701.0505(2)(b)2.
2. The beneficiary's right to withdraw part of the trust property, to the extent that the value of the property affected by the lapse, waiver, or release in any year does not exceed the greater of the following:
701.0505(2)(b)2.b.
b. The amount referenced in section
2503 (b) of the Internal Revenue Code for each individual other than the beneficiary who makes a transfer to the trust or who is deemed to make a transfer to the trust pursuant to an election to split gifts under section
2513 (a) of the Internal Revenue Code.
701.0505(2)(c)
(c) A beneficiary of a trust is not a settlor, has not made a voluntary or involuntary transfer of the beneficiary's interest in the trust, and does not have the power to make a voluntary or involuntary transfer of the beneficiary's interest in the trust solely because the beneficiary holds, exercises, or allows in any capacity, any of the following:
701.0505(2)(c)1.
1. A presently exercisable power to consume, invade, appropriate, or distribute property to or for the benefit of the beneficiary if the power is any of the following:
701.0505(2)(c)1.a.
a. Exercisable only with the consent of another person holding an interest adverse to the beneficiary's interest.
701.0505(2)(c)2.
2. A presently exercisable power to appoint any property of the trust to or for the benefit of a person other than the beneficiary, a creditor of the beneficiary, the beneficiary's estate, or a creditor of the beneficiary's estate.
701.0505(2)(d)
(d) A beneficiary of a trust is not a settlor solely because the beneficiary is entitled to nondiscretionary distributions from the trust.
701.0505(2)(e)1.1. Contributions to the following trusts are not considered to have been contributed by the settlor:
701.0505(2)(e)1.a.
a. An irrevocable marital trust that is treated as qualified terminable interest property under section
2523 (f) of the Internal Revenue Code if after the death of the settlor's spouse the settlor is a beneficiary of the trust or an irrevocable trust that receives property from the trust.
701.0505(2)(e)1.b.
b. An irrevocable marital trust that is treated as a general power of appointment trust under section
2523 (e) of the Internal Revenue Code if after the death of the settlor's spouse the settlor is a beneficiary of the trust or an irrevocable trust that receives property from the trust.
701.0505(2)(e)1.c.
c. An irrevocable trust for the settlor's spouse if after the death of the settlor's spouse the settlor is a beneficiary of the trust or an irrevocable trust that receives property from the trust.
701.0505(2)(e)1.d.
d. An irrevocable trust for the benefit of a person, the settlor of which is the person's spouse, regardless of whether or when the person was the settlor of an irrevocable trust for the benefit of that spouse.
701.0505(2)(e)1.e.
e. An irrevocable trust for the benefit of a person to the extent that the property of the trust was subject to a general power of appointment in another person.
701.0505(2)(e)2.
2. A person who would otherwise be treated as a settlor of a trust described in subd.
1. a. to
e. is not treated as a settlor of the trust.
701.0505(2)(e)3.
3. For purposes of this paragraph, notwithstanding s.
701.0103 (3), “beneficiary" means a person who satisfies s.
701.0103 (3) (a) or
(b) and who is designated in a trust instrument or through the exercise of a nongeneral or general power of appointment.
701.0505(3)
(3) Any order entered by a court under this section is subject to modification upon application of an interested person.
701.0505 History
History: 2013 a. 92 ss.
99,
108 to
110;
2023 a. 127.
701.0506(1)(1)
In this section, “mandatory distribution" means a distribution of income or principal that the trustee is required to make to a beneficiary under the terms of the trust, including a distribution upon termination of the trust. “Mandatory distribution" does not include a distribution subject to the exercise of the trustee's discretion even if any of the following applies:
701.0506(1)(a)
(a) The discretion is expressed in the form of a standard of distribution.
701.0506(1)(b)
(b) The terms of the trust authorizing a distribution couple language of discretion with language of direction.
701.0506(2)
(2) Whether or not a trust contains a spendthrift provision, a creditor or assignee of a beneficiary may reach a mandatory distribution of income or principal, including a distribution upon termination of the trust, if the trustee has not made the distribution to the beneficiary within a reasonable time after the designated distribution date.
701.0506 History
History: 2013 a. 92.
701.0507
701.0507
Personal obligations of trustee. Trust property is not subject to personal obligations of the trustee, even if the trustee becomes insolvent or bankrupt.
701.0507 History
History: 2013 a. 92.
701.0508
701.0508
Debts of deceased settlor. 701.0508(1)(1)
Deadline on claims. A claimant must assert a claim for payment of a debt of a deceased settlor within the time for such claims under applicable law. For purposes of this section, a debt incurred by a trustee of a revocable trust before the death of a settlor of the revocable trust shall be treated in the same manner as a debt of the settlor. A trustee of a trust that was revocable at the settlor's death may shorten the time period and set a deadline for filing claims with the trustee by doing any of the following:
701.0508(1)(a)
(a) Publishing a legal notice as a class 3 notice under ch.
985 in the county in which the deceased settlor resided. The legal notice shall identify the name, address, and any other contact information of the trustee or other person with whom claims must be filed. The deadline for a claim by any claimant who is not known by the trustee shall be the earlier of the date that is 4 months after the date of the first insertion of the legal notice or, if sub.
(6) is applicable, the deadline prescribed under s.
859.01.
701.0508(1)(b)
(b) Giving notice to a potential claimant. The notice shall include a copy of the legal notice, if published, and shall identify the name, address, and any other contact information of the trustee or other person with whom claims must be filed and shall state that any claim by the potential claimant must be filed not later than the date that is 30 days from the date notice is given to the potential claimant or the deadline specified in the legal notice. If a legal notice has not been published, the deadline shall be 4 months from the date the trustee provides notice to the potential claimant.
701.0508(1)(c)
(c) Publishing a legal notice and not giving a separate notice to a potential claimant who is known to the trustee. The deadline for a claim when a legal notice has been published but notice is not given to a known potential claimant is the later of the date that is one year from the date of the settlor's death or the deadline specified in the legal notice.
701.0508(2)
(2) Exceptions to deadlines on claims. A claim that is not filed on or before an applicable deadline specified under sub.
(1) is not barred if the claim is a claim based on tort, a marital property agreement that is subject to the time limitations under s.
766.58 (13) (b) or
(c), Wisconsin income, franchise, sales, withholding, gift, or death taxes, unemployment compensation contributions due or benefits overpaid, funeral or administrative expenses, a claim of this state under s.
46.27 (7g), 2017 stats., or s.
49.496,
49.682, or
49.849, or a claim of the United States.
701.0508(3)(a)
(a) A claim is considered filed if the claimant provides notice of the claim to the trustee or other person with whom claims must be filed as prescribed under sub.
(1) (a) or
(b).
701.0508(3)(b)
(b) A claim is considered filed if the deceased settlor is subject to a probate proceeding in this state and a claim is filed with the court under ch.
859.
701.0508(3)(c)
(c) If an action is pending against a deceased settlor at the time of the settlor's death and the action survives, the plaintiff in that action may serve a notice of substitution of party defendant on the trustee and file proof of service of notice in the court. Filing of proof of service on or before the deadline for filing a claim under sub.
(1) gives the plaintiff the same rights against the trust as the filing of a claim.
701.0508(4)(a)(a) A claim that was barred by a statute of limitations at the time of the deceased settlor's death is barred and the claimant may not pursue a claim against the trustee, the trust property, or recipients with respect to trust property.
701.0508(4)(b)
(b) A claim not barred by a statute of limitations at the time of the settlor's death shall not be barred thereafter by a statute of limitations if the claim is filed on or before the deadline for filing a claim under sub.
(1).
701.0508(4)(c)
(c) A claim that is not filed or is filed after the deadline for filing a claim under sub.
(1) is barred and the claimant may not pursue a claim against the trustee, the trust property, or recipients with respect to trust property.
701.0508(4)(d)
(d) The deadlines established under sub.
(1) do not extend the time for commencement of a claim beyond the time provided by any statute of limitations applicable to that claim.
701.0508(5)
(5) Satisfaction of claim from other property. Failure of a claimant timely to file a claim as provided in this section does not bar the claimant from satisfying the claim, if not otherwise barred, from property other than trust property.
701.0508(6)
(6) Coordination with probate. If a legal notice has been published with respect to the estate of a deceased settlor who died domiciled in this state, property of a trust that was revocable at the settlor's death shall be treated as property of the estate solely for purposes of administering claims under ch.
859. The trustee shall be subject to the jurisdiction of the court in which the estate administration is pending. A personal representative, as defined in s.
851.23, shall provide notice to the trustee regarding claims filed against the estate. A claim barred under ch.
859 may not be satisfied from property of a trust that was revocable at the settlor's death. The trustee and qualified beneficiaries shall have standing to file an objection, offset, or counterclaim with respect to claims filed against the estate. Nothing in this subsection causes property of the trust that otherwise would be exempt from claims to be subject to claims filed against the settlor's estate. If the trust is not referenced in a deceased settlor's will, the trustee of a trust that was revocable at the settlor's death shall provide notice to a personal representative of the settlor's estate, if any, of the existence of such trust.
701.0509
701.0509
Procedures for claims for debts of a deceased settlor; revocable trusts. 701.0509(1)(1)
Scope of applicability. The procedures under this section apply only to claims against a trust that was revocable by the settlor until the settlor's death.
701.0509(2)
(2) Form and verification of claims; trustee response to claims. 701.0509(2)(a)(a)
General requirements. A claim shall be in writing, shall describe the nature and amount of the claim, if ascertainable, shall identify the name, address, and any other contact information of the claimant, and shall be sworn to by the claimant or a person on the claimant's behalf that the amount is justly due, or if not yet due, when it will or may become due, that no payments have been made on the claim that are not credited, and that there are no offsets to the knowledge of the affiant, except as stated in the claim.
701.0509(2)(b)
(b)
Requirements when claim founded on written instrument. If a claim is founded on a written instrument that is available, the original instrument or a copy of the original instrument shall be attached to the claim.
701.0509(2)(c)
(c)
Trustee response to a claim. A trustee does not need to respond to a claim until after the expiration of the deadline for filing a claim against the trust under s.
701.0508. Within 30 days after the later of the receipt of the claim or 30 days after the expiration of the deadline, the trustee shall make a good faith determination of whether the claim is valid, absolute, contingent, or invalid, or whether the trustee will object to the claim, and the trustee shall inform the claimant of the determination. If the trustee decides to object to the claim, the claim may be compromised as provided in sub.
(10) or contested as provided under sub.
(11). If the trustee determines the claim is invalid, the claimant may object to that determination under sub.
(11). If the trustee fails to respond within the applicable period, the claim shall be presumed valid and the claimant may seek enforcement under sub.
(11).
701.0509(3)
(3) Claims not due. If a claim will become due at some future time, the trustee may, or the court with respect to a contested claim may order the trustee to, do any of the following:
701.0509(3)(b)
(b) Pay the claim at the present value and in the same manner as in the case of an absolute claim that has been allowed.
701.0509(3)(c)
(c) Retain sufficient funds to satisfy the claim upon maturity.
701.0509(3)(d)
(d) Obtain a bond to be given by the distributees for payment in satisfaction of the claim and order the trust to be administered as if the claim had not been filed.
701.0509(4)(a)
(a) When a claimant holds any security for a claim, the security shall be described in the written claim given to the trustee. The security is sufficiently described if the security document is described by date and by the recording or filing data.
701.0509(4)(b)
(b) Payment of the claim shall be made on the basis of one of the following:
701.0509(4)(b)1.
1. If the creditor surrenders the security, the full amount of the claim.
701.0509(4)(b)2.
2. If the creditor realizes on the security before receiving payment, upon the full amount of the claim allowed less the fair value of the security.
701.0509(5)
(5) Contingent claims. If the amount or validity of a claim cannot be determined until some time in the future, the claim is a contingent claim regardless of whether the claim is based on an event that occurred in the past or on an event that may occur in the future. Except for claims of the type not required to be filed under s.
701.0508 (2), contingent claims must be filed with the trustee as provided under sub.
(2). If the trustee determines the claim to be valid subject to the contingency, the determination shall state the nature of the contingency. If the trustee determines the claim to be valid and absolute before distribution of the trust, the claim shall be paid in the same manner as absolute claims of the same class. In all other cases the trustee, or the court in the case of a contested claim, may provide for the payment of contingent claims in any of the following methods:
701.0509(5)(a)
(a) The claimant and trustee may determine, by agreement, arbitration, or compromise, the value of the claim, according to its probable present worth, and it shall be paid in the same manner as a valid and absolute claim.
701.0509(5)(b)
(b) The trustee may, or the court may order the trustee to, in the case of a contested claim, make distribution of the trust but retain sufficient funds to pay the claim if and when the same becomes absolute. For this purpose, the trust may not be required to remain intact longer than 2 years after distribution of the remainder of the trust has been made, and if the claim has not become absolute within that time, distribution shall be made to the distributees of the retained funds, after paying any costs and expenses accruing during such period, but the distributees shall be liable to the claimant to the extent provided in sub.
(6), if the contingent claim thereafter becomes absolute. When distribution is so made to distributees, the trustee or the court may require the distributees to give bond for the satisfaction of their liability to the contingent claimant.
701.0509(5)(c)
(c) The trustee may require, or the court, in the case of a contested claim, may order, distribution of the trust as though the contingent claim did not exist, but the distributees shall be liable to the claimant as limited by sub.
(7), if the contingent claim thereafter becomes absolute. The trustee or the court may require the distributees to give bond for the satisfaction of their liability to the contingent claimant.
701.0509(5)(d)
(d) Any other method the trustee determines or the court, in the case of a contested claim, orders.
701.0509(6)
(6) Payment of contingent claims by distributees. If a contingent claim is filed and the trustee determines the claim to be valid subject to the contingency and all of the assets of the trust, including the fund set apart for the payment of the claim, have been distributed, the claimant may recover on the claim against those distributees, or the persons who furnish bond for the distributees, whose distributive shares have been increased by reason of the fact that the amount of the claim as finally determined was not paid prior to final distribution, if a proceeding for the claim is commenced in court within 6 months after the claim becomes absolute. A distributee or the person who furnishes bond for the distributee shall not be liable for an amount exceeding that person's proportionate share of the trust subject to the claim, nor for an amount greater than the value of the property that that person received from the trust, the value to be determined as of the time of distribution to the distributee.
701.0509(7)
(7) Priority of payment of claims and allowances. 701.0509(7)(a)(a) Classes and priority. At the time a claim is determined to be valid, the claim shall be classified in one of the categories under subds.
1. to
8. The trustee shall pay an absolute claim if the trustee reasonably believes the assets of the trust are sufficient to pay the claim. If the applicable assets of the trust are insufficient to pay the claim in full, the trustee shall make payment in the following order:
701.0509(7)(a)3.
3. Provisions for the family of the deceased settlor under ss.
861.31,
861.33, and
861.35, which sections are incorporated by reference and applied as if the trust is an estate.
701.0509(7)(a)4.
4. Reasonable and necessary expenses of the last illness of the deceased settlor, including compensation of persons attending the deceased settlor.
701.0509(7)(a)5.
5. All debts, charges, or taxes owing to the United States, this state, or a governmental subdivision or municipality of this state.
701.0509(7)(a)6.
6. Wages, including pension, welfare, and vacation benefits, due to employees that have been earned within 3 months before the date of the death of the deceased settlor, not to exceed $300 in value to each employee.
701.0509(7)(a)7.
7. Property assigned to the surviving spouse or surviving domestic partner under s.
861.41, which section is incorporated by reference and applied as if the trust is an estate.
701.0509(7)(b)
(b)
No preference within classes. Preference shall not be given in the payment of any claim over any other claim of the same class, nor shall a claim due and payable be entitled to a preference over a claim not due.
701.0509(8)
(8) Execution and levies prohibited. Garnishment, attachment, or execution shall not issue against, nor shall any levy be made against, any property of the trust under any judgment or cause of action against a deceased settlor or the trustee, but this subsection shall not be construed to prevent the enforcement of mortgages, pledges, liens, or other security agreements upon real or personal property in an appropriate proceeding.
701.0509(9)
(9) Qualified beneficiaries and claimants may be informed of claims. After the deadline for filing a claim against the trust under s.
701.0508, any qualified beneficiary or claimant may make a written request to the trustee for a statement listing all claims that have been filed against the trust. The statement provided by the trustee shall show each claim, the name of the claimant, a brief description of the basis of the claim, the amount claimed, and the trustee's determination of whether the claim is valid, absolute, contingent, or invalid, or whether the trustee will object to the claim in whole or in part. The trustee shall provide notice of the statement to the requester, including any representative under subch.
III within 5 business days of the receipt of the request. The requester shall, within 5 business days of receiving notice of the statement from the trustee, inform the trustee whether the requester agrees or objects to the trustee's determination on whether to allow the claim in whole or in part or whether to object to the claim. Failure on the part of any party to comply with this subsection does not affect the jurisdiction of the court to intervene in the administration of the claim.
701.0509(10)
(10) Compromise of claims. When a claim against a trust has been filed and payment of the claim is pending, the claimant and trustee may, if it appears to be in the best interest of the trust, compromise the claim, whether due or not due, absolute or contingent, or liquidated or unliquidated. If an objection to the claim has been filed by a qualified beneficiary or another claimant, no compromise of the claim may be made without the consent of the objector.
701.0509(11)
(11) Contest and enforcement of claims; court procedure. 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.
