Register March 2024 No. 819
Chapter DFI-SL 17
TRUST POWERS
DFI-SL 17.01 Definitions.
DFI-SL 17.02 Special permit.
DFI-SL 17.03 Filing applications.
DFI-SL 17.04 Administration of trust powers.
DFI-SL 17.05 Books and accounts.
DFI-SL 17.06 Audit of trust department.
DFI-SL 17.07 Segregation of assets; prohibited deposits.
DFI-SL 17.08 Funds awaiting investment or distribution.
DFI-SL 17.09 Investment of funds held as fiduciary.
DFI-SL 17.10 Self-dealing.
DFI-SL 17.11 Custody of investments.
DFI-SL 17.12 Compensation of association.
DFI-SL 17.13 Collective investment.
DFI-SL 17.14 Common trust funds.
DFI-SL 17.15 Indemnity fund.
DFI-SL 17.16 Surrender of trust powers.
DFI-SL 17.17 Effect of trust accounts of appointment of conservator or receiver or voluntary dissolution of association.
DFI-SL 17.18 Revocation of trust powers.
Ch. DFI-SL 17 Note
Note: Chapter S-L 17 was renumbered chapter DFI-SL 17 under s. 13.93 (2m) (b) 1., Stats., and corrections made under s. 13.93 (2m) (b) 6. and 7., Stats.,
Register, July, 1998, No. 511.
DFI-SL 17.01(1)
(1) “Account" means the trust, estate or other fiduciary relationship which has been established with an association.
DFI-SL 17.01(2)
(2) “Custodian under a uniform gifts to minors act" means an account established under ss.
54.854 to
54.894, Stats., or a substantially similar law of another state, and with respect to which the association operating the account has established to the satisfaction of the division that it has duties and responsibilities similar to the duties and responsibilities of a trustee or guardian.
DFI-SL 17.01(3)
(3) “Fiduciary" means an association undertaking to act alone, through an affiliate, or jointly with others primarily for the benefit of another in all matters connected with its undertaking and includes but is not limited to trustee, executor, administrator, personal representative, guardian, receiver, managing agent, registrar of stocks and bonds, escrow agent, transfer agent, paying agent, trustee of employee pension, welfare and profit-sharing trusts, or any other similar capacity.
DFI-SL 17.01(4)
(4) “Fiduciary records" means all matters which are written, transcribed, recorded, received or otherwise come into the possession of an association and are necessary to preserve information concerning the actions and events relevant to the fiduciary activities of an association.
DFI-SL 17.01(5)
(5) “Guardian" means the guardian, conservator, or committee by whatever name employed by local law of the estate of an infant, an incompetent individual, an absent individual, or a competent individual over whose estate a court has taken jurisdiction, other than under bankruptcy or insolvency laws. “Guardian" includes, but is not limited to, a guardian or conservator appointed by a court under ch.
54, Stats.
DFI-SL 17.01(6)
(6) “Investment authority" means the responsibility conferred by action of law or a provision of an appropriate governing instrument to make, select or change investments, to review investment decisions made by others, or to provide investment advice or counsel to others.
DFI-SL 17.01(7)
(7) “Local law" means the law of the state or other jurisdiction governing the fiduciary relationship.
DFI-SL 17.01(8)
(8) “Managing agent" means the fiduciary relationship assumed by an association upon the creation of an account which names the association as agent and confers investment discretion upon the association.
DFI-SL 17.01(10)
(10) “State chartered corporate fiduciary" means any state bank, trust company, or other corporation which comes into competition with associations and is permitted to act in a fiduciary capacity under the laws of this state.
DFI-SL 17.01(11)
(11) “Trust department" means that group of officers and employees of an association or of an affiliate of an association to whom are assigned the performance of fiduciary services by the association.
DFI-SL 17.01(12)
(12) “Trust powers" means the power to act in any fiduciary capacity.
DFI-SL 17.01 History
History: Cr.
Register, June, 1989, No. 402, eff. 7-1-89; corrections in (2) and (5) made under s.
13.92 (4) (b) 1., Stats.,
Register December 2012 No. 684.
DFI-SL 17.02
DFI-SL 17.02
Special permit. The division may, on application, grant a special permit to an association or affiliate of an association to exercise trust powers. Except as permitted under s.
215.13, Stats., or s.
DFI-SL 16.01 (10) no association may exercise trust powers without obtaining such a permit.
DFI-SL 17.02 Note
Note: Sentence one parallels
12 USC 1464 (n)
1.
DFI-SL 17.02 History
History: Cr.
Register, June, 1989, No. 402, eff. 7-1-89.
DFI-SL 17.03(1)(1)
Application. An application filed under s.
DFI-SL 17.02 shall indicate the trust services the association wishes to offer and provide the information necessary to make the determinations under sub. (2).
DFI-SL 17.03(2)
(2)
Factors considered. Factors the division will consider in passing upon an application to exercise trust powers include, but are not limited to, the following:
DFI-SL 17.03(2)(a)
(a) The financial condition of the association, except trust powers may not be granted to an association if its financial condition is such that the association does not meet the financial standards required of state chartered corporate fiduciaries;
DFI-SL 17.03(2)(b)
(b) The needs of the community for fiduciary services and the probable volume of fiduciary business available to the association.
DFI-SL 17.03(2)(c)
(c) The general character and ability of the management of the association;
DFI-SL 17.03(2)(d)
(d) The nature of the supervision to be given to the fiduciary activities, including the qualifications, experience and character of the proposed officers of the trust department; and
DFI-SL 17.03(2)(e)
(e) Whether the association has available legal counsel to advise and pass upon fiduciary matters.
DFI-SL 17.03 Note
Note: This section parallels
12 CFR 550.2.
DFI-SL 17.03 History
History: Cr.
Register, June, 1989, No. 402, eff. 7-1-89.
DFI-SL 17.04(1)(a)
(a)
Responsibility of the board of directors. The board of directors of an association is responsible for the proper exercise of fiduciary powers by the association. All matters pertinent to the exercise of fiduciary powers, including the determination of policies, the investment and disposition of property held in a fiduciary capacity, and the direction and review of the actions of all officers, employees, and committees utilized by the association in the exercise of its fiduciary powers, are the responsibility of the board. The board of directors may assign, by action entered in the minutes, the administration of any of the association's trust powers to a director, officer, employee, or committee.
DFI-SL 17.04(1)(b)
(b)
Administration of accounts. No fiduciary account may be accepted without the prior approval of the board of directors, or of the director, officer, employee or committee to whom the board may have assigned the performance of that responsibility. A written record shall be made of acceptances and of the relinquishment or closing out of all fiduciary accounts. Upon the acceptance of an account for which the association has investment responsibilities, the association shall make a prompt review of the assets. The board shall also ensure that at least once during every calendar year thereafter, and within 15 months of the last review, all the assets held in or held for each fiduciary account for which the association has investment responsibilities are reviewed to determine the advisability of retaining or disposing of the assets. The board shall act to ensure that all investments have been made in accordance with the terms and purposes of the governing instrument.
DFI-SL 17.04(2)
(2)
Use of other association personnel. The trust department may utilize personnel and facilities of other departments of the association, and other departments of the association may utilize personnel and facilities of the trust department unless prohibited by law.
DFI-SL 17.04(3)
(3)
Compliance with federal securities laws. Every association exercising trust powers shall adopt written policies and procedures to ensure that the federal securities laws are complied with in connection with any decision or recommendation to purchase or sell any security. The policies and procedures shall ensure that the association's trust departments shall not use material inside information in connection with any decision or recommendation to purchase or sell any security.
DFI-SL 17.04(4)
(4)
Legal counsel. Every association exercising fiduciary powers shall designate, employ or retain legal counsel who shall be readily available to pass upon fiduciary matters and to advise the association and its trust department.
DFI-SL 17.04(5)
(5)
Bonding. Directors, officers and employees of an association engaged in the operation of a trust department shall acquire bond coverage as the division may require.
DFI-SL 17.04(6)
(6)
Oath or affidavit. If the laws of a state require that a corporation acting as trustee, executor, administrator, personal representative or in any capacity specified in this chapter shall take an oath or make an affidavit, the president, vice president, cashier or trust officer of the association may take the necessary oath or execute the necessary affidavit.
DFI-SL 17.04 History
History: Cr.
Register, June, 1989, No. 402, eff. 7-1-89.
DFI-SL 17.05(1)(1)
General. Every association exercising trust powers shall keep its fiduciary records separate and distinct from other records of the association. All fiduciary records shall be kept and retained for such time as to enable the association to furnish any information or reports with respect to the records as may be required by the division. The fiduciary records shall contain full information on each account.
DFI-SL 17.05(2)
(2)
Record of pending litigation. Every association shall keep an adequate record of all pending litigation to which it is a party in connection with its exercise of trust powers.
DFI-SL 17.05 Note
Note: This section parallels
12 CFR 550.6.
DFI-SL 17.05 History
History: Cr.
Register, June, 1989, No. 402, eff. 7-1-89.
DFI-SL 17.06
DFI-SL 17.06
Audit of trust department. At least once during each calendar year, the association's trust department shall be audited by auditors in a manner consistent with s.
215.25, Stats. A copy of the report of the audit shall be promptly filed with the division. Trust department audits may be made as part of the audits required by s.
215.25, Stats.
DFI-SL 17.06 Note
Note: This section parallels
12 CFR 550.7.
DFI-SL 17.06 History
History: Cr.
Register, June, 1989, No. 402, eff. 7-1-89.
DFI-SL 17.07
DFI-SL 17.07
Segregation of assets; prohibited deposits. Associations exercising any of the powers enumerated in this chapter shall segregate all assets held in any fiduciary capacity from the general assets of the association. No association may receive in its trust department deposits of current funds subject to check or the deposit of checks, drafts, bills of exchange, or other items for collection or exchange purposes.
DFI-SL 17.07 Note
Note: This section parallels
12 USC 1464 (n) (3) and (4) and is intended to prohibit operating a check clearing exchange through a trust account.
DFI-SL 17.07 History
History: Cr.
Register, June, 1989, No. 402, eff. 7-1-89.
DFI-SL 17.08
DFI-SL 17.08
Funds awaiting investment or distribution. DFI-SL 17.08(1)(1)
General. Funds held in a fiduciary capacity by an association awaiting investment or distribution may not be held uninvested or undistributed any longer than is reasonable for the proper management of the account.
DFI-SL 17.08(2)
(2)
Use by association in regular business. Funds held in trust by an association, including managing agency accounts, awaiting investment or distribution may, unless prohibited by the instrument creating the trust or by local law, be deposited in other departments of the association, except the association shall first set aside under control of the trust department as collateral security:
DFI-SL 17.08(2)(a)
(a) Direct obligations of the United States, or other obligations fully guaranteed by the United States as to principal and interest;
DFI-SL 17.08(2)(b)
(b) Readily marketable securities of the classes in which state chartered corporate fiduciaries may invest trust funds; or
