Updated 2023-24 Wis. Stats.  Published and certified under s. 35.18.  March 7, 2025.

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701.0101

CHAPTER 701

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SUBCHAPTER I
GENERAL PROVISIONS AND DEFINITIONS

701.0101  Short title.
701.0102  Scope.
701.0103  Definitions.
701.0104  Knowledge.
701.0105  Default and mandatory rules.
701.0106  Common law of trusts; principles of equity.
701.0107  Governing law.
701.0108  Principal place of administration.
701.0109  Methods of notice; waiver.
701.0110  Others treated as qualified beneficiaries.
701.0111  Nonjudicial settlement agreements.
701.0113  Insurable interest of trustee.

SUBCHAPTER II
JUDICIAL PROCEEDINGS

701.0201  Role of court in administration of trust.
701.0202  Personal jurisdiction.
701.0203  Subject matter jurisdiction.
701.0204  Venue.
701.0205  Notice.
701.0206  Attorney for person in military service.

SUBCHAPTER III
REPRESENTATION

701.0301  Representation: basic effect.
701.0302  Representation by powerholder of certain powers of appointment.
701.0303  Representation by fiduciaries, parents, or a person appointed by a trustee.
701.0304  Representation by person having substantially identical interest.
701.0305  Appointment of representative by a court.
701.0306  Designated representative.
701.0307  Role of a representative or guardian ad litem.
701.0308  Liability of representative.

SUBCHAPTER IV
CREATION, VALIDITY, MODIFICATION,
 AND TERMINATION OF TRUST

701.0401  Methods of creating a trust.
701.0402  Requirements for creation.
701.0403  Trusts created in other jurisdictions.
701.0404  Trust purposes.
701.0405  Charitable purposes; enforcement.
701.0406  Creation of trust induced by fraud, duress, or undue influence.
701.0407  Evidence of oral trust.
701.0408  Trust for care of animal.
701.0409  Noncharitable trust without ascertainable beneficiary.
701.0410  Modification  or  termination  of  trust;  proceedings  for  approval  or

disapproval.

701.0411  Modification  or  termination  of  noncharitable  irrevocable  trust  by

consent.

701.0412  Modification  or  termination  because  of  unanticipated  circumstances  or

inability to administer trust effectively.

701.0413  Cy pres.
701.0414  Modification or termination of uneconomic trust.
701.0415  Reformation to correct mistakes.
701.0416  Modification or termination to achieve settlor do not apply to a conversion of a trust to a unitrust un-
der this section.

NOTE: The correct cross-reference is shown in brackets.  Section 701.0418

was repealed by 2023 Wis. Act 127.  Corrective legislation is pending.

History:  2013 a. 92 ss. 181, 231 to 235, 237 to 242.

701.1107  Express unitrusts.  (1)  In this section, Xexpress
unitrustY means any trust that by its trust instrument requires the
distribution at least annually of a unitrust amount equal to a fixed
percentage of the net fair market value of the trust[s assets, valued
at least annually, other than a trust solely for charitable purposes
or a charitable split-interest trust under section 664 (d) or 170 (f)
(2) (B) of the Internal Revenue Code.

(2)  The following apply to an express unitrust:
(a)  To the extent not otherwise provided for in the trust instru-
ment,  the  unitrust  amount  of  not  less  than  3  percent  nor  more
than 5 percent may be determined by reference to the net fair mar-
ket value of the trust[s assets averaged over a preceding period de-
termined  by  the  trustee,  which  is  at  least  3  years  but  not  more
than 5 years.

(b)  Distribution of such a fixed percentage unitrust amount of
not less than 3 percent nor more than 5 percent is a distribution of
all of the income of the unitrust and is an income interest.

(c)  Such a distribution of a fixed percentage of not less than 3
percent nor more than 5 percent is a reasonable apportionment of
the total return of the trust.

(d)  A trust that provides for a fixed annual percentage payout
in excess of 5 percent per year of the net fair market value of the
trust is considered to be a 5 percent express unitrust, paying out
all of the income of the unitrust, and to have paid out principal of
the trust to the extent that the fixed percentage payout exceeds 5
percent per year.

(e)  The trust instrument may grant discretion to the trustee to
adopt a consistent practice of treating capital gains as part of the
unitrust distribution, to the extent that the unitrust distribution ex-
ceeds the income determined as if the trust were not a unitrust, or
it may specify the ordering of such classes of income.

(f)    Unless  the  terms  of  the  trust  specifically  provide  other-
wise, a distribution of the unitrust amount is considered to have
been made from the following sources in the following order of
priority:

1.  Net income determined as if the trust were not a unitrust.
2.  Ordinary income for federal income tax purposes that is

not net income under subd. 1.

3.  Net realized short-term capital gains for federal income

tax purposes.

4.  Net realized long-term capital gains for federal income tax

purposes.

5.  Principal.
(g)  The trust instrument may provide that assets used by the
trust beneficiary, such as a residence or tangible personal prop-
erty, may be excluded from the net fair market value for comput-
ing the unitrust amount.  Such use may be considered equivalent
to the income or unitrust amount.

(h)  In the absence of contrary provisions in the trust instru-
ment of an express unitrust, the provisions of s. 701.1106 (3) (a),
(d), and (e) apply.

History:  2013 a. 92 s. 243.

2023-24 Wisconsin Statutes updated through all Supreme Court and Controlled Substances Board Orders filed before and in
effect on March 7, 2025.  Published and certified under s. 35.18.  Changes effective after March 7, 2025, are designated by
NOTES. (Published 3-7-25)

Updated 2023-24 Wis. Stats.  Published and certified under s. 35.18.  March 7, 2025.

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701.1108  Power to treat capital gains as part of a dis-
tribution.  Unless prohibited by the will or trust instrument, a
fiduciary may cause gains from the sale or exchange of estate or
trust property, as determined for federal income tax purposes, to
be taxed for federal income tax purposes as part of a distribution
of income that has been increased by an adjustment from princi-
pal to income under s. 701.1104, of a unitrust distribution, of a
fixed  annuity  distribution,  or  of  a  principal  distribution  to  a
beneficiary.

History:  2013 a. 92 s. 244.

701.1109  Judicial review of discretionary power.  (1)
Nothing in this subchapter creates a duty to make an adjustment
under  s.  701.1104  or  to  convert  a  trust  to  a  unitrust  under  s.
701.1106.  Unless it determines that the decision to make an ad-
justment or to convert to a unitrust was an abuse of the fiduciary[s
discretion, a court may not grant relief from any decision a fidu-
ciary makes regarding the exercise of a discretionary power con-
ferred by s. 701.1104 or 701.1106.

(2)  An action taken under s. 701.1104 or 701.1106 is not an
abuse of a fiduciary[s discretion if the fiduciary gave written no-
tice of the proposed action under s. 701.1105 and did not receive
a timely written objection to the notice.  It is not an abuse of dis-
cretion not to exercise the power to adjust under s. 701.1104 or to
convert under s. 701.1106.

(3)  A fiduciary[s decision is not an abuse of discretion merely
because the court would have exercised the power in a different
manner or would not have exercised the power.

(4)  If  the  court  determines  that  a  fiduciary  has  abused  the
fiduciary[s discretion, the remedy shall be to restore the income
and remainder beneficiaries to the positions that they would have
occupied had the discretion not been abused, according to the fol-
lowing rules:

(a)  To the extent that the abuse of discretion has resulted in no
distribution to a beneficiary or in a distribution that is too small,
the court shall order the fiduciary to distribute from the trust to
the beneficiary an amount that the court determines will restore
the beneficiary, in whole or in part, to the beneficiary[s appropri-
ate position.

(b)  To the extent that the abuse of discretion has resulted in a
distribution to a beneficiary that is too large, the court shall place
the beneficiaries, the trust, or both, in whole or in part, in their
appropriate  positions  by  ordering  the  fiduciary  to  withhold  an
amount from one or more future distributions to the beneficiary
who received the distribution that was too large or by ordering
that  beneficiary  to  return  some  or  all  of  the  distribution  to  the
trust.

(c)  To the extent that the court is unable, after applying pars.
(a) and (b), to place the beneficiaries, the trust, or both in the po-
sitions that they would have occupied had the discretion not been
abused, the court may order the fiduciary to pay an appropriate
amount from its own funds to one or more of the beneficiaries,
the trust, or both.

(5)  Upon petition by the fiduciary, the court having jurisdic-
tion over a trust shall determine whether a proposed exercise or
nonexercise by the fiduciary of a discretionary power conferred
under this section will result in an abuse of the fiduciary[s discre-
tion.  The petition must describe the proposed exercise or nonex-
ercise of the power and contain sufficient information to inform
the beneficiaries of the reasons for the proposal, the facts upon
which the fiduciary relies, and an explanation of how the income
and remainder beneficiaries will be affected by the proposed ex-
ercise or nonexercise of the power.  A beneficiary who challenges
the proposed exercise or nonexercise of the power has the burden
of establishing that it will result in an abuse of discretion.

History:  2013 a. 92 ss. 245 to 250.

701.1110  Determination  and  distribution  of  net  in-
come.  In the case of an estate of a decedent or after an income
interest in a trust ends, the following rules apply:

(1)  A fiduciary of an estate or of a terminating income inter-
est shall determine the amount of net income and net principal re-
ceipts received from property specifically given to a beneficiary
under the rules in ss. 701.1112 to 701.1135 that apply to trustees
and the rules in sub. (5).  The fiduciary shall distribute the net in-
come and net principal receipts to the beneficiary who is to re-
ceive the specific property.

(2)  A fiduciary shall determine the remaining net income of a
decedent[s estate or a terminating income interest under the rules
in ss. 701.1112 to 701.1135 that apply to trustees and by:

(a)  Including in net income all income from property used to

discharge liabilities.

(b)  Paying from income or principal, in the fiduciary[s discre-
tion, fees of attorneys, accountants, and fiduciaries; court costs
and other expenses of administration; and interest on death taxes,
but the fiduciary may pay those expenses from income of prop-
erty passing to a trust for which the fiduciary claims an estate tax
marital  or  charitable  deduction  only  to  the  extent  that  the  pay-
ment of those expenses from income will not cause the reduction
or loss of the deduction.

(c)  Paying from principal all other disbursements made or in-
curred in connection with the settlement of a decedent[s estate or
the winding up of a terminating income interest, including debts,
funeral expenses, disposition of remains, family allowances, and
death taxes and related penalties that are apportioned to the estate
or terminating income interest by the will, the terms of the trust,
or applicable law.

(3)  A fiduciary shall distribute to a beneficiary, including a
trustee, who receives a pecuniary amount not determined by a pe-
cuniary formula related to a transfer tax interest at the legal rate
set  forth  in  s.  138.04  on  any  unpaid  portion  of  the  pecuniary
amount for the period commencing one year after the decedent[s
death or after the income interest in the trust ends.  The interest
under this subsection shall be distributed from net income deter-
mined under sub. (2) or from principal to the extent that net in-
come  is  insufficient.    For  purposes  of  this  subsection,  the  de-
ferred marital property elective share amount elected by a surviv-
ing spouse under s. 861.02 (1) is a bequest of a pecuniary amount
not determined by a pecuniary formula related to a transfer tax.

(4)  A fiduciary shall distribute the net income remaining af-
ter distributions required under subs. (1) to (3) in the manner de-
scribed in s. 701.1111 to all other beneficiaries, including a bene-
ficiary who receives a pecuniary amount determined by a pecu-
niary formula related to a transfer tax.

(5)  A fiduciary may not reduce principal or income receipts
from  property  described  in  sub.  (1)  because  of  a  payment  de-
scribed in s. 701.1130 or 701.1131 to the extent that the will, the
terms  of  the  trust,  or  applicable  law  requires  the  fiduciary  to
make the payment from assets other than the property or to the
extent that the fiduciary recovers or expects to recover the pay-
ment  from  a  3rd  party.    The  net  income  and  principal  receipts
from the property are determined by including all of the amounts
the  fiduciary  receives  or  pays  with  respect  to  the  property,
whether those amounts accrued or became due before, on, or af-
ter the date of a decedent[s death or an income interest[s terminat-
ing event, and by making a reasonable provision for amounts that
the  fiduciary  believes  the  estate  or  terminating  income  interest
may become obligated to pay after the property is distributed.

History:  2013 a. 92 s. 251.

701.1111  Distribution  to  residuary  and  remainder
beneficiaries.  (1)  Each beneficiary described in s. 701.1110

2023-24 Wisconsin Statutes updated through all Supreme Court and Controlled Substances Board Orders filed before and in
effect on March 7, 2025.  Published and certified under s. 35.18.  Changes effective after March 7, 2025, are designated by
NOTES. (Published 3-7-25)

Updated 2023-24 Wis. Stats.  Published and certified under s. 35.18.  March 7, 2025.

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701.1115

(4) is entitled to receive a portion of the net income equal to the
beneficiary[s fractional interest in undistributed principal assets,
using  values  as  of  the  distribution  date.    If  a  fiduciary  makes
more than one distribution of assets to beneficiaries to whom this
section applies, each beneficiary, including one who does not re-
ceive part of the distribution, is entitled, as of each distribution
date, to the net income the fiduciary has received after the date of
death or terminating event or earlier distribution date but has not
distributed as of the current distribution date.

(2)  In  determining  a  beneficiary[s  share  of  net  income,  the

following rules apply:

(a)  The beneficiary is entitled to receive a portion of the net
income equal to the beneficiary[s fractional interest in the undis-
tributed principal assets immediately before the distribution date,
including  assets  that  later  may  be  sold  to  meet  principal
obligations.

(b)  The beneficiary[s fractional interest in the undistributed
principal  assets  must  be  calculated  without  regard  to  property
specifically given to a beneficiary and property required to pay
pecuniary amounts not determined by a pecuniary formula.

(c)  The beneficiary[s fractional interest in the undistributed
principal assets must be calculated on the basis of the aggregate
value of those assets as of the distribution date without reducing
the value by any unpaid principal obligation.

(d)  The distribution date for purposes of this section may be
the date as of which the fiduciary calculates the value of the as-
sets if that date is reasonably near the date on which assets are ac-
tually distributed.

(3)  If a fiduciary does not distribute all of the collected but
undistributed net income to each person as of a distribution date,
the fiduciary shall maintain appropriate records showing the in-
terest of each beneficiary in that net income.

(4)  A trustee may apply the rules in this section, to the extent
that the trustee considers it appropriate, to net gain or loss real-
ized after the date of death or terminating event or earlier distri-
bution date from the disposition of a principal asset if this section
applies to the income from the asset.

History:  2013 a. 92 s. 252

701.1112  When right to income begins and ends.  (1)
An income beneficiary is entitled to net income from the date on
which the income interest begins.  An income interest begins on
the date specified in the terms of the trust or, if no date is speci-
fied, on the date an asset becomes subject to a trust or successive
income interest.

(2)  An asset becomes subject to a trust:
(a)  On the date it is transferred to the trust in the case of an as-

set that is transferred to a trust during the transferor[s life.

(b)  On the date of a testator[s death in the case of an asset that
becomes subject to a trust by reason of a will, even if there is an
intervening period of administration of the testator[s estate.

(c)  On the date of an individual[s death in the case of an asset
that a 3rd party transfers to a fiduciary because of the individual[s
death.

(3)  An asset becomes subject to a successive income interest
on  the  day  after  the  preceding  income  interest  ends,  as  deter-
mined under sub. (4), even if there is an intervening period of ad-
ministration to wind up the preceding income interest.

(4)  An income interest ends on the day before an income ben-
eficiary dies or another terminating event occurs, or on the last
day of a period during which there is no beneficiary to whom a
trustee may distribute income.

History:  2013 a. 92 s. 253.

ments when decedent dies or income interest begins.
(1)  A trustee shall allocate to principal an income receipt or dis-
bursement other than one to which s. 701.1110 (1) applies if its
due date occurs before a decedent dies in the case of an estate or
before an income interest begins in the case of a trust or succes-
sive income interest.

(2)  A  trustee  shall  allocate  to  income  an  income  receipt  or
disbursement if its due date occurs on or after the date on which
a decedent dies or an income interest begins and it is a periodic
due date.  An income receipt or disbursement must be treated as
accruing from day to day if its due date is not periodic or it has no
due date.  The portion of the receipt or disbursement accruing be-
fore the date of death or an income interest begins must be allo-
cated to principal and the balance must be allocated to income.

(3)  An item of income or an obligation is due on the date the
payer  is  required  to  make  a  payment.    If  a  payment  date  is  not
stated, there is no due date for the purposes of this section.  Dis-
tributions to shareholders or other owners from an entity, as de-
fined in s. 701.1115, are due on the date fixed by the entity for de-
termining who is entitled to receive the distribution or, if no date
is fixed, on the declaration date for the distribution.  A due date is
periodic for receipts or disbursements that must be paid at regular
intervals under a lease or an obligation to pay interest or if an en-
tity customarily makes distributions at regular intervals.

History:  2013 a. 92 s. 254.

701.1114  Apportionment when income interest ends.
(1)  In this section, Xundistributed incomeY means net income re-
ceived before the date on which an income interest ends.  XUndis-
tributed incomeY does not include an item of income or expense
that is due or accrued or net income that has been added or is re-
quired to be added to principal under the terms of the trust.

(2)  When a mandatory income interest ends, the trustee shall
pay to a mandatory income beneficiary who survives that date, or
to the estate of a deceased mandatory income beneficiary whose
death  causes  the  interest  to  end,  the  beneficiary[s  share  of  the
undistributed income that is not disposed of under the terms of
the trust unless the beneficiary has an unqualified power to re-
voke more than 5 percent of the trust immediately before the in-
come interest ends.  In the latter case, the undistributed income
from the portion of the trust that may be revoked must be added
to principal.

(3)  When  a  trustee[s  obligation  to  pay  a  fixed  annuity  or  a
fixed fraction of the value of the trust[s assets ends, the trustee
shall prorate the final payment if and to the extent required by ap-
plicable law to accomplish a purpose of the trust or its settlor re-
lating to income, gift, estate, or other tax requirements.

History:  2013 a. 92 s. 255; 2013 a. 151 s. 27.

701.1115  Character of receipts.  (1)  In this section, Xenti-
tyY means a corporation, partnership, limited liability company,
regulated investment company, real estate investment trust, com-
mon trust fund, or any other organization in which a trustee has
an interest other than a trust or estate to which s. 701.1116 ap-
plies, a business or activity to which s. 701.1117 applies, or an as-
set-backed security to which s. 701.1129 applies.

(2)  Except  as  otherwise  provided  in  this  section,  a  trustee

shall allocate to income money received from an entity.

(3)  A trustee shall allocate the following receipts from an en-

tity to principal:

(a)  Property other than money.
(b)  Money received in one distribution or a series of related
distributions in exchange for part or all of a trust[s interest in the
entity.

701.1113  Apportionment  of  receipts  and  disburse-

(c)  Money received in total or partial liquidation of the entity.

2023-24 Wisconsin Statutes updated through all Supreme Court and Controlled Substances Board Orders filed before and in
effect on March 7, 2025.  Published and certified under s. 35.18.  Changes effective after March 7, 2025, are designated by
NOTES. (Published 3-7-25)

Updated 2023-24 Wis. Stats.  Published and certified under s. 35.18.  March 7, 2025.

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(d)  Money received from an entity that is a regulated invest-
ment company or a real estate investment trust if the money dis-
tributed  is  a  capital  gain  dividend  for  federal  income  tax
purposes.

(4)  Money is received in partial liquidation:
(a)  To the extent that the entity, at or near the time of a distri-

bution, indicates that it is a distribution in partial liquidation.

(b)  If the total amount of money and property distributed in a
distribution  or  series  of  related  distributions  is  greater  than  20
percent of the entity[s gross assets, as shown by the entity[s year-
end  financial  statements  immediately  preceding  the  initial
receipt.

(5)  Money is not received in partial liquidation, nor may it be
taken into account under sub. (4) (b), to the extent that it does not
exceed  the  amount  of  income  tax  that  a  trustee  or  beneficiary
must  pay  on  taxable  income  of  the  entity  that  distributes  the
money.

(6)  A  trustee  may  rely  upon  a  statement  made  by  an  entity
about the source or character of a distribution if the statement is
made at or near the time of distribution by the entity[s board of
directors or other person or group of persons authorized to exer-
cise  powers  to  pay  money  or  transfer  property  comparable  to
those of a corporation[s board of directors.

History:  2013 a. 92 s. 256.

701.1116  Distribution  from  trust  or  estate.    A  trustee
shall allocate to income an amount received as a distribution of
income from a trust or an estate in which the trust has an interest
other than a purchased interest, and shall allocate to principal an
amount received as a distribution of principal from such a trust or
estate.  If a trustee purchases an interest in a trust that is an invest-
ment entity, or a decedent or donor transfers an interest in such a
trust  to  a  trustee,  s.  701.1115  or  701.1129  applies  to  a  receipt
from the trust.

History:  2013 a. 92 s. 257.

701.1117  Business and other activities conducted by
trustee.  (1)  If a trustee who conducts a business or other activ-
ity determines that it is in the best interest of all the beneficiaries
to  account  separately  for  the  business  or  activity  instead  of  ac-
counting for it as part of the trust[s general accounting records,
the  trustee  may  maintain  separate  accounting  records  for  its
transactions, whether or not its assets are segregated from other
trust assets.

(2)  A trustee who accounts separately for a business or other
activity may determine the extent to which its net cash receipts
must be retained for working capital, the acquisition or replace-
ment of fixed assets, and other reasonably foreseeable needs of
the business or activity and the extent to which the remaining net
cash  receipts  are  accounted  for  as  principal  or  income  in  the
trust[s general accounting records.  If a trustee sells assets of the
business or other activity, other than in the ordinary course of the
business or activity, the trustee shall account for the net amount
received as principal in the trust[s general accounting records to
the extent the trustee determines that the amount received is no
longer required in the conduct of the business.

(3)  Activities for which a trustee may maintain separate ac-

counting records include:

(a)  Retail, manufacturing, service, and other traditional busi-

ness activities.

(b)  Farming.
(c)  Raising and selling livestock and other animals.
(d)  Management of rental properties.
(e)  Extraction of minerals and other natural resources.

(f)  Timber operations.
(g)  Activities to which s. 701.1128 applies.
History:  2013 a. 92 s. 258.

701.1118  Principal  receipts.    A  trustee  shall  allocate  to
principal:

(1)  To the extent not allocated to income under this subchap-
ter, assets received from a transferor during the transferor[s life-
time, a decedent[s estate, a trust with a terminating income inter-
est, or a payer under a contract naming the trust or its trustee as
beneficiary.

(2)  Money or other property received from the sale, exchange,
liquidation, or change in form of a principal asset, including real-
ized profit, subject to ss. 701.1115 to 701.1129.

(3)  Amounts recovered from 3rd parties to reimburse the trust
because of disbursements described in s. 701.1131 (1) (g) or for
other reasons to the extent not based on the loss of income.

(4)  Proceeds of property taken by eminent domain, but a sep-
arate award made for the loss of income with respect to an ac-
counting period during which a current income beneficiary had a
mandatory income interest is income.

(5)  Net  income  received  in  an  accounting  period  during
which there is no beneficiary to whom a trustee may or must dis-
tribute income.

(6)  Other receipts as provided in ss. 701.1122 to 701.1129.
History:  2013 a. 92 s. 259.

701.1119  Rental property.  To the extent that a trustee ac-
counts for receipts from rental property in accordance with this
section, the trustee shall allocate to income an amount received as
rent of real or personal property, including an amount received for
cancellation or renewal of a lease.  An amount received as a re-
fundable deposit, including a security deposit or a deposit that is
to be applied as rent for future periods, must be added to principal
and held subject to the terms of the lease and is not available for
distribution to a beneficiary until the trustee[s contractual obliga-
tions have been satisfied with respect to that amount.

History:  2013 a. 92 s. 260.

701.1120  Obligation  to  pay  money.    (1)  An amount re-
ceived  as  interest,  whether  determined  at  a  fixed,  variable,  or
floating rate, on an obligation to pay money to the trustee, includ-
ing an amount received as consideration for prepaying principal,
must be allocated to income without any provision for amortiza-
tion of premium.

(2)  A  trustee  shall  allocate  to  principal  an  amount  received
from the sale, redemption, or other disposition of an obligation to
pay money to the trustee more than one year after it is purchased
or  acquired  by  the  trustee,  including  an  obligation  whose  pur-
chase price or value when it is acquired is less than its value at
maturity.    If  the  obligation  matures  within  one  year  after  the
trustee purchases or acquires it, an amount received in excess of
its purchase price or its value when the trust acquires it must be
allocated to income.

(3)  This section does not apply to an obligation to which s.
701.1123, 701.1124, 701.1125, 701.1126, 701.1128, or 701.1129
applies.

History:  2013 a. 92 s. 261.

Insurance  policies  and  similar  contracts.

701.1121
(1)  Except as provided in sub. (2), a trustee shall allocate to prin-
cipal the proceeds of a life insurance policy or other contract in
which the trust or its trustee is named as beneficiary, including a
contract that insures the trust or its trustee against loss for damage
to, destruction of, or loss of title to, a trust asset.  The trustee shall
allocate dividends on an insurance policy to income if the premi-

2023-24 Wisconsin Statutes updated through all Supreme Court and Controlled Substances Board Orders filed before and in
effect on March 7, 2025.  Published and certified under s. 35.18.  Changes effective after March 7, 2025, are designated by
NOTES. (Published 3-7-25)

Updated 2023-24 Wis. Stats.  Published and certified under s. 35.18.  March 7, 2025.

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ums on the policy are paid from income, and to principal if the
premiums are paid from principal.

(2)  A trustee shall allocate to income proceeds of a contract
that insures the trustee against loss of occupancy or other use by
an income beneficiary, loss of income, or, subject to s. 701.1117,
loss of profits from a business.

(3)  This  section  does  not  apply  to  a  contract  to  which  s.

701.1123 applies.

History:  2013 a. 92 s. 262.

701.1122
Insubstantial  allocations  not  required.    If a
trustee  determines  that  an  allocation  between  principal  and  in-
come  required  by  s.  701.1120  (2),  701.1123,  701.1124,
701.1125, 701.1126, or 701.1129 is insubstantial, the trustee may
allocate the entire amount to principal unless one of the circum-
stances  described  in  s.  701.1104  (3)  applies  to  the  allocation.
This power may be exercised by a cotrustee in the circumstances
described in s. 701.1104 (4) and may be released for the reasons
and in the manner described in s. 701.1104 (5).  An allocation is
presumed to be insubstantial if:

(1)  The amount of the allocation would increase or decrease
net income in an accounting period, as determined before the al-
location, by less than 10 percent.

(2)  The value of the asset producing the receipt for which the
allocation would be made is less than 10 percent of the total value
of the trust[s assets at the beginning of the accounting period.

History:  2013 a. 92 s. 263.

701.1123  Deferred compensation, annuities, and sim-
ilar payments.  (1)  In this section:

(a)  XMarital deduction trustY means a trust for which an elec-
tion to qualify for a marital deduction under section 2056 (b) (7),
2056A (a) (3), or 2523 (f) of the Internal Revenue Code has been
made  or  a  trust  that  qualified  for  the  marital  deduction  under
other provisions of section 2056 or 2523 of the Internal Revenue
Code.

(b)    XPaymentY  means  an  amount  of  money  or  property  re-

ceived by a trustee that is any of the following:

1.  Part of a series, or eligible to be part of a series, of distri-
butions payable over a fixed number of years or during the life of
one or more individuals because of services rendered or property
transferred to the payer in exchange for the future distributions.

2.  Distributed from a plan, regardless of the reason for the

distribution.

(c)  XPlanY means a contractual, custodial, trust, or other ar-
rangement  that  provides  for  distributions  to  a  trust.    XPlanY  in-
cludes a private or commercial annuity, an individual retirement
account, a Roth individual retirement account, a qualified retire-
ment  plan  such  as  a  pension,  profit-sharing,  stock-bonus,  or
stock-ownership plan, or any nonqualified deferred compensation
plan.

(d)  XPlan incomeY means any of the following:
1.  With respect to payments received from a plan that main-
tains separate accounts for its participants or account holders, ei-
ther the amount of the separate account held for the benefit of the
trust that, if the separate account were a trust, would be allocated
to income for that accounting period, or 4 percent of the value of
the plan account on the first day of the accounting period.  The
trustee  shall  choose  the  method  of  determining  Xplan  incomeY
under this subdivision, and may change the method of determin-
ing Xplan incomeY under this subdivision for any subsequent ac-
counting period.

2.  With respect to payments received from a plan that does
not  maintain  separate  accounts  for  its  participants  or  account

holders, 4 percent of the total present value of the trust[s interest
in the plan as of the first day of the accounting period, based on
reasonable actuarial assumptions as determined by the trustee.

(e)  XSeparate accountY means an account established or main-
tained  under  a  plan  under  which  income,  gains,  and  losses,
whether or not realized, from assets allocated to the account, are
credited to or charged against the account without regard to other
income, gains, or losses of the plan.

(2)  To the extent that a payment is characterized as interest, a
dividend, or a payment made in lieu of interest or a dividend, a
trustee shall allocate the payment to income.  The trustee shall al-
locate to principal the balance of the payment and any other pay-
ment received in the same accounting period that is not character-
ized as interest, a dividend, or a payment in lieu of interest or a
dividend.

(3)  For each accounting period of a trust in which the trust re-
ceives a payment but no part of any payment is allocated to in-
come under sub. (2), the trustee shall allocate to income that por-
tion of the aggregate value of all payments received by the trustee
in that accounting period that is equal to the amount of plan in-
come that  is attributable  to the  trust[s  interest in the plan from
which  payment  is  received  for  that  accounting  period.    The
trustee shall allocate the balance of any payments to principal.

(4)  (a)  Notwithstanding sub. (3), a trustee of a marital deduc-
tion trust shall determine plan income for an accounting period as
if the plan were a trust subject to this subchapter.  If the trustee of
a marital deduction trust cannot determine the plan income, the
plan income is 4 percent of the total present value of the trust[s
income  in  the  plan  on  the  first  day  of  the  accounting  period,
based on reasonable actuarial assumptions as determined by the
trustee of the marital deduction trust.

(b)  Notwithstanding subs. (2) and (3), a trustee of a marital
deduction trust shall allocate a payment from a plan to income to
the extent of the plan income and distribute that amount to the
surviving spouse.  The trustee of the marital deduction trust shall
allocate the balance of the payment to principal.  Upon the re-
quest of the surviving spouse, the trustee of a marital deduction
trust shall allocate principal to income to the extent the plan in-
come exceeds payments made from the plan to the trust during
the accounting period.

(c)  Upon the request of the surviving spouse of the settlor, a
trustee of a marital deduction trust shall demand that a person ad-
ministering a plan distribute the plan income to the trust.

(5)  If, to obtain an estate or gift tax marital deduction for an
interest in a trust, a trustee must allocate more of a payment to in-
come than provided for by this section, the trustee shall allocate
to income the additional amount necessary to obtain the marital
deduction.

(6)  This  section  does  not  apply  to  a  payment  to  which  s.

701.1124 applies.

History:  2013 a. 92 ss. 182, 183, 264, 266 to 270.

701.1124  Liquidating asset.  (1)  In this section, Xliquidat-
ing assetY means an asset whose value will diminish or terminate
because the asset is expected to produce receipts for a period of
limited  duration.    The  term  includes  a  leasehold,  patent,  copy-
right, royalty right, and right to receive payments during a period
of more than one year under an arrangement that does not provide
for the payment of interest on the unpaid balance.  The term does
not include a payment subject to s. 701.1123, resources subject to
s. 701.1125, timber subject to s. 701.1126, an activity subject to s.
701.1128, an asset subject to s. 701.1129, or any asset for which
the  trustee  establishes  a  reserve  for  depreciation  under  s.
701.1132.

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effect on March 7, 2025.  Published and certified under s. 35.18.  Changes effective after March 7, 2025, are designated by
NOTES. (Published 3-7-25)

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(2)  A  trustee  shall  allocate  to  income  10  percent  of  the  re-

ceipts from a liquidating asset and the balance to principal.

History:  2013 a. 92 s. 271.

701.1125  Minerals,  water,  and  other  natural  re-
sources.  (1)  To the extent that a trustee accounts for receipts
from an interest in minerals or other natural resources in accor-
dance with this section, the trustee shall allocate them as follows:
(a)  If received as nominal delay rental or nominal annual rent

on a lease, a receipt must be allocated to income.

(b)  If received from a production payment, a receipt must be
allocated to income if and to the extent that the agreement creat-
ing  the  production  payment  provides  a  factor  for  interest  or  its
equivalent.  The balance must be allocated to principal.

(c)  If an amount received as a royalty, shut-in-well payment,
take-or-pay payment, bonus, or delay rental is more than nominal,
90  percent  must  be  allocated  to  principal  and  the  balance  to
income.

(d)  If an amount is received from a working interest or any
other interest not provided for in par. (a), (b), or (c), 90 percent of
the  net  amount  received  must  be  allocated  to  principal  and  the
balance to income.

(2)  An amount received on account of an interest in water that
is renewable must be allocated to income.  If the water is not re-
newable, 90 percent of the amount must be allocated to principal
and the balance to income.

(3)  This section applies whether or not a decedent or donor
was extracting minerals, water, or other natural resources before
the interest became subject to the trust.

(4)  If a trust owns an interest in minerals, water, or other natu-
ral resources on May 17, 2005, the trustee may allocate receipts
from the interest as provided in this section or in the manner used
by the trustee before May 17, 2005.  If the trust acquires an inter-
est  in  minerals,  water,  or  other  natural  resources  after  May  17,
2005, the trustee shall allocate receipts from the interest as pro-
vided in this section.

History:  2013 a. 92 s. 272.

701.1126  Timber.  (1)  To the extent that a trustee accounts
for receipts from the sale of timber and related products in accor-
dance with this section, the trustee shall allocate the net receipts:
(a)  To income to the extent that the amount of timber removed
from the land does not exceed the rate of growth of the timber
during  the  accounting  periods  in  which  a  beneficiary  has  a
mandatory income interest.

(b)  To principal to the extent that the amount of timber re-
moved from the land exceeds the rate of growth of the timber or
the net receipts are from the sale of standing timber.

(c)  To income or principal or between income and principal if
the net receipts are from the lease of timberland or from a con-
tract to cut timber from land owned by a trust, by determining the
amount of timber removed from the land under the lease or con-
tract and applying the rules in pars. (a) and (b).

(d)  To principal to the extent that advance payments, bonuses,

and other payments are not allocated under par. (a), (b), or (c).

(2)  In determining net receipts to be allocated under sub. (1),
a  trustee  shall  deduct  and  transfer  to  principal  a  reasonable
amount for depletion.

(3)  This section applies whether or not a decedent or trans-
feror was harvesting timber from the property before it became
subject to the trust.

(4)  If a trust owns an interest in timberland on May 17, 2005,
the trustee may allocate net receipts from the sale of timber and
related products as provided in this section or in the manner used
by the trustee before May 17, 2005.  If the trust acquires an inter-

est in timberland after May 17, 2005, the trustee shall allocate net
receipts from the sale of timber and related products as provided
in this section.

History:  2013 a. 92 ss. 184, 274.

701.1127  Property not productive of income.  (1)  If a
marital deduction is allowed for all or part of a trust whose assets
consist substantially of property that does not provide the surviv-
ing spouse with sufficient income from or use of the trust assets,
and if the amounts that the trustee transfers from principal to in-
come under s. 701.1104 and distributes to the spouse from princi-
pal in accordance with the terms of the trust are insufficient to
provide the spouse with the beneficial enjoyment required to ob-
tain the marital deduction, the spouse may require the trustee to
make property productive of income, convert property within a
reasonable time, or exercise the power conferred by s. 701.1104
(1).  The trustee may decide which action or combination of ac-
tions to take.

(2)  In cases not governed by sub. (1), proceeds from the sale
or other disposition of an asset are principal without regard to the
amount  of  income  the  asset  produces  during  any  accounting
period.

History:  2013 a. 92 s. 275.

701.1128  Derivatives  and  options.    (1)  In  this  section,
XderivativeY means a contract or financial instrument or a combi-
nation of contracts and financial instruments that gives a trust the
right  or  obligation  to  participate  in  some  or  all  changes  in  the
price  of  a  tangible  or  intangible  asset  or  group  of  assets,  or
changes in a rate, an index of prices or rates, or another market in-
dicator for an asset or a group of assets.

(2)  To  the  extent  that  a  trustee  does  not  account  under  s.
701.1117 for transactions in derivatives, the trustee shall allocate
to principal receipts from and disbursements made in connection
with those transactions.

(3)  If a trustee grants an option to buy property from the trust,
whether  or  not  the  trust  owns  the  property  when  the  option  is
granted, grants an option that permits another person to sell prop-
erty to the trust, or acquires an option to buy property for the trust
or an option to sell an asset owned by the trust, and the trustee or
other owner of the asset is required to deliver the asset if the op-
tion is exercised, an amount received for granting the option must
be allocated to principal.  An amount paid to acquire the option
must be paid from principal.  A gain or loss realized upon the ex-
ercise of an option, including an option granted to a settlor of the
trust for services rendered, must be allocated to principal.

History:  2013 a. 92 s. 276.

701.1129  Asset-backed  securities.    (1)  In  this  section,
Xasset-backed  securityY  means  an  asset  whose  value  is  based
upon the right it gives the owner to receive distributions from the
proceeds of financial assets that provide collateral for the secu-
rity.  The term includes an asset that gives the owner the right to
receive  from  the  collateral  financial  assets  only  the  interest  or
other  current  return  or  only  the  proceeds  other  than  interest  or
current return.  The term does not include an asset to which s.
701.1115 or 701.1123 applies.

(2)  If a trust receives a payment from interest or other current
return and from other proceeds of the collateral financial assets,
the  trustee  shall  allocate  to  income  the  portion  of  the  payment
that the payer identifies as being from interest or other current re-
turn and shall allocate the balance of the payment to principal.

(3)  If a trust receives one or more payments in exchange for
the  trust[s  entire  interest  in  an  asset-backed  security  in  one  ac-
counting period, the trustee shall allocate the payments to princi-
pal.  If a payment is one of a series of payments that will result in
the  liquidation  of  the  trust[s  interest  in  the  security  over  more

2023-24 Wisconsin Statutes updated through all Supreme Court and Controlled Substances Board Orders filed before and in
effect on March 7, 2025.  Published and certified under s. 35.18.  Changes effective after March 7, 2025, are designated by
NOTES. (Published 3-7-25)

Updated 2023-24 Wis. Stats.  Published and certified under s. 35.18.  March 7, 2025.

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than one accounting period, the trustee shall allocate 10 percent
of the payment to income and the balance to principal.

or  made  available  for  the  personal  use  or  enjoyment  of  a
beneficiary.

History:  2013 a. 92 s. 277.

701.1130  Disbursements from income.  A trustee shall
make the following disbursements from income to the extent that
they are not disbursements specified in s. 701.1110 (2) (b) or (c):
(1)  One-half of the regular compensation of the trustee and of
any person providing investment advisory or custodial services to
the trustee.

(2)  One-half  of  all  expenses  for  accountings,  judicial  pro-
ceedings, or other matters that involve both the income and re-
mainder interests.

(3)  All of the other ordinary expenses incurred in connection
with  the  administration,  management,  or  preservation  of  trust
property and the distribution of income, including interest, ordi-
nary repairs, regularly recurring taxes assessed against principal,
and expenses of a proceeding or other matter that concerns pri-
marily the income interest.

(4)  Recurring premiums on insurance covering the loss of a

principal asset or the loss of income from or use of the asset.

History:  2013 a. 92 s. 278.

701.1131  Disbursements from principal.  (1)  A trustee
shall make the following disbursements from principal:

(a)  The remaining one-half of the disbursements described in

s. 701.1130 (1) and (2).

(b)  All of the trustee[s compensation calculated on principal
as a fee for acceptance, distribution, or termination, and disburse-
ments made to prepare property for sale.

(c)  Payments on the principal of a trust debt.
(d)  Expenses of a proceeding that concerns primarily princi-
pal, including a proceeding to construe the trust or to protect the
trust or its property.

(e)  Premiums paid on a policy of insurance not described in s.

701.1130 (4) of which the trust is the owner and beneficiary.

(f)    Estate,  inheritance,  and  other  transfer  taxes,  including

penalties, apportioned to the trust.

(g)  Disbursements related to environmental matters, including
reclamation, assessing environmental conditions, remedying and
removing environmental contamination, monitoring remedial ac-
tivities and the release of substances, preventing future releases of
substances, collecting amounts from persons liable or potentially
liable  for  the  costs  of  those  activities,  penalties  imposed  under
environmental law and other payments made to comply with en-
vironmental law, statutory or common law claims by 3rd parties,
and defending claims based on environmental matters.

(2)  If a principal asset is encumbered with an obligation that
requires income from that asset to be paid directly to the creditor,
the  trustee  shall  transfer  from  principal  to  income  an  amount
equal to the income paid to the creditor in reduction of the princi-
pal balance of the obligation.

History:  2013 a. 92 s. 279.

701.1132  Transfers  from  income  to  principal  for  de-
preciation.  (1)  In this section, XdepreciationY means a reduc-
tion in value due to wear, tear, decay, corrosion, or gradual obso-
lescence  of  a  fixed  asset  having  a  useful  life  of  more  than  one
year.

(2)  A trustee may transfer to principal a reasonable amount of
the net cash receipts from a principal asset that is subject to de-
preciation, but may not transfer any amount for depreciation:

(a)  Of that portion of real property used or available for use by
a beneficiary as a residence or of tangible personal property held

(b)  During the administration of a decedent[s estate.
(c)    Under  this  section  if  the  trustee  is  accounting  under  s.

701.1117 for the business or activity in which the asset is used.

(3)  An amount transferred to principal need not be held as a

separate fund.

History:  2013 a. 92 s. 280.

701.1133  Transfers from income to reimburse princi-
pal.  (1)  If a trustee makes or expects to make a principal dis-
bursement described in this section, the trustee may transfer an
appropriate amount from income to principal in one or more ac-
counting periods to reimburse principal or to provide a reserve
for future principal disbursements.

(2)  Principal disbursements to which sub. (1) applies include
the following, but only to the extent that the trustee has not been
and does not expect to be reimbursed by a 3rd party:

(a)  An amount chargeable to income but paid from principal

because it is unusually large, including extraordinary repairs.

(b)  A capital improvement to a principal asset, whether in the
form of changes to an existing asset or the construction of a new
asset, including special assessments.

(c)    Disbursements  made  to  prepare  property  for  rental,  in-
cluding tenant allowances, leasehold improvements, and brokers[
commissions.

(d)  Periodic payments on an obligation secured by a principal
asset  to  the  extent  that  the  amount  transferred  from  income  to
principal for depreciation is less than the periodic payments.

(e)  Disbursements described in s. 701.1131 (1) (g).
(3)  If  the  asset  whose  ownership  gives  rise  to  the  disburse-
ments becomes subject to a successive income interest after an in-
come  interest  ends,  a  trustee  may  continue  to  transfer  amounts
from income to principal as provided in sub. (1).

History:  2013 a. 92 s. 281.

Income taxes.  (1)  A tax required to be paid by a
701.1134
trustee based on receipts allocated to income must be paid from
income.

(2)  A tax required to be paid by a trustee based on receipts al-
located to principal must be paid from principal, even if the tax is
called an income tax by the taxing authority.

(3)  A tax required to be paid by a trustee on the trust[s share

of an entity[s taxable income must be paid as follows:

(a)  From income to the extent that receipts from the entity are

allocated only to income.

(b)  From principal to the extent that receipts from the entity

are allocated only to principal.

(c)  Proportionately from principal and income to the extent
that  receipts  from  the  entity  are  allocated  to  both  income  and
principal.

(d)  From principal to the extent that the tax exceeds the total

receipts from the entity.

(4)  After applying subs. (1) to (3), the trustee shall adjust in-
come or principal receipts to the extent that the trust[s taxes are
reduced  because  the  trust  receives  a  deduction  for  payments
made to a beneficiary.

History:  2013 a. 92 ss. 185, 282 to 287.

701.1135  Adjustments between principal and income
because of taxes.  (1)  A fiduciary may make adjustments be-
tween principal and income to offset the shifting of economic in-
terests or tax benefits between income beneficiaries and remain-
der beneficiaries which arise from:

(a)  Elections and decisions, other than those described in sub.

2023-24 Wisconsin Statutes updated through all Supreme Court and Controlled Substances Board Orders filed before and in
effect on March 7, 2025.  Published and certified under s. 35.18.  Changes effective after March 7, 2025, are designated by
NOTES. (Published 3-7-25)

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(2),  that  the  fiduciary  makes  from  time  to  time  regarding  tax
matters.

(b)  An income tax or any other tax that is imposed upon the
fiduciary or a beneficiary as a result of a transaction involving or
a distribution from the estate or trust.

(c)  The ownership by an estate or trust of an interest in an en-
tity whose taxable income, whether or not distributed, is includ-
able  in  the  taxable  income  of  the  estate  or  trust  or  of  a
beneficiary.

(2)  If the amount of an estate tax marital deduction or charita-
ble contribution deduction is reduced because a fiduciary deducts
an amount paid from principal for income tax purposes instead of
deducting it for estate tax purposes, and as a result estate taxes
paid from principal are increased and income taxes paid by an es-
tate, trust, or beneficiary are decreased, each estate, trust, or ben-
eficiary that benefits from the decrease in income tax shall reim-
burse the principal from which the increase in estate tax is paid.
The total reimbursement must equal the increase in the estate tax
to  the  extent  that  the  principal  used  to  pay  the  increase  would
have qualified for a marital deduction or charitable contribution
deduction but for the payment.  The proportionate share of the re-
imbursement for each estate, trust, or beneficiary whose income
taxes are reduced must be the same as its proportionate share of
the total decrease in income tax.  An estate or trust shall reim-
burse principal from income.

History:  2013 a. 92 s. 290.

Income  payments  and  accumulations.    (1)
701.1136
DISTRIBUTION  OF  INCOME.  Except as otherwise determined by
the trustee or a court under s. 701.1106 with respect to unitrust
distributions, if a trust instrument fails to specify how frequently
a  current  beneficiary  is  to  receive  income  from  the  trust,  the
trustee  shall  distribute  the  income  to  which  the  current  benefi-
ciary is entitled at least annually.

(2)  PERMITTED ACCUMULATIONS.  No provision directing or

authorizing accumulation of income is invalid.

(3)  CHARITABLE TRUST ACCUMULATIONS.  A trust containing
a direction or authorization to accumulate income from property
devoted to a charitable purpose shall be subject to the general eq-
uitable supervision of the court with respect to any such accumu-
lation  of  income,  including  its  reasonableness,  amount  and
duration.

(4)  DISPOSITION OF ACCUMULATED INCOME.  Income not re-
quired  to  be  distributed  by  the  trust  instrument  may,  in  the
trustee[s discretion, be held in reserve for future distribution as
income or be added to principal subject to retransfer to income of
the dollar amount originally transferred to principal.  At the ter-
mination of the income interest, any undistributed income shall
be distributed as principal.

History:  2005 a. 10; 2013 a. 92 s. 292; Stats. 2013 s. 701.1136; 2023 a. 127.

SUBCHAPTER XII

MISCELLANEOUS PROVISIONS

701.1201  Private foundations.  (1)  (a)  In the administra-
tion of any trust that is a private foundation, as defined in section
509 of the Internal Revenue Code, a charitable trust, as described
in section 4947 (a) (1) of the Internal Revenue Code, or a split-in-
terest  trust  as  described  in  section  4947  (a)  (2)  of  the  Internal
Revenue Code, all of the following acts shall be prohibited:

1.  Engaging in any act of self-dealing, as defined in section
4941 (d) of the Internal Revenue Code, that would give rise to any
liability for the tax imposed by section 4941 (a) of the Internal
Revenue Code.

2.  Retaining any excess business holdings, as defined in sec-
tion 4943 (c) of the Internal Revenue Code, that would give rise
to any liability for the tax imposed by section 4943 (a) of the In-
ternal Revenue Code.

3.  Making any investments that would jeopardize the carry-
ing  out  of  any  of  the  exempt  purposes  of  the  trust,  within  the
meaning of section 4944 of the Internal Revenue Code, so as to
give rise to any liability for the tax imposed by section 4944 (a) of
the Internal Revenue Code.

4.    Making  any  taxable  expenditures,  as  defined  in  section
4945 (d) of the Internal Revenue Code, that would give rise to any
liability for the tax imposed by section 4945 (a) of the Internal
Revenue Code.

(b)  This subsection does not apply either to those split-interest
trusts or to amounts thereof that are not subject to the prohibi-
tions applicable to private foundations by reason of the provisions
of section 4947 of the Internal Revenue Code.

(2)  In the administration of any trust that is a private founda-
tion, as defined in section 509 of the Internal Revenue Code, or
that is a charitable trust, as described in section 4947 (a) (1) of
the Internal Revenue Code, there shall be distributed, for the pur-
poses  specified  in  the  trust  instrument,  for  each  taxable  year,
amounts at least sufficient to avoid liability for the tax imposed
by section 4942 (a) of the Internal Revenue Code.

(3)  Subsections (1) and (2) do not apply to any trust to the ex-
tent that a court of competent jurisdiction determines that the ap-
plication would be contrary to the terms of the trust and that the
same  may  not  properly  be  changed  to  conform  to  such
subsections.

History:  1971 c. 66; 1991 a. 39; 2013 a. 92 ss. 174, 175; Stats. 2013 s. 701.1201.

701.1202  Electronic records and signatures.  The pro-
visions of this chapter governing the legal effect, validity, or en-
forceability of electronic records or signatures, and of contracts
formed or performed with the use of such records or signatures
conform to the requirements of section 102 of the federal Elec-
tronic Signatures in Global and National Commerce Act, 15 USC
7002, and supersede, modify, and limit the federal Electronic Sig-
natures in Global and National Commerce Act, 15 USC 7001 to
7031.

History:  2013 a. 92.

701.1203  Uniformity of application and construction.
This chapter shall be applied and construed to effectuate its gen-
eral purpose to make uniform the law with respect to the subject
of this chapter among states enacting it.

History:  2013 a. 92.

701.1204  Applicability  of  general  transfers  at  death
provisions.    Chapter  854  applies  to  transfers  at  death  under
trust instruments.

History:  1997 a. 188; 2013 a. 92 s. 300; Stats. 2013 s. 701.1204.
Wisconsin[s New Probate Code.  Erlanger.  Wis. Law. Oct. 1998.

701.1205  Applicability.  (1)  Except as otherwise provided
in  sub.  (2)  and  ss.  701.0602,  701.0813,  and  701.0903  (4),  this
chapter is applicable to a trust existing on July 1, 2014, as well as
a trust created after such date, and shall govern trustees acting un-
der such trusts.  If application of any provision of this chapter to
a trust in existence on July 1, 2014, is unconstitutional, it shall
not affect application of the provision to a trust created after that
date.

(2)  Subchapter XI of this chapter applies to a trust or dece-
dent[s estate existing on July 1, 2014, and to a trust or decedent[s
estate created or coming into existence after that date, except as
otherwise expressly provided in subch. XI or by the decedent[s
will or the terms of the trust.  With respect to a trust or decedent[s

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estate existing on July 1, 2014, ss. 701.1110 to 701.1135 shall ap-
ply at the beginning of the trust[s or estate[s first accounting pe-
riod, as defined in s. 701.1102 (1), that begins on or after July 1,
2014.

(3)  (a)  Except as provided in par. (b), this chapter applies to a
judicial proceeding concerning a trust commenced before, on, or
after July 1, 2014.

(b)  If a court finds that application of a particular provision of
this chapter to a judicial proceeding commenced before July 1,
2014, will substantially interfere with the effective conduct of the
judicial proceedings or prejudice the rights of the parties, the par-
ticular  provision  of  this  chapter  does  not  apply  to  that  judicial
proceeding and the court shall apply ch. 701, 2011 stats., as the
court finds to be necessary to prevent interference with the effec-
tive conduct of the judicial proceeding and to avoid prejudicing
the rights of the parties.

History:  1971 c. 66; 1977 c. 309; 2005 a. 10, 216; 2013 a. 92 ss. 191, 296 to 298;

Stats. 2013 s. 701.1205; 2013 a. 151.

SUBCHAPTER XIII

UNIFORM TRUST DECANTING ACT

701.1301  Short  title.    This subchapter may be cited as the
Uniform Trust Decanting Act.

History:  2023 a. 127.

701.1302  Definitions.  In this subchapter:

(1)  XAuthorized fiduciaryY means any of the following:
(a)    A  trustee,  a  directing  party,  or  another  fiduciary,  other
than a settlor, that has discretion to distribute or direct a trustee to
distribute part or all of the principal of the first trust to one or
more current beneficiaries.

(b)  A special fiduciary appointed under s. 701.1309.
(c)  A special-needs fiduciary under s. 701.1313.
(d)  A trust protector who has been granted a decanting power,
which may be exercised in a fiduciary or nonfiduciary capacity,
under s. 701.0818 (2) (b) 2. h.

(2)  XDecanting  powerY  means  the  power  of  an  authorized
fiduciary  under  this  subchapter  to  distribute  property  of  a  first
trust to one or more 2nd trusts or to modify the terms of the first
trust.

(3)  XExpanded distributive discretionY means a discretionary
power of distribution that is not limited to an ascertainable stan-
dard or a reasonably definite standard.

(4)  XFirst trustY means a trust over which an authorized fidu-

ciary may exercise the decanting power.

(5)  XFirst-trust instrumentY means the trust instrument for a

first trust.

(6)  XReasonably definite standardY means a clearly  measur-
able standard under which a holder of a power of distribution is
legally accountable within the meaning of section 674 (b) (5) (A)
of the Internal Revenue Code and any applicable regulations.

(7)  XSecond trustY means any of the following:
(a)  A first trust after modification under this subchapter.
(b)  A trust to which a distribution of property from a first trust

is or may be made under this subchapter.

(8)  XSecond-trust instrumentY means the trust instrument for

a 2nd trust.

History:  2023 a. 127.

701.1303  Scope.  (1)  Except as otherwise provided in subs.
(2) and (3), this subchapter applies to an express trust that is ir-
revocable or revocable by the settlor only with the consent of the
trustee or a person holding an adverse interest.

(2)  This subchapter does not apply to a trust held solely for

charitable purposes.

(3)  Subject to s. 701.1315, a trust instrument may restrict or

prohibit exercise of the decanting power.

(4)  This subchapter does not limit the power of an authorized
fiduciary or other person to distribute or appoint property in fur-
ther trust or to modify a trust under the trust instrument, law of
this state other than this subchapter, common law, a court order,
or a nonjudicial settlement agreement.

(5)  This subchapter does not affect the ability of a settlor to
provide in a trust instrument for the distribution of the trust prop-
erty or appointment in further trust of the trust property or for
modification of the trust instrument.

History:  2023 a. 127.

701.1304  Fiduciary  duty.    (1)  In exercising the decanting
power,  an  authorized  fiduciary  shall  act  in  accordance  with  its
fiduciary duties, including the duty to act in accordance with the
purposes of the first trust.  If a trustee or other authorized fidu-
ciary is directed by another authorized fiduciary to exercise the
decanting  power,  the  trustee  or  other  directed  authorized  fidu-
ciary shall act to comply with the exercise of the decanting power
and the trustee or other directed authorized fiduciary shall not be
liable  for  the  action  regardless  of  any  fiduciary  duty  that  the
trustee  or  other  directed  authorized  fiduciary  might  otherwise
have.

(2)  This subchapter does not create or imply a duty to exer-
cise the decanting power or to inform beneficiaries about the ap-
plicability of this subchapter.

(3)  Except as otherwise provided in a first-trust instrument,
for purposes of this subchapter and ss. 701.0801 and 701.0802
(2), the terms of the first trust are deemed to include the decant-
ing power.

History:  2023 a. 127.

701.1305  Application;  governing  law.    This  subchapter
applies to a trust created before, on, or after March 23, 2024, if
any of the following applies:

(1)  The trust has its principal place of administration in this
state,  including  a  trust  whose  principal  place  of  administration
has been changed to this state.

(2)  The  trust  provides  by  its  trust  instrument  that  it  is  gov-
erned by the law of this state or is governed by the law of this state
for the purpose of any of the following:

(a)  Administration, including administration of a trust whose
governing law for purposes of administration has been changed to
the law of this state.

(b)  Construction of terms of the trust.
(c)  Determining the meaning or effect of terms of the trust.
History:  2023 a. 127.

701.1306  Reasonable reliance.  A trustee or other person
that reasonably relies on the validity of a distribution of part or all
of the property of a trust to another trust, or a modification of a
trust, under this subchapter, law of this state other than this sub-
chapter, or the law of another jurisdiction is not liable to any per-
son for any action or failure to act as a result of the reliance.

History:  2023 a. 127.

701.1307  Notice; exercise of decanting power.  (1)  In
this section, a notice period begins on the day notice is given un-
der sub. (3) and ends 30 days after the day notice is given.

(2)  Except as otherwise provided in this subchapter, an autho-
rized  fiduciary  may  exercise  the  decanting  power  without  the
consent of any person and without court approval.

(3)  Except  as  otherwise  provided  in  sub.  (6),  an  authorized

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fiduciary shall give notice of the intended exercise of the decant-
ing power not later than 30 days before the exercise to all of the
following:

(a)  Each settlor of the first trust, if living or then in existence.
(b)  Each qualified beneficiary of the first trust.
(c)  Each holder of a presently exercisable power of appoint-

ment over any part or all of the first trust.

(d)  Each person that currently has the right to remove or re-

place the authorized fiduciary.

(e)  Each directing party, trust protector, or other fiduciary of

the first trust.

(f)  Each directing party, trust protector, or other fiduciary of

the 2nd trust.

(g)  If s. 701.1314 (2) applies, the attorney general.
(4)  An authorized fiduciary is not required to give notice un-
der sub. (3) to a person that is not known to the fiduciary or is
known to the fiduciary but cannot be located by the fiduciary af-
ter reasonable diligence.

(5)  A notice under sub. (3) must do all of the following:
(a)  Specify the manner in which the authorized fiduciary in-

tends to exercise the decanting power.

(b)    Specify  the  proposed  effective  date  for  exercise  of  the

power.

(c)  Include a copy of the first-trust instrument.
(d)  Include a copy of all 2nd-trust instruments.
(6)  The decanting power may be exercised before expiration
of the notice period under sub. (1) if all persons entitled to receive
notice waive the period in a signed record.

(7)  The receipt of notice, waiver of the notice period, or expi-
ration of the notice period does not affect the right of a person to
file  an  application  under  s.  701.1309  asserting  any  of  the
following:

(a)  That an attempted exercise of the decanting power is inef-
fective because it did not comply with this subchapter or was an
abuse of discretion or breach of fiduciary duty.

(b)  That s. 701.1322 applies to the exercise of the decanting

power.

(8)  An exercise of the decanting power is not ineffective be-
cause of the failure to give notice to one or more persons under
sub. (3) if the authorized fiduciary acted with reasonable care to
comply with sub. (3).
History:  2023 a. 127.

701.1309  Court involvement.  (1)  On application of an au-
thorized fiduciary, a person entitled to notice under s. 701.1307
(3), a beneficiary, or with respect to a charitable interest the attor-
ney general or other person that has standing to enforce the chari-
table interest, the court may do any of the following:

(a)  Provide instructions to the authorized fiduciary regarding
whether a proposed exercise of the decanting power is permitted
under this subchapter and consistent with the fiduciary duties of
the authorized fiduciary.

(b)  Appoint a special fiduciary and authorize the special fidu-
ciary to determine whether the decanting power should be exer-
cised under this subchapter and to exercise the decanting power.

(c)  Approve an exercise of the decanting power.
(d)  Determine that a proposed or attempted exercise of the de-

canting power is ineffective for any of the following reasons:

1.  After applying s. 701.1322, the proposed or attempted ex-

ercise does not or did not comply with this subchapter.

3.  The proposed or attempted exercise is expressly prohibited

under the terms of the first trust.

(e)    Determine  the  extent  to  which  s.  701.1322  applies  to  a

prior exercise of the decanting power.

(f)  Provide instructions to the trustee regarding the applica-

tion of s. 701.1322 to a prior exercise of the decanting power.

(g)    Order  other  relief  to  carry  out  the  purposes  of  this

subchapter.

(2)  On application of an authorized fiduciary, the court may

approve any of the following:

(a)    An  increase  in  the  fiduciary[s  compensation  under  s.

701.1316.

(b)  A modification under s. 701.1318 of a provision granting

a person the right to remove or replace the fiduciary.

History:  2023 a. 127.

701.1310  Formalities.  An exercise of the decanting power
must be made in a record signed by an authorized fiduciary.  The
signed record must, directly or by reference to the notice required
by s. 701.1307, identify the first trust and the 2nd trust or trusts
and state the property of the first trust being distributed to each
2nd trust and the property, if any, that remains in the first trust.

History:  2023 a. 127.

701.1311  Decanting power under expanded distribu-
tive discretion.  (1)  In this section:

(a)  XNoncontingent rightY means a right that is not subject to
the exercise of discretion or the occurrence of a specified event
that is not certain to occur.  The term does not include a right held
by a beneficiary if any person has discretion to distribute prop-
erty subject to the right to any person other than the beneficiary
or the beneficiary[s estate.

(b)  XSuccessor beneficiaryY means a beneficiary that is not a
qualified beneficiary on the date the beneficiary[s qualification is
determined.  The term does not include a person that is a benefi-
ciary  only  because  the  person  holds  a  nongeneral  power  of
appointment.

(c)  XVested interestY means any of the following:
1.  A right to a mandatory distribution that is a noncontingent

right as of the date of the exercise of the decanting power.

2.  A current and noncontingent right, annually or more fre-
quently, to a mandatory distribution of income, a specified dollar
amount,  or  a  percentage  of  value  of  some  or  all  of  the  trust
property.

3.  A current and noncontingent right, annually or more fre-
quently, to withdraw income, a specified dollar amount, or a per-
centage of value of some or all of the trust property.

4.  A presently exercisable general power of appointment.
5.  A right to receive an ascertainable part of the trust prop-
erty on the trust[s termination that is not subject to the exercise of
discretion or to the occurrence of a specified event that is not cer-
tain to occur.

(2)  Subject to sub. (3) and s. 701.1314, an authorized fidu-
ciary that has expanded distributive discretion over the principal
of a first trust for the benefit of one or more current beneficiaries
may exercise the decanting power over the principal of the first
trust.

(3)  Subject  to  s.  701.1313,  in  an  exercise  of  the  decanting
power  under  this  section,  a  2nd  trust  may  not  do  any  of  the
following:

(a)  Include as a current beneficiary a person that is not a cur-
rent beneficiary of the first trust, except as otherwise provided in
sub. (4).

2.  The proposed or attempted exercise would be or was an

abuse of the fiduciary[s discretion or a breach of fiduciary duty.

(b)  Include as a presumptive remainder beneficiary or succes-
sor  beneficiary  a  person  that  is  not  a  current  beneficiary,  pre-

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sumptive remainder beneficiary, or successor beneficiary of the
first trust, except as otherwise provided in sub. (4).

(c)  Reduce or eliminate a vested interest.
(d)  Fail to be a trust described in 42 USC 1396p (d) (4) (A) or
(C) if the first trust is a trust described in 42 USC 1396p (d) (4)
(A) or (C).

(4)  Subject to sub. (3) (c) and s. 701.1314, in an exercise of
the decanting power under this section, a 2nd trust may be a trust
created or administered under the law of any jurisdiction and may
do any of the following:

(a)  Retain a power of appointment granted in the first trust.
(b)    Omit  a  power  of  appointment  granted  in  the  first  trust,
other than a presently exercisable general power of appointment.
(c)    Create  or  modify  a  power  of  appointment  if  the  power-
holder is a current beneficiary of the first trust and the authorized
fiduciary has expanded distributive discretion to distribute prin-
cipal to the beneficiary.

(d)  Create or modify a  power of appointment if the  power-
holder is a presumptive remainder beneficiary or successor bene-
ficiary of the first trust, but the exercise of the power may take ef-
fect only after the powerholder becomes, or would have become
if then living, a current beneficiary.

(5)  A power of appointment described in sub.  (4) (a) to (d)
may  be  general  or  nongeneral.    The  class  of  permissible  ap-
pointees in favor of which the power may be exercised may be
broader than or different from the beneficiaries of the first trust.
(6)  If an authorized fiduciary has expanded distributive dis-
cretion over part but not all of the principal of a first trust, the
fiduciary  may  exercise  the  decanting  power  under  this  section
over that part of the principal over which the authorized fiduciary
has expanded distributive discretion.

History:  2023 a. 127.

701.1312  Decanting power under limited distributive
discretion.  (1)  In this section, Xlimited distributive discretionY
means a discretionary power of distribution that is limited to an
ascertainable standard or a reasonably definite standard.

(2)  An authorized fiduciary that has limited distributive dis-
cretion over the principal of the first trust for the benefit of one or
more current beneficiaries may exercise the decanting power over
the principal of the first trust.

(3)  Under this section and subject to s. 701.1314, a 2nd trust
may be created or administered under the law of any jurisdiction.
Under  this  section,  the  2nd  trusts,  in  the  aggregate,  must  grant
each beneficiary of the first trust beneficial interests that are sub-
stantially similar to the beneficial interests of the beneficiary in
the first trust.

(3m)  Notwithstanding sub. (3), an authorized fiduciary exer-
cising the decanting power under this section may grant to a ben-
eficiary of the 2nd trust a testamentary power of appointment ex-
ercisable in favor of the creditors of the beneficiary[s estate, but
only  if  the  authorized  fiduciary  concludes  the  granting  of  such
power will be unlikely to adversely affect the beneficial interest of
the presumptive remainder beneficiaries of the first trust.

(4)  A power to make a distribution under a 2nd trust for the
benefit of a beneficiary who is an individual is substantially sim-
ilar to a power under the first trust to make a distribution directly
to the beneficiary.  A distribution is for the benefit of a benefi-
ciary if any of the following applies:

(a)    The  distribution  is  applied  for  the  benefit  of  the

beneficiary.

(b)  The beneficiary is under a legal disability or the trustee
reasonably believes the beneficiary is incapacitated, and the dis-
tribution is made as permitted under this chapter.

(c)  The distribution is made as permitted under the terms of
the first-trust instrument and the 2nd-trust instrument for the ben-
efit of the beneficiary.

(5)  If an authorized fiduciary has limited distributive discre-
tion over part but not all of the principal of a first trust, the fidu-
ciary may exercise the decanting power under this section over
that part of the principal over which the authorized fiduciary has
limited distributive discretion.

History:  2023 a. 127.

701.1313  Trust  for  beneficiary  with  disability.    (1)  In
this section:

(a)  XBeneficiary with a disabilityY means a beneficiary of a
first trust who the special-needs fiduciary believes in good faith is
an individual with a disability.

(b)  XSpecial-needs fiduciaryY means, with respect to a trust

that has a beneficiary with a disability, any of the following:

1.  A trustee or other fiduciary, other than a settlor, that has
discretion to distribute part or all of the principal of a first trust to
one or more current beneficiaries.

2.  If no trustee or fiduciary has discretion under subd. 1., a
trustee or other fiduciary, other than a settlor, that has discretion
to distribute part or all of the income of the first trust to one or
more current beneficiaries.

3.  If no trustee or fiduciary has discretion under subds.  1.
and 2., a trustee or other fiduciary, other than a settlor, that is re-
quired to distribute part or all of the income or principal of the
first trust to one or more current beneficiaries.

(c)    XSpecial-needs  trustY  means  a  trust  the  trustee  believes
would not be considered a resource for purposes of determining
whether an individual with a disability is eligible for the supple-
mental  security  income  program  or  the  medical  assistance
program.

(2)  A  special-needs  fiduciary  may  exercise  the  decanting
power under s. 701.1311 over the principal of a first trust as if the
fiduciary  had  authority  to  distribute  principal  to  a  beneficiary
with a disability subject to expanded distributive discretion if all
of the following apply:

(a)  A 2nd trust is a special-needs trust that benefits the benefi-

ciary with a disability.

(b)    The  special-needs  fiduciary  determines  that  exercise  of

the decanting power will further the purposes of the first trust.

(3)  In an exercise of the decanting power under this section,

the following rules apply:

(a)  Notwithstanding s. 701.1311 (3) (b), the interest in the 2nd
trust  of  a  beneficiary  with  a  disability  may  do  any  of  the
following:

1.  Be an account in a pooled trust for the benefit of the bene-
ficiary with a disability described in 42 USC 1396p (d) (4) (C)
that includes the trust retention provisions permitted by 42 USC
1396p (d) (4) (C) (iv).

2.    Contain  payback  provisions  complying  with  reimburse-
ment requirements of Medicaid law under 42 USC 1396p (d) (4)
(A) or (C).

(b)  Section 701.1311 (3) (c) does not apply to the interests of

the beneficiary with a disability.

(c)    Except  as  affected  by  any  change  to  the  interests  of  the
beneficiary with a disability or by the effects on remainder bene-
ficiaries of a transfer to a 2nd trust under par. (a), if the special
needs fiduciary has limited distributive discretion over the princi-
pal of the 2nd trust, or if there are 2 or more 2nd trusts, the 2nd
trusts in the aggregate must grant each other beneficiary of the
first trust beneficial interests in the 2nd trusts that are substan-

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effect on March 7, 2025.  Published and certified under s. 35.18.  Changes effective after March 7, 2025, are designated by
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tially similar to the beneficiary[s beneficial interests in the first
trust.

History:  2023 a. 127.

701.1314  Protection of charitable interest.  (1)  In this
section:

(a)  XDeterminable charitable interestY means an interest that

is all of the following:

1.  A charitable interest.
2.  Entitled to receive a mandatory distribution currently, pe-
riodically, on the occurrence of a specified event, or after the pas-
sage of a specified time.

3.  Unconditional or held solely for charitable purposes.
(b)  XUnconditionalY means not subject to the occurrence of a
specified event that is not certain to occur, other than a require-
ment in a trust instrument that a charitable organization be in ex-
istence or qualify under a particular provision of the Internal Rev-
enue Code, on the date of the distribution, if the charitable orga-
nization meets the requirement on the date of determination.

(2)  The attorney general may represent and bind a charitable
interest only when the attorney general has the rights of a quali-
fied beneficiary as provided in s. 701.0110 (3).

(3)  If a first trust contains a charitable interest, the 2nd trust

or trusts may not do any of the following:
(a)  Diminish the charitable interest.
(b)  Diminish the interest of an identified charitable organiza-

tion that holds the charitable interest.

(c)    Alter  any  charitable  purpose  stated  in  the  first-trust

instrument.

(d)  Alter any condition or restriction related to the charitable

interest.

(3m)  Notwithstanding subs. (3) and (5), if the first trust is an
account in a pooled trust described in 42 USC 1396p (d) (4) (C),
the 2nd trust may be an account in another pooled trust described
in 42 USC 1396p (d) (4) (C) or a trust described in 42 USC 1396p
(d) (4) (A) regardless of any of the following:

(a)  Any effect on a charitable interest in property that is per-
mitted to be retained in the first trust under 42 USC 1396p (d) (4)
(C) (iv).

(b)    Any  effect  the  trust  retention  and  Medicaid  reimburse-
ment provisions of the 2nd trust may have on a charitable interest
in the first trust.

(c)  Any change in the identified charitable organization.
(d)  Any change in the governing law or principal place of ad-

ministration of the trust.

(4)  If there are 2 or more 2nd trusts, the 2nd trusts shall be
treated as one trust for purposes of determining whether the exer-
cise of the decanting power diminishes the charitable interest or
diminishes the interest of an identified charitable organization for
purposes of sub. (3).

(5)  If a first trust contains a determinable charitable interest,
the 2nd trust or trusts that include a charitable interest pursuant to
sub. (3) must be administered under the law of this state unless
any of the following applies:

(a)    The  attorney  general,  after  receiving  notice  under  s.
701.1307, fails to object in a signed record delivered to the autho-
rized fiduciary within the notice period.

(b)  The attorney general consents in a signed record to the 2nd
trust  or  trusts  being  administered  under  the  law  of  another
jurisdiction.

(c)  The court approves the exercise of the decanting power.
(d)  The identified charitable organization consents in a signed

record delivered to the authorized fiduciary.

(6)  This subchapter does not limit the powers and duties of
the attorney general under the laws of this state other than this
subchapter.

History:  2023 a. 127.

701.1315  Trust limitation on decanting.  (1)  An autho-
rized fiduciary may not exercise the decanting power to the extent
the first-trust instrument expressly prohibits exercise of any of the
following:

(a)  The decanting power.
(b)  A power granted by state law to the fiduciary to distribute
part or all of the principal of the trust to another trust or to modify
the trust.

(2)  Exercise of the decanting power is subject to any restric-
tion in the first-trust instrument that expressly applies to exercise
of any of the following:

(a)  The decanting power.
(b)  A power granted by state law to a fiduciary to distribute
part or all of the principal of the trust to another trust or to modify
the trust.

(3)  A general prohibition of the amendment or revocation of a
first trust, a spendthrift clause, or a clause restraining the volun-
tary  or  involuntary  transfer  of  a  beneficiary[s  interest  does  not
preclude exercise of the decanting power.

(4)  Subject to subs. (1) and (2), an authorized fiduciary may
exercise  the  decanting  power  under  this  subchapter  even  if  the
first-trust instrument permits the authorized fiduciary or another
person to modify the first-trust instrument or to distribute part or
all of the principal of the first trust to another trust.

(5)  If  a  first-trust  instrument  contains  an  express  restriction
described in sub. (2), the provision must be included in the 2nd-
trust instrument.

History:  2023 a. 127.

701.1316  Change  in  compensation.    (1)  If  a  first-trust
instrument specifies an authorized fiduciary[s compensation, the
fiduciary  may  not  exercise  the  decanting  power  to  increase  the
fiduciary[s compensation above the specified compensation un-
less any of the following applies:

(a)  All qualified beneficiaries of the 2nd trust consent to the

increase in a signed record.

(b)  The increase is approved by the court.
(2)  If a first-trust instrument does not specify an authorized
fiduciary[s compensation, the fiduciary may not exercise the de-
canting power to increase the fiduciary[s compensation above the
compensation permitted by this chapter unless any of the follow-
ing applies:

(a)  All qualified beneficiaries of the 2nd trust consent to the

increase in a signed record.

(b)  The increase is approved by the court.
(3)  A change in an authorized fiduciary[s compensation that
is incidental to other changes made by the exercise of the decant-
ing power is not an increase in the fiduciary[s compensation for
purposes of subs. (1) and (2).

(4)  This  section  does  not  apply  to  a  decanting  from  a  first
trust that is a pooled trust described in 42 USC 1396p (d) (4) (C),
or to a decanting to a 2nd trust that is a pooled trust described in
42 USC 1396p (d) (4) (C).

History:  2023 a. 127.

701.1317  Relief from liability and indemnification.  (1)
Except as otherwise provided in this section, a 2nd-trust instru-
ment  may  not  relieve  an  authorized  fiduciary  from  liability  for
breach of trust to a greater extent than the first-trust instrument
unless any of the following applies:

2023-24 Wisconsin Statutes updated through all Supreme Court and Controlled Substances Board Orders filed before and in
effect on March 7, 2025.  Published and certified under s. 35.18.  Changes effective after March 7, 2025, are designated by
NOTES. (Published 3-7-25)

Updated 2023-24 Wis. Stats.  Published and certified under s. 35.18.  March 7, 2025.

43

 Updated 23-24 Wis. Stats.

TRUSTS

701.1319

(a)  All the qualified beneficiaries of the 2nd trust consent to

the relief from liability in a signed record.

(b)  The relief from liability is approved by the court.
(2)  A 2nd-trust instrument may provide for indemnification
of an authorized fiduciary of the first trust or another person act-
ing in a fiduciary capacity under the first trust for any liability or
claim that would have been payable from the first trust if the de-
canting power had not been exercised.

(3)  Absent  consent  of  all  qualified  beneficiaries  or  the  ap-
proval of the court, the 2nd-trust instrument may not reduce the
aggregate fiduciary liability of all fiduciaries of the 2nd trust.

(4)  Subject to sub. (3), a 2nd-trust instrument may divide and
reallocate fiduciary powers among fiduciaries, including one or
more trustees, directing parties, trust protectors, or other persons,
and relieve a fiduciary from liability for an act or failure to act of
another fiduciary as permitted by law of this state other than this
subchapter.

History:  2023 a. 127.

701.1318  Removal or replacement of authorized fidu-
ciary.  (1)  An authorized fiduciary may not exercise the decant-
ing power to modify a provision in a first-trust instrument grant-
ing another person power to remove or replace the fiduciary un-
less any of the following applies:

(a)  The person holding the power consents to the modification
in  a  signed  record  and  the  modification  applies  only  to  the
person.

(b)  The person holding the power and the qualified beneficia-
ries of the 2nd trust consent to the modification in a signed record
and the modification grants a substantially similar power to an-
other person.

(c)  The court approves the modification and the modification

grants a substantially similar power to another person.

(2)  This  section  does  not  apply  to  a  decanting  from  a  first
trust that is a pooled trust described in 42 USC 1396p (d) (4) (C),
or to a decanting to a 2nd trust that is a pooled trust described in
42 USC 1396p (d) (4) (C).

History:  2023 a. 127.

701.1319  Tax-related limitations.  (1)  In this section:

(a)  XGrantor trustY means a trust as to which a settlor of a first
trust is considered the owner under sections 671 to 677 of the In-
ternal  Revenue  Code  or  section  679  of  the  Internal  Revenue
Code.

(b)  XNongrantor trustY means a trust that is not a grantor trust.
(c)  XQualified benefits propertyY means property subject to
the minimum distribution requirements of section 401 (a) (9) of
the Internal Revenue Code, and any applicable regulations, or to
any similar requirements that refer to section 401 (a) (9) of the In-
ternal Revenue Code or the regulations.

(2)  An exercise of the decanting power is subject to the fol-

lowing limitations:

(a)  If a first trust contains property that qualified, or would
have qualified but for provisions of this subchapter other than this
section, for a marital deduction for purposes of the gift or estate
tax under the Internal Revenue Code or a state gift, estate, or in-
heritance tax, the 2nd-trust instrument must not include or omit
any term that, if included in or omitted from the trust instrument
for the trust to which the property was transferred, would have
prevented the transfer from qualifying for the deduction, or would
have reduced the amount of the deduction, under the same provi-
sions of the Internal Revenue Code or state law under which the
transfer qualified.

(b)  If the first trust contains property that qualified, or would
have qualified but for provisions of this subchapter other than this

section,  for  a  charitable  deduction  for  purposes  of  the  income,
gift, or estate tax under the Internal Revenue Code or a state in-
come,  gift,  estate,  or  inheritance  tax,  the  2nd-trust  instrument
must not include or omit any term that, if included in or omitted
from the trust instrument for the trust to which the property was
transferred, would have prevented the transfer from qualifying for
the deduction, or would have reduced the amount of the deduc-
tion, under the same provisions of the Internal Revenue Code or
state law under which the transfer qualified.

(c)  If the first trust contains property that qualified, or would
have qualified but for provisions of this subchapter other than this
section, for the exclusion from the gift tax described in section
2503 (b) of the Internal Revenue Code, the 2nd-trust instrument
must  not  include  or  omit  a  term  that,  if  included  in  or  omitted
from the trust instrument for the trust to which the property was
transferred,  would  have  prevented  the  transfer  from  qualifying
under section 2503 (b) of the Internal Revenue Code.  If the first
trust contains property that qualified, or would have qualified but
for provisions of this subchapter other than this section, for the
exclusion  from  the  gift  tax  described  in  the  Internal  Revenue
Code section 2503 (b) by application of section 2503 (c) of the
Internal Revenue Code, the 2nd-trust instrument must not include
or omit a term that, if included or omitted from the trust instru-
ment for the trust to which the property was transferred, would
have prevented the transfer from qualifying under section 2503
(c) of the Internal Revenue Code.

(d)  If the property of the first trust includes shares of stock in
an S corporation, as defined in section 1361 of the Internal Rev-
enue Code, and the first trust is, or but for provisions of this sub-
chapter other than this section would be, a permitted shareholder
under  any  provision  of  section  1361  of  the  Internal  Revenue
Code,  an  authorized  fiduciary  may  exercise  the  power  with  re-
spect to part or all of the S-corporation stock only if any 2nd trust
receiving the stock is a permitted shareholder under section 1361
(c) (2) of the Internal Revenue Code.  If the property of the first
trust  includes  shares  of  stock  in  an  S  corporation  and  the  first
trust  is,  or  but  for  provisions  of  this  subchapter  other  than  this
section would be, a qualified subchapter S trust within the mean-
ing of section 1361 (d) of the Internal Revenue Code, the 2nd-
trust instrument must not include or omit a term that prevents the
2nd trust from qualifying as a qualified subchapter S trust.

(e)  If the first trust contains property that qualified, or would
have qualified but for provisions of this subchapter other than this
section, for a zero inclusion ratio for purposes of the generation-
skipping transfer tax under section 2642 (c) of the Internal Rev-
enue Code, the 2nd-trust instrument must not include or omit a
term that, if included in or omitted from the first-trust instrument,
would have prevented the transfer to the first trust from qualify-
ing for a zero inclusion ratio under section 2642 (c) of the Inter-
nal Revenue Code.

(f)  If the first trust is directly or indirectly the beneficiary of
qualified benefits property, the 2nd-trust instrument may not in-
clude or omit any term that, if included in or omitted from the
first-trust instrument, would have increased the minimum distri-
butions  required  with  respect  to  the  qualified  benefits  property
under section 401 (a) (9) of the Internal Revenue Code and any
applicable regulations, or any similar requirements that refer to
section 401 (a) (9) of the Internal Revenue Code or the regula-
tions.  If an attempted exercise of the decanting power violates
this paragraph, the trustee is deemed to have held the qualified
benefits property and any reinvested distributions of the property
as a separate share from the date of the exercise of the power and
s. 701.1322 applies to the separate share.

(g)  If the first trust qualifies as a grantor trust because of the
application  of  section  672  (f)  (2)  (A)  of  the  Internal  Revenue
Code,  the  2nd  trust  may  not  include  or  omit  a  term  that,  if  in-

2023-24 Wisconsin Statutes updated through all Supreme Court and Controlled Substances Board Orders filed before and in
effect on March 7, 2025.  Published and certified under s. 35.18.  Changes effective after March 7, 2025, are designated by
NOTES. (Published 3-7-25)

Updated 2023-24 Wis. Stats.  Published and certified under s. 35.18.  March 7, 2025.

 701.1319

TRUSTS

Updated 23-24 Wis. Stats.

  44

cluded in or omitted from the first-trust instrument, would have
prevented the first trust from qualifying under section 672 (f) (2)
(A) of the Internal Revenue Code.

(h)  In this paragraph, Xtax benefitY means a federal or state
tax deduction, exemption, exclusion, or other benefit not other-
wise listed in this section, except for a benefit arising from being
a grantor trust.  Subject to par. (i), a 2nd-trust instrument may not
include  or  omit  a  term  that,  if  included  in  or  omitted  from  the
first-trust  instrument,  would  have  prevented  qualification  for  a
tax benefit if all of the following apply:

1.  The first-trust instrument expressly indicates an intent to
qualify for the benefit or the first-trust instrument clearly is de-
signed to enable the first trust to qualify for the benefit.

2.  The transfer of property held by the first trust or the first
trust qualified, or but for provisions of this subchapter other than
this section, would have qualified for the tax benefit.
(i)  Subject to par. (d), all of the following apply:
1.  Except as otherwise provided in par. (g), the 2nd trust may

be a nongrantor trust, even if the first trust is a grantor trust.

2.  Except as otherwise provided in par. (j), the 2nd trust may

be a grantor trust, even if the first trust is a nongrantor trust.

(j)    An  authorized  fiduciary  may  not  exercise  the  decanting
power if a settlor objects in a signed record delivered to the fidu-
ciary within the notice period and any of the following applies:

1.  The first trust and a 2nd trust are both grantor trusts, in
whole or in part, the first trust grants the settlor or another person
the power to cause the first trust to cease to be a grantor trust, and
the 2nd trust does not grant an equivalent power to the settlor or
other person.

2.  The first trust is a nongrantor trust and a 2nd  trust is a
grantor trust, in whole or in part, with respect to the settlor, unless
any of the following applies:

a.  The settlor has the power at all times to cause the 2nd trust

to cease to be a grantor trust.

b.  The first-trust instrument contains a provision granting the
settlor or another person a power that would cause the first trust
to cease to be a grantor trust and the 2nd-trust instrument con-
tains the same provision.

ted under this subchapter is void to the extent necessary to com-
ply with this subchapter.

(b)  A provision required by this subchapter to be in the 2nd-
trust instrument that is not contained in the instrument is deemed
to be included in the instrument to the extent necessary to comply
with this subchapter.

(2)  If  a  trustee  or  other  fiduciary  of  a  2nd  trust  determines
that sub. (1) applies to a prior exercise of the decanting power, the
fiduciary  shall  take  corrective  action  consistent  with  the  fidu-
ciary[s duties.

History:  2023 a. 127.

701.1323  Trust  for  care  of  animal.    (1)  The  decanting
power may be exercised over an animal trust that has an animal
protector to the extent the trust could be decanted under this sub-
chapter if each animal that benefits from the trust were an indi-
vidual, if the animal protector consents in a signed record to the
exercise of the power.

(2)  An animal protector has the rights under this subchapter

of a qualified beneficiary.

(3)  Notwithstanding any other provision of this subchapter, if
a  first  trust  is  an  animal  trust,  in  an  exercise  of  the  decanting
power, the 2nd trust must provide that trust property may be ap-
plied  only  to  its  intended  purpose  for  the  period  the  first  trust
benefitted the animal.
History:  2023 a. 127.

701.1324  Terms of 2nd trust.  A reference in this chapter to
a trust instrument or terms of the trust includes a 2nd-trust instru-
ment and the terms of the 2nd trust.

History:  2023 a. 127.

701.1325  Settlor.  (1)  For purposes of law of this state other
than this subchapter and subject to sub. (2), a settlor of a first trust
is deemed to be the settlor of the 2nd trust with respect to the por-
tion of the principal of the first trust subject to the exercise of the
decanting power.

(2)  In determining settlor intent with respect to a 2nd trust,
the intent of a settlor of the first trust, a settlor of the 2nd trust,
and the authorized fiduciary may be considered.

History:  2023 a. 127.

History:  2023 a. 127.

701.1320  Duration of 2nd trust.  (1)  Subject to sub. (2), a
2nd trust may have a duration that is the same as or different from
the duration of the first trust.

(2)  To the extent that property of a 2nd trust is attributable to
property of the first trust, the property of the 2nd trust is subject
to  any  rules  governing  maximum  perpetuity,  accumulation,  or
suspension of the power of alienation that apply to property of the
first trust.

History:  2023 a. 127.

701.1321  Need  to  distribute  not  required.    An  autho-
rized fiduciary may exercise the decanting power whether or not
under the first trust[s discretionary distribution standard the fidu-
ciary would have made or could have been compelled to make a
discretionary distribution of principal at the time of the exercise.

History:  2023 a. 127.

701.1322  Saving provision.  (1)  If exercise of the decant-
ing power would be effective under this subchapter except that the
2nd-trust instrument in part does not comply with this subchap-
ter, the exercise of the power is effective and the following rules
apply with respect to the principal of the 2nd trust attributable to
the exercise of the power:

(a)  A provision in the 2nd-trust instrument that is not permit-

701.1326  Later-discovered property.  (1)  Except as oth-
erwise  provided  in  sub.  (3),  if  exercise  of  the  decanting  power
was intended to distribute all the principal of the first trust to one
or  more  2nd  trusts,  later-discovered  property  belonging  to  the
first trust and property paid to or acquired by the first trust after
the exercise of the power is part of the trust estate of the 2nd trust
or trusts.

(2)  Except as otherwise provided in sub. (3), if exercise of the
decanting power was intended to distribute less than all the prin-
cipal of the first trust to one or more 2nd trusts, later-discovered
property  belonging  to  the  first  trust  or  property  paid  to  or  ac-
quired by the first trust after exercise of the power remains part of
the trust estate of the first trust.

(3)  An authorized fiduciary may provide in an exercise of the
decanting power or by the terms of a 2nd trust for disposition of
later-discovered property belonging to the first trust or property
paid to or acquired by the first trust after exercise of the power.

History:  2023 a. 127.

701.1327  Obligations.  A debt, liability, or other obligation
enforceable against property of a first trust is enforceable to the
same extent against the property when held by the 2nd trust after
exercise of the decanting power.

History:  2023 a. 127.

2023-24 Wisconsin Statutes updated through all Supreme Court and Controlled Substances Board Orders filed before and in
effect on March 7, 2025.  Published and certified under s. 35.18.  Changes effective after March 7, 2025, are designated by
NOTES. (Published 3-7-25)

