701.0903 Nonapplication of prudent investor rule to life insurance contracts owned by trusts. (1) Notwithstanding s. 881.01, if a principal purpose of a trust is to hold a life insurance contract or to purchase a life insurance contract from contributions made to the trust, the trustee does not have a duty to determine whether the life insurance contract is or remains a proper investment of the trust. For purposes of this subsection, determining whether a life insurance contact is or remains a proper investment includes all of the following: (a) Investigating the financial strength or changes in the financial strength of the life insurance company maintaining the life insurance contract. (b) Determining whether to exercise any policy option, right, or privilege available under the life insurance contract. (c) Diversifying the life insurance contract relative to any other life insurance contracts or any other assets of the trust. (d) Inquiring about or investigating the health or financial condition of an insured. (e) Preventing the lapse of a life insurance contract if the trust does not receive contributions or hold other readily marketable assets to pay the life insurance contract premiums. (2) A trustee is not liable for a loss that arises because the trustee did not take an action specified in sub. (1). (4) This section does not apply to a trust that was executed before July 1, 2014, unless the trustee notifies the qualified beneficiaries that the trustee elects to be governed by this section and provides the qualified beneficiaries with a copy of this section. (5) Subject to sub. (4), this section applies to a life insurance contract acquired, retained, or owned by a trustee before, on, or after July 1, 2014. History: 2013 a. 92.
SUBCHAPTER X LIABILITY OF TRUSTEES AND RIGHTS OF PERSONS DEALING WITH TRUSTEE 701.1001 Remedies for breach of trust. (1) A violation by a trustee of a duty the trustee owes to a beneficiary is a breach of trust. (2) To remedy a breach of trust that has occurred or may occur, a court may do any of the following: (a) Compel the trustee to perform the trustee’s duties. (b) Enjoin the trustee from committing a breach of trust. (c) Compel the trustee to redress a breach of trust by paying money, restoring property, or other means.
701.1002 Damages for breach of trust; liability of successor trustee. (1) A trustee who commits a breach of trust is liable to an affected beneficiary for the greater of the following: (a) The amount required to restore the value of the trust property and trust distributions to what they would have been had the breach not occurred. (b) The profit the trustee made by reason of the breach. (2) Except as otherwise provided in this subsection, if more than one trustee is liable to a beneficiary for a breach of trust, a trustee is entitled to contribution from the other trustee or trustees. A trustee is not entitled to contribution if the trustee was substantially more at fault than another trustee or if the trustee committed the breach of trust in bad faith or with reckless indifference to the purposes of the trust or the interests of the beneficiary. A trustee who received a benefit from the breach of trust is not entitled to contribution from another trustee to the extent of the benefit received. (3) A successor trustee is not liable for the acts and omissions of a former trustee or for the acts or omissions of any directing party or trust protector that are taken before the appointment of the successor trustee. History: 2013 a. 92.
701.1003 Damages in absence of breach. Absent a breach of trust, a trustee is not liable to a beneficiary for a loss or depreciation in the value of trust property or for not having made a profit. History: 2013 a. 92.
701.1004 Attorney fees and costs. (1) In a judicial proceeding involving the administration of a trust, the court, as justice and equity may require, may award costs and expenses, including reasonable attorney fees, to any party, to be paid by another party or from the trust that is the subject of the controversy. (2) Subject to sub. (3), if a trustee, directing party, or trust protector defends or prosecutes any proceeding in good faith, whether successful or not, the trustee, directing party, or trust protector is entitled to receive from the trust the necessary expenses and disbursements, including reasonable attorney fees, incurred. This subsection does not preclude a court from ordering another party to reimburse the trust for these expenses and disbursements as provided in sub. (1). (3) (a) A trustee may pay costs or attorney fees incurred in any proceeding from the trust property without the approval of any person and without court authorization, unless the court orders otherwise as provided in par. (c). (b) If a claim or defense based upon a breach of trust is made against a trustee, directing party, or trust protector in a proceed-
May 22, 2026, are designated by NOTES. (Published 5-22-26)
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ing, the trustee shall provide notice to each qualified beneficiary, directing party, and trust protector of the trustee’s intention to pay costs or attorney fees incurred in the proceeding from the trust prior to making payment. The notice shall inform each qualified beneficiary, directing party, and trust protector of the right to apply to the court for an order prohibiting the trustee from paying attorney fees or costs from trust property. If a trustee is served with a motion for an order prohibiting the trustee from paying from the trust attorney fees or costs in the proceeding and the trustee pays attorney fees or costs from the trust before an order is entered on the motion, the trustee, directing party, or trust protector and their respective attorneys who have been paid attorney fees or costs from trust property are subject to the remedies in pars. (c) and (d). (c) 1. If a claim or defense based upon breach of trust is made against a trustee, directing party, or trust protector in a proceeding, a party may move the court for an order to prohibit the trustee from paying costs or attorney fees from trust property. 2. Except as provided in subd. 3., if the moving party demonstrates to the court that there is a reasonable basis for the court to find that a breach of trust occurred, the court shall enter an order prohibiting the payment of further attorney fees and costs from trust property and shall order attorney fees or costs previously paid from trust property in such proceeding to be refunded, unless the court finds good cause to allow attorney fees and costs to be paid from the trust. A trustee, directing party, or trust protector may offer evidence to rebut the evidence submitted to the court by the moving party. 3. The court may defer ruling on a motion to prohibit a trustee from paying costs or attorney fees from trust property until discovery is taken by the parties. 4. An order entered under this paragraph does not limit a trustee’s, directing party’s, or trust protector’s right to seek an order allowing the payment of some or all of the attorney fees or costs incurred in the proceeding from trust property, including any fees required to be refunded, after the claim or defense is finally determined by the court. If a claim or defense based upon a breach of trust is withdrawn, dismissed, or resolved without a determination by the court that the trustee committed a breach of trust, after the entry of an order prohibiting payment of attorney fees and costs pursuant to this paragraph, the trustee may pay costs or attorney fees incurred in the proceeding from the trust property without further court authorization. (d) If the court orders a refund under par. (c), the court may enter sanctions as are appropriate if a refund is not made as directed by the court, including striking defenses or pleadings filed by the trustee, directing party, or trust protector. Nothing in this paragraph limits other remedies and sanctions the court may employ for the failure to refund the trust in a timely manner. (e) Subject to s. 701.1005, nothing in this subsection limits the power of the court to review fees and costs or the right of any interested persons to challenge fees and costs after payment, after an accounting, or after conclusion of the litigation. (f) Notice under par. (b) is not required if the action or defense is later withdrawn or dismissed by the party that is alleging a breach of trust or resolved without a determination by the court that the trustee has not committed a breach of trust. (4) A provision of a trust instrument drafted or caused to be drafted by a trustee, directing party, or trust protector that modifies the application of this section in a manner favorable to the trustee, directing party, or trust protector and potentially detrimental to a beneficiary is invalid with respect to the trustee, directing party, or trust protector unless the trustee, directing party, or trust protector proves that the provision was fair under the circumstances existing at the time the trust instrument was signed
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701.1009
and that the existence and contents of the provision were adequately communicated to the settlor. History: 2013 a. 92.
701.1005 Limitation of action against trustee. (1) A beneficiary may not commence a proceeding against a trustee for breach of trust more than one year after the earlier of either the date on which the beneficiary or a representative of the beneficiary waived the right to a report under s. 701.0813 (4) or the date on which the beneficiary or a representative of the beneficiary was sent a report or other record that adequately disclosed the existence of a potential claim for breach of trust. (2) A report or other record adequately discloses the existence of a potential claim for breach of trust if it provides sufficient information so that the beneficiary or representative knows of the potential claim or should have inquired into its existence. (3) If sub. (1) does not apply, a proceeding by a beneficiary against a trustee for breach of trust must be commenced within 5 years after the first to occur of the following: (a) The removal, resignation, or death of the trustee. (b) The termination of the beneficiary’s interest in the trust. (c) The termination of the trust. (4) Subsections (1) and (3) do not apply to a claim for fraud. The time for asserting a claim for fraud is governed by applicable law. History: 2013 a. 92; 2023 a. 127.
701.1006 Reliance on trust instrument. A trustee who acts in reasonable reliance on the terms of the trust as expressed in the trust instrument is not liable to a beneficiary for a breach of trust to the extent the breach resulted from the reliance. History: 2013 a. 92.
701.1007 Event affecting administration or distribution. If the happening of an event, including marriage, divorce, performance of educational requirements, or death, affects the administration or distribution of a trust, a trustee who has exercised reasonable care to ascertain the happening of the event is not liable for a loss resulting from the trustee’s lack of knowledge. History: 2013 a. 92.
701.1008 Exculpation of trustee. (1) A term of a trust relieving a trustee of liability for breach of trust is unenforceable to the extent that it does any of the following: (a) Relieves the trustee of liability for breach of trust committed in bad faith or with reckless indifference to the purposes of the trust or the interests of a beneficiary. (b) Was inserted as the result of an abuse by the trustee of a fiduciary or confidential relationship with the settlor. (2) An exculpatory term drafted or caused to be drafted by the trustee is invalid as an abuse of a fiduciary or confidential relationship unless the trustee proves that the exculpatory term was fair under the circumstances existing at the time the trust instrument was signed and that the existence and contents of the exculpatory term were adequately communicated to the settlor. History: 2013 a. 92.
701.1009 Beneficiary’s consent, release, or ratification. A trustee is not liable to a beneficiary for breach of trust if the beneficiary consented to the conduct constituting the breach, released the trustee from liability for the breach, or ratified the transaction constituting the breach, unless any of the following applies: (1) The consent, release, or ratification of the beneficiary was induced by improper conduct of the trustee. (2) At the time of the consent, release, or ratification, the beneficiary did not have knowledge or a reasonable opportunity to
May 22, 2026, are designated by NOTES. (Published 5-22-26)
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obtain knowledge of the beneficiary’s rights or of the material facts relating to the breach. History: 2013 a. 92; 2023 a. 127.
701.1010 Limitation on personal liability of trustee. (1) Except as otherwise provided in the contract, a trustee is not personally liable on a contract properly entered into in the trustee’s fiduciary capacity in the course of administering the trust if the trustee in the contract disclosed the fiduciary capacity. (2) A trustee is personally liable for torts committed in the course of administering a trust, or for obligations arising from ownership or control of trust property, including liability for violation of environmental law, only if the trustee is personally at fault. History: 2013 a. 92.
701.1011 Interest as general partner. (1) Unless personal liability is imposed in the contract, a trustee who holds an interest as a general partner in a general or limited partnership is not personally liable on a contract entered into by the partnership after the trust’s acquisition of the interest if the fiduciary capacity was disclosed in the contract. (2) A trustee who holds an interest as a general partner is not personally liable for torts committed by the partnership or for obligations arising from ownership or control of the interest unless the trustee is personally at fault. (3) If the trustee of a revocable trust holds an interest as a general partner, the settlor is personally liable for contracts and other obligations of the partnership as if the settlor were a general partner. History: 2013 a. 92.
701.1012 Protection of person dealing with trustee. (1) A person other than a beneficiary who in good faith assists a trustee, or who in good faith and for value deals with a trustee, without knowledge that the trustee is exceeding or improperly exercising the trustee’s powers is protected from liability as if the trustee properly exercised the power. (2) A person other than a beneficiary who in good faith deals with a trustee is not required to inquire into the extent of the trustee’s powers or the propriety of their exercise. (3) A person who in good faith delivers assets to a trustee does not need to ensure their proper application. (4) A person other than a beneficiary who in good faith assists a former trustee, or who in good faith and for value deals with a former trustee, without knowledge that the trusteeship has terminated is protected from liability as if the former trustee were still a trustee. (5) Comparable protective provisions of other laws relating to commercial transactions or transfer of securities by fiduciaries prevail over the protection provided by this section. History: 2013 a. 92.
701.1013 Certification of trust. (1) Instead of furnishing a copy of the trust instrument to a person other than a beneficiary, the trustee may furnish to the person a certification of trust containing the following information: (a) That the trust exists and the date on which the trust instrument was executed. (b) The identity of the settlor. (c) The identity and address of the currently acting trustee. (d) The powers of the trustee. (e) The revocability or irrevocability of the trust and the identity of any person holding a power to revoke the trust. (f) The authority of a cotrustee to sign or otherwise authenticate and whether all cotrustees or less than all cotrustees are re-
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quired to sign or otherwise authenticate in order to exercise powers of the trustee. (g) The manner in which title to trust property may be taken. (2) A certification of trust may be signed or otherwise authenticated by any trustee. (3) A trustee shall include in a certification of trust that the trust has not been revoked, modified, or amended in any manner that would cause the representations contained in the certification of trust to be incorrect. (4) A certification of trust does not need to contain the dispositive terms of a trust. (5) A recipient of a certification of trust may require the trustee to furnish copies of those excerpts from the original trust instrument and later amendments that designate the trustee and confer upon the trustee the power to act in the pending transaction. (6) A person who acts in reliance upon a certification of trust without knowledge that the representations contained therein are incorrect is not liable to any person for so acting and may assume without inquiry the existence of the facts contained in the certification. Knowledge of the terms of the trust may not be inferred solely from the fact that a copy of all or part of the trust instrument is held by the person relying upon the certification. (7) A person who in good faith enters into a transaction in reliance upon a certification of trust may enforce the transaction against the trust property as if the representations contained in the certification were correct. (8) A person making a demand for copies of the trust instrument or excerpts from the trust instrument, other than those excerpts described in sub. (5), in addition to a certification of trust is liable for costs, expenses, reasonable attorney fees, and damages if the court determines that the person did not act in good faith in demanding the copies. (9) This section does not limit the right of a person to obtain a copy of the trust instrument in a judicial proceeding concerning the trust. History: 2013 a. 92; 2013 a. 151 s. 28.
SUBCHAPTER XI UNIFORM PRINCIPAL AND INCOME ACT 701.1101 Short title and scope. This subchapter may be cited as the Wisconsin Uniform Principal and Income Act. Subject to s. 701.1205 (2), this subchapter applies to a trust described in s. 701.0102 and an estate that is administered in this state. History: 2013 a. 92, 151.
701.1102 Definitions. In this subchapter: (1) “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. (1g) “Asset” has the meaning given for property under s. 701.0103 (20). (1m) Notwithstanding s. 701.0103 (3), “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. (2) “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.
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(3) “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 ss. 701.1115 to 701.1129. (4) “Income beneficiary” means a person to whom net income of a trust is or may be payable. (5) “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. (6) “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. (7) “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 subchapter to or from income during the period. (8) “Principal” means property held in trust for distribution to a remainder beneficiary when the trust terminates or property held in trust in perpetuity. (9) “Remainder beneficiary” means a person who is a beneficiary under s. 701.0103 (21) (b). History: 2013 a. 92 ss. 179, 180, 205 to 212, 214, 215.
701.1103 Fiduciary duties; general principles. (1) In allocating receipts and disbursements to income or principal or between income and principal, and with respect to any matter within the scope of ss. 701.1110 to 701.1114, a fiduciary: (a) Shall first administer a trust or estate in accordance with the terms of the trust or the will, even if there is a different provision in this subchapter. (b) May administer a trust or estate by the exercise of a discretionary power of administration given to the fiduciary by the terms of the trust or the will, even if the exercise of the power produces a result different from a result required or permitted by this subchapter. (c) Shall administer a trust or estate in accordance with this subchapter if the terms of the trust or the will do not contain a different provision or do not give the fiduciary a discretionary power of administration. (d) Shall add a receipt or charge a disbursement to principal to the extent that the terms of the trust and this subchapter do not provide a rule for allocating the receipt or disbursement to principal or income or between principal and income. (2) In exercising the power to adjust under s. 701.1104 (1) or a discretionary power of administration regarding a matter within the scope of this subchapter, whether granted by the terms of a trust, a will, or this subchapter, a fiduciary shall administer a trust or estate impartially, based on what is fair and reasonable to all of the beneficiaries, except to the extent that the terms of the trust or the will clearly manifest an intention that the fiduciary shall or may favor one or more of the beneficiaries. A determination in accordance with this subchapter is presumed to be fair and reasonable to all of the beneficiaries. History: 2013 a. 92 s. 217.
701.1104 Trustee’s power to adjust. (1) A trustee may adjust between principal and income to the extent the trustee considers necessary if the trustee invests and manages trust assets as a prudent investor, the terms of the trust describe the amount that may or must be distributed to a beneficiary by referring to the trust’s income, and the trustee determines, after applying the rules in s. 701.1103 (1), that the trustee is unable to comply with s. 701.1103 (2).
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(2) In deciding whether and to what extent to exercise the power conferred by sub. (1), a trustee shall consider all factors relevant to the trust and its beneficiaries, including the following factors to the extent they are relevant: (a) The nature, purpose, and expected duration of the trust. (b) The intent of the settlor. (c) The identity and circumstances of the beneficiaries. (d) The needs for liquidity, regularity of income, and preservation and appreciation of capital. (e) The assets held in the trust; the extent to which they consist of financial assets, interests in closely held enterprises, tangible and intangible personal property, or real property; the extent to which an asset is used by a beneficiary; and whether an asset was purchased by the trustee or received from the settlor. (f) The net amount allocated to income under the other subsections of this section and the increase or decrease in the value of the principal assets, which the trustee may estimate in the case of assets for which market values are not readily available. (g) Whether and to what extent the terms of the trust give the trustee the power to invade principal or accumulate income or prohibit the trustee from invading principal or accumulating income, and the extent to which the trustee has exercised a power from time to time to invade principal or accumulate income. (h) The actual and anticipated effect of economic conditions on principal and income and effects of inflation and deflation. (i) The anticipated tax consequences of an adjustment. (3) A trustee may not make an adjustment: (a) If possessing or exercising the power to make an adjustment would disqualify an estate tax or gift tax marital or charitable deduction in whole or in part. (b) That reduces the actuarial value of the income interest in a trust to which a person transfers property with the intent to qualify for a gift tax exclusion. (c) That changes the amount payable to a beneficiary as a fixed annuity or a fixed fraction of the value of the trust assets. (d) From any amount that is permanently set aside for charitable purposes under a will or the terms of a trust and for which an estate tax or gift tax charitable deduction has been taken unless both income and principal are so set aside. (e) If possessing or exercising the power to make an adjustment causes an individual to be treated as the owner of all or part of the trust for income tax purposes, and the individual would not be treated as the owner if the trustee did not possess the power to make an adjustment. (f) If possessing or exercising the power to make an adjustment causes all or part of the trust assets to be included for estate tax purposes in the estate of an individual and the assets would not be included in the estate of the individual if the trustee did not possess the power to make an adjustment. (g) If the trustee is a beneficiary of the trust. (h) If the trust has been converted under s. 701.1106 to a unitrust. (i) If the trust is an express unitrust, as defined in s. 701.1107 (1). (4) If sub. (3) (e), (f), or (g) applies to a trustee and there is more than one trustee, a cotrustee to whom the provision does not apply may make the adjustment unless the terms of the trust do not permit the exercise of the power by that cotrustee. (5) A trustee may release the entire power conferred by sub. (1) or may release only the power to adjust from income to principal or the power to adjust from principal to income if the trustee is uncertain about whether possessing or exercising the power will cause a result described in sub. (3) (a) to (f) or if the trustee
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determines that possessing or exercising the power will or may deprive the trust of a tax benefit or impose a tax burden not described in sub. (3). The release may be permanent or for a specified period, including a period measured by the life of an individual. (6) Terms of a trust that limit the power of a trustee to make an adjustment between principal and income do not affect the application of this subsection unless it is clear from the terms of the trust that the terms are intended to deny the trustee the power of adjustment conferred by sub. (1). History: 2013 a. 92 s. 218.
701.1105 Notice to beneficiaries of proposed action. (1) A trustee may, but is not required to, obtain approval of a proposed action under s. 701.1104 (1) by providing a written notice that complies with all of the following: (a) Is given at least 30 days before the proposed effective date of the proposed action. (b) Is given in the manner provided in s. 701.0109. (c) Is given to all qualified beneficiaries. (d) States that it is given in accordance with this section and discloses the following information: 1. The identification of the trustee. 2. A description of the proposed action. 3. The time within which a beneficiary may object to the proposed action, which shall be at least 30 days after the giving of the notice. 4. The effective date of the proposed action if no objection is received from any beneficiary within the time specified in subd. 3. (2) If a trustee gives notice of a proposed action under this section, the trustee is not required to give notice to a qualified beneficiary who consents to the proposed action in writing at any time before or after the proposed action is taken. (3) A qualified beneficiary may object to the proposed action by giving a written objection to the trustee within the time specified in the notice under sub. (1) (d) 3. (4) A trustee may decide not to take a proposed action after the trustee receives a written objection to the proposed action or at any other time for any other reason. In that case, the trustee shall give written notice to the qualified beneficiaries of the decision not to take the proposed action. (5) If a trustee receives a written objection to a proposed action within the time specified in the notice under sub. (1) (d) 3., either the trustee or the qualified beneficiary making the written objection may petition the court to have the proposed action approved, modified, or prohibited. In the court proceeding, the qualified beneficiary objecting to the proposed action has the burden of proving that the proposed action should be modified or prohibited. A qualified beneficiary who did not make the written objection may oppose the proposed action in the court proceeding. (6) For purposes of this section, a proposed action under s. 701.1104 includes a course of action or a decision not to take action under s. 701.1104. History: 2013 a. 92 ss. 219 to 223, 225 to 230; 2023 a. 127.
701.1106 Conversion to unitrust. (1) Subject to sub. (4), a trust may be converted to a unitrust in any of the following ways: (a) By the trustee, at his or her own discretion or at the request of a qualified beneficiary, if all of the following apply: 1. The trustee determines that the conversion will enable the trustee to better carry out the purposes of the trust.
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2. The trustee provides notice in the same manner as provided in s. 701.1105 (1) of the trustee’s intention to convert the trust to a unitrust, and the notice advises how the unitrust will operate, including the fixed percentage under sub. (3) (a) and any other initial determinations under sub. (3) (d) that the trustee intends to follow. 3. Every qualified beneficiary consents to the conversion to a unitrust in a writing delivered to the trustee. 4. The terms of the trust describe the amount that may or must be distributed by referring to the trust income. (b) By a court on the petition of the trustee or a qualified beneficiary, if all of the following apply: 1. The trustee or qualified beneficiary has provided notice under s. 701.1105 of the intention to request the court to convert the trust to a unitrust, and the notice advises how the unitrust will operate, including the fixed percentage under sub. (3) (a) and any other initial determinations under sub. (3) (d) that will be requested. 2. The court determines that the conversion to a unitrust will enable the trustee to better carry out the purposes of the trust. (2) In deciding whether to convert the trust to a unitrust under sub. (1) (a) and in determining the fixed percentage under sub. (3) (b) 1., the trustee shall consider all relevant factors under s. 701.1104 (2) (a) to (i). (3) (a) If a trust is converted to a unitrust under this section by the trustee or a court, notwithstanding s. 701.1103 (1) (a) and (d) and s. 701.1136 (4) the trustee shall make distributions in accordance with the trust instrument, except that any reference in the trust instrument to “income” means a fixed percentage of the net fair market value of the unitrust’s assets, whether such assets otherwise would be considered income or principal under this subchapter, averaged over a preceding period determined by the trustee, which is at least 3 years but not more than 5 years, or the period since the original trust was created, whichever is less. (b) 1. Subject to subd. 2., if the trust is converted to a unitrust under sub. (1) (a), the trustee shall determine the fixed percentage to be applied under par. (a), and the notice under sub. (1) (a) 2. must state the fixed percentage. If the trust is converted to a unitrust under sub. (1) (b), the court shall determine the fixed percentage to be applied under par. (a). 2. Any fixed percentage under par. (a) that is determined by a trustee may not be less than 3 percent nor more than 5 percent. (c) After a trust is converted to a unitrust, the trustee may, subject to the notice requirement under s. 701.1105 and with the consent of every qualified beneficiary, do any of the following: 1. Convert the unitrust back to the original trust under the trust instrument. 2. Change the fixed percentage under par. (a), subject to par. (b) 2. (d) After a trust is converted to a unitrust, a trustee may determine or change any of the following: 1. The frequency of distributions during the year. 2. Standards for prorating a distribution for a short year in which a beneficiary’s right to payments commences or ceases. 3. The effect on the valuation of the unitrust’s assets of other payments from, or contributions to, the unitrust. 4. How, and how frequently, to value the unitrust’s assets. 5. The valuation dates to use. 6. Whether to omit from the calculation of the value of the unitrust’s assets unitrust property occupied by or in the possession of a beneficiary. 7. The averaging under par. (a) to a different preceding period, which is at least 3 years but not more than 5 years.
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8. Any other matters necessary for the proper functioning of the unitrust. (e) The trustee may not deduct from a unitrust distribution expenses that would be deducted from income if the trust were not a unitrust. (f) Unless otherwise provided by the trust instrument, the unitrust distribution is considered to have been paid from the following sources in the order of priority: 1. Net income, determined as if the trust were not a unitrust. 2. Ordinary income for federal income tax purposes that is not net income under subd. 1. 3. Net realized short-term capital gains for federal income tax purposes. 4. Net realized long-term capital gain for federal income tax purposes. 5. Principal. (g) A court may, on the petition of the trustee or a qualified beneficiary, do any of the following: 1. Change the fixed percentage that was determined under par. (b) by the trustee or by a prior court order. 2. If necessary to preserve a tax benefit, provide for a distribution of net income, determined as if the trust were not a unitrust, that exceeds the unitrust distribution. 3. Average the valuation of the unitrust’s assets over a period other than that specified in par. (a). 4. Require the unitrust to be converted back to the original trust under the creating instrument. (h) Conversion to a unitrust under this section does not affect a provision in the trust instrument that directs or authorizes the trustee to distribute principal or that authorizes a beneficiary to withdraw a portion or all of the principal. (4) (a) A trust may not be converted under this section to a unitrust if any of the following applies: 1. The trust instrument specifically prohibits the conversion. 2. Payment of the unitrust distribution will change the amount payable to a beneficiary as a fixed annuity or a fixed fraction of the value of the trust assets. 3. The unitrust distribution will be made from any amount that is permanently set aside for charitable purposes under the creating instrument and for which an estate or gift tax charitable deduction has been taken, unless both income and principal are so set aside. 4. Converting to a unitrust will cause an individual to be treated as the owner of all or part of the trust for income tax purposes and the individual would not be treated as the owner if the trust were not converted. 5. Converting to a unitrust will cause all or a part of the trust assets to be subject to estate or gift tax with respect to an individual and the trust assets would not be subject to estate or gift tax with respect to the individual if the trust were not converted. 6. Converting to a unitrust will result in the disallowance of an estate or gift tax marital deduction that would be allowed if the trust were not converted. 7. A trustee is a beneficiary of the trust. (b) Notwithstanding par. (a), if a trust may not be converted to a unitrust solely because par. (a) 7. applies to a trustee, a cotrustee, if any, to whom par. (a) 7. does not apply may convert the trust to a unitrust under sub. (1) (a), unless prohibited by the creating instrument, or a court may convert the trust to a unitrust under sub. (1) (b) on the petition of a trustee or qualified beneficiary. (5) A trustee may release the power conferred by sub. (1) (a) if the trustee is uncertain about whether possessing or exercising
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the power will cause a result described in sub. (4) (a) 2. to 6. or if the trustee determines that possessing or exercising the power will or may deprive the trust of a tax benefit or impose a tax burden not described in sub. (4) (a). The release may be permanent or for a specified period, including a period measured by the life of an individual. (6) Sections 701.0410 to 701.0417 do not apply to a conversion of a trust to a unitrust under this section. History: 2013 a. 92 ss. 181, 231 to 235, 237 to 242; 2025 a. 127.
701.1107 Express unitrusts. (1) In this section, “express unitrust” means any trust that by its trust instrument requires the distribution at least annually of a unitrust amount equal to a fixed percentage of the net fair market value of the trust’s assets, valued at least annually, other than a trust solely for charitable purposes or a charitable split-interest trust under section 664 (d) or 170 (f) (2) (B) of the Internal Revenue Code. (2) The following apply to an express unitrust: (a) To the extent not otherwise provided for in the trust instrument, the unitrust amount of not less than 3 percent nor more than 5 percent may be determined by reference to the net fair market value of the trust’s assets averaged over a preceding period determined by the trustee, which is at least 3 years but not more than 5 years. (b) Distribution of such a fixed percentage unitrust amount of not less than 3 percent nor more than 5 percent is a distribution of all of the income of the unitrust and is an income interest. (c) Such a distribution of a fixed percentage of not less than 3 percent nor more than 5 percent is a reasonable apportionment of the total return of the trust. (d) A trust that provides for a fixed annual percentage payout in excess of 5 percent per year of the net fair market value of the trust is considered to be a 5 percent express unitrust, paying out all of the income of the unitrust, and to have paid out principal of the trust to the extent that the fixed percentage payout exceeds 5 percent per year. (e) The trust instrument may grant discretion to the trustee to adopt a consistent practice of treating capital gains as part of the unitrust distribution, to the extent that the unitrust distribution exceeds the income determined as if the trust were not a unitrust, or it may specify the ordering of such classes of income. (f) Unless the terms of the trust specifically provide otherwise, a distribution of the unitrust amount is considered to have been made from the following sources in the following order of priority: 1. Net income determined as if the trust were not a unitrust. 2. Ordinary income for federal income tax purposes that is not net income under subd. 1. 3. Net realized short-term capital gains for federal income tax purposes. 4. Net realized long-term capital gains for federal income tax purposes. 5. Principal. (g) The trust instrument may provide that assets used by the trust beneficiary, such as a residence or tangible personal property, may be excluded from the net fair market value for computing the unitrust amount. Such use may be considered equivalent to the income or unitrust amount. (h) In the absence of contrary provisions in the trust instrument of an express unitrust, the provisions of s. 701.1106 (3) (a), (d), and (e) apply. History: 2013 a. 92 s. 243.
701.1108 Power to treat capital gains as part of a distribution. Unless prohibited by the will or trust instrument, a
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fiduciary may cause gains from the sale or exchange of estate or trust property, as determined for federal income tax purposes, to be taxed for federal income tax purposes as part of a distribution of income that has been increased by an adjustment from principal to income under s. 701.1104, of a unitrust distribution, of a fixed annuity distribution, or of a principal distribution to a beneficiary. History: 2013 a. 92 s. 244.
701.1109 Judicial review of discretionary power. (1) Nothing in this subchapter creates a duty to make an adjustment under s. 701.1104 or to convert a trust to a unitrust under s. 701.1106. Unless it determines that the decision to make an adjustment or to convert to a unitrust was an abuse of the fiduciary’s discretion, a court may not grant relief from any decision a fiduciary makes regarding the exercise of a discretionary power conferred by s. 701.1104 or 701.1106. (2) An action taken under s. 701.1104 or 701.1106 is not an abuse of a fiduciary’s discretion if the fiduciary gave written notice of the proposed action under s. 701.1105 and did not receive a timely written objection to the notice. It is not an abuse of discretion not to exercise the power to adjust under s. 701.1104 or to convert under s. 701.1106. (3) A fiduciary’s decision is not an abuse of discretion merely because the court would have exercised the power in a different manner or would not have exercised the power. (4) If the court determines that a fiduciary has abused the fiduciary’s discretion, the remedy shall be to restore the income and remainder beneficiaries to the positions that they would have occupied had the discretion not been abused, according to the following rules: (a) To the extent that the abuse of discretion has resulted in no distribution to a beneficiary or in a distribution that is too small, the court shall order the fiduciary to distribute from the trust to the beneficiary an amount that the court determines will restore the beneficiary, in whole or in part, to the beneficiary’s appropriate position. (b) To the extent that the abuse of discretion has resulted in a distribution to a beneficiary that is too large, the court shall place the beneficiaries, the trust, or both, in whole or in part, in their appropriate positions by ordering the fiduciary to withhold an amount from one or more future distributions to the beneficiary who received the distribution that was too large or by ordering that beneficiary to return some or all of the distribution to the trust. (c) To the extent that the court is unable, after applying pars. (a) and (b), to place the beneficiaries, the trust, or both in the positions that they would have occupied had the discretion not been abused, the court may order the fiduciary to pay an appropriate amount from its own funds to one or more of the beneficiaries, the trust, or both. (5) Upon petition by the fiduciary, the court having jurisdiction over a trust shall determine whether a proposed exercise or nonexercise by the fiduciary of a discretionary power conferred under this section will result in an abuse of the fiduciary’s discretion. The petition must describe the proposed exercise or nonexercise of the power and contain sufficient information to inform the beneficiaries of the reasons for the proposal, the facts upon which the fiduciary relies, and an explanation of how the income and remainder beneficiaries will be affected by the proposed exercise or nonexercise of the power. A beneficiary who challenges the proposed exercise or nonexercise of the power has the burden of establishing that it will result in an abuse of discretion. History: 2013 a. 92 ss. 245 to 250.
701.1110
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come. In the case of an estate of a decedent or after an income interest in a trust ends, the following rules apply: (1) A fiduciary of an estate or of a terminating income interest shall determine the amount of net income and net principal receipts received from property specifically given to a beneficiary under the rules in ss. 701.1112 to 701.1135 that apply to trustees and the rules in sub. (5). The fiduciary shall distribute the net income and net principal receipts to the beneficiary who is to receive the specific property. (2) A fiduciary shall determine the remaining net income of a decedent’s estate or a terminating income interest under the rules in ss. 701.1112 to 701.1135 that apply to trustees and by: (a) Including in net income all income from property used to discharge liabilities. (b) Paying from income or principal, in the fiduciary’s discretion, fees of attorneys, accountants, and fiduciaries; court costs and other expenses of administration; and interest on death taxes, but the fiduciary may pay those expenses from income of property passing to a trust for which the fiduciary claims an estate tax marital or charitable deduction only to the extent that the payment of those expenses from income will not cause the reduction or loss of the deduction. (c) Paying from principal all other disbursements made or incurred in connection with the settlement of a decedent’s estate or the winding up of a terminating income interest, including debts, funeral expenses, disposition of remains, family allowances, and death taxes and related penalties that are apportioned to the estate or terminating income interest by the will, the terms of the trust, or applicable law. (3) A fiduciary shall distribute to a beneficiary, including a trustee, who receives a pecuniary amount not determined by a pecuniary formula related to a transfer tax interest at the legal rate set forth in s. 138.04 on any unpaid portion of the pecuniary amount for the period commencing one year after the decedent’s death or after the income interest in the trust ends. The interest under this subsection shall be distributed from net income determined under sub. (2) or from principal to the extent that net income is insufficient. For purposes of this subsection, the deferred marital property elective share amount elected by a surviving spouse under s. 861.02 (1) is a bequest of a pecuniary amount not determined by a pecuniary formula related to a transfer tax. (4) A fiduciary shall distribute the net income remaining after distributions required under subs. (1) to (3) in the manner described in s. 701.1111 to all other beneficiaries, including a beneficiary who receives a pecuniary amount determined by a pecuniary formula related to a transfer tax. (5) A fiduciary may not reduce principal or income receipts from property described in sub. (1) because of a payment described in s. 701.1130 or 701.1131 to the extent that the will, the terms of the trust, or applicable law requires the fiduciary to make the payment from assets other than the property or to the extent that the fiduciary recovers or expects to recover the payment from a 3rd party. The net income and principal receipts from the property are determined by including all of the amounts the fiduciary receives or pays with respect to the property, whether those amounts accrued or became due before, on, or after the date of a decedent’s death or an income interest’s terminating event, and by making a reasonable provision for amounts that the fiduciary believes the estate or terminating income interest may become obligated to pay after the property is distributed. History: 2013 a. 92 s. 251.
701.1111 Distribution to residuary and remainder beneficiaries. (1) Each beneficiary described in s. 701.1110 (4) is entitled to receive a portion of the net income equal to the
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beneficiary’s fractional interest in undistributed principal assets, using values as of the distribution date. If a fiduciary makes more than one distribution of assets to beneficiaries to whom this section applies, each beneficiary, including one who does not receive part of the distribution, is entitled, as of each distribution date, to the net income the fiduciary has received after the date of death or terminating event or earlier distribution date but has not distributed as of the current distribution date. (2) In determining a beneficiary’s share of net income, the following rules apply: (a) The beneficiary is entitled to receive a portion of the net income equal to the beneficiary’s fractional interest in the undistributed principal assets immediately before the distribution date, including assets that later may be sold to meet principal obligations. (b) The beneficiary’s fractional interest in the undistributed principal assets must be calculated without regard to property specifically given to a beneficiary and property required to pay pecuniary amounts not determined by a pecuniary formula. (c) The beneficiary’s fractional interest in the undistributed principal assets must be calculated on the basis of the aggregate value of those assets as of the distribution date without reducing the value by any unpaid principal obligation. (d) The distribution date for purposes of this section may be the date as of which the fiduciary calculates the value of the assets if that date is reasonably near the date on which assets are actually distributed. (3) If a fiduciary does not distribute all of the collected but undistributed net income to each person as of a distribution date, the fiduciary shall maintain appropriate records showing the interest of each beneficiary in that net income. (4) A trustee may apply the rules in this section, to the extent that the trustee considers it appropriate, to net gain or loss realized after the date of death or terminating event or earlier distribution date from the disposition of a principal asset if this section applies to the income from the asset. History: 2013 a. 92 s. 252
701.1112 When right to income begins and ends. (1) An income beneficiary is entitled to net income from the date on which the income interest begins. An income interest begins on the date specified in the terms of the trust or, if no date is specified, on the date an asset becomes subject to a trust or successive income interest. (2) An asset becomes subject to a trust: (a) On the date it is transferred to the trust in the case of an asset that is transferred to a trust during the transferor’s life. (b) On the date of a testator’s death in the case of an asset that becomes subject to a trust by reason of a will, even if there is an intervening period of administration of the testator’s estate. (c) On the date of an individual’s death in the case of an asset that a 3rd party transfers to a fiduciary because of the individual’s death. (3) An asset becomes subject to a successive income interest on the day after the preceding income interest ends, as determined under sub. (4), even if there is an intervening period of administration to wind up the preceding income interest. (4) An income interest ends on the day before an income beneficiary dies or another terminating event occurs, or on the last day of a period during which there is no beneficiary to whom a trustee may distribute income. History: 2013 a. 92 s. 253.
701.1113 Apportionment of receipts and disbursements when decedent dies or income interest begins.
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(1) A trustee shall allocate to principal an income receipt or disbursement other than one to which s. 701.1110 (1) applies if its due date occurs before a decedent dies in the case of an estate or before an income interest begins in the case of a trust or successive income interest. (2) A trustee shall allocate to income an income receipt or disbursement if its due date occurs on or after the date on which a decedent dies or an income interest begins and it is a periodic due date. An income receipt or disbursement must be treated as accruing from day to day if its due date is not periodic or it has no due date. The portion of the receipt or disbursement accruing before the date of death or an income interest begins must be allocated to principal and the balance must be allocated to income. (3) An item of income or an obligation is due on the date the payer is required to make a payment. If a payment date is not stated, there is no due date for the purposes of this section. Distributions to shareholders or other owners from an entity, as defined in s. 701.1115, are due on the date fixed by the entity for determining who is entitled to receive the distribution or, if no date is fixed, on the declaration date for the distribution. A due date is periodic for receipts or disbursements that must be paid at regular intervals under a lease or an obligation to pay interest or if an entity customarily makes distributions at regular intervals. History: 2013 a. 92 s. 254.
701.1114 Apportionment when income interest ends. (1) In this section, “undistributed income” means net income received before the date on which an income interest ends. “Undistributed income” does not include an item of income or expense that is due or accrued or net income that has been added or is required to be added to principal under the terms of the trust. (2) When a mandatory income interest ends, the trustee shall pay to a mandatory income beneficiary who survives that date, or to the estate of a deceased mandatory income beneficiary whose death causes the interest to end, the beneficiary’s share of the undistributed income that is not disposed of under the terms of the trust unless the beneficiary has an unqualified power to revoke more than 5 percent of the trust immediately before the income interest ends. In the latter case, the undistributed income from the portion of the trust that may be revoked must be added to principal. (3) When a trustee’s obligation to pay a fixed annuity or a fixed fraction of the value of the trust’s assets ends, the trustee shall prorate the final payment if and to the extent required by applicable law to accomplish a purpose of the trust or its settlor relating to income, gift, estate, or other tax requirements. History: 2013 a. 92 s. 255; 2013 a. 151 s. 27.
701.1115 Character of receipts. (1) In this section, “entity” means a corporation, partnership, limited liability company, regulated investment company, real estate investment trust, common trust fund, or any other organization in which a trustee has an interest other than a trust or estate to which s. 701.1116 applies, a business or activity to which s. 701.1117 applies, or an asset-backed security to which s. 701.1129 applies. (2) Except as otherwise provided in this section, a trustee shall allocate to income money received from an entity. (3) A trustee shall allocate the following receipts from an entity to principal: (a) Property other than money. (b) Money received in one distribution or a series of related distributions in exchange for part or all of a trust’s interest in the entity. (c) Money received in total or partial liquidation of the entity. (d) Money received from an entity that is a regulated investment company or a real estate investment trust if the money dis-
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tributed is a capital gain dividend for federal income tax purposes. (4) Money is received in partial liquidation: (a) To the extent that the entity, at or near the time of a distribution, indicates that it is a distribution in partial liquidation. (b) If the total amount of money and property distributed in a distribution or series of related distributions is greater than 20 percent of the entity’s gross assets, as shown by the entity’s yearend financial statements immediately preceding the initial receipt. (5) Money is not received in partial liquidation, nor may it be taken into account under sub. (4) (b), to the extent that it does not exceed the amount of income tax that a trustee or beneficiary must pay on taxable income of the entity that distributes the money. (6) A trustee may rely upon a statement made by an entity about the source or character of a distribution if the statement is made at or near the time of distribution by the entity’s board of directors or other person or group of persons authorized to exercise powers to pay money or transfer property comparable to those of a corporation’s board of directors. History: 2013 a. 92 s. 256.
701.1116 Distribution from trust or estate. A trustee shall allocate to income an amount received as a distribution of income from a trust or an estate in which the trust has an interest other than a purchased interest, and shall allocate to principal an amount received as a distribution of principal from such a trust or estate. If a trustee purchases an interest in a trust that is an investment entity, or a decedent or donor transfers an interest in such a trust to a trustee, s. 701.1115 or 701.1129 applies to a receipt from the trust. History: 2013 a. 92 s. 257.
701.1117 Business and other activities conducted by trustee. (1) If a trustee who conducts a business or other activity determines that it is in the best interest of all the beneficiaries to account separately for the business or activity instead of accounting for it as part of the trust’s general accounting records, the trustee may maintain separate accounting records for its transactions, whether or not its assets are segregated from other trust assets. (2) A trustee who accounts separately for a business or other activity may determine the extent to which its net cash receipts must be retained for working capital, the acquisition or replacement of fixed assets, and other reasonably foreseeable needs of the business or activity and the extent to which the remaining net cash receipts are accounted for as principal or income in the trust’s general accounting records. If a trustee sells assets of the business or other activity, other than in the ordinary course of the business or activity, the trustee shall account for the net amount received as principal in the trust’s general accounting records to the extent the trustee determines that the amount received is no longer required in the conduct of the business. (3) Activities for which a trustee may maintain separate accounting records include: (a) Retail, manufacturing, service, and other traditional business activities. (b) Farming. (c) Raising and selling livestock and other animals. (d) Management of rental properties. (e) Extraction of minerals and other natural resources. (f) Timber operations. (g) Activities to which s. 701.1128 applies. History: 2013 a. 92 s. 258.
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701.1118 Principal receipts. A trustee shall allocate to principal: (1) To the extent not allocated to income under this subchapter, assets received from a transferor during the transferor’s lifetime, a decedent’s estate, a trust with a terminating income interest, or a payer under a contract naming the trust or its trustee as beneficiary. (2) Money or other property received from the sale, exchange, liquidation, or change in form of a principal asset, including realized profit, subject to ss. 701.1115 to 701.1129. (3) Amounts recovered from 3rd parties to reimburse the trust because of disbursements described in s. 701.1131 (1) (g) or for other reasons to the extent not based on the loss of income. (4) Proceeds of property taken by eminent domain, but a separate award made for the loss of income with respect to an accounting period during which a current income beneficiary had a mandatory income interest is income. (5) Net income received in an accounting period during which there is no beneficiary to whom a trustee may or must distribute income. (6) Other receipts as provided in ss. 701.1122 to 701.1129. History: 2013 a. 92 s. 259.
701.1119 Rental property. To the extent that a trustee accounts for receipts from rental property in accordance with this section, the trustee shall allocate to income an amount received as rent of real or personal property, including an amount received for cancellation or renewal of a lease. An amount received as a refundable deposit, including a security deposit or a deposit that is to be applied as rent for future periods, must be added to principal and held subject to the terms of the lease and is not available for distribution to a beneficiary until the trustee’s contractual obligations have been satisfied with respect to that amount. History: 2013 a. 92 s. 260.
701.1120 Obligation to pay money. (1) An amount received as interest, whether determined at a fixed, variable, or floating rate, on an obligation to pay money to the trustee, including an amount received as consideration for prepaying principal, must be allocated to income without any provision for amortization of premium. (2) A trustee shall allocate to principal an amount received from the sale, redemption, or other disposition of an obligation to pay money to the trustee more than one year after it is purchased or acquired by the trustee, including an obligation whose purchase price or value when it is acquired is less than its value at maturity. If the obligation matures within one year after the trustee purchases or acquires it, an amount received in excess of its purchase price or its value when the trust acquires it must be allocated to income. (3) This section does not apply to an obligation to which s. 701.1123, 701.1124, 701.1125, 701.1126, 701.1128, or 701.1129 applies. History: 2013 a. 92 s. 261.
701.1121 Insurance policies and similar contracts. (1) Except as provided in sub. (2), a trustee shall allocate to principal the proceeds of a life insurance policy or other contract in which the trust or its trustee is named as beneficiary, including a contract that insures the trust or its trustee against loss for damage to, destruction of, or loss of title to, a trust asset. The trustee shall allocate dividends on an insurance policy to income if the premiums on the policy are paid from income, and to principal if the premiums are paid from principal. (2) A trustee shall allocate to income proceeds of a contract that insures the trustee against loss of occupancy or other use by
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an income beneficiary, loss of income, or, subject to s. 701.1117, loss of profits from a business. (3) This section does not apply to a contract to which s. 701.1123 applies. History: 2013 a. 92 s. 262.
701.1122 Insubstantial allocations not required. If a trustee determines that an allocation between principal and income required by s. 701.1120 (2), 701.1123, 701.1124, 701.1125, 701.1126, or 701.1129 is insubstantial, the trustee may allocate the entire amount to principal unless one of the circumstances described in s. 701.1104 (3) applies to the allocation. This power may be exercised by a cotrustee in the circumstances described in s. 701.1104 (4) and may be released for the reasons and in the manner described in s. 701.1104 (5). An allocation is presumed to be insubstantial if: (1) The amount of the allocation would increase or decrease net income in an accounting period, as determined before the allocation, by less than 10 percent. (2) The value of the asset producing the receipt for which the allocation would be made is less than 10 percent of the total value of the trust’s assets at the beginning of the accounting period. History: 2013 a. 92 s. 263.
701.1123 Deferred compensation, annuities, and similar payments. (1) In this section: (a) “Marital deduction trust” means a trust for which an election to qualify for a marital deduction under section 2056 (b) (7), 2056A (a) (3), or 2523 (f) of the Internal Revenue Code has been made or a trust that qualified for the marital deduction under other provisions of section 2056 or 2523 of the Internal Revenue Code. (b) “Payment” means an amount of money or property received by a trustee that is any of the following: 1. Part of a series, or eligible to be part of a series, of distributions payable over a fixed number of years or during the life of one or more individuals because of services rendered or property transferred to the payer in exchange for the future distributions. 2. Distributed from a plan, regardless of the reason for the distribution. (c) “Plan” means a contractual, custodial, trust, or other arrangement that provides for distributions to a trust. “Plan” includes a private or commercial annuity, an individual retirement account, a Roth individual retirement account, a qualified retirement plan such as a pension, profit-sharing, stock-bonus, or stock-ownership plan, or any nonqualified deferred compensation plan. (d) “Plan income” means any of the following: 1. With respect to payments received from a plan that maintains separate accounts for its participants or account holders, either the amount of the separate account held for the benefit of the trust that, if the separate account were a trust, would be allocated to income for that accounting period, or 4 percent of the value of the plan account on the first day of the accounting period. The trustee shall choose the method of determining “plan income” under this subdivision, and may change the method of determining “plan income” under this subdivision for any subsequent accounting period. 2. With respect to payments received from a plan that does not maintain separate accounts for its participants or account holders, 4 percent of the total present value of the trust’s interest in the plan as of the first day of the accounting period, based on reasonable actuarial assumptions as determined by the trustee. (e) “Separate account” means an account established or maintained under a plan under which income, gains, and losses,
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whether or not realized, from assets allocated to the account, are credited to or charged against the account without regard to other income, gains, or losses of the plan. (2) To the extent that a payment is characterized as interest, a dividend, or a payment made in lieu of interest or a dividend, a trustee shall allocate the payment to income. The trustee shall allocate to principal the balance of the payment and any other payment received in the same accounting period that is not characterized as interest, a dividend, or a payment in lieu of interest or a dividend. (3) For each accounting period of a trust in which the trust receives a payment but no part of any payment is allocated to income under sub. (2), the trustee shall allocate to income that portion of the aggregate value of all payments received by the trustee in that accounting period that is equal to the amount of plan income that is attributable to the trust’s interest in the plan from which payment is received for that accounting period. The trustee shall allocate the balance of any payments to principal. (4) (a) Notwithstanding sub. (3), a trustee of a marital deduction trust shall determine plan income for an accounting period as if the plan were a trust subject to this subchapter. If the trustee of a marital deduction trust cannot determine the plan income, the plan income is 4 percent of the total present value of the trust’s income in the plan on the first day of the accounting period, based on reasonable actuarial assumptions as determined by the trustee of the marital deduction trust. (b) Notwithstanding subs. (2) and (3), a trustee of a marital deduction trust shall allocate a payment from a plan to income to the extent of the plan income and distribute that amount to the surviving spouse. The trustee of the marital deduction trust shall allocate the balance of the payment to principal. Upon the request of the surviving spouse, the trustee of a marital deduction trust shall allocate principal to income to the extent the plan income exceeds payments made from the plan to the trust during the accounting period. (c) Upon the request of the surviving spouse of the settlor, a trustee of a marital deduction trust shall demand that a person administering a plan distribute the plan income to the trust. (5) If, to obtain an estate or gift tax marital deduction for an interest in a trust, a trustee must allocate more of a payment to income than provided for by this section, the trustee shall allocate to income the additional amount necessary to obtain the marital deduction. (6) This section does not apply to a payment to which s. 701.1124 applies. History: 2013 a. 92 ss. 182, 183, 264, 266 to 270.
701.1124 Liquidating asset. (1) In this section, “liquidating asset” means an asset whose value will diminish or terminate because the asset is expected to produce receipts for a period of limited duration. The term includes a leasehold, patent, copyright, royalty right, and right to receive payments during a period of more than one year under an arrangement that does not provide for the payment of interest on the unpaid balance. The term does not include a payment subject to s. 701.1123, resources subject to s. 701.1125, timber subject to s. 701.1126, an activity subject to s. 701.1128, an asset subject to s. 701.1129, or any asset for which the trustee establishes a reserve for depreciation under s. 701.1132. (2) A trustee shall allocate to income 10 percent of the receipts from a liquidating asset and the balance to principal. History: 2013 a. 92 s. 271.
701.1125 Minerals, water, and other natural resources. (1) To the extent that a trustee accounts for receipts
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from an interest in minerals or other natural resources in accordance with this section, the trustee shall allocate them as follows: (a) If received as nominal delay rental or nominal annual rent on a lease, a receipt must be allocated to income. (b) If received from a production payment, a receipt must be allocated to income if and to the extent that the agreement creating the production payment provides a factor for interest or its equivalent. The balance must be allocated to principal. (c) If an amount received as a royalty, shut-in-well payment, take-or-pay payment, bonus, or delay rental is more than nominal, 90 percent must be allocated to principal and the balance to income. (d) If an amount is received from a working interest or any other interest not provided for in par. (a), (b), or (c), 90 percent of the net amount received must be allocated to principal and the balance to income. (2) An amount received on account of an interest in water that is renewable must be allocated to income. If the water is not renewable, 90 percent of the amount must be allocated to principal and the balance to income. (3) This section applies whether or not a decedent or donor was extracting minerals, water, or other natural resources before the interest became subject to the trust. (4) If a trust owns an interest in minerals, water, or other natural resources on May 17, 2005, the trustee may allocate receipts from the interest as provided in this section or in the manner used by the trustee before May 17, 2005. If the trust acquires an interest in minerals, water, or other natural resources after May 17, 2005, the trustee shall allocate receipts from the interest as provided in this section. History: 2013 a. 92 s. 272.
701.1126 Timber. (1) To the extent that a trustee accounts for receipts from the sale of timber and related products in accordance with this section, the trustee shall allocate the net receipts: (a) To income to the extent that the amount of timber removed from the land does not exceed the rate of growth of the timber during the accounting periods in which a beneficiary has a mandatory income interest. (b) To principal to the extent that the amount of timber removed from the land exceeds the rate of growth of the timber or the net receipts are from the sale of standing timber. (c) To income or principal or between income and principal if the net receipts are from the lease of timberland or from a contract to cut timber from land owned by a trust, by determining the amount of timber removed from the land under the lease or contract and applying the rules in pars. (a) and (b). (d) To principal to the extent that advance payments, bonuses, and other payments are not allocated under par. (a), (b), or (c). (2) In determining net receipts to be allocated under sub. (1), a trustee shall deduct and transfer to principal a reasonable amount for depletion. (3) This section applies whether or not a decedent or transferor was harvesting timber from the property before it became subject to the trust. (4) If a trust owns an interest in timberland on May 17, 2005, the trustee may allocate net receipts from the sale of timber and related products as provided in this section or in the manner used by the trustee before May 17, 2005. If the trust acquires an interest in timberland after May 17, 2005, the trustee shall allocate net receipts from the sale of timber and related products as provided in this section. History: 2013 a. 92 ss. 184, 274.
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Property not productive of income. (1) If a
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marital deduction is allowed for all or part of a trust whose assets consist substantially of property that does not provide the surviving spouse with sufficient income from or use of the trust assets, and if the amounts that the trustee transfers from principal to income under s. 701.1104 and distributes to the spouse from principal in accordance with the terms of the trust are insufficient to provide the spouse with the beneficial enjoyment required to obtain the marital deduction, the spouse may require the trustee to make property productive of income, convert property within a reasonable time, or exercise the power conferred by s. 701.1104 (1). The trustee may decide which action or combination of actions to take. (2) In cases not governed by sub. (1), proceeds from the sale or other disposition of an asset are principal without regard to the amount of income the asset produces during any accounting period. History: 2013 a. 92 s. 275.
701.1128 Derivatives and options. (1) In this section, “derivative” means a contract or financial instrument or a combination of contracts and financial instruments that gives a trust the right or obligation to participate in some or all changes in the price of a tangible or intangible asset or group of assets, or changes in a rate, an index of prices or rates, or another market indicator for an asset or a group of assets. (2) To the extent that a trustee does not account under s. 701.1117 for transactions in derivatives, the trustee shall allocate to principal receipts from and disbursements made in connection with those transactions. (3) If a trustee grants an option to buy property from the trust, whether or not the trust owns the property when the option is granted, grants an option that permits another person to sell property to the trust, or acquires an option to buy property for the trust or an option to sell an asset owned by the trust, and the trustee or other owner of the asset is required to deliver the asset if the option is exercised, an amount received for granting the option must be allocated to principal. An amount paid to acquire the option must be paid from principal. A gain or loss realized upon the exercise of an option, including an option granted to a settlor of the trust for services rendered, must be allocated to principal. History: 2013 a. 92 s. 276.
701.1129 Asset-backed securities. (1) In this section, “asset-backed security” means an asset whose value is based upon the right it gives the owner to receive distributions from the proceeds of financial assets that provide collateral for the security. The term includes an asset that gives the owner the right to receive from the collateral financial assets only the interest or other current return or only the proceeds other than interest or current return. The term does not include an asset to which s. 701.1115 or 701.1123 applies. (2) If a trust receives a payment from interest or other current return and from other proceeds of the collateral financial assets, the trustee shall allocate to income the portion of the payment that the payer identifies as being from interest or other current return and shall allocate the balance of the payment to principal. (3) If a trust receives one or more payments in exchange for the trust’s entire interest in an asset-backed security in one accounting period, the trustee shall allocate the payments to principal. If a payment is one of a series of payments that will result in the liquidation of the trust’s interest in the security over more than one accounting period, the trustee shall allocate 10 percent of the payment to income and the balance to principal. History: 2013 a. 92 s. 277.
701.1130 Disbursements from income. A trustee shall
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make the following disbursements from income to the extent that they are not disbursements specified in s. 701.1110 (2) (b) or (c): (1) One-half of the regular compensation of the trustee and of any person providing investment advisory or custodial services to the trustee. (2) One-half of all expenses for accountings, judicial proceedings, or other matters that involve both the income and remainder interests. (3) All of the other ordinary expenses incurred in connection with the administration, management, or preservation of trust property and the distribution of income, including interest, ordinary repairs, regularly recurring taxes assessed against principal, and expenses of a proceeding or other matter that concerns primarily the income interest. (4) Recurring premiums on insurance covering the loss of a principal asset or the loss of income from or use of the asset. History: 2013 a. 92 s. 278.
701.1131 Disbursements from principal. (1) A trustee shall make the following disbursements from principal: (a) The remaining one-half of the disbursements described in s. 701.1130 (1) and (2). (b) All of the trustee’s compensation calculated on principal as a fee for acceptance, distribution, or termination, and disbursements made to prepare property for sale. (c) Payments on the principal of a trust debt. (d) Expenses of a proceeding that concerns primarily principal, including a proceeding to construe the trust or to protect the trust or its property. (e) Premiums paid on a policy of insurance not described in s. 701.1130 (4) of which the trust is the owner and beneficiary. (f) Estate, inheritance, and other transfer taxes, including penalties, apportioned to the trust. (g) Disbursements related to environmental matters, including reclamation, assessing environmental conditions, remedying and removing environmental contamination, monitoring remedial activities and the release of substances, preventing future releases of substances, collecting amounts from persons liable or potentially liable for the costs of those activities, penalties imposed under environmental law and other payments made to comply with environmental law, statutory or common law claims by 3rd parties, and defending claims based on environmental matters. (2) If a principal asset is encumbered with an obligation that requires income from that asset to be paid directly to the creditor, the trustee shall transfer from principal to income an amount equal to the income paid to the creditor in reduction of the principal balance of the obligation. History: 2013 a. 92 s. 279.
701.1132 Transfers from income to principal for depreciation. (1) In this section, “depreciation” means a reduction in value due to wear, tear, decay, corrosion, or gradual obsolescence of a fixed asset having a useful life of more than one year. (2) A trustee may transfer to principal a reasonable amount of the net cash receipts from a principal asset that is subject to depreciation, but may not transfer any amount for depreciation: (a) Of that portion of real property used or available for use by a beneficiary as a residence or of tangible personal property held or made available for the personal use or enjoyment of a beneficiary. (b) During the administration of a decedent’s estate. (c) Under this section if the trustee is accounting under s. 701.1117 for the business or activity in which the asset is used.
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(3) An amount transferred to principal need not be held as a separate fund. History: 2013 a. 92 s. 280.
701.1133 Transfers from income to reimburse principal. (1) If a trustee makes or expects to make a principal disbursement described in this section, the trustee may transfer an appropriate amount from income to principal in one or more accounting periods to reimburse principal or to provide a reserve for future principal disbursements. (2) Principal disbursements to which sub. (1) applies include the following, but only to the extent that the trustee has not been and does not expect to be reimbursed by a 3rd party: (a) An amount chargeable to income but paid from principal because it is unusually large, including extraordinary repairs. (b) A capital improvement to a principal asset, whether in the form of changes to an existing asset or the construction of a new asset, including special assessments. (c) Disbursements made to prepare property for rental, including tenant allowances, leasehold improvements, and brokers’ commissions. (d) Periodic payments on an obligation secured by a principal asset to the extent that the amount transferred from income to principal for depreciation is less than the periodic payments. (e) Disbursements described in s. 701.1131 (1) (g). (3) If the asset whose ownership gives rise to the disbursements becomes subject to a successive income interest after an income interest ends, a trustee may continue to transfer amounts from income to principal as provided in sub. (1). History: 2013 a. 92 s. 281.
701.1134 Income taxes. (1) A tax required to be paid by a trustee based on receipts allocated to income must be paid from income. (2) A tax required to be paid by a trustee based on receipts allocated to principal must be paid from principal, even if the tax is called an income tax by the taxing authority. (3) A tax required to be paid by a trustee on the trust’s share of an entity’s taxable income must be paid as follows: (a) From income to the extent that receipts from the entity are allocated only to income. (b) From principal to the extent that receipts from the entity are allocated only to principal. (c) Proportionately from principal and income to the extent that receipts from the entity are allocated to both income and principal. (d) From principal to the extent that the tax exceeds the total receipts from the entity. (4) After applying subs. (1) to (3), the trustee shall adjust income or principal receipts to the extent that the trust’s taxes are reduced because the trust receives a deduction for payments made to a beneficiary. History: 2013 a. 92 ss. 185, 282 to 287.
701.1135 Adjustments between principal and income because of taxes. (1) A fiduciary may make adjustments between principal and income to offset the shifting of economic interests or tax benefits between income beneficiaries and remainder beneficiaries which arise from: (a) Elections and decisions, other than those described in sub. (2), that the fiduciary makes from time to time regarding tax matters. (b) An income tax or any other tax that is imposed upon the fiduciary or a beneficiary as a result of a transaction involving or a distribution from the estate or trust.
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(c) The ownership by an estate or trust of an interest in an entity whose taxable income, whether or not distributed, is includable in the taxable income of the estate or trust or of a beneficiary. (2) If the amount of an estate tax marital deduction or charitable contribution deduction is reduced because a fiduciary deducts an amount paid from principal for income tax purposes instead of deducting it for estate tax purposes, and as a result estate taxes paid from principal are increased and income taxes paid by an estate, trust, or beneficiary are decreased, each estate, trust, or beneficiary that benefits from the decrease in income tax shall reimburse the principal from which the increase in estate tax is paid. The total reimbursement must equal the increase in the estate tax to the extent that the principal used to pay the increase would have qualified for a marital deduction or charitable contribution deduction but for the payment. The proportionate share of the reimbursement for each estate, trust, or beneficiary whose income taxes are reduced must be the same as its proportionate share of the total decrease in income tax. An estate or trust shall reimburse principal from income. History: 2013 a. 92 s. 290.
701.1136 Income payments and accumulations. (1) DISTRIBUTION OF INCOME. Except as otherwise determined by the trustee or a court under s. 701.1106 with respect to unitrust distributions, if a trust instrument fails to specify how frequently a current beneficiary is to receive income from the trust, the trustee shall distribute the income to which the current beneficiary is entitled at least annually. (2) PERMITTED ACCUMULATIONS. No provision directing or authorizing accumulation of income is invalid. (3) CHARITABLE TRUST ACCUMULATIONS. A trust containing a direction or authorization to accumulate income from property devoted to a charitable purpose shall be subject to the general equitable supervision of the court with respect to any such accumulation of income, including its reasonableness, amount and duration. (4) DISPOSITION OF ACCUMULATED INCOME. Income not required to be distributed by the trust instrument may, in the trustee’s discretion, be held in reserve for future distribution as income or be added to principal subject to retransfer to income of the dollar amount originally transferred to principal. At the termination of the income interest, any undistributed income shall be distributed as principal. History: 2005 a. 10; 2013 a. 92 s. 292; Stats. 2013 s. 701.1136; 2023 a. 127.
SUBCHAPTER XII MISCELLANEOUS PROVISIONS 701.1201 Private foundations. (1) (a) In the administration of any trust that is a private foundation, as defined in section 509 of the Internal Revenue Code, a charitable trust, as described in section 4947 (a) (1) of the Internal Revenue Code, or a split-interest trust as described in section 4947 (a) (2) of the Internal Revenue Code, all of the following acts shall be prohibited: 1. Engaging in any act of self-dealing, as defined in section 4941 (d) of the Internal Revenue Code, that would give rise to any liability for the tax imposed by section 4941 (a) of the Internal Revenue Code. 2. Retaining any excess business holdings, as defined in section 4943 (c) of the Internal Revenue Code, that would give rise to any liability for the tax imposed by section 4943 (a) of the Internal Revenue Code. 3. Making any investments that would jeopardize the carry-
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ing out of any of the exempt purposes of the trust, within the meaning of section 4944 of the Internal Revenue Code, so as to give rise to any liability for the tax imposed by section 4944 (a) of the Internal Revenue Code. 4. Making any taxable expenditures, as defined in section 4945 (d) of the Internal Revenue Code, that would give rise to any liability for the tax imposed by section 4945 (a) of the Internal Revenue Code. (b) This subsection does not apply either to those split-interest trusts or to amounts thereof that are not subject to the prohibitions applicable to private foundations by reason of the provisions of section 4947 of the Internal Revenue Code. (2) In the administration of any trust that is a private foundation, as defined in section 509 of the Internal Revenue Code, or that is a charitable trust, as described in section 4947 (a) (1) of the Internal Revenue Code, there shall be distributed, for the purposes specified in the trust instrument, for each taxable year, amounts at least sufficient to avoid liability for the tax imposed by section 4942 (a) of the Internal Revenue Code. (3) Subsections (1) and (2) do not apply to any trust to the extent that a court of competent jurisdiction determines that the application would be contrary to the terms of the trust and that the same may not properly be changed to conform to such subsections. History: 1971 c. 66; 1991 a. 39; 2013 a. 92 ss. 174, 175; Stats. 2013 s. 701.1201.
701.1202 Electronic records and signatures. The provisions of this chapter governing the legal effect, validity, or enforceability of electronic records or signatures, and of contracts formed or performed with the use of such records or signatures conform to the requirements of section 102 of the federal Electronic Signatures in Global and National Commerce Act, 15 USC 7002, and supersede, modify, and limit the federal Electronic Signatures in Global and National Commerce Act, 15 USC 7001 to 7031. History: 2013 a. 92.
701.1203 Uniformity of application and construction. This chapter shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this chapter among states enacting it. History: 2013 a. 92.
701.1204 Applicability of general transfers at death provisions. Chapter 854 applies to transfers at death under trust instruments. History: 1997 a. 188; 2013 a. 92 s. 300; Stats. 2013 s. 701.1204. Wisconsin’s New Probate Code. Erlanger. Wis. Law. Oct. 1998.
701.1205 Applicability. (1) Except as otherwise provided in sub. (2) and ss. 701.0602, 701.0813, and 701.0903 (4), this chapter is applicable to a trust existing on July 1, 2014, as well as a trust created after such date, and shall govern trustees acting under such trusts. If application of any provision of this chapter to a trust in existence on July 1, 2014, is unconstitutional, it shall not affect application of the provision to a trust created after that date. (2) Subchapter XI of this chapter applies to a trust or decedent’s estate existing on July 1, 2014, and to a trust or decedent’s estate created or coming into existence after that date, except as otherwise expressly provided in subch. XI or by the decedent’s will or the terms of the trust. With respect to a trust or decedent’s estate existing on July 1, 2014, ss. 701.1110 to 701.1135 shall apply at the beginning of the trust’s or estate’s first accounting period, as defined in s. 701.1102 (1), that begins on or after July 1, 2014. (3) (a) Except as provided in par. (b), this chapter applies to a
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judicial proceeding concerning a trust commenced before, on, or after July 1, 2014. (b) If a court finds that application of a particular provision of this chapter to a judicial proceeding commenced before July 1, 2014, will substantially interfere with the effective conduct of the judicial proceedings or prejudice the rights of the parties, the particular provision of this chapter does not apply to that judicial proceeding and the court shall apply ch. 701, 2011 stats., as the court finds to be necessary to prevent interference with the effective conduct of the judicial proceeding and to avoid prejudicing the rights of the parties. History: 1971 c. 66; 1977 c. 309; 2005 a. 10, 216; 2013 a. 92 ss. 191, 296 to 298; Stats. 2013 s. 701.1205; 2013 a. 151.
SUBCHAPTER XIII UNIFORM TRUST DECANTING ACT 701.1301 Short title. This subchapter may be cited as the Uniform Trust Decanting Act. History: 2023 a. 127.
701.1302 Definitions. In this subchapter: (1) “Authorized fiduciary” means any of the following: (a) A trustee, a directing party, or another fiduciary, other than a settlor, that has discretion to distribute or direct a trustee to distribute part or all of the principal of the first trust to one or more current beneficiaries. (b) A special fiduciary appointed under s. 701.1309. (c) A special-needs fiduciary under s. 701.1313. (d) A trust protector who has been granted a decanting power, which may be exercised in a fiduciary or nonfiduciary capacity, under s. 701.0818 (2) (b) 2. h. (2) “Decanting power” means the power of an authorized fiduciary under this subchapter to distribute property of a first trust to one or more 2nd trusts or to modify the terms of the first trust. (3) “Expanded distributive discretion” means a discretionary power of distribution that is not limited to an ascertainable standard or a reasonably definite standard. (4) “First trust” means a trust over which an authorized fiduciary may exercise the decanting power. (5) “First-trust instrument” means the trust instrument for a first trust. (6) “Reasonably definite standard” means a clearly measurable standard under which a holder of a power of distribution is legally accountable within the meaning of section 674 (b) (5) (A) of the Internal Revenue Code and any applicable regulations. (7) “Second trust” means any of the following: (a) A first trust after modification under this subchapter. (b) A trust to which a distribution of property from a first trust is or may be made under this subchapter. (8) “Second-trust instrument” means the trust instrument for a 2nd trust. History: 2023 a. 127.
701.1303 Scope. (1) Except as otherwise provided in subs. (2) and (3), this subchapter applies to an express trust that is irrevocable or revocable by the settlor only with the consent of the trustee or a person holding an adverse interest. (2) This subchapter does not apply to a trust held solely for charitable purposes. (3) Subject to s. 701.1315, a trust instrument may restrict or prohibit exercise of the decanting power.
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(4) This subchapter does not limit the power of an authorized fiduciary or other person to distribute or appoint property in further trust or to modify a trust under the trust instrument, law of this state other than this subchapter, common law, a court order, or a nonjudicial settlement agreement. (5) This subchapter does not affect the ability of a settlor to provide in a trust instrument for the distribution of the trust property or appointment in further trust of the trust property or for modification of the trust instrument. History: 2023 a. 127.
701.1304 Fiduciary duty. (1) In exercising the decanting power, an authorized fiduciary shall act in accordance with its fiduciary duties, including the duty to act in accordance with the purposes of the first trust. If a trustee or other authorized fiduciary is directed by another authorized fiduciary to exercise the decanting power, the trustee or other directed authorized fiduciary shall act to comply with the exercise of the decanting power and the trustee or other directed authorized fiduciary shall not be liable for the action regardless of any fiduciary duty that the trustee or other directed authorized fiduciary might otherwise have. (2) This subchapter does not create or imply a duty to exercise the decanting power or to inform beneficiaries about the applicability of this subchapter. (3) Except as otherwise provided in a first-trust instrument, for purposes of this subchapter and ss. 701.0801 and 701.0802 (2), the terms of the first trust are deemed to include the decanting power. History: 2023 a. 127.
701.1305 Application; governing law. This subchapter applies to a trust created before, on, or after March 23, 2024, if any of the following applies: (1) The trust has its principal place of administration in this state, including a trust whose principal place of administration has been changed to this state. (2) The trust provides by its trust instrument that it is governed by the law of this state or is governed by the law of this state for the purpose of any of the following: (a) Administration, including administration of a trust whose governing law for purposes of administration has been changed to the law of this state. (b) Construction of terms of the trust. (c) Determining the meaning or effect of terms of the trust. History: 2023 a. 127.
701.1306 Reasonable reliance. A trustee or other person that reasonably relies on the validity of a distribution of part or all of the property of a trust to another trust, or a modification of a trust, under this subchapter, law of this state other than this subchapter, or the law of another jurisdiction is not liable to any person for any action or failure to act as a result of the reliance. History: 2023 a. 127.
701.1307 Notice; exercise of decanting power. (1) In this section, a notice period begins on the day notice is given under sub. (3) and ends 30 days after the day notice is given. (2) Except as otherwise provided in this subchapter, an authorized fiduciary may exercise the decanting power without the consent of any person and without court approval. (3) Except as otherwise provided in sub. (6), an authorized fiduciary shall give notice of the intended exercise of the decanting power not later than 30 days before the exercise to all of the following: (a) Each settlor of the first trust, if living or then in existence.
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(b) Each qualified beneficiary of the first trust. (c) Each holder of a presently exercisable power of appointment over any part or all of the first trust. (d) Each person that currently has the right to remove or replace the authorized fiduciary. (e) Each directing party, trust protector, or other fiduciary of the first trust. (f) Each directing party, trust protector, or other fiduciary of the 2nd trust. (g) If s. 701.1314 (2) applies, the attorney general. (4) An authorized fiduciary is not required to give notice under sub. (3) to a person that is not known to the fiduciary or is known to the fiduciary but cannot be located by the fiduciary after reasonable diligence. (5) A notice under sub. (3) must do all of the following: (a) Specify the manner in which the authorized fiduciary intends to exercise the decanting power. (b) Specify the proposed effective date for exercise of the power. (c) Include a copy of the first-trust instrument. (d) Include a copy of all 2nd-trust instruments. (6) The decanting power may be exercised before expiration of the notice period under sub. (1) if all persons entitled to receive notice waive the period in a signed record. (7) The receipt of notice, waiver of the notice period, or expiration of the notice period does not affect the right of a person to file an application under s. 701.1309 asserting any of the following: (a) That an attempted exercise of the decanting power is ineffective because it did not comply with this subchapter or was an abuse of discretion or breach of fiduciary duty. (b) That s. 701.1322 applies to the exercise of the decanting power. (8) An exercise of the decanting power is not ineffective because of the failure to give notice to one or more persons under sub. (3) if the authorized fiduciary acted with reasonable care to comply with sub. (3). History: 2023 a. 127.
701.1309 Court involvement. (1) On application of an authorized fiduciary, a person entitled to notice under s. 701.1307 (3), a beneficiary, or with respect to a charitable interest the attorney general or other person that has standing to enforce the charitable interest, the court may do any of the following: (a) Provide instructions to the authorized fiduciary regarding whether a proposed exercise of the decanting power is permitted under this subchapter and consistent with the fiduciary duties of the authorized fiduciary. (b) Appoint a special fiduciary and authorize the special fiduciary to determine whether the decanting power should be exercised under this subchapter and to exercise the decanting power. (c) Approve an exercise of the decanting power. (d) Determine that a proposed or attempted exercise of the decanting power is ineffective for any of the following reasons: 1. After applying s. 701.1322, the proposed or attempted exercise does not or did not comply with this subchapter. 2. The proposed or attempted exercise would be or was an abuse of the fiduciary’s discretion or a breach of fiduciary duty. 3. The proposed or attempted exercise is expressly prohibited under the terms of the first trust. (e) Determine the extent to which s. 701.1322 applies to a prior exercise of the decanting power.
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(f) Provide instructions to the trustee regarding the application of s. 701.1322 to a prior exercise of the decanting power. (g) Order other relief to carry out the purposes of this subchapter. (2) On application of an authorized fiduciary, the court may approve any of the following: (a) An increase in the fiduciary’s compensation under s. 701.1316. (b) A modification under s. 701.1318 of a provision granting a person the right to remove or replace the fiduciary. History: 2023 a. 127.
701.1310 Formalities. An exercise of the decanting power must be made in a record signed by an authorized fiduciary. The signed record must, directly or by reference to the notice required by s. 701.1307, identify the first trust and the 2nd trust or trusts and state the property of the first trust being distributed to each 2nd trust and the property, if any, that remains in the first trust. History: 2023 a. 127.
701.1311 Decanting power under expanded distributive discretion. (1) In this section: (a) “Noncontingent right” means a right that is not subject to the exercise of discretion or the occurrence of a specified event that is not certain to occur. The term does not include a right held by a beneficiary if any person has discretion to distribute property subject to the right to any person other than the beneficiary or the beneficiary’s estate. (b) “Successor beneficiary” means a beneficiary that is not a qualified beneficiary on the date the beneficiary’s qualification is determined. The term does not include a person that is a beneficiary only because the person holds a nongeneral power of appointment. (c) “Vested interest” means any of the following: 1. A right to a mandatory distribution that is a noncontingent right as of the date of the exercise of the decanting power. 2. A current and noncontingent right, annually or more frequently, to a mandatory distribution of income, a specified dollar amount, or a percentage of value of some or all of the trust property. 3. A current and noncontingent right, annually or more frequently, to withdraw income, a specified dollar amount, or a percentage of value of some or all of the trust property. 4. A presently exercisable general power of appointment. 5. A right to receive an ascertainable part of the trust property on the trust’s termination that is not subject to the exercise of discretion or to the occurrence of a specified event that is not certain to occur. (2) Subject to sub. (3) and s. 701.1314, an authorized fiduciary that has expanded distributive discretion over the principal of a first trust for the benefit of one or more current beneficiaries may exercise the decanting power over the principal of the first trust. (3) Subject to s. 701.1313, in an exercise of the decanting power under this section, a 2nd trust may not do any of the following: (a) Include as a current beneficiary a person that is not a current beneficiary of the first trust, except as otherwise provided in sub. (4). (b) Include as a presumptive remainder beneficiary or successor beneficiary a person that is not a current beneficiary, presumptive remainder beneficiary, or successor beneficiary of the first trust, except as otherwise provided in sub. (4). (c) Reduce or eliminate a vested interest. (d) Fail to be a trust described in 42 USC 1396p (d) (4) (A) or
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(C) if the first trust is a trust described in 42 USC 1396p (d) (4) (A) or (C). (4) Subject to sub. (3) (c) and s. 701.1314, in an exercise of the decanting power under this section, a 2nd trust may be a trust created or administered under the law of any jurisdiction and may do any of the following: (a) Retain a power of appointment granted in the first trust. (b) Omit a power of appointment granted in the first trust, other than a presently exercisable general power of appointment. (c) Create or modify a power of appointment if the powerholder is a current beneficiary of the first trust and the authorized fiduciary has expanded distributive discretion to distribute principal to the beneficiary. (d) Create or modify a power of appointment if the powerholder is a presumptive remainder beneficiary or successor beneficiary of the first trust, but the exercise of the power may take effect only after the powerholder becomes, or would have become if then living, a current beneficiary. (5) A power of appointment described in sub. (4) (a) to (d) may be general or nongeneral. The class of permissible appointees in favor of which the power may be exercised may be broader than or different from the beneficiaries of the first trust. (6) If an authorized fiduciary has expanded distributive discretion over part but not all of the principal of a first trust, the fiduciary may exercise the decanting power under this section over that part of the principal over which the authorized fiduciary has expanded distributive discretion. History: 2023 a. 127.
701.1312 Decanting power under limited distributive discretion. (1) In this section, “limited distributive discretion” means a discretionary power of distribution that is limited to an ascertainable standard or a reasonably definite standard. (2) An authorized fiduciary that has limited distributive discretion over the principal of the first trust for the benefit of one or more current beneficiaries may exercise the decanting power over the principal of the first trust. (3) Under this section and subject to s. 701.1314, a 2nd trust may be created or administered under the law of any jurisdiction. Under this section, the 2nd trusts, in the aggregate, must grant each beneficiary of the first trust beneficial interests that are substantially similar to the beneficial interests of the beneficiary in the first trust. (3m) Notwithstanding sub. (3), an authorized fiduciary exercising the decanting power under this section may grant to a beneficiary of the 2nd trust a testamentary power of appointment exercisable in favor of the creditors of the beneficiary’s estate, but only if the authorized fiduciary concludes the granting of such power will be unlikely to adversely affect the beneficial interest of the presumptive remainder beneficiaries of the first trust. (4) A power to make a distribution under a 2nd trust for the benefit of a beneficiary who is an individual is substantially similar to a power under the first trust to make a distribution directly to the beneficiary. A distribution is for the benefit of a beneficiary if any of the following applies: (a) The distribution is applied for the benefit of the beneficiary. (b) The beneficiary is under a legal disability or the trustee reasonably believes the beneficiary is incapacitated, and the distribution is made as permitted under this chapter. (c) The distribution is made as permitted under the terms of the first-trust instrument and the 2nd-trust instrument for the benefit of the beneficiary. (5) If an authorized fiduciary has limited distributive discre-
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tion over part but not all of the principal of a first trust, the fiduciary may exercise the decanting power under this section over that part of the principal over which the authorized fiduciary has limited distributive discretion. History: 2023 a. 127.
701.1313 Trust for beneficiary with disability. (1) In this section: (a) “Beneficiary with a disability” means a beneficiary of a first trust who the special-needs fiduciary believes in good faith is an individual with a disability. (b) “Special-needs fiduciary” means, with respect to a trust that has a beneficiary with a disability, any of the following: 1. A trustee or other fiduciary, other than a settlor, that has discretion to distribute part or all of the principal of a first trust to one or more current beneficiaries. 2. If no trustee or fiduciary has discretion under subd. 1., a trustee or other fiduciary, other than a settlor, that has discretion to distribute part or all of the income of the first trust to one or more current beneficiaries. 3. If no trustee or fiduciary has discretion under subds. 1. and 2., a trustee or other fiduciary, other than a settlor, that is required to distribute part or all of the income or principal of the first trust to one or more current beneficiaries. (c) “Special-needs trust” means a trust the trustee believes would not be considered a resource for purposes of determining whether an individual with a disability is eligible for the supplemental security income program or the medical assistance program. (2) A special-needs fiduciary may exercise the decanting power under s. 701.1311 over the principal of a first trust as if the fiduciary had authority to distribute principal to a beneficiary with a disability subject to expanded distributive discretion if all of the following apply: (a) A 2nd trust is a special-needs trust that benefits the beneficiary with a disability. (b) The special-needs fiduciary determines that exercise of the decanting power will further the purposes of the first trust. (3) In an exercise of the decanting power under this section, the following rules apply: (a) Notwithstanding s. 701.1311 (3) (b), the interest in the 2nd trust of a beneficiary with a disability may do any of the following: 1. Be an account in a pooled trust for the benefit of the beneficiary with a disability described in 42 USC 1396p (d) (4) (C) that includes the trust retention provisions permitted by 42 USC 1396p (d) (4) (C) (iv). 2. Contain payback provisions complying with reimbursement requirements of Medicaid law under 42 USC 1396p (d) (4) (A) or (C). (b) Section 701.1311 (3) (c) does not apply to the interests of the beneficiary with a disability. (c) Except as affected by any change to the interests of the beneficiary with a disability or by the effects on remainder beneficiaries of a transfer to a 2nd trust under par. (a), if the special needs fiduciary has limited distributive discretion over the principal of the 2nd trust, or if there are 2 or more 2nd trusts, the 2nd trusts in the aggregate must grant each other beneficiary of the first trust beneficial interests in the 2nd trusts that are substantially similar to the beneficiary’s beneficial interests in the first trust. History: 2023 a. 127.
701.1314 Protection of charitable interest. (1) In this section:
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701.1314
(a) “Determinable charitable interest” means an interest that is all of the following: 1. A charitable interest. 2. Entitled to receive a mandatory distribution currently, periodically, on the occurrence of a specified event, or after the passage of a specified time. 3. Unconditional or held solely for charitable purposes. (b) “Unconditional” means not subject to the occurrence of a specified event that is not certain to occur, other than a requirement in a trust instrument that a charitable organization be in existence or qualify under a particular provision of the Internal Revenue Code, on the date of the distribution, if the charitable organization meets the requirement on the date of determination. (2) The attorney general may represent and bind a charitable interest only when the attorney general has the rights of a qualified beneficiary as provided in s. 701.0110 (3). (3) If a first trust contains a charitable interest, the 2nd trust or trusts may not do any of the following: (a) Diminish the charitable interest. (b) Diminish the interest of an identified charitable organization that holds the charitable interest. (c) Alter any charitable purpose stated in the first-trust instrument. (d) Alter any condition or restriction related to the charitable interest. (3m) Notwithstanding subs. (3) and (5), if the first trust is an account in a pooled trust described in 42 USC 1396p (d) (4) (C), the 2nd trust may be an account in another pooled trust described in 42 USC 1396p (d) (4) (C) or a trust described in 42 USC 1396p (d) (4) (A) regardless of any of the following: (a) Any effect on a charitable interest in property that is permitted to be retained in the first trust under 42 USC 1396p (d) (4) (C) (iv). (b) Any effect the trust retention and Medicaid reimbursement provisions of the 2nd trust may have on a charitable interest in the first trust. (c) Any change in the identified charitable organization. (d) Any change in the governing law or principal place of administration of the trust. (4) If there are 2 or more 2nd trusts, the 2nd trusts shall be treated as one trust for purposes of determining whether the exercise of the decanting power diminishes the charitable interest or diminishes the interest of an identified charitable organization for purposes of sub. (3). (5) If a first trust contains a determinable charitable interest, the 2nd trust or trusts that include a charitable interest pursuant to sub. (3) must be administered under the law of this state unless any of the following applies: (a) The attorney general, after receiving notice under s. 701.1307, fails to object in a signed record delivered to the authorized fiduciary within the notice period. (b) The attorney general consents in a signed record to the 2nd trust or trusts being administered under the law of another jurisdiction. (c) The court approves the exercise of the decanting power. (d) The identified charitable organization consents in a signed record delivered to the authorized fiduciary. (6) This subchapter does not limit the powers and duties of the attorney general under the laws of this state other than this subchapter. History: 2023 a. 127.
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Trust limitation on decanting. (1) An autho-
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rized fiduciary may not exercise the decanting power to the extent the first-trust instrument expressly prohibits exercise of any of the following: (a) The decanting power. (b) A power granted by state law to the fiduciary to distribute part or all of the principal of the trust to another trust or to modify the trust. (2) Exercise of the decanting power is subject to any restriction in the first-trust instrument that expressly applies to exercise of any of the following: (a) The decanting power. (b) A power granted by state law to a fiduciary to distribute part or all of the principal of the trust to another trust or to modify the trust. (3) A general prohibition of the amendment or revocation of a first trust, a spendthrift clause, or a clause restraining the voluntary or involuntary transfer of a beneficiary’s interest does not preclude exercise of the decanting power. (4) Subject to subs. (1) and (2), an authorized fiduciary may exercise the decanting power under this subchapter even if the first-trust instrument permits the authorized fiduciary or another person to modify the first-trust instrument or to distribute part or all of the principal of the first trust to another trust. (5) If a first-trust instrument contains an express restriction described in sub. (2), the provision must be included in the 2ndtrust instrument. History: 2023 a. 127.
701.1316 Change in compensation. (1) If a first-trust instrument specifies an authorized fiduciary’s compensation, the fiduciary may not exercise the decanting power to increase the fiduciary’s compensation above the specified compensation unless any of the following applies: (a) All qualified beneficiaries of the 2nd trust consent to the increase in a signed record. (b) The increase is approved by the court. (2) If a first-trust instrument does not specify an authorized fiduciary’s compensation, the fiduciary may not exercise the decanting power to increase the fiduciary’s compensation above the compensation permitted by this chapter unless any of the following applies: (a) All qualified beneficiaries of the 2nd trust consent to the increase in a signed record. (b) The increase is approved by the court. (3) A change in an authorized fiduciary’s compensation that is incidental to other changes made by the exercise of the decanting power is not an increase in the fiduciary’s compensation for purposes of subs. (1) and (2). (4) This section does not apply to a decanting from a first trust that is a pooled trust described in 42 USC 1396p (d) (4) (C), or to a decanting to a 2nd trust that is a pooled trust described in 42 USC 1396p (d) (4) (C). History: 2023 a. 127.
701.1317 Relief from liability and indemnification. (1) Except as otherwise provided in this section, a 2nd-trust instrument may not relieve an authorized fiduciary from liability for breach of trust to a greater extent than the first-trust instrument unless any of the following applies: (a) All the qualified beneficiaries of the 2nd trust consent to the relief from liability in a signed record. (b) The relief from liability is approved by the court. (2) A 2nd-trust instrument may provide for indemnification of an authorized fiduciary of the first trust or another person act-
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ing in a fiduciary capacity under the first trust for any liability or claim that would have been payable from the first trust if the decanting power had not been exercised. (3) Absent consent of all qualified beneficiaries or the approval of the court, the 2nd-trust instrument may not reduce the aggregate fiduciary liability of all fiduciaries of the 2nd trust. (4) Subject to sub. (3), a 2nd-trust instrument may divide and reallocate fiduciary powers among fiduciaries, including one or more trustees, directing parties, trust protectors, or other persons, and relieve a fiduciary from liability for an act or failure to act of another fiduciary as permitted by law of this state other than this subchapter. History: 2023 a. 127.
701.1318 Removal or replacement of authorized fiduciary. (1) An authorized fiduciary may not exercise the decanting power to modify a provision in a first-trust instrument granting another person power to remove or replace the fiduciary unless any of the following applies: (a) The person holding the power consents to the modification in a signed record and the modification applies only to the person. (b) The person holding the power and the qualified beneficiaries of the 2nd trust consent to the modification in a signed record and the modification grants a substantially similar power to another person. (c) The court approves the modification and the modification grants a substantially similar power to another person. (2) This section does not apply to a decanting from a first trust that is a pooled trust described in 42 USC 1396p (d) (4) (C), or to a decanting to a 2nd trust that is a pooled trust described in 42 USC 1396p (d) (4) (C). History: 2023 a. 127.
701.1319 Tax-related limitations. (1) In this section: (a) “Grantor trust” means a trust as to which a settlor of a first trust is considered the owner under sections 671 to 677 of the Internal Revenue Code or section 679 of the Internal Revenue Code. (b) “Nongrantor trust” means a trust that is not a grantor trust. (c) “Qualified benefits property” means property subject to the minimum distribution requirements of section 401 (a) (9) of the Internal Revenue Code, and any applicable regulations, or to any similar requirements that refer to section 401 (a) (9) of the Internal Revenue Code or the regulations. (2) An exercise of the decanting power is subject to the following limitations: (a) If a first trust contains property that qualified, or would have qualified but for provisions of this subchapter other than this section, for a marital deduction for purposes of the gift or estate tax under the Internal Revenue Code or a state gift, estate, or inheritance tax, the 2nd-trust instrument must not include or omit any term that, if included in or omitted from the trust instrument for the trust to which the property was transferred, would have prevented the transfer from qualifying for the deduction, or would have reduced the amount of the deduction, under the same provisions of the Internal Revenue Code or state law under which the transfer qualified. (b) If the first trust contains property that qualified, or would have qualified but for provisions of this subchapter other than this section, for a charitable deduction for purposes of the income, gift, or estate tax under the Internal Revenue Code or a state income, gift, estate, or inheritance tax, the 2nd-trust instrument must not include or omit any term that, if included in or omitted from the trust instrument for the trust to which the property was
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transferred, would have prevented the transfer from qualifying for the deduction, or would have reduced the amount of the deduction, under the same provisions of the Internal Revenue Code or state law under which the transfer qualified. (c) If the first trust contains property that qualified, or would have qualified but for provisions of this subchapter other than this section, for the exclusion from the gift tax described in section 2503 (b) of the Internal Revenue Code, the 2nd-trust instrument must not include or omit a term that, if included in or omitted from the trust instrument for the trust to which the property was transferred, would have prevented the transfer from qualifying under section 2503 (b) of the Internal Revenue Code. If the first trust contains property that qualified, or would have qualified but for provisions of this subchapter other than this section, for the exclusion from the gift tax described in the Internal Revenue Code section 2503 (b) by application of section 2503 (c) of the Internal Revenue Code, the 2nd-trust instrument must not include or omit a term that, if included or omitted from the trust instrument for the trust to which the property was transferred, would have prevented the transfer from qualifying under section 2503 (c) of the Internal Revenue Code. (d) If the property of the first trust includes shares of stock in an S corporation, as defined in section 1361 of the Internal Revenue Code, and the first trust is, or but for provisions of this subchapter other than this section would be, a permitted shareholder under any provision of section 1361 of the Internal Revenue Code, an authorized fiduciary may exercise the power with respect to part or all of the S-corporation stock only if any 2nd trust receiving the stock is a permitted shareholder under section 1361 (c) (2) of the Internal Revenue Code. If the property of the first trust includes shares of stock in an S corporation and the first trust is, or but for provisions of this subchapter other than this section would be, a qualified subchapter S trust within the meaning of section 1361 (d) of the Internal Revenue Code, the 2ndtrust instrument must not include or omit a term that prevents the 2nd trust from qualifying as a qualified subchapter S trust. (e) If the first trust contains property that qualified, or would have qualified but for provisions of this subchapter other than this section, for a zero inclusion ratio for purposes of the generationskipping transfer tax under section 2642 (c) of the Internal Revenue Code, the 2nd-trust instrument must not include or omit a term that, if included in or omitted from the first-trust instrument, would have prevented the transfer to the first trust from qualifying for a zero inclusion ratio under section 2642 (c) of the Internal Revenue Code. (f) If the first trust is directly or indirectly the beneficiary of qualified benefits property, the 2nd-trust instrument may not include or omit any term that, if included in or omitted from the first-trust instrument, would have increased the minimum distributions required with respect to the qualified benefits property under section 401 (a) (9) of the Internal Revenue Code and any applicable regulations, or any similar requirements that refer to section 401 (a) (9) of the Internal Revenue Code or the regulations. If an attempted exercise of the decanting power violates this paragraph, the trustee is deemed to have held the qualified benefits property and any reinvested distributions of the property as a separate share from the date of the exercise of the power and s. 701.1322 applies to the separate share. (g) If the first trust qualifies as a grantor trust because of the application of section 672 (f) (2) (A) of the Internal Revenue Code, the 2nd trust may not include or omit a term that, if included in or omitted from the first-trust instrument, would have prevented the first trust from qualifying under section 672 (f) (2) (A) of the Internal Revenue Code. (h) In this paragraph, “tax benefit” means a federal or state tax deduction, exemption, exclusion, or other benefit not other-
May 22, 2026, are designated by NOTES. (Published 5-22-26)
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Updated 23-24 Wis. Stats.
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wise listed in this section, except for a benefit arising from being a grantor trust. Subject to par. (i), a 2nd-trust instrument may not include or omit a term that, if included in or omitted from the first-trust instrument, would have prevented qualification for a tax benefit if all of the following apply: 1. The first-trust instrument expressly indicates an intent to qualify for the benefit or the first-trust instrument clearly is designed to enable the first trust to qualify for the benefit. 2. The transfer of property held by the first trust or the first trust qualified, or but for provisions of this subchapter other than this section, would have qualified for the tax benefit. (i) Subject to par. (d), all of the following apply: 1. Except as otherwise provided in par. (g), the 2nd trust may be a nongrantor trust, even if the first trust is a grantor trust. 2. Except as otherwise provided in par. (j), the 2nd trust may be a grantor trust, even if the first trust is a nongrantor trust. (j) An authorized fiduciary may not exercise the decanting power if a settlor objects in a signed record delivered to the fiduciary within the notice period and any of the following applies: 1. The first trust and a 2nd trust are both grantor trusts, in whole or in part, the first trust grants the settlor or another person the power to cause the first trust to cease to be a grantor trust, and the 2nd trust does not grant an equivalent power to the settlor or other person. 2. The first trust is a nongrantor trust and a 2nd trust is a grantor trust, in whole or in part, with respect to the settlor, unless any of the following applies: a. The settlor has the power at all times to cause the 2nd trust to cease to be a grantor trust. b. The first-trust instrument contains a provision granting the settlor or another person a power that would cause the first trust to cease to be a grantor trust and the 2nd-trust instrument contains the same provision. History: 2023 a. 127.
701.1320 Duration of 2nd trust. (1) Subject to sub. (2), a 2nd trust may have a duration that is the same as or different from the duration of the first trust. (2) To the extent that property of a 2nd trust is attributable to property of the first trust, the property of the 2nd trust is subject to any rules governing maximum perpetuity, accumulation, or suspension of the power of alienation that apply to property of the first trust. History: 2023 a. 127.
701.1321 Need to distribute not required. An authorized fiduciary may exercise the decanting power whether or not under the first trust’s discretionary distribution standard the fiduciary would have made or could have been compelled to make a discretionary distribution of principal at the time of the exercise. History: 2023 a. 127.
701.1322 Saving provision. (1) If exercise of the decanting power would be effective under this subchapter except that the 2nd-trust instrument in part does not comply with this subchapter, the exercise of the power is effective and the following rules apply with respect to the principal of the 2nd trust attributable to the exercise of the power: (a) A provision in the 2nd-trust instrument that is not permitted under this subchapter is void to the extent necessary to comply with this subchapter. (b) A provision required by this subchapter to be in the 2nd-
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trust instrument that is not contained in the instrument is deemed to be included in the instrument to the extent necessary to comply with this subchapter. (2) If a trustee or other fiduciary of a 2nd trust determines that sub. (1) applies to a prior exercise of the decanting power, the fiduciary shall take corrective action consistent with the fiduciary’s duties. History: 2023 a. 127.
701.1323 Trust for care of animal. (1) The decanting power may be exercised over an animal trust that has an animal protector to the extent the trust could be decanted under this subchapter if each animal that benefits from the trust were an individual, if the animal protector consents in a signed record to the exercise of the power. (2) An animal protector has the rights under this subchapter of a qualified beneficiary. (3) Notwithstanding any other provision of this subchapter, if a first trust is an animal trust, in an exercise of the decanting power, the 2nd trust must provide that trust property may be applied only to its intended purpose for the period the first trust benefitted the animal. History: 2023 a. 127.
701.1324 Terms of 2nd trust. A reference in this chapter to a trust instrument or terms of the trust includes a 2nd-trust instrument and the terms of the 2nd trust. History: 2023 a. 127.
701.1325 Settlor. (1) For purposes of law of this state other than this subchapter and subject to sub. (2), a settlor of a first trust is deemed to be the settlor of the 2nd trust with respect to the portion of the principal of the first trust subject to the exercise of the decanting power. (2) In determining settlor intent with respect to a 2nd trust, the intent of a settlor of the first trust, a settlor of the 2nd trust, and the authorized fiduciary may be considered. History: 2023 a. 127.
701.1326 Later-discovered property. (1) Except as otherwise provided in sub. (3), if exercise of the decanting power was intended to distribute all the principal of the first trust to one or more 2nd trusts, later-discovered property belonging to the first trust and property paid to or acquired by the first trust after the exercise of the power is part of the trust estate of the 2nd trust or trusts. (2) Except as otherwise provided in sub. (3), if exercise of the decanting power was intended to distribute less than all the principal of the first trust to one or more 2nd trusts, later-discovered property belonging to the first trust or property paid to or acquired by the first trust after exercise of the power remains part of the trust estate of the first trust. (3) An authorized fiduciary may provide in an exercise of the decanting power or by the terms of a 2nd trust for disposition of later-discovered property belonging to the first trust or property paid to or acquired by the first trust after exercise of the power. History: 2023 a. 127.
701.1327 Obligations. A debt, liability, or other obligation enforceable against property of a first trust is enforceable to the same extent against the property when held by the 2nd trust after exercise of the decanting power. History: 2023 a. 127.
May 22, 2026, are designated by NOTES. (Published 5-22-26)