(c) Direct trust investments.
(d) Execute any other managerial duties.
701.1306 Limitations on actions, remedies, and claims. (1) In this section:
(a) “Cash” means the coins or currency of the United States or any other nation.
(b) “Cash equivalent” means a monetary instrument or device that is commonly or routinely accepted instead of cash, including a certified or uncertified check; money order; bank draft; electronic transfer of funds; negotiable instrument or an instrument endorsed in blank or in bearer form; securities issued or guaranteed by the United States, a state, or a state or federal agency; funds on deposit in a savings or checking account or any similar account; funds on deposit in a money market account or similar account; or demand deposit account, time deposit account, or savings deposit account at any bank, savings and loan association, brokerage house, or similar institution.
(c) “Fungible asset” means an asset other than money that is interchangeable for commercial purposes and the properties of which are essentially identical.
(d) “Money” means cash or a cash equivalent.
(2) Subject to sub. (3) and s. 701.1311 (4), a creditor may not bring an action of any kind, including an action to enforce a judgment, an action at law or in equity, or an action for an attachment or other final or provisional remedy, against a person who made or received a qualified disposition, against a trustee of a domestic asset preservation trust, or against or involving any property that is the subject of a qualified disposition or is otherwise held by a domestic asset preservation trust, except that, subject to s. 701.1307, a creditor may bring an action against a qualified disposition of an asset if the transferor made the qualified disposition with the intent to hinder, delay, or defraud the creditor.
(3) A creditor may bring an action against a qualified disposition under sub. (2) only if the creditor satisfies one of the following:
(a) The creditor was a creditor of the transferor when the qualified disposition was made and the creditor commences the action within the later of the following:
1. Eighteen months after the qualified disposition.
2. Six months after the creditor discovers or reasonably should have discovered the qualified disposition. For purposes of this subdivision, a creditor is considered to have discovered a transfer at the time a public record is made of the transfer.
(b) The creditor becomes a creditor after the qualified disposition is made, and the creditor commences the action no later than 18 months after the qualified disposition.
(4) In an action against a qualified disposition under sub. (2), each creditor has the burden of proving by clear and convincing evidence that the transferor made the qualified disposition with the intent to hinder, delay, or defraud the creditor. Proof by one creditor that a transferor made a qualified disposition with the intent to hinder, delay, or defraud that creditor is not proof that the transferor made a qualified disposition with the intent to hinder, delay, or defraud any other creditor and does not invalidate any other transfer of property to the domestic asset preservation trust.
(5) Subject to s. 701.1311 (4), with respect to a qualified disposition, a creditor has only the rights and remedies that are provided in this section and s. 701.1307.
(6) Subject to sub. (8), an advisor may not be found liable for damages a person suffers in connection with a domestic asset preservation trust unless the person demonstrates by clear and convincing evidence that the advisor’s actions violated the laws of this state, that the advisor acted knowingly and in bad faith, and that the advisor’s actions directly caused the damages suffered by the person.
(7) Subject to sub. (8), a trustee of a domestic asset preservation trust may not be found liable to a person who is not a beneficiary or a transferor of the domestic asset preservation trust unless the person demonstrates by clear and convincing evidence that the trustee’s actions violated the laws of this state, that the trustee acted knowingly and in bad faith, and that the trustee’s actions directly caused the damages suffered by the person.
(8) (a) Subject to s. 701.1311 (4), no person may bring an action of any kind related to a qualified disposition if the period under sub. (3) in which a creditor may bring an action against the qualified disposition that is the basis of the action has expired.
(b) An action barred under par. (a) includes an action to enforce a judgment entered by a court or other authorized adjudicative body, in law or equity, against a trustee or advisor of a domestic asset preservation trust or against any person involved in the counseling in connection with, or the drafting, preparation, execution, administration, or funding of a domestic asset preservation trust. For purposes of this paragraph, “counseling in connection with, or the drafting, preparation, execution, administration, or funding of a domestic asset preservation trust” includes any of those actions related to any limited partnership, limited liability company, corporation, or similar entity if the limited partnership interests, limited liability company interests, stock, or other similar ownership interests in the relevant entity are subsequently the subject of a qualified disposition.
(9) If more than one qualified disposition is made to a domestic asset preservation trust, all of the following apply:
(a) For purposes of determining whether a creditor’s claim against a qualified disposition is barred under sub. (3), each qualified disposition shall be evaluated individually without regard to any subsequent qualified disposition.
(b) For purposes of determining the order in which property is paid, applied, or distributed from a domestic asset preservation trust, all of the following apply:
1. A payment, application, or distribution of money is considered to be made from or with the money most recently received or acquired by any trustee of a domestic asset preservation trust except to the extent that it is proven otherwise beyond a reasonable doubt.
2. A payment, application, or distribution of a fungible asset is considered to be made from or with the fungible asset most recently received or acquired by any trustee of a domestic asset preservation trust except to the extent that it is proven otherwise by clear and convincing evidence.
(c) A distribution to a beneficiary is considered to have been made from the most recent transfer to the domestic asset preservation trust.
701.1307 Creditor claims against qualified dispositions. (1) If a creditor’s claim against a qualified disposition under s. 701.1306 is successful, in whole or in part, all of the following apply:
(a) The creditor may recover damages from trust assets only to the extent necessary to satisfy a transferor’s debt to the creditor and any part of the qualified disposition that is not used to satisfy the debt remains subject to the domestic asset preservation trust.
(b) Any other qualified disposition to a trustee of the domestic asset preservation trust and the domestic asset preservation trust remain valid, including a qualified disposition of a partial, co-ownership, or undivided interest in property by a transferor whose transfer was the subject of a creditor claim under s. 701.1306.
(c) If a court is satisfied that the trustee did not act in bad faith in accepting or administering the property that was the subject of the claim under s. 701.1306, all of the following apply:
1. The trustee has a first lien against the property that was the subject of the claim under s. 701.1306 in an amount equal to the entire cost, including attorney fees, properly incurred by the trustee in defense of the action or proceedings against the qualified disposition.
2. Any recovery for damages under par. (a) is subject to the fees, costs, and preexisting rights, claims, and interests of the trustee and of any predecessor trustee that has not acted in bad faith.
(d) If a court is satisfied that a beneficiary of the domestic asset preservation trust did not act in bad faith in receiving a distribution from the domestic asset preservation trust, the creditor’s recovery of the qualified disposition is subject to the right of the beneficiary to retain that distribution if the distribution was the result of an exercise of a trust power or of discretion vested in a trustee or advisor and that power or discretion was exercised before the creditor commenced the action against the qualified disposition.
(e) 1. For purposes of par. (c), a trustee is not considered to have acted in bad faith solely because the trustee accepted the property that is the subject of the recoverable qualified disposition.
2. For purposes of par. (d), a beneficiary, including a beneficiary who is a transferor, is not considered to have acted in bad faith solely because the beneficiary accepted a distribution made in accordance with the terms of the domestic asset preservation trust.
3. For purposes of pars. (c) and (d), a creditor has the burden of proving by clear and convincing evidence that a trustee or a beneficiary acted in bad faith.
(2) A court shall award costs and reasonable attorney fees to a prevailing party in a final judgment in an action that is wholly or partially brought under this section or s. 701.1306.
701.1308 Trust advisors; eligibility; default fiduciary status. (1) Except as provided in sub. (2), any person is eligible to serve as an advisor of a domestic asset preservation trust.
(2) A transferor of a domestic asset preservation trust may serve as an advisor only in connection with investment decisions related to trust assets.
(3) Notwithstanding s. 701.0818 (2), an advisor is a fiduciary unless the terms of a domestic asset preservation trust expressly provide otherwise.
701.1309 Rules regarding discretion. Except as otherwise provided under the terms of a domestic asset preservation trust, each trustee and each advisor of the domestic asset preservation trust has the greatest discretion permitted by law in connection with all matters of trust administration, trust distributions, and any other trustee or advisor decision.
701.1310 Discretionary interest not property of a beneficiary. No person, including a beneficiary, has a property interest in property of a domestic asset preservation trust to the extent that the distribution of that property is subject to the discretion of a qualified trustee or advisor, whether acting alone or in conjunction with another person, including a person authorized to veto a distribution from the domestic asset preservation trust.
701.1311 Miscellaneous provisions. (1) If there is a conflict between a provision of this subchapter and s. 242.07, the provision of this subchapter shall control.
(2) A statement in a trust instrument that the trust is governed by “the laws of this state” or a statement to similar effect is considered to expressly designate the laws of this state to govern the validity, construction, and administration of the trust and satisfies s. 701.1301 (6m) (b).
(3) A disposition by a nonqualified trustee to a qualified trustee of a domestic asset preservation trust is not disqualified from being a qualified disposition on the sole basis that the nonqualified trustee is a trustee of a trust that is a nondomestic asset preservation trust.
(4) A valid lien that is attached to property before the property is the subject of a qualified disposition survives the disposition, and the trustee of the domestic asset preservation trust takes the property subject to the lien and subject to any agreements that created or perfected the lien. Nothing in this subchapter may be construed to authorize any disposition that is prohibited by the terms of an agreement, note, guaranty, mortgage, indenture, instrument, undertaking, or other document.
(5) A trust administered under the laws of another state or a foreign jurisdiction is considered to be a domestic asset preservation trust if all of the following apply:
(a) The trustee of the trust complies with the requirements in the trust instrument and any applicable requirements under the laws of the state or foreign jurisdiction in which the trust is being administered.
(b) 1. The trustee or other person having the power to transfer the domicile of the trust declares in writing that the trustee or other person intends to transfer the domicile of the trust to this state.
2. If the person making the declaration under subd. 1. is a person other than the trustee, the declaration is delivered to the trustee.
(c) At the time of or immediately following the transfer of the trustee to this state, the trust satisfies the definition of a domestic asset preservation trust under this subchapter.
(6) Subsection (1) and ss. 701.1302, 701.1306, 701.1307, and 701.1310 do not apply to the collection of taxes and debts owed to or being collected by the department of revenue.
701.1312 Transferor’s affidavit required. (1) Except as provided in sub. (4), a transferor shall sign a qualified affidavit before or substantially contemporaneously with making a qualified disposition.
(2) A qualified affidavit shall be notarized and shall contain all of the following statements under oath:
(a) The property being transferred to the domestic asset preservation trust was not derived from unlawful activities.
(b) The transferor has full right, title, and authority to transfer the property to the domestic asset preservation trust.
(c) The transferor will not be rendered insolvent immediately after the transfer of the property to the domestic asset preservation trust.
(d) The transferor does not intend to defraud any creditor by transferring the property to the domestic asset preservation trust.
(e) There are no pending or threatened court actions against the transferor, except for any court action identified by the affidavit or an attachment to the affidavit.
(f) The transferor is not involved in any administrative proceeding, except for any proceeding identified by the affidavit or an attachment to the affidavit.
(g) The transferor does not contemplate at the time of the transfer the filing for relief under the federal bankruptcy code.
(3) A qualified affidavit is considered defective if it materially fails to meet the requirements set forth in sub. (2), but a qualified affidavit is not considered defective due to any of the following:
(a) Any nonsubstantive variances from the language set forth in sub. (2).
(b) Any statements or representations in addition to those set forth in sub. (2) if the statements or representations do not materially contradict the statements or representations required by that subsection.
(c) Any technical errors in the form, substance, or method of administering an oath if those errors were not the fault of the affiant, and the affiant reasonably relied upon another person to prepare or administer the oath.
(4) (a) A qualified affidavit is not required from a transferor who is not a beneficiary of the domestic asset preservation trust that receives the disposition.
(b) A subsequent qualified affidavit is not required in connection with any qualified disposition made after the execution of an earlier qualified affidavit if that disposition is a part of, is required by, or is the direct result of a prior qualified disposition that was made in connection with that earlier qualified affidavit.
(5) If a qualified affidavit is required under this section and a transferor fails to timely sign a qualified affidavit or signs a defective qualified affidavit, then, subject to the normal rules of evidence, that failure or defect may be considered as evidence in any proceeding commenced pursuant to s. 701.1306, but the domestic asset preservation trust or the validity of any attempted qualified disposition shall not be affected in any other way due to that failure or defect.
SB667,1mSection 1m. Nonstatutory provisions. (1) Reconciliation provisions.
(a) If 2023 Senate Bill 759 is enacted into law and creates s. 702.102 (11), the language “special power of appointment” in ss. 701.1301 (6) (b) and 701.1304 (2) of this act is changed to “nongeneral power of appointment.” If 2023 Senate Bill 759 is not enacted into law, the language “special power of appointment” in ss. 701.1301 (6) (b) and 701.1304 (2) of this act is unchanged.
(b) If 2023 Senate Bill 759 is enacted into law and creates s. 702.102 (11), the language “, as defined in s. 702.02 (7),” in s. 701.1304 (2) of this act is void and is deleted. If 2023 Senate Bill 759 is not enacted into law, the language “, as defined in s. 702.02 (7),” in s. 701.1304 (2) of this act is not void and is retained.
SB667,2Section 2. Initial applicability. (1) This act first applies to qualified dispositions made on the effective date of this subsection.
(1) This act takes effect on July 1, 2025.
