Chapter 701

701.1012(1) (1) A person other than a beneficiary who in good faith assists a trustee, or who in good faith and for value deals with a trustee, without knowledge that the trustee is exceeding or improperly exercising the trustee’s powers is protected from liability as if the trustee properly exercised the power.

701.1012(2) (2) A person other than a beneficiary who in good faith deals with a trustee is not required to inquire into the extent of the trustee’s powers or the propriety of their exercise.

701.1012(3) (3) A person who in good faith delivers assets to a trustee does not need to ensure their proper application.

701.1012(4) (4) A person other than a beneficiary who in good faith assists a former trustee, or who in good faith and for value deals with a former trustee, without knowledge that the trusteeship has terminated is protected from liability as if the former trustee were still a trustee.

701.1012(5) (5) Comparable protective provisions of other laws relating to commercial transactions or transfer of securities by fiduciaries prevail over the protection provided by this section.

701.1012 History History: 2013 a. 92.

701.1013 701.1013 Certification of trust.

701.1013(1) (1) Instead of furnishing a copy of the trust instrument to a person other than a beneficiary, the trustee may furnish to the person a certification of trust containing the following information:

701.1013(1)(a) (a) That the trust exists and the date on which the trust instrument was executed.

701.1013(1)(b) (b) The identity of the settlor.

701.1013(1)(c) (c) The identity and address of the currently acting trustee.

701.1013(1)(d) (d) The powers of the trustee.

701.1013(1)(e) (e) The revocability or irrevocability of the trust and the identity of any person holding a power to revoke the trust.

701.1013(1)(f) (f) The authority of a cotrustee to sign or otherwise authenticate and whether all cotrustees or less than all cotrustees are required to sign or otherwise authenticate in order to exercise powers of the trustee.

701.1013(1)(g) (g) The manner in which title to trust property may be taken.

701.1013(2) (2) A certification of trust may be signed or otherwise authenticated by any trustee.

701.1013(3) (3) A trustee shall include in a certification of trust that the trust has not been revoked, modified, or amended in any manner that would cause the representations contained in the certification of trust to be incorrect.

701.1013(4) (4) A certification of trust does not need to contain the dispositive terms of a trust.

701.1013(5) (5) A recipient of a certification of trust may require the trustee to furnish copies of those excerpts from the original trust instrument and later amendments that designate the trustee and confer upon the trustee the power to act in the pending transaction.

701.1013(6) (6) A person who acts in reliance upon a certification of trust without knowledge that the representations contained therein are incorrect is not liable to any person for so acting and may assume without inquiry the existence of the facts contained in the certification. Knowledge of the terms of the trust may not be inferred solely from the fact that a copy of all or part of the trust instrument is held by the person relying upon the certification.

701.1013(7) (7) A person who in good faith enters into a transaction in reliance upon a certification of trust may enforce the transaction against the trust property as if the representations contained in the certification were correct.

701.1013(8) (8) A person making a demand for copies of the trust instrument or excerpts from the trust instrument, other than those excerpts described in sub. (5), in addition to a certification of trust is liable for costs, expenses, reasonable attorney fees, and damages if the court determines that the person did not act in good faith in demanding the copies.

701.1013(9) (9) This section does not limit the right of a person to obtain a copy of the trust instrument in a judicial proceeding concerning the trust.

701.1013 History History: 2013 a. 92; 2013 a. 151 s. 28.

subch. XI of ch. 701 SUBCHAPTER XI

UNIFORM PRINCIPAL AND INCOME ACT

701.1101 701.1101 Short title and scope. This subchapter may be cited as the Wisconsin Uniform Principal and Income Act. Subject to s. 701.1205 (2), this subchapter applies to a trust described in s. 701.0102 and an estate that is administered in this state.

701.1101 History History: 2013 a. 92, 151.

701.1102 701.1102 Definitions. In this subchapter:

701.1102(1) (1) “Accounting period” means a calendar year, unless a fiduciary selects another 12-month period, and includes a portion of a calendar year or other 12-month period that begins when an income interest begins or that ends when an income interest ends.

701.1102(1g) (1g) “Asset” has the meaning given for property under s. 701.0103 (20).

701.1102(1m) (1m) Notwithstanding s. 701.0103 (3), “beneficiary” means a person who has a beneficial interest in a trust or an estate and includes, in the case of a decedent’s estate, an heir, a legatee, and a devisee and, in the case of a trust, an income beneficiary and a remainder beneficiary.

701.1102(2) (2) “Fiduciary” means a personal representative or a trustee and includes an executor, administrator, successor personal representative, special administrator, and a person performing substantially the same function as any of those.

701.1102(3) (3) “Income” means money or property that a fiduciary receives as current return from a principal asset. “Income” includes a portion of receipts from a sale, exchange, or liquidation of a principal asset, to the extent provided in ss. 701.1115 to 701.1129.

701.1102(4) (4) “Income beneficiary” means a person to whom net income of a trust is or may be payable.

701.1102(5) (5) “Income interest” means the right of an income beneficiary to receive all or part of net income, whether the terms of the trust require it to be distributed or authorize it to be distributed in the trustee’s discretion.

701.1102(6) (6) “Mandatory income interest” means the right of an income beneficiary to receive net income that the terms of the trust require the fiduciary to distribute.

701.1102(7) (7) “Net income” means the total receipts allocated to income during an accounting period, minus the disbursements made from income during the period, plus or minus transfers under this subchapter to or from income during the period.

701.1102(8) (8) “Principal” means property held in trust for distribution to a remainder beneficiary when the trust terminates or property held in trust in perpetuity.

701.1102(9) (9) “Remainder beneficiary” means a person who is a beneficiary under s. 701.0103 (21) (b).

701.1102 History History: 2013 a. 92 ss. 179, 180, 205 to 212, 214, 215.

701.1103 701.1103 Fiduciary duties; general principles.

701.1103(1) (1) In allocating receipts and disbursements to income or principal or between income and principal, and with respect to any matter within the scope of ss. 701.1110 to 701.1114, a fiduciary:

701.1103(1)(a) (a) Shall first administer a trust or estate in accordance with the terms of the trust or the will, even if there is a different provision in this subchapter.

701.1103(1)(b) (b) May administer a trust or estate by the exercise of a discretionary power of administration given to the fiduciary by the terms of the trust or the will, even if the exercise of the power produces a result different from a result required or permitted by this subchapter.

701.1103(1)(c) (c) Shall administer a trust or estate in accordance with this subchapter if the terms of the trust or the will do not contain a different provision or do not give the fiduciary a discretionary power of administration.

701.1103(1)(d) (d) Shall add a receipt or charge a disbursement to principal to the extent that the terms of the trust and this subchapter do not provide a rule for allocating the receipt or disbursement to principal or income or between principal and income.

701.1103(2) (2) In exercising the power to adjust under s. 701.1104 (1) or a discretionary power of administration regarding a matter within the scope of this subchapter, whether granted by the terms of a trust, a will, or this subchapter, a fiduciary shall administer a trust or estate impartially, based on what is fair and reasonable to all of the beneficiaries, except to the extent that the terms of the trust or the will clearly manifest an intention that the fiduciary shall or may favor one or more of the beneficiaries. A determination in accordance with this subchapter is presumed to be fair and reasonable to all of the beneficiaries.

701.1103 History History: 2013 a. 92 s. 217.

701.1104 701.1104 Trustee’s power to adjust.

701.1104(1) (1) A trustee may adjust between principal and income to the extent the trustee considers necessary if the trustee invests and manages trust assets as a prudent investor, the terms of the trust describe the amount that may or must be distributed to a beneficiary by referring to the trust’s income, and the trustee determines, after applying the rules in s. 701.1103 (1), that the trustee is unable to comply with s. 701.1103 (2).

701.1104(2) (2) In deciding whether and to what extent to exercise the power conferred by sub. (1), a trustee shall consider all factors relevant to the trust and its beneficiaries, including the following factors to the extent they are relevant:

701.1104(2)(a) (a) The nature, purpose, and expected duration of the trust.

701.1104(2)(b) (b) The intent of the settlor.

701.1104(2)(c) (c) The identity and circumstances of the beneficiaries.

701.1104(2)(d) (d) The needs for liquidity, regularity of income, and preservation and appreciation of capital.

701.1104(2)(e) (e) The assets held in the trust; the extent to which they consist of financial assets, interests in closely held enterprises, tangible and intangible personal property, or real property; the extent to which an asset is used by a beneficiary; and whether an asset was purchased by the trustee or received from the settlor.

701.1104(2)(f) (f) The net amount allocated to income under the other subsections of this section and the increase or decrease in the value of the principal assets, which the trustee may estimate in the case of assets for which market values are not readily available.

701.1104(2)(g) (g) Whether and to what extent the terms of the trust give the trustee the power to invade principal or accumulate income or prohibit the trustee from invading principal or accumulating income, and the extent to which the trustee has exercised a power from time to time to invade principal or accumulate income.

701.1104(2)(h) (h) The actual and anticipated effect of economic conditions on principal and income and effects of inflation and deflation.

701.1104(2)(i) (i) The anticipated tax consequences of an adjustment.

701.1104(3) (3) A trustee may not make an adjustment:

701.1104(3)(a) (a) If possessing or exercising the power to make an adjustment would disqualify an estate tax or gift tax marital or charitable deduction in whole or in part.

701.1104(3)(b) (b) That reduces the actuarial value of the income interest in a trust to which a person transfers property with the intent to qualify for a gift tax exclusion.

701.1104(3)(c) (c) That changes the amount payable to a beneficiary as a fixed annuity or a fixed fraction of the value of the trust assets.

701.1104(3)(d) (d) From any amount that is permanently set aside for charitable purposes under a will or the terms of a trust and for which an estate tax or gift tax charitable deduction has been taken unless both income and principal are so set aside.

701.1104(3)(e) (e) If possessing or exercising the power to make an adjustment causes an individual to be treated as the owner of all or part of the trust for income tax purposes, and the individual would not be treated as the owner if the trustee did not possess the power to make an adjustment.

701.1104(3)(f) (f) If possessing or exercising the power to make an adjustment causes all or part of the trust assets to be included for estate tax purposes in the estate of an individual and the assets would not be included in the estate of the individual if the trustee did not possess the power to make an adjustment.

701.1104(3)(g) (g) If the trustee is a beneficiary of the trust.

701.1104(3)(h) (h) If the trust has been converted under s. 701.1106 to a unitrust.

701.1104(3)(i) (i) If the trust is an express unitrust, as defined in s. 701.1107 (1).

701.1104(4) (4) If sub. (3) (e), (f), or (g) applies to a trustee and there is more than one trustee, a cotrustee to whom the provision does not apply may make the adjustment unless the terms of the trust do not permit the exercise of the power by that cotrustee.

701.1104(5) (5) A trustee may release the entire power conferred by sub. (1) or may release only the power to adjust from income to principal or the power to adjust from principal to income if the trustee is uncertain about whether possessing or exercising the power will cause a result described in sub. (3) (a) to (f) or if the trustee determines that possessing or exercising the power will or may deprive the trust of a tax benefit or impose a tax burden not described in sub. (3). The release may be permanent or for a specified period, including a period measured by the life of an individual.

701.1104(6) (6) Terms of a trust that limit the power of a trustee to make an adjustment between principal and income do not affect the application of this subsection unless it is clear from the terms of the trust that the terms are intended to deny the trustee the power of adjustment conferred by sub. (1).

701.1104 History History: 2013 a. 92 s. 218.

701.1105 701.1105 Notice to beneficiaries of proposed action.

701.1105(1) (1) A trustee may, but is not required to, obtain approval of a proposed action under s. 701.1104 (1) by providing a written notice that complies with all of the following:

701.1105(1)(a) (a) Is given at least 30 days before the proposed effective date of the proposed action.

701.1105(1)(b) (b) Is given in the manner provided in s. 701.0109.

701.1105(1)(c) (c) Is given to all qualified beneficiaries.

701.1105(1)(d) (d) States that it is given in accordance with this section and discloses the following information:

701.1105(1)(d)1. 1. The identification of the trustee.

701.1105(1)(d)2. 2. A description of the proposed action.

701.1105(1)(d)3. 3. The time within which a beneficiary may object to the proposed action, which shall be at least 30 days after the giving of the notice.

701.1105(1)(d)4. 4. The effective date of the proposed action if no objection is received from any beneficiary within the time specified in subd. 3.

701.1105(2) (2) If a trustee gives notice of a proposed action under this section, the trustee is not required to give notice to a qualified beneficiary who consents to the proposed action in writing at any time before or after the proposed action is taken.

701.1105(3) (3) A qualified beneficiary may object to the proposed action by giving a written objection to the trustee within the time specified in the notice under sub. (1) (d) 3.

701.1105(4) (4) A trustee may decide not to take a proposed action after the trustee receives a written objection to the proposed action or at any other time for any other reason. In that case, the trustee shall give written notice to the qualified beneficiaries of the decision not to take the proposed action.

701.1105(5) (5) If a trustee receives a written objection to a proposed action within the time specified in the notice under sub. (1) (d) 3., either the trustee or the qualified beneficiary making the written objection may petition the court to have the proposed action approved, modified, or prohibited. In the court proceeding, the qualified beneficiary objecting to the proposed action has the burden of proving that the proposed action should be modified or prohibited. A qualified beneficiary who did not make the written objection may oppose the proposed action in the court proceeding.