Chapter 701

701.0509(11)(a) (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.

701.0509(11)(b) (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.

701.0509(12) (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.

701.0509(13) (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.

701.0509(14) (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.

701.0509(15) (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.

701.0509(16) (16) Encumbered assets; payment of debt.

701.0509(16)(a) (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.

701.0509(16)(b) (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.

701.0509(17) (17) Tort claims.

701.0509(17)(a) (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.

701.0509(17)(b) (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).

701.0509(18) (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.

701.0509(19) (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.

701.0509 History History: 2023 a. 127.

subch. VI of ch. 701 SUBCHAPTER VI

REVOCABLE TRUSTS

701.0601 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.

701.0601 History History: 2013 a. 92.

701.0602 701.0602 Revocation or amendment of revocable trust.

701.0602(1) (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.

701.0602(2) (2) If a revocable trust is created or funded by more than one settlor, all of the following apply:

701.0602(2)(a) (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.

701.0602(2)(b) (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.

701.0602(2)(c) (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.

701.0602(3) (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:

701.0602(3)(am) (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.

701.0602(3)(bm) (bm) Any other method manifesting clear and convincing evidence of the settlor’s intent.

701.0602(4) (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.

701.0602(5) (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.

701.0602(6) (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.

701.0602(7) (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).

701.0602 History History: 2013 a. 92; 2023 a. 127.

701.0603 701.0603 Settlor’s powers; powers of withdrawal.

701.0603(1) (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.

701.0603(2) (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.

701.0603(3) (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.

701.0603 History History: 2013 a. 92.

701.0604 701.0604 Limitation on action contesting validity of revocable trust; distribution of trust property.

701.0604(1) (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:

701.0604(1)(a) (a) One year after the settlor’s death.

701.0604(1)(b) (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 allowed 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.

701.0604(2) (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:

701.0604(2)(a) (a) The trustee knows of a pending judicial proceeding contesting the validity of the trust.

701.0604(2)(b) (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.

701.0604(3) (3) A beneficiary of a trust that is determined to have been invalid is liable to return any distribution received.

701.0604 History History: 2013 a. 92.

701.0605 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.

701.0605 History History: 2023 a. 127.

subch. VII of ch. 701 SUBCHAPTER VII

OFFICE OF TRUSTEE

701.0701 701.0701 Accepting or declining trusteeship.

701.0701(1) (1) Except as provided in sub. (3), a person designated as trustee accepts the trusteeship by doing any of the following:

701.0701(1)(a) (a) Substantially complying with a method of acceptance provided in the terms of the trust.

701.0701(1)(b) (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.

701.0701(2) (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.

701.0701(3) (3) A person designated as trustee, without accepting the trusteeship, may do any of the following:

701.0701(3)(a) (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.

701.0701(3)(b) (b) Inspect or investigate trust property to determine potential liability under environmental or other law or for any other purpose.

701.0701 History History: 2013 a. 92.

701.0702 701.0702 Trustee’s bond.

701.0702(1) (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.

701.0702(2) (2) The court may specify the amount of a bond, its liabilities, and whether sureties are necessary. The court may modify or terminate a bond at any time.

701.0702(3) (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.

701.0702 History History: 2013 a. 92; 2023 a. 127.

701.0703 701.0703 Cotrustees.

701.0703(1) (1) Cotrustees may act only by majority decision.

701.0703(2) (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.

701.0703(3) (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.

701.0703(4) (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.

701.0703(5) (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.

701.0703(6) (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.

701.0703(7) (7) Each trustee shall exercise reasonable care to do all of the following:

701.0703(7)(a) (a) Prevent a cotrustee from committing a material breach of trust.

701.0703(7)(b) (b) Compel a cotrustee to redress a material breach of trust.

701.0703(8) (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.

701.0703 History History: 2013 a. 92.

701.0704 701.0704 Vacancy in trusteeship; appointment of successor.

701.0704(1) (1) A vacancy in a trusteeship exists if any of the following occurs:

701.0704(1)(a) (a) A person designated as trustee declines the trusteeship.

701.0704(1)(b) (b) A person designated as trustee cannot be identified or does not exist.

701.0704(1)(c) (c) A trustee resigns.

701.0704(1)(d) (d) A trustee is disqualified or removed.

701.0704(1)(e) (e) A trustee dies.

701.0704(1)(f) (f) A guardian or conservator is appointed for an individual serving as trustee.

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

701.0704(2) (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.

701.0704(3) (3) A vacancy in a trusteeship that is required to be filled shall be filled in the following order of priority:

701.0704(3)(a) (a) By a person designated in the terms of the trust to act as successor trustee.