Chapter DFI-SB 17

DFI-SB 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-SB 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-SB 17.01(7) (7) “Local law” means the law of the state or other jurisdiction governing the fiduciary relationship.

DFI-SB 17.01(8) (8) “Managing agent” means the fiduciary relationship assumed by a savings bank upon the creation of an account which names the savings bank as agent and confers investment discretion upon the savings bank.

DFI-SB 17.01(9) (9) “Plan” means a plan adopted under s. DFI-SB 17.14.

DFI-SB 17.01(10) (10) “State chartered corporate fiduciary” means any state bank, trust company, savings and loan association or other corporation which comes into competition with savings banks and is permitted to act in a fiduciary capacity under the laws of this state.

DFI-SB 17.01(11) (11) “Trust department” means that group of officers and employees of a savings bank or of an affiliate of a savings bank to whom are assigned the performance of fiduciary services by the savings bank.

DFI-SB 17.01(12) (12) “Trust powers” means the power to act in any fiduciary capacity.

DFI-SB 17.01 Note Note: This section parallels 12 CFR 550.1 and s. DFI-SL 17.01.

DFI-SB 17.01 History History: Cr. Register, February, 1994, No. 458, eff. 3-1-94; correction in (2) and (5) made under s. 13.92 (4) (b) 7., Stats., Register December 2012 No. 684.

DFI-SB 17.02 DFI-SB 17.02 Special permit. The division may, on application, grant a special permit to a savings bank or affiliate of a savings bank to exercise trust powers. The division shall review and make a determination on the application within 30 business days of its receipt. Except as permitted under s. 214.04 (10) and (22), Stats., no savings bank may exercise trust powers without obtaining the permit.

DFI-SB 17.02 Note Note: This section interprets or implements ss. 214.03 and 214.04, Stats.

DFI-SB 17.02 Note Note: Sentence one parallels 12 USC 1464 (n) 1. The section parallels s. DFI-SL 17.02.

DFI-SB 17.02 History History: Cr. Register, February, 1994, No. 458, eff. 3-1-94.

DFI-SB 17.03 DFI-SB 17.03 Filing applications.

DFI-SB 17.03(1) (1) Application. An application filed under s. DFI-SB 17.02 shall indicate the trust services the savings bank wishes to offer and provide the information necessary to make the determinations under sub. (2).

DFI-SB 17.03(2) (2) Factors considered. Factors the division will consider in acting upon an application to exercise trust powers include, but are not limited to, the following:

DFI-SB 17.03(2)(a) (a) The financial condition of the savings bank, except trust powers may not be granted to a savings bank if its financial condition is such that the savings bank does not meet the financial standards required of state chartered corporate fiduciaries;

DFI-SB 17.03(2)(b) (b) The needs of the community for fiduciary services and the probable volume of fiduciary business available to the savings bank.

DFI-SB 17.03(2)(c) (c) The general character and ability of the management of the savings bank;

DFI-SB 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-SB 17.03(2)(e) (e) Whether the savings bank has available legal counsel to advise and pass upon fiduciary matters.

DFI-SB 17.03 Note Note: This section parallels 12 CFR 550.2 and s. DFI-SL 17.03.

DFI-SB 17.03 History History: Cr. Register, February, 1994, No. 458, eff. 3-1-94.

DFI-SB 17.04 DFI-SB 17.04 Administration of trust powers.

DFI-SB 17.04(1) (1) General provisions.

DFI-SB 17.04(1)(a) (a) Responsibility of the board of directors. The board of directors of a savings bank is responsible for the proper exercise of fiduciary powers by the savings bank. 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 savings bank 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 savings bank’s trust powers to a director, officer, employee, or committee.

DFI-SB 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 savings bank has investment responsibilities, the savings bank 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 savings bank 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-SB 17.04(2) (2) Use of other savings bank personnel. The trust department may utilize personnel and facilities of other departments of the savings bank, and other departments of the savings bank may utilize personnel and facilities of the trust department unless prohibited by law.

DFI-SB 17.04(3) (3) Compliance with federal securities laws. Every savings bank exercising trust powers shall adopt written policies and procedures to ensure that 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 savings bank’s trust department shall not use material inside information in connection with any decision or recommendation to purchase or sell any security.

DFI-SB 17.04(4) (4) Legal counsel. Every savings bank exercising fiduciary powers shall designate, employ or retain legal counsel who shall be readily available to pass upon fiduciary matters and to advise the savings bank and its trust department.

DFI-SB 17.04(5) (5) Bonding. Directors, officers and employees of a savings bank engaged in the operation of a trust department shall acquire bond coverage as the division may require.

DFI-SB 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 savings bank may take the necessary oath or execute the necessary affidavit.

DFI-SB 17.04 Note Note: This section parallels 12 CFR 550.5 and 12 USC 1464 (n) (7) and s. DFI- 17.04.

DFI-SB 17.04 History History: Cr. Register, February, 1994, No. 458, eff. 3-1-94.

DFI-SB 17.05 DFI-SB 17.05 Books and accounts.

DFI-SB 17.05(1) (1) General. Every savings bank exercising trust powers shall keep its fiduciary records separate and distinct from other records of the savings bank. All fiduciary records shall be kept and retained for such time as to enable the savings bank 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-SB 17.05(2) (2) Record of pending litigation. Every savings bank shall keep an adequate record of all pending litigation to which it is a party in connection with its exercise of trust powers.

DFI-SB 17.05 Note Note: This section parallels 12 CFR 550.6 and s. DFI-SL 17.05.

DFI-SB 17.05 History History: Cr. Register, February, 1994, No. 458, eff. 3-1-94.

DFI-SB 17.06 DFI-SB 17.06 Audit of trust department. At least once during each calendar year, the savings bank’s trust department shall be audited by certified public accountants in a manner consistent with s. 214.76, 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. 214.76, Stats.

DFI-SB 17.06 Note Note: This section parallels 12 CFR 550.7 and s. DFI-SL 17.06.

DFI-SB 17.06 History History: Cr. Register, February, 1994, No. 458, eff. 3-1-94.

DFI-SB 17.07 DFI-SB 17.07 Segregation of assets; prohibited deposits. Savings banks exercising any of the powers enumerated in this chapter shall segregate all assets held in any fiduciary capacity from the general assets of the savings bank. No savings bank 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-SB 17.07 Note Note: This section parallels 12 USC 1464 (n) (3) and (4) and s. DFI-SL 17.07 and is intended to prohibit operating a check clearing exchange through a trust account.

DFI-SB 17.07 History History: Cr. Register, February, 1994, No. 458, eff. 3-1-94.

DFI-SB 17.08 DFI-SB 17.08 Funds awaiting investment or distribution.

DFI-SB 17.08(1) (1) General. Funds held in a fiduciary capacity by a savings bank awaiting investment or distribution may not be held uninvested or undistributed any longer than is reasonable for the proper management of the account.

DFI-SB 17.08(2) (2) Use by association in regular business. Funds held in trust by a savings bank, including managed 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 savings bank, except the savings bank shall first set aside under control of the trust department as collateral security:

DFI-SB 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-SB 17.08(2)(b) (b) Readily marketable securities of the classes in which state chartered corporate fiduciaries may invest trust funds; or

DFI-SB 17.08(2)(c) (c) Other readily marketable securities as the division may determine.

DFI-SB 17.08(3) (3) Contingent lien. A savings bank shall ensure that in the event of its failure, the owners of the funds held in trust for investment under this chapter shall have a lien on the bonds or other securities set apart under sub. (2) in addition to their claim against the estate of the savings bank.

DFI-SB 17.08(4) (4) Amount of collateral. Collateral securities or securities substituted for collateral securities as collateral shall at all times be at least equal in face value to the amount of trust funds deposited under sub. (2), but the security is not required to the extent that the funds so deposited are insured by the federal deposit insurance corporation.

DFI-SB 17.08(5) (5) Productivity. Any funds held by a savings bank as fiduciary awaiting investment or distribution and deposited in other departments of the savings bank shall be made productive.

DFI-SB 17.08 Note Note: This section parallels 12 CFR 550.8 and 12 USC 1464 (n) (5).

DFI-SB 17.08 History History: Cr. Register, February, 1994, No. 458, eff. 3-1-94.

DFI-SB 17.09 DFI-SB 17.09 Investment of funds held as fiduciary.

DFI-SB 17.09(1) (1) Private trusts. Funds held by a savings bank in a fiduciary capacity shall be invested in accordance with the instrument establishing the fiduciary relationship and local law. If the instrument does not specify the character or class of investments to be made and does not give the savings bank, its directors, or its officers investment discretion in the matter, funds held under the instrument may be invested in any investment in which state chartered corporate fiduciaries may invest under local law.

DFI-SB 17.09(2) (2) Court trusts. If, under local law, corporate fiduciaries appointed by a court are permitted to exercise discretion in investments, or if a savings bank acting as fiduciary under appointment by a court is vested with discretion in investments by an order of the court, funds of the accounts may be invested in any investments which are permitted by local law. Otherwise, a savings bank acting as fiduciary under appointment by a court shall make all investments of funds in such accounts under an order of that court. The orders in either case shall be preserved with the fiduciary records of the savings bank.

DFI-SB 17.09(3) (3) Collective investment of trust funds. The collective investment of funds received or held by a savings bank as fiduciary is governed by ss. DFI-SB 17.13 and 17.14.

DFI-SB 17.09 History History: Cr. Register, February, 1994, No. 458, eff. 3-1-94.

DFI-SB 17.10 DFI-SB 17.10 Self-dealing.

DFI-SB 17.10(1) (1) Purchases. Unless authorized by the instrument creating the relationship, or by court order or local law, funds held by a savings bank as fiduciary shall not be invested in:

DFI-SB 17.10(1)(a) (a) Stock or obligations of, or property acquired from, the savings bank or its directors, officers, or employees, or individuals with whom there exists a connection, or organizations in which there exists an interest, which may affect the exercise of the best judgment of the savings bank in acquiring the property; or

DFI-SB 17.10(1)(b) (b) Stock or obligations of, or property acquired from, affiliates of the savings bank or their directors, officers or employees.

DFI-SB 17.10(2) (2) Loans. No savings bank may lend any officer, director, or employee any funds held in trust under the powers conferred by this chapter.

DFI-SB 17.10(3) (3) Sale or transfer. Property held by a savings bank as fiduciary shall not be sold or transferred, by loan or otherwise, to the savings bank or its directors, officers, or employees, or to individuals with whom there exists a connection, or organizations in which there exists such an interest, which may affect the exercise of the best judgment of the savings bank in selling or transferring the property, or to affiliates of the savings bank or their directors, officers or employees, except:

DFI-SB 17.10(3)(a) (a) When lawfully authorized by the instrument creating the relationship or by court order or by local law;

DFI-SB 17.10(3)(b) (b) The savings bank may, if it has been advised by its counsel in writing that it has incurred as fiduciary a contingent or potential liability and desires to relieve itself from the liability, so sell or transfer property with the approval of the board of directors and the division. The savings bank, upon the consummation of the sale or transfer, shall make reimbursement in cash at no loss to the account;

DFI-SB 17.10(3)(c) (c) As provided in the laws and rules governing collective investments; or

DFI-SB 17.10(3)(d) (d) When required by the division.

DFI-SB 17.10(4) (4) Investment in stock of savings bank. Except as provided in s. DFI-SB 17.08, funds held by a savings bank as fiduciary shall not be invested by the purchase of stock or obligations of the savings bank or its affiliates unless authorized by the instrument creating the relationship or by court order or by local law. However, if the retention of stock or obligations of the savings bank or its affiliates is authorized by the instrument creating the relationship or by court order or by local law, it may exercise rights to purchase its own stock or securities convertible into its own stock when offered pro rata to stockholders, unless forbidden by local law. When the exercise of rights or receipt of a stock dividend results in fractional share holdings, additional fractional shares may be purchased to complement the fractional shares so acquired. In elections of directors, a savings bank’s share held by the savings bank as sole trustee, whether in its own name as trustee or in the name of its nominee, may not be voted by the registered owner unless, under the terms of the trust, the manner in which the shares shall be voted may be determined by a donor or beneficiary of the trust and the donor or beneficiary actually directs how the shares will be voted.

DFI-SB 17.10(5) (5) Transactions between accounts.

DFI-SB 17.10(5)(a) (a) A savings bank may sell assets held by it as fiduciary in one account to itself as fiduciary in another account if the transaction is fair to both accounts and if such transaction is not prohibited by the terms of any governing instrument or by local law.

DFI-SB 17.10(5)(b) (b) A savings bank may make a loan to an account from the funds belonging to another account, when the making of loans to a designated account is authorized by the instrument creating the account from which the loans are made, and is not prohibited by local law, and the terms of the transaction are fair to all accounts.

DFI-SB 17.10(5)(c) (c) A savings bank may make a loan to an account and may take as security assets of the account, provided the transaction is fair to the account and is not prohibited by local law.

DFI-SB 17.10 Note Note: This section parallels 12 CFR 550.10, 12 USC 1464 (n) (8) and s. DFI-SL 17.10.

DFI-SB 17.10 History History: Cr. Register, February, 1994, No. 458, eff. 3-1-94.

DFI-SB 17.11 DFI-SB 17.11 Custody of investments.

DFI-SB 17.11(1) (1) Segregation of trust assets and joint custody. The investments of each account shall be kept separate from the assets of the savings bank, and shall be placed in the joint custody or control of not fewer than 2 of the officers or employees of the savings bank designated for that purpose either by the board of directors of the savings bank or by one or more officers designated by the board of directors of the savings bank, and all such officers and employees shall be adequately bonded. To the extent permitted by law, a savings bank may permit the investments of a fiduciary account to be deposited elsewhere.

DFI-SB 17.11(2) (2) Segregation of accounts. The investments of each account shall be either:

DFI-SB 17.11(2)(a) (a) Kept separate from those of all other accounts, except as provided in s. DFI-SB 17.13; or

DFI-SB 17.11(2)(b) (b) Adequately identified as the property of the relevant account.

DFI-SB 17.11 Note Note: This section parallels 12 CFR 550.11 and s. DFI-SL 17.11.

DFI-SB 17.11 History History: Cr. Register, February, 1994, No. 458, eff. 3-1-94.

DFI-SB 17.12 DFI-SB 17.12 Compensation of savings bank.

DFI-SB 17.12(1) (1) General. If the amount of the compensation for acting in a fiduciary capacity is not regulated by local law or provided for in the instrument creating the fiduciary relationship or otherwise agreed to by the parties, a savings bank acting in such capacity may charge or deduct a reasonable compensation for its services. When the savings bank is acting in a fiduciary capacity under appointment by a court, it shall receive the compensation allowed or approved by that court or by local law.

DFI-SB 17.12(2) (2) Officer or employee of savings bank as co-fiduciary. No savings bank may except with the specific approval of its board of directors, permit any of its officers or employees, while serving as a co-fiduciary, to retain any compensation for acting as a co-fiduciary with the savings bank in the administration of any account undertaken by it.