SB759: Bill Text

SB759,,217 701.0509 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.

SB759,,218 (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.

SB759,,219 (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.

SB759,,220 (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).

SB759,,221 (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:

SB759,,222 (a) Pay the claim in full.

SB759,,223 (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.

SB759,,224 (c) Retain sufficient funds to satisfy the claim upon maturity.

SB759,,225 (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.

SB759,,226 (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.

SB759,,227 (b) Payment of the claim shall be made on the basis of one of the following:

SB759,,228 1. If the creditor surrenders the security, the full amount of the claim.

SB759,,229 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.

SB759,,230 (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:

SB759,,231 (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.

SB759,,232 (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.

SB759,,233 (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.

SB759,,234 (d) Any other method the trustee determines or the court, in the case of a contested claim, orders.

SB759,,235 (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 determined 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.

SB759,,236 (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:

SB759,,237 1. Costs and expenses of administration.

SB759,,238 2. Reasonable funeral and burial expenses.

SB759,,239 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.

SB759,,240 4. Reasonable and necessary expenses of the last illness of the deceased settlor, including compensation of persons attending the deceased settlor.

SB759,,241 5. All debts, charges, or taxes owing to the United States, this state, or a governmental subdivision or municipality of this state.

SB759,,242 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.

SB759,,243 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.

SB759,,244 8. All other claims allowed.

SB759,,245 (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.

SB759,,246 (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.

SB759,,247 (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.

SB759,,248 (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.

SB759,,249 (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.

SB759,,250 (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.

SB759,,251 (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.

SB759,,252 (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.

SB759,,253 (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.

SB759,,254 (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 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.

SB759,,255 (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.

SB759,,256 (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.

SB759,,257 (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.

SB759,,258 (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).

SB759,,259 (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.

SB759,,260 (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.

SB759,87 Section 87. 701.0602 (1) of the statutes is amended to read:

SB759,,262 701.0602 (1) Unless the terms of a trust expressly provide that the trust is irrevocable, there is a rebuttable presumption that the settlor may revoke or amend the trust. This subsection does not apply to a trust created under an instrument executed before July 1, 2014.

SB759,88 Section 88. 701.0602 (3) (intro.), (a) and (b) (intro.) of the statutes are consolidated, renumbered 701.0602 (3) (intro.) and amended to read:

SB759,,264 701.0602 (3) (intro.) A settlor may revoke or amend a revocable trust by any of the following means: (a) By substantial compliance with a method provided in the terms of the trust. (b) (intro.) If, or, if the terms of the trust do not provide a method, by any of the following means:

SB759,89 Section 89. 701.0602 (3) (b) 1. of the statutes is renumbered 701.0602 (3) (am).

SB759,90 Section 90. 701.0602 (3) (b) 2. of the statutes is renumbered 701.0602 (3) (bm).

SB759,91 Section 91. 701.0602 (4) of the statutes is amended to read:

SB759,,268 701.0602 (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.

SB759,92 Section 92. 701.0605 of the statutes is created to read:

SB759,,270 701.0605 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.

SB759,93 Section 93. 701.0702 (3) of the statutes is amended to read:

SB759,,272 701.0702 (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 nor shall a bond be required of a religious, charitable, or educational corporation or society.

SB759,94 Section 94. 701.0704 (1) (g) of the statutes is created to read:

SB759,,274 701.0704 (1) (g) Any other event occurs resulting in no person acting as trustee.

SB759,95 Section 95. 701.0706 (2) (c) of the statutes is amended to read:

SB759,,276 701.0706 (2) (c) The court determines that removal Removal of the trustee best serves the interests of the beneficiaries is appropriate because of unfitness, unwillingness, or persistent failure of the trustee to administer the trust effectively.

SB759,96 Section 96. 701.0706 (2) (d) of the statutes is amended to read:

SB759,,278 701.0706 (2) (d) There has been a substantial change of circumstances or removal is requested by all of the qualified beneficiaries, the court finds that the removal of the trustee best serves the interests of all of the beneficiaries and is not inconsistent with a material purpose of the trust, and a suitable cotrustee or successor trustee is available.

SB759,97 Section 97. 701.0707 (2) of the statutes is amended to read:

SB759,,280 701.0707 (2) A trustee who has resigned or been removed shall proceed expeditiously 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.

SB759,98 Section 98. 701.0802 (5) of the statutes is renumbered 701.0802 (5) (a).

SB759,99 Section 99. 701.0802 (5) (b) of the statutes is created to read:

SB759,,283 701.0802 (5) (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.

SB759,100 Section 100. 701.0802 (9) of the statutes is created to read:

SB759,,285 701.0802 (9) A trustee is not liable for releasing information, including 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.

SB759,101 Section 101. 701.0813 (1), (2) (d) and (3) (a) (intro.) of the statutes are amended to read:

SB759,,287 701.0813 (1) A trustee shall keep the distributees or permissible distributees of trust income or principal, current beneficiaries and other qualified 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.

SB759,,288 (2) (d) Notify the distributees or permissible distributees of trust income or principal, current beneficiaries and other qualified presumptive remainder beneficiaries who so request, of any change in the method or rate of the trustee’s compensation.

SB759,,289 (3) (a) (intro.) At Subject to par. (c), at least annually and upon the termination of a trust, a trustee shall send to the distributees or permissible distributees of trust income or principal, current beneficiaries and to other qualified presumptive remainder beneficiaries who request it, all of the following:

SB759,102 Section 102. 701.0813 (2) (a) of the statutes is amended to read:

SB759,,291 701.0813 (2) (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.

SB759,103 Section 103. 701.0813 (3) (b) of the statutes is amended to read:

SB759,,293 701.0813 (3) (b) Upon 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.

SB759,104 Section 104. 701.0813 (3) (c) of the statutes is created to read:

SB759,,295 701.0813 (3) (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.

SB759,105 Section 105. 701.0813 (5) of the statutes is amended to read:

SB759,,297 701.0813 (5) Subsections (2) (b) and, (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.

SB759,106 Section 106. 701.0813 (6) and (7) of the statutes are created to read:

SB759,,299 701.0813 (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.

SB759,,300 (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.

SB759,107 Section 107. 701.0815 (3) of the statutes is created to read:

SB759,,302 701.0815 (3) A trustee has no power to give warranties in a sale, mortgage, or lease that are binding on the trustee personally.

SB759,108 Section 108. 701.0816 (29) of the statutes is created to read:

SB759,,304 701.0816 (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.

SB759,109 Section 109. 701.0816 (30) of the statutes is created to read: