Chapter 701

701.1004(3)(c)2. 2. Except as provided in subd. 3., if the moving party demonstrates to the court that there is a reasonable basis for the court to find that a breach of trust occurred, the court shall enter an order prohibiting the payment of further attorney fees and costs from trust property and shall order attorney fees or costs previously paid from trust property in such proceeding to be refunded, unless the court finds good cause to allow attorney fees and costs to be paid from the trust. A trustee, directing party, or trust protector may offer evidence to rebut the evidence submitted to the court by the moving party.

701.1004(3)(c)3. 3. The court may defer ruling on a motion to prohibit a trustee from paying costs or attorney fees from trust property until discovery is taken by the parties.

701.1004(3)(c)4. 4. An order entered under this paragraph does not limit a trustee’s, directing party’s, or trust protector’s right to seek an order allowing the payment of some or all of the attorney fees or costs incurred in the proceeding from trust property, including any fees required to be refunded, after the claim or defense is finally determined by the court. If a claim or defense based upon a breach of trust is withdrawn, dismissed, or resolved without a determination by the court that the trustee committed a breach of trust, after the entry of an order prohibiting payment of attorney fees and costs pursuant to this paragraph, the trustee may pay costs or attorney fees incurred in the proceeding from the trust property without further court authorization.

701.1004(3)(d) (d) If the court orders a refund under par. (c), the court may enter sanctions as are appropriate if a refund is not made as directed by the court, including striking defenses or pleadings filed by the trustee, directing party, or trust protector. Nothing in this paragraph limits other remedies and sanctions the court may employ for the failure to refund the trust in a timely manner.

701.1004(3)(e) (e) Subject to s. 701.1005, nothing in this subsection limits the power of the court to review fees and costs or the right of any interested persons to challenge fees and costs after payment, after an accounting, or after conclusion of the litigation.

701.1004(3)(f) (f) Notice under par. (b) is not required if the action or defense is later withdrawn or dismissed by the party that is alleging a breach of trust or resolved without a determination by the court that the trustee has not committed a breach of trust.

701.1004(4) (4) A provision of a trust instrument drafted or caused to be drafted by a trustee, directing party, or trust protector that modifies the application of this section in a manner favorable to the trustee, directing party, or trust protector and potentially detrimental to a beneficiary is invalid with respect to the trustee, directing party, or trust protector unless the trustee, directing party, or trust protector proves that the provision was fair under the circumstances existing at the time the trust instrument was signed and that the existence and contents of the provision were adequately communicated to the settlor.

701.1004 History History: 2013 a. 92.

701.1005 701.1005 Limitation of action against trustee.

701.1005(1) (1) A beneficiary may not commence a proceeding against a trustee for breach of trust more than one year after the earlier of either the date on which the beneficiary or a representative of the beneficiary waived the right to a report under s. 701.0813 (4) or the date on which the beneficiary or a representative of the beneficiary was sent a report or other record that adequately disclosed the existence of a potential claim for breach of trust.

701.1005(2) (2) A report or other record adequately discloses the existence of a potential claim for breach of trust if it provides sufficient information so that the beneficiary or representative knows of the potential claim or should have inquired into its existence.

701.1005(3) (3) If sub. (1) does not apply, a proceeding by a beneficiary against a trustee for breach of trust must be commenced within 5 years after the first to occur of the following:

701.1005(3)(a) (a) The removal, resignation, or death of the trustee.

701.1005(3)(b) (b) The termination of the beneficiary’s interest in the trust.

701.1005(3)(c) (c) The termination of the trust.

701.1005(4) (4) Subsections (1) and (3) do not apply to a claim for fraud. The time for asserting a claim for fraud is governed by applicable law.

701.1005 History History: 2013 a. 92; 2023 a. 127.

701.1006 701.1006 Reliance on trust instrument. A trustee who acts in reasonable reliance on the terms of the trust as expressed in the trust instrument is not liable to a beneficiary for a breach of trust to the extent the breach resulted from the reliance.

701.1006 History History: 2013 a. 92.

701.1007 701.1007 Event affecting administration or distribution. If the happening of an event, including marriage, divorce, performance of educational requirements, or death, affects the administration or distribution of a trust, a trustee who has exercised reasonable care to ascertain the happening of the event is not liable for a loss resulting from the trustee’s lack of knowledge.

701.1007 History History: 2013 a. 92.

701.1008 701.1008 Exculpation of trustee.

701.1008(1) (1) A term of a trust relieving a trustee of liability for breach of trust is unenforceable to the extent that it does any of the following:

701.1008(1)(a) (a) Relieves the trustee of liability for breach of trust committed in bad faith or with reckless indifference to the purposes of the trust or the interests of a beneficiary.

701.1008(1)(b) (b) Was inserted as the result of an abuse by the trustee of a fiduciary or confidential relationship with the settlor.

701.1008(2) (2) An exculpatory term drafted or caused to be drafted by the trustee is invalid as an abuse of a fiduciary or confidential relationship unless the trustee proves that the exculpatory term was fair under the circumstances existing at the time the trust instrument was signed and that the existence and contents of the exculpatory term were adequately communicated to the settlor.

701.1008 History History: 2013 a. 92.

701.1009 701.1009 Beneficiary’s consent, release, or ratification. A trustee is not liable to a beneficiary for breach of trust if the beneficiary consented to the conduct constituting the breach, released the trustee from liability for the breach, or ratified the transaction constituting the breach, unless any of the following applies:

701.1009(1) (1) The consent, release, or ratification of the beneficiary was induced by improper conduct of the trustee.

701.1009(2) (2) At the time of the consent, release, or ratification, the beneficiary did not have knowledge or a reasonable opportunity to obtain knowledge of the beneficiary’s rights or of the material facts relating to the breach.

701.1009 History History: 2013 a. 92; 2023 a. 127.

701.1010 701.1010 Limitation on personal liability of trustee.

701.1010(1) (1) Except as otherwise provided in the contract, a trustee is not personally liable on a contract properly entered into in the trustee’s fiduciary capacity in the course of administering the trust if the trustee in the contract disclosed the fiduciary capacity.

701.1010(2) (2) A trustee is personally liable for torts committed in the course of administering a trust, or for obligations arising from ownership or control of trust property, including liability for violation of environmental law, only if the trustee is personally at fault.

701.1010 History History: 2013 a. 92.

701.1011 701.1011 Interest as general partner.

701.1011(1) (1) Unless personal liability is imposed in the contract, a trustee who holds an interest as a general partner in a general or limited partnership is not personally liable on a contract entered into by the partnership after the trust’s acquisition of the interest if the fiduciary capacity was disclosed in the contract.

701.1011(2) (2) A trustee who holds an interest as a general partner is not personally liable for torts committed by the partnership or for obligations arising from ownership or control of the interest unless the trustee is personally at fault.

701.1011(3) (3) If the trustee of a revocable trust holds an interest as a general partner, the settlor is personally liable for contracts and other obligations of the partnership as if the settlor were a general partner.

701.1011 History History: 2013 a. 92.

701.1012 701.1012 Protection of person dealing with trustee.

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.