Chapter 701

701.0409 History History: 2013 a. 92.

701.0410 701.0410 Modification or termination of trust; proceedings for approval or disapproval.

701.0410(1) (1) In addition to the methods of termination prescribed by ss. 701.0411 to 701.0414, a trust terminates to the extent the trust is revoked or expires pursuant to its terms, no purpose of the trust remains to be achieved, or the purposes of the trust have become unlawful or impossible to achieve.

701.0410(2) (2) A proceeding to approve or disapprove a proposed modification or termination under ss. 701.0411 to 701.0416, or a proposed trust combination or division under s. 701.0417, may be commenced by a trustee or beneficiary, and a proceeding to approve or disapprove a proposed modification or termination under s. 701.0411 may be commenced by the settlor. The settlor of a charitable trust may maintain a proceeding to modify the trust under s. 701.0413. Except as provided in s. 701.0411 (1m), a trustee does not have standing to oppose a proposed modification or termination commenced under s. 701.0411 (1).

701.0410(3) (3) A trustee may not be compelled by a modification or termination under this section or under ss. 701.0411 to 701.0416 to make distributions to or for any beneficiary of a trust for an individual with a disability or to terminate the trust, during the lifetime of the individual with a disability. A court may modify the terms of a trust that has an individual with a disability as a beneficiary with retroactive effect or reform the terms of such trust to achieve the settlor’s objective or, if because of circumstances not anticipated by the settlor, to otherwise further the purposes of the trust so that it does not result in trust property being countable as resources or income of the individual with a disability for purposes of public assistance.

701.0410 History History: 2013 a. 92; 2023 a. 127.

701.0411 701.0411 Modification or termination of noncharitable irrevocable trust by consent.

701.0411(1) (1) Except as provided in sub. (1m), a noncharitable irrevocable trust may be modified or terminated, with or without court approval, upon consent of the settlor and all beneficiaries, even if the modification or termination is inconsistent with a material purpose of the trust. A settlor’s power to consent to a trust’s modification or termination may be exercised by a representative under s. 701.0303 only if the representative is specifically authorized to consent to a trust’s modification or termination under a power of attorney, the terms of the trust, or by a court under a guardianship or conservatorship.

701.0411(1m) (1m) A trust described in 42 USC 1396p (d) (4) may be terminated or modified under sub. (1) only with consent of the trustee, and is not considered revocable because it lacks ascertainable remainder beneficiaries.

701.0411(2) (2) With the approval of the court, any of the following may occur:

701.0411(2)(a) (a) A noncharitable irrevocable trust may be terminated upon consent of all of the beneficiaries if continuance of the trust is not necessary to achieve any material purpose of the trust.

701.0411(2)(b) (b) A noncharitable irrevocable trust may be modified upon consent of all of the beneficiaries if the modification is not inconsistent with a material purpose of the trust.

701.0411(3) (3) A spendthrift provision in the terms of the trust is not presumed to constitute a material purpose of the trust.

701.0411(4) (4) A court may not compel a beneficiary to consent to a modification or termination to satisfy a creditor of the beneficiary.

701.0411(5) (5) Upon termination of a trust under sub. (1) or (2), the trustee shall distribute the trust property as agreed by the beneficiaries.

701.0411(6) (6) If not all of the beneficiaries consent to a proposed modification or termination of the trust under sub. (1) or (2), the modification or termination may be approved by the court if the court is satisfied that all of the following apply:

701.0411(6)(a) (a) If all of the beneficiaries had consented, the trust could have been modified or terminated under this section.

701.0411(6)(b) (b) The interests of a beneficiary who does not consent will be adequately protected.

701.0411(7) (7) A party proposing to modify or terminate a trust under sub. (1), (2), or (6) shall give notice of the proposed modification or termination to the settlor, if living, the trustee, each trust protector, each directing party, and each beneficiary at least 30 days before the proposed effective date of the modification or termination.

701.0411 History History: 2013 a. 92; 2023 a. 127.

701.0412 701.0412 Modification or termination because of unanticipated circumstances or inability to administer trust effectively.

701.0412(1) (1) The court may modify the administrative or dispositive terms of a trust or terminate the trust if, because of circumstances not anticipated by the settlor, modification or termination will further the purposes of the trust. To the extent practicable, the court shall make the modification in accordance with the settlor’s probable intention.

701.0412(2) (2) The court may modify the administrative terms of a trust if continuation of the trust on its existing terms would be impracticable or wasteful or impair the trust’s administration.

701.0412(3) (3) Upon termination of a trust under this section, the trustee shall distribute the trust property in a manner consistent with the purposes of the trust.

701.0412(4) (4) A party petitioning the court for action under this section shall give notice of the proceeding to the settlor, if living, the trustee, each trust protector, each directing party, and the qualified beneficiaries.

701.0412 History History: 2013 a. 92.

701.0413 701.0413 Cy pres.

701.0413(1) (1) The purpose of this section is to broaden the power of the courts to make charitable gifts more effective. The court shall liberally apply the cy pres doctrine.

701.0413(2) (2) Except as provided in sub. (3), if a particular charitable purpose becomes unlawful, impracticable, impossible to achieve, or wasteful, all of the following apply:

701.0413(2)(a) (a) The trust does not fail, in whole or in part.

701.0413(2)(b) (b) The trust property does not revert to the settlor or the settlor’s successors in interest.

701.0413(2)(c) (c) The court may apply the cy pres doctrine to modify or terminate the trust by directing that the trust property be applied or distributed, in whole or in part, in a manner consistent with the settlor’s charitable purposes. In determining the alternative plan for disposition of the property under this paragraph, the court shall take into account current and future community needs in the general field of charity within which the original charitable purpose falls, other charitable interests of the settlor, the amount of principal and income available under the trust, and other relevant factors. A person with standing to enforce the terms of a charitable trust under s. 701.0405 (3) has standing to commence a proceeding under this paragraph. The attorney general is a necessary party in all proceedings under this paragraph.

701.0413(3) (3) A provision in the terms of a charitable trust that would result in distribution of the trust property to a noncharitable beneficiary prevails over the power of the court under sub. (2) to apply the cy pres doctrine to modify or terminate the trust only if, when the provision takes effect, the trust property is to revert to the settlor and the settlor is still living.

701.0413(4) (4) A party petitioning the court for action under this section shall give notice to the settlor, if living, the trustee, each trust protector, each directing party, the qualified beneficiaries, and any person with standing to enforce the terms of a charitable trust under s. 701.0405 (3).

701.0413 History History: 2013 a. 92.

701.0414 701.0414 Modification or termination of uneconomic trust.

701.0414(1) (1) In this section:

701.0414(1)(a) (a) “Adjustment reference number” means the consumer price index for all urban consumers, as published by the United States bureau of labor statistics, in effect on January 1 of the year in which an adjustment is to be made in accordance with sub. (3).

701.0414(1)(b) (b) “Base reference number” means the consumer price index for all urban consumers, as published by the United States bureau of labor statistics, in effect on January 1 of the base year.

701.0414(1)(c) (c) “Base year” means 2014.

701.0414(2) (2) After notice to the settlor, if living, each trust protector, each directing party, and the qualified beneficiaries, the trustee of a trust consisting of trust property having a total value less than $100,000 or a revised applicable figure, as determined under sub. (3), may terminate the trust if the trustee concludes that the value of the trust property is insufficient to justify the cost of administration.

701.0414(3) (3) The dollar amount specified in sub. (2) shall be adjusted to a revised applicable figure on July 1, 2019, and every 5 years thereafter. The revised applicable figure shall be determined as follows:

701.0414(3)(a) (a) Calculate the percentage change between the base reference number and the adjustment reference number for the year in which the adjustment is being made.

701.0414(3)(b) (b)

701.0414(3)(b)1. 1. If the percentage change determined in par. (a) is a positive number, determine the revised applicable figure as follows:

701.0414(3)(b)1.a. a. Multiply $100,000 by the percentage change determined in par. (a), expressed as a decimal.

701.0414(3)(b)1.b. b. Round the product under subd. 1. a. to the nearest $1,000.

701.0414(3)(b)1.c. c. Add the value determined under subd. 1. b. to $100,000.

701.0414(3)(b)2. 2. If the percentage change determined in par. (a) is a negative number, determine the revised applicable figure as follows:

701.0414(3)(b)2.a. a. Multiply $100,000 by the absolute value of the percentage change determined in par. (a), expressed as a decimal.

701.0414(3)(b)2.b. b. Round the product under subd. 2. a. to the nearest $1,000.

701.0414(3)(b)2.c. c. Subtract the value determined under subd. 2. b. from $100,000.

701.0414(4) (4) The court may modify or terminate a trust or remove the trustee and appoint a different trustee if the value of the trust property is insufficient to justify the cost of administration even if the trust property has a total value in excess of the amount described in sub. (2).

701.0414(5) (5) Upon termination of a trust under this section, the trustee shall distribute the trust property in a manner consistent with the purposes of the trust.

701.0414(6) (6) This section does not apply to an easement for conservation or preservation.

701.0414(7) (7) A party petitioning the court for action under this section shall give notice of the proceeding to the settlor, if living, the trustee, each trust protector, each directing party, and the qualified beneficiaries.

701.0414 History History: 2013 a. 92; 2023 a. 127.

701.0415 701.0415 Reformation to correct mistakes. The court may reform the terms of a trust, even if unambiguous, to conform the terms to the settlor’s intention if it is proved by clear and convincing evidence what the settlor’s intention was and that the terms of the trust were affected by a mistake of fact or law, whether in expression or inducement. A party petitioning the court for action under this section shall give notice of the proceeding to the settlor, if living, the trustee, each trust protector, each directing party, and the qualified beneficiaries.

701.0415 History History: 2013 a. 92; 2023 a. 127.

701.0416 701.0416 Modification or termination to achieve settlor’s tax objectives. To achieve the settlor’s tax objectives, the court may modify the terms of a trust or terminate a trust in a manner that is not contrary to the settlor’s probable intent. The court may provide that the modification or termination has retroactive effect. A party petitioning the court for action under this section shall give notice of the proceeding to the settlor, if living, the trustee, each trust protector, each directing party, and the qualified beneficiaries.

701.0416 History History: 2013 a. 92; 2023 a. 127.

701.0417 701.0417 Combination and division of trusts.

701.0417(1) (1) After notice to each trust protector, each directing party, and the qualified beneficiaries, a trustee may do any of the following if the result does not impair rights of any beneficiary or adversely affect achievement of any trust purposes:

701.0417(1)(a) (a) Combine 2 or more trusts into a single trust.

701.0417(1)(b) (b) Divide a trust into 2 or more separate trusts.

701.0417(2) (2) Subject to the terms of the trust, the trustee may take into consideration differences in federal tax attributes and other pertinent factors in administering the trust property of any separate account or trust, in making applicable tax elections, and in making distributions. A separate trust created by severance under sub. (1) (b) is treated as a separate trust for all purposes from the date on which the severance is effective. The effective date of the severance may be retroactive to a date before the date on which the trustee exercises the power.

701.0417(3) (3) If a trustee combines 2 or more trusts into a single trust, the trustee shall identify which trust is the surviving trust.

701.0417(4) (4) In case of a division of a trust into 2 or more trusts, any distribution or allocation of assets as an equivalent of a dollar amount fixed by formula or otherwise shall be made at current fair market values unless the trust instrument expressly provided that another value may be used. If the trust instrument requires or permits a different value to be used, all property available for distribution, including cash, shall be distributed so that the property, including cash, is fairly representative of the net appreciation or depreciation in the value of the available property on the date or dates of distribution. A provision in the trust instrument that the trustee may fix values for purposes of distribution or allocation does not of itself constitute authorization to fix a value other than current fair market value.

701.0417 History History: 2013 a. 92 ss. 91, 294.

701.0419 701.0419 Transfers to trusts.

701.0419(1) (1) Validity and effect. The order of execution of a trust instrument and a will or other instrument purporting to transfer or appoint property to the trust evidenced by the trust instrument shall be disregarded in determining the validity of the transfer or appointment. No reference in any will to a trust shall cause assets in such trust to be included in property administered as part of the testator’s estate.

701.0419(2) (2) Governing terms. Property transferred or appointed by a will or by a beneficiary designation under an employee benefit plan, life insurance policy, or online tool, as defined in s. 711.03 (18), or other instrument permitting designation of a beneficiary to a trust, shall be administered in accordance with the terms of the trust as the terms of the trust may have been modified prior to the testator’s or designator’s death, even though the will, beneficiary designation, online tool, or other instrument was not reexecuted or republished after exercise of the power to modify, unless the will, beneficiary designation, online tool, or other instrument expressly provides otherwise.

701.0419(3) (3) Disposition when no existing trust. If at the death of a testator a trust has been completely revoked, or otherwise terminated, a provision in the testator’s will purporting to transfer or appoint property to the trust shall have the following effect, unless the will provides otherwise:

701.0419(3)(a) (a) If the testator was a necessary party to the revocation or other termination of the trust, the provision in the testator’s will shall be invalid.

701.0419(3)(b) (b) If the testator was not a necessary party to the revocation or other termination of such trust, the provision in the testator’s will shall be deemed to create a trust upon the terms of the trust instrument at the time the will was executed or as otherwise provided where sub. (2) is applicable.

701.0419 History History: 1971 c. 66; 1991 a. 316; 2013 a. 92 s. 132; Stats. 2013 s. 701.0419; 2015 a. 300.

subch. V of ch. 701 SUBCHAPTER V

CREDITOR’S CLAIMS; SPENDTHRIFT
AND DISCRETIONARY TRUSTS

701.0501 701.0501 Rights of beneficiary’s creditor or assignee.

701.0501(1) (1) 

701.0501(1)(a) (a) To the extent a beneficiary’s interest is not protected by a spendthrift provision, the court may authorize a judgment creditor or an assignee of the beneficiary to reach the beneficiary’s interest by attachment of present or future distributions to or for the benefit of the beneficiary or other means. The court may limit the award to such relief as is appropriate under the circumstances.

701.0501(1)(b) (b) This subsection does not apply to a trust for an individual with a disability.

701.0501(2) (2) A trustee is not liable to any creditor of a beneficiary for any distributions made to or for the benefit of the beneficiary if any of the following applies:

701.0501(2)(a) (a) The beneficiary’s interest is protected by a spendthrift provision.

701.0501(2)(b) (b) The trust is a trust for an individual with a disability.

701.0501 History History: 2013 a. 92.

701.0502 701.0502 Spendthrift provision.

701.0502(1) (1) A spendthrift provision is valid only if any of the following applies:

701.0502(1)(a) (a) The beneficiary is a person other than the settlor and is not treated as the settlor under s. 701.0505 (2).