Chapter 854

854.24   Protection of buyers.

854.25   Personal liability of recipients not for value.

854.26   Effect of federal preemption.

854.30   Application of certain wills or trusts referring to repealed federal transfer taxes.

854.01 854.01 Definitions. In this chapter:

854.01(1) (1) “Extrinsic evidence” means evidence that would be inadmissible under the common law parole evidence rule or a similar doctrine because the evidence is not contained in the governing instrument to which it relates.

854.01(2) (2) “Governing instrument” means a will; a deed; a trust instrument; an insurance or annuity policy; a contract; a pension, profit-sharing, retirement, or similar benefit plan; a marital property agreement under s. 766.58 (3) (f); a beneficiary designation under s. 40.02 (8) (a); an instrument under ch. 705; an instrument that creates or exercises a power of appointment; or any other dispositive, appointive, or nominative instrument that transfers property at death.

854.01(3) (3) “Revocable,” with respect to a disposition, provision, or nomination, means one under which the decedent, at the time referred to, was alone empowered, by law or under the governing instrument, to change or revoke, regardless of whether the decedent was then empowered to designate himself or herself in place of a former designee, and regardless of whether the decedent then had the capacity to exercise the power.

854.01 History History: 1997 a. 188; 2005 a. 216 ss. 89, 90, 144.

854.02 854.02 Scope. This chapter applies to all statutes and governing instruments that transfer property at death.

854.02 History History: 1997 a. 188.

854.02 Annotation Wisconsin’s New Probate Code. Erlanger. Wis. Law. Oct. 1998.

854.03 854.03 Requirement of survival by 120 hours.

854.03(1) (1) Requirement of survival. Except as provided in sub. (5), if property is transferred to an individual under a statute or under a provision in a governing instrument that requires the individual to survive an event and it is not established that the individual survived the event by at least 120 hours, the individual is considered to have predeceased the event.

854.03(2) (2) Co-owners with right of survivorship.

854.03(2)(a) (a) In this subsection, “co-owners with right of survivorship” includes joint tenants, owners of survivorship marital property and other co-owners of property or accounts that are held under circumstances that entitle one or more persons to all of the property or account upon the death of one or more of the others.

854.03(2)(b) (b) Except as provided in sub. (5), if property is transferred under a governing instrument that establishes 2 or more co-owners with right of survivorship, and if at least one of the co-owners did not survive the others by at least 120 hours, the property is transferred to the co-owners in proportion to their ownership interests.

854.03(3) (3) Marital property. Except as provided in subs. (4) and (5), if a husband and wife die leaving marital property and it is not established that one survived the other by at least 120 hours, 50 percent of the marital property shall be distributed as if it were the husband’s individual property and the husband had survived, and 50 percent of the marital property shall be distributed as if it were the wife’s individual property and the wife had survived.

854.03(4) (4) Life insurance. Except as provided in sub. (5), if the insured and the beneficiary under a policy of life or accident insurance have both died and it is not established that one survived the other by at least 120 hours, the proceeds of the policy shall be distributed as if the insured had survived the beneficiary. If the policy is the marital property of the insured and of the insured’s spouse and there is no alternative beneficiary except the estate or the personal representative of the estate, the proceeds shall be distributed as marital property in the manner provided in sub. (3).

854.03(5) (5) Exceptions.

854.03(5)(am) (am) This section does not apply if any of the following conditions applies:

854.03(5)(am)1. 1. The statute or governing instrument requires the individual to survive an event by a specified period.

854.03(5)(am)2. 2. The statute or governing instrument indicates that the individual is not required to survive an event by any specified period.

854.03(5)(am)3. 3. The statute or governing instrument deals with simultaneous deaths or deaths in a common disaster and the provision is relevant to the facts.

854.03(5)(am)4. 4. The imposition of a 120-hour survival requirement would cause a nonvested property interest or a power of appointment to fail to be valid, or to be invalidated, under s. 700.16 or under the rule against perpetuities of the applicable jurisdiction.

854.03(5)(am)5. 5. The application of this section to more than one statute or governing instrument would result in an unintended failure or unintended duplication of a transfer.

854.03(5)(am)6. 6. The application of this section would result in the escheat of an intestate estate under s. 852.01 (3).

854.03(5)(am)7. 7. The statute or governing instrument specifies that this statute, or one similar to it, does not apply.

854.03(5)(am)8. 8. The imposition of a 120-hour survival requirement would be administratively cumbersome and would not change the identity of the ultimate beneficiaries of the property or the property that each beneficiary would receive.

854.03(5)(bm) (bm) If the transfer is made under a governing instrument and the person who executed the governing instrument had an intent contrary to any provision in this section, then that provision is not applicable to the transfer. Extrinsic evidence may be used to construe the intent.

854.03(6) (6) Evidentiary standard. Unless the statute or governing instrument provides otherwise, proof that an individual survived the period required under subs. (1) to (4) must be by clear and convincing evidence.

854.03 History History: 1997 a. 188; 2005 a. 216.

854.04 854.04 Representation; per stirpes; modified per stirpes; per capita at each generation; per capita.

854.04(1) (1) By representation or per stirpes.

854.04(1)(a) (a) Except as provided in subs. (5) and (6), if a statute or a governing instrument calls for property to be distributed to the issue or descendants of a designated person “by representation,” “by right of representation,” or “per stirpes,” the property is divided into equal shares for the designated person’s surviving children and for the designated person’s deceased children who left surviving issue. Each surviving child and each deceased child who left surviving issue are allocated one share.

854.04(1)(b) (b) The share of each deceased child allocated a share under par. (a) is divided among that person’s issue in the same manner as under par. (a), repeating until the property is fully allocated among surviving issue.

854.04(2) (2) Modified per stirpes.

854.04(2)(a) (a) Except as provided in subs. (5) and (6), if a statute or a governing instrument calls for property to be distributed to the issue or descendants of a designated person by “modified per stirpes”, the property is divided into equal shares at the generation nearest to the designated person that contains one or more surviving issue. Each survivor and each deceased person in that same generation who left surviving issue are allocated one share.

854.04(2)(b) (b) The share of each deceased person allocated a share in par. (a) is divided among that person’s issue in the same manner as under par. (a), repeating until the property is fully allocated.

854.04(3) (3) Per capita at each generation.

854.04(3)(a) (a) Except as provided in subs. (5) and (6), if a statute or a governing instrument calls for property to be distributed to the issue or descendants of a designated person “per capita at each generation,” the property is divided into equal shares at the generation nearest to the designated person that contains one or more surviving issue. Each survivor in that generation and each deceased person in that generation who left surviving issue are allocated one share. The shares of the deceased persons in that same generation who left surviving issue are combined for allocation under par. (b).

854.04(3)(b) (b) The combined share created under par. (a) is divided among the surviving issue of the persons whose shares were combined in the same manner as under par. (a), as though all of those issue were the issue of one person. The process is repeated until the property is fully allocated.

854.04(4) (4) Per capita. Except as provided in sub. (6), if a statute or governing instrument calls for property to be distributed to a group or class “per capita”, the property is divided into as many shares as there are surviving members of the group or class, and each member is allocated one share.

854.04(5) (5) Certain individuals disregarded. For the purposes of subs. (1) to (3), all of the following apply:

854.04(5)(a) (a) An individual who is deceased and who left no surviving issue is disregarded.

854.04(5)(b) (b) An individual who has a surviving ancestor who is an issue of the designated person is not allocated a share.

854.04(6) (6) Contrary intent. If the transfer is made under a governing instrument and the person who executed the governing instrument had an intent contrary to any provision in this section, then that provision is not applicable to the transfer. Extrinsic evidence may be used to construe the intent.

854.04 History History: 1997 a. 188; 2005 a. 216.

854.04 Annotation A will clause providing for “equal shares to the then living issue of donor’s three daughter-beneficiaries in this trust, and/or the then living issue of any deceased issue of donor’s three daughter-beneficiaries, by right of representation” required distribution per capita among the grandchildren and by representation among their children. In re Bowler Trust, 56 Wis. 2d 171, 201 N.W.2d 573 (1972).

854.04 Note NOTE: The preceding case was decided prior to the adoption of 1997 Wis. Act 188, which made extensive revisions to the Wisconsin Probate Code.

854.05 854.05 No exoneration of encumbered property.

854.05(1) (1) Definitions. In this section:

854.05(1)(a) (a) “Debt” includes accrued interest on the debt.

854.05(1)(b) (b) “Encumbrance” includes mortgages, liens, pledges and other security agreements that are encumbrances on property.

854.05(2) (2) Generally.

854.05(2)(a) (a) Except as provided in sub. (5), all property that is specifically transferred by a governing instrument shall be assigned to the transferee without exoneration of a debt that is secured by an encumbrance on the property.

854.05(2)(b) (b) If the debt that is secured by the encumbrance on the property is paid in whole or in part out of other assets, the specifically transferred property shall be assigned to the transferee only if any of the following applies:

854.05(2)(b)1. 1. The transferee contributes to the person or entity that held the assets that were used to pay the debt an amount equal to the amount that was paid.

854.05(2)(b)2. 2. The person or entity secures the amount described in subd. 1. through a new encumbrance on the property.

854.05(3) (3) Joint tenancy; survivorship marital property. Except as provided in sub. (5), if all or part of a debt that is secured by an encumbrance on property in which the decedent at the time of death had an interest as a joint tenant or as a holder of survivorship marital property is paid out of other assets as the result of a claim being allowed, the person or entity that makes the payment is subrogated to all rights that the claimant had against the property.

854.05(4) (4) Insurance. Except as provided in sub. (5), if all or part of a debt that is secured by an encumbrance on the proceeds payable under a life insurance policy in which the decedent was the named insured is paid out of other assets as the result of a claim being allowed, the person or entity that makes the payment is subrogated to all rights that the claimant had against the proceeds.

854.05(5) (5) Contrary intent.

854.05(5)(a) (a) If the person who executed the governing instrument had an intent contrary to any provision in this section, then that provision is not applicable to the transfer. Extrinsic evidence may be used to construe the intent.

854.05(5)(b) (b) A general directive to pay debts does not give rise to a presumption of exoneration.

854.05 History History: 1997 a. 188; 2005 a. 216.

854.06 854.06 Predeceased transferee.

854.06(1) (1) Definitions. In this section:

854.06(1)(a) (a) “Provision in a governing instrument” includes all of the following:

854.06(1)(a)1. 1. A gift to an individual whether or not the individual is alive at the time of the execution of the instrument.

854.06(1)(a)2. 2. A share in a class gift only if a member of the class dies after the execution of the instrument.

854.06(1)(a)3. 3. An appointment by the decedent under any power of appointment, unless the issue who would take under this section could not have been appointees under the terms of the power.

854.06(1)(c) (c) “Stepchild” means a child of the decedent’s surviving, deceased or former spouse, and not of the decedent.

854.06(2) (2) Scope of coverage. This section applies to revocable provisions in a governing instrument executed by the decedent that provide for an outright transfer upon the death of the decedent to any of the following persons:

854.06(2)(a) (a) A grandparent of the decedent, or issue of a grandparent, subject to s. 854.21.

854.06(2)(b) (b) A stepchild of the decedent, subject to s. 854.15.

854.06(3) (3) Substitute gift to issue of covered transferee. Subject to sub. (4), if a transferee under a provision described in sub. (2) does not survive the decedent but has issue who do survive, the issue of the transferee take the transfer per stirpes, as provided in s. 854.04 (1).

854.06(4) (4) Contrary intent.

854.06(4)(a) (a) Subsection (3) does not apply if any of the following applies:

854.06(4)(a)1. 1. The governing instrument provides that a transfer to a predeceased beneficiary lapses.

854.06(4)(a)2. 2. The governing instrument designates one or more persons, classes, or groups of people as contingent transferees, in which case those transferees take in preference to those under sub. (3). But if none of the contingent transferees survives, sub. (3) applies to the first group in the sequence of contingent transferees that has one or more transferees specified in sub. (2) who left surviving issue.

854.06(4)(bm) (bm) If the person who executed the governing instrument had an intent contrary to any provision in this section, then that provision is not applicable to the transfer. Extrinsic evidence may be used to construe the intent.

854.06 History History: 1997 a. 188; 2005 a. 216.

854.06 Annotation A will clause providing that if any beneficiary dies within 5 months of the testator, the deceased beneficiary’s share is to be treated as if the beneficiary predeceased the testator, served to pass a deceased beneficiary’s share to her children under the anti-lapse statute. Firehammer v. Marchant, 224 Wis. 2d 673, 591 N.W.2d 898 (Ct. App. 1999), 98-0586.

854.07 854.07 Failed transfer and residue.

854.07(1) (1) Except as provided in sub. (4) and s. 854.06, if an attempted transfer under a governing instrument fails, the attempted transfer becomes part of the residue of the governing instrument. This subsection does not apply if the attempted transfer is itself a residuary transfer.

854.07(2) (2) Except as provided in sub. (4) and s. 854.06, if the residue of a governing instrument is to be transferred to 2 or more persons, the share of a residuary transferee that fails passes to the other residuary transferees in proportion to the interest of each in the remaining part of the residue.

854.07(3) (3) If a governing instrument other than a will does not effectively dispose of an asset that is governed by the instrument, that asset shall be paid or distributed to the transferor’s probate estate.

854.07(4) (4) If the person who executed the governing instrument had an intent contrary to any provision in this section, then that provision is inapplicable to the transfer. Extrinsic evidence may be used to construe the intent.