A trustee or a fraternal society, order or association operating under the lodge system, provided the principal or income of such trust is to be used by such trustee or by such fraternal society, order or association exclusively for religious, charitable, scientific, literary or educational purposes or for the prevention of cruelty to children and animals, and no substantial part of the activities of such trustee or of such fraternal society, order or association is carrying on propaganda or otherwise attempting to influence legislation, and such trustee or such fraternal society, order, or association does not participate or intervene in any political campaign on behalf of any candidate for public office.
Any veteran's organization incorporated by act of congress, or of its departments or local chapters or posts, no part of the net earnings of which inures to the benefit of any private shareholder or individual.
(6) Other applicable law.
Nothing in this section shall prohibit modification or termination of any trust pursuant to its terms or limit the general equitable power of a court to modify or terminate a trust in whole or in part.
Circuit court procedure in trust proceedings. 701.14(1)(1)
A proceeding in the circuit court involving a living or testamentary trust may be commenced by a trustee or other person interested in the trust and, except as otherwise provided in this chapter, all probate procedure governing circuit courts, so far as it may be applicable, shall apply to such proceeding.
If notice of a trust proceeding to a person interested in the trust, to the person's representative or guardian ad litem as provided in s. 701.15
or to other persons, is required by law or deemed necessary by the court, the court shall order such notice to be given as prescribed in s. 879.05
except that service by publication shall not be required unless ordered by the court. The court may order both personal service and service by publication on designated persons. Proof of service shall be made as provided in s. 879.07
. Persons interested in the trust, on behalf of themselves, or their representatives or guardians ad litem as provided in s. 701.15
, on behalf of themselves and those whom they represent, may in writing waive service of notice and consent to the hearing of any matter without notice. Waiver of notice or an appearance by any person interested in the trust or the person's representative or guardian ad litem as provided in s. 701.15
is equivalent to timely service of notice.
(3) Attorney for person in military service.
At the time of filing a petition for a trust proceeding, an affidavit shall be filed setting forth the name of any person interested in the proceeding who is actively engaged in the military service of the United States. Whenever it appears by the affidavit or otherwise that any person in the active military service of the United States is interested in any trust proceeding and is not represented by an attorney, or by an attorney-in-fact who is duly authorized to act on the person's behalf in the matter, the court shall appoint an attorney to represent the person and protect the person's interest.
A proceeding involving a living trust shall be governed by ss. 801.50
so far as applicable and shall be regarded as a civil action for that purpose.
History: 1971 c. 66
; Sup. Ct. Order, 67 Wis. 2d 585, 777 (1975); 1977 c. 449
; 1991 a. 220
See s. 701.10 (3)
, which lists the persons who may start proceedings to enforce a charitable trust and requires notice be given to the attorney general of any proceeding affecting the trust.
Representation of others.
Except as otherwise provided in ss. 701.12
and 701.13 (1)
, in a trust proceeding in the circuit court:
(1) Power to create or extinguish.
The sole holder or all coholders of a power of revocation or a general power of appointment as defined in s. 702.01 (3)
may represent any or all persons whose interests are subject to such power.
(2) Guardian ad litem; virtual representation.
Subject to sub. (1)
, the court may appoint a guardian ad litem for any person interested who is legally incapacitated, unascertained or unborn if such person is not already represented by a fiduciary having no adverse interest in the proceeding. A guardian ad litem may represent 2 or more such persons where they have a substantially identical interest in the proceeding. The court may dispense with or terminate the appointment of a guardian ad litem for such person if there is a legally competent person who is a party to the proceeding and has a substantially identical interest in it.
Testamentary trustees. 701.16(1)
Appointment of original trustee. 701.16(1)(a)(a)
Trustee named in will.
A trustee who is named or whose appointment is provided for in a will derives the authority to carry out the trust from the will and assumes the office of trustee upon the issuance of letters of trust by the court as provided in s. 856.29
. A trustee named in a will may renounce the position by an instrument filed with the court having jurisdiction to admit the will to probate.
Other original trustee.
If a testamentary trust is created which fails to name a trustee, or the named trustee refuses to accept the position or predeceases the settlor and no alternate trustee is named in the will nor effective provision made for appointment of an alternate trustee, the court shall appoint a suitable person as trustee. Letters of trust shall be issued to such trustee as provided in s. 856.29
If it appears necessary, the court can appoint a special trustee until a regular trustee can be appointed. A special trustee may be appointed without notice and may be removed whenever the court so orders. Such special trustee shall give such bond as the court requires and shall have such powers as are conferred by the order of appointment and set forth in any letters of trust issued the special trustee.
If a trustee is authorized to carry out a trust created by will admitted to probate outside this state, but not also admitted to probate in this state, the foreign trustee may have recorded in the office of the register of deeds of a county in which part of the subject matter of the trust is located a certified copy of the letters of trust and filed with the register of probate of the same county a statement appointing the register of probate in his or her official capacity the trustee's resident agent for service of process. Thereafter the trustee may exercise all powers and have all the rights, remedies and defenses that the trustee would have if he or she received letters of trust from a circuit court of this state. Service of process shall be complete upon delivery of duplicate copies to the register of probate, one of which copies the register of probate shall promptly forward by registered mail to the foreign trustee.
Prior to the issuance of letters of trust to an original testamentary trustee under sub. (1)
or to a successor or added testamentary trustee under s. 701.17 (1)
, the court may require such trustee to give a bond in accordance with ch. 878
and conditioned on the faithful performance of such trustee's duties. If a settlor directs that a trustee serve without bond, the court shall give effect to this direction unless it determines that a bond is required by a change in the trustee's personal circumstances since the execution of the settlor's will. If the court requires a bond, and the trustee named in the will fails to furnish the required bond within a reasonable period of time after receiving notice of the bond requirement, the court may remove the trustee named in the will and appoint a successor trustee under s. 701.17
. No bond shall be required of a trust company bank, state bank or national banking association which is authorized to exercise trust powers and which has complied with s. 220.09
, nor shall a bond be required of a religious, charitable or educational corporation or society.
A testamentary trustee shall make and file a verified inventory of all property received from the settlor's personal representative or from any other source.
A testamentary trustee is required to make and file a verified account annually with the court, except as provided in pars. (am)
. If the trustee is accounting on a calendar-year basis, the court may not require the trustee to file the annual account prior to April 15. Production of securities and other assets for examination is not necessary upon the filing of an annual account unless the court determines such production is necessary to ascertain the correctness of an account filed for a particular trust. In the case of a testamentary charitable trust a copy of the annual account filed with the court shall be filed with the attorney general.
The annual accounting requirements under par. (a)
do not apply to corporate trustees or to corporate cotrustees if those trustees or cotrustees agree, in their initial consent to act as trustees or cotrustees or in a subsequent filing with the register in probate for the county that has jurisdiction over the trust, to provide annual accounts to all persons interested, as defined in s. 851.21
, who request those accounts by writing to the trustee or cotrustee. Each request is effective until the requester withdraws it or is no longer a person interested. A corporate trustee or cotrustee may withdraw its agreement by notifying the appropriate register in probate of its intent to do so.
Except in the case of a testamentary charitable trust, the court may dispense with the requirement of an annual accounting where, due to the size or nature of the trust property, the duration of the trust, the relationship of the trustee to the beneficiaries or other relevant factors, compliance with such requirement is unnecessary or unduly burdensome on the trustee. Whether or not an annual accounting is required a beneficiary may petition the court to require an accounting and the trustee may petition for approval of the trustee's accounts on a periodic basis.
Notwithstanding s. 879.47
, trustees and cotrustees may submit to courts accounts in the format that they normally use for accounts submitted to beneficiaries under this subsection, if all of the information required by the court is included.
(5) Final accounting.
A verified final account is required upon the termination of a testamentary trust. Upon the petition of a surviving or successor trustee, a beneficiary, a personal representative of a deceased trustee or on its own motion, the court may order a verified account filed upon the death, resignation or removal of a testamentary trustee. The court may require such proof of the correctness of a final account as it considers necessary.
No testamentary trustee or personal representative of a deceased trustee shall be discharged from further responsibility with respect to a testamentary trust until the court is satisfied upon notice and hearing that the requirements of this section have been met and it has received satisfactory proof that the trust property has been turned over to a successor or special trustee or, where the trust is terminated, distributed to the beneficiaries entitled to such property or turned over to a special trustee for distribution.
See s. 223.12
which contains requirements which must be met before a foreign corporate trustee is qualified to act in this state.
See s. 701.23 (1), which provides for the discharge of a trustee when a testamentary trust is removed to another state.
Even during a hearing on discharge, a trustee's duty to affirmatively represent the beneficiaries' interests by disclosing relevant information remains, and a breach of this duty leaves the discharge open to attack. Hammes v. First National Bank & Trust Co. 79 Wis. 2d 355
, 255 N.W.2d 555
A trustee has a duty to the trust beneficiaries to ensure that the personal representative transfers all property to which the trust is entitled. Even when the same person acts as trustee and personal representative, the trustee has a duty to enforce claims the trust has against the personal representative. Old Republic Surety Co. v. Erlien, 190 Wis. 2d 400
, 527 N.W.2d 389
(Ct. App. 1994).
Successor and added trustees. 701.17(1)
Appointment of successor or added trustee.
If there is a vacancy in the office of trustee because of the death, resignation or removal of a trustee, the court may appoint a successor trustee unless the creating instrument names or provides an effective method for appointing a successor. Upon the death of a sole trustee, title to the trust property does not pass to the trustee's personal representative but to the successor named in or appointed pursuant to the terms of the creating instrument or, in the case of a successor or special trustee appointed by the court, as provided in sub. (5)
. The court may in the exercise of a sound discretion appoint an additional trustee if necessary for the better administration of the trust, unless the creating instrument expressly prohibits such addition or provides an effective method for appointing an additional trustee. Subject to s. 701.16 (2)
, a successor or added testamentary trustee shall be issued letters of trust, at that trustee's request.
(2) Appointment of special trustee.
If it appears necessary, the court may appoint a special trustee until a successor trustee can be appointed or, where a trust has terminated, to distribute the assets. A special trustee may be appointed without notice and may be removed whenever the court so orders. Such special trustee shall give such bond as the court requires and shall have the powers conferred by the order of appointment and set forth in any letters of trust issued the special trustee.
(3) Powers of successor or added trustee.
Unless expressly prohibited in the creating instrument, all powers conferred upon the trustee by such instrument attach to the office and are exercisable by the trustee holding the office.
(4) Powers of cotrustees.
If one of several trustees dies, resigns or is removed, the remaining trustees shall have all rights, title and powers of all the original trustees. If the creating instrument manifests an intent that a successor trustee be appointed to fill a vacancy, the remaining trustees may exercise the powers of all the original trustees until such time as a successor is appointed.
(5) Vesting of title.
A special or successor trustee is vested with the title of the original trustee and an added trustee becomes a joint tenant with the existing trustee in all trust property. The court may order a trustee who resigns, is removed or is joined by an added trustee to execute such documents transferring title to trust property as may be appropriate to facilitate administration of the trust or may itself transfer title.
History: 1971 c. 66
; 1991 a. 316
Resignation and removal of trustees. 701.18(1)
A trustee may resign in accordance with the terms of the creating instrument or petition the court to accept the trustee's resignation and the court may, upon notice and hearing, discharge the trustee from further responsibility for the trust upon such terms and conditions as are necessary to protect the rights of the beneficiaries and any cotrustee. In no event shall a testamentary trustee be discharged from further responsibility except as provided in s. 701.16 (6)
A trustee may be removed in accordance with the terms of the creating instrument or the court may, upon its own motion or upon a petition by a beneficiary or cotrustee, and upon notice and hearing, remove a trustee who fails to comply with the requirements of this chapter or a court order, or who is otherwise unsuitable to continue in office. In no event shall a testamentary trustee be discharged from further responsibility except as provided in s. 701.16 (6)
History: 1971 c. 66
; 1991 a. 316
Trustees of an employees' profit-sharing plan who are also beneficiaries may not be removed simply because other beneficiaries have lost confidence in them or because they personally benefit in a minor way from a denial of benefits to a participant. Zimmermann v. Brennan, 56 Wis. 2d 623
, 202 N.W.2d 923
Although the will creating the trust provided that the trustee could resign without court approval, filing a petition for the appointment of a successor and approval of accounts invoked court jurisdiction and required the exercise of discretion regarding the trustee's resignation. Matter of Sherman B. Smith Family Trust, 167 Wis. 2d 196
, 482 N.W.2d 118
(Ct. App. 1992).
That this section allows removing a trustee for cause does not prevent removal of a trustee under s. 701.12 with the approval of the settlor and all beneficiaries, without showing cause. Weinberger v. Bowen, 2000 WI App 264
, 240 Wis. 2d 55
, 622 N.W.2d 471
Powers of trustees. 701.19(1)(1)
Power to sell, mortgage or lease.
In the absence of contrary or limiting provisions in the creating instrument, in the court order appointing a trustee or in a subsequent order, a trustee has complete power to sell, mortgage or lease trust property without notice, hearing or order. A trustee has no power to give warranties in a sale, mortgage or lease which are binding on the trustee personally. In this section "sale" includes an option or agreement to transfer for cash or on credit, exchange, partition or settlement of a title dispute; this definition is intended to broaden rather than limit the meaning of "sale". "Mortgage" means any agreement or arrangement in which trust property is used as security.
(2) Court authorization of administrative action. 701.19(2)(a)(a)
In the absence of contrary or limiting provisions in the creating instrument, in any case where it is for the best interests of the trust, on application of the trustee or other interested person, the court may upon notice and hearing authorize or require a trustee to sell, mortgage, lease or otherwise dispose of trust property upon such terms and conditions as the court deems just and proper.
Despite contrary or limiting provisions in the creating instrument, upon application of a trustee or other interested person, a court may upon notice and hearing order the retention, investment, reinvestment, sale, mortgage, lease or other disposition of trust property if the court is satisfied that the original purpose of the settlor cannot be carried out, substantially performed or practically achieved for any reason existing at the inception of the trust or arising from any subsequent change in circumstances and the retention, investment, reinvestment, sale, mortgage, lease or other disposition of the property more nearly approximates the settlor's intention.
Unless authorized in the creating instrument, a trustee may not be interested as a purchaser, mortgagee or lessee of trust property unless such purchase, mortgage or lease is made with the written consent of all beneficiaries or with the approval of the court upon notice and hearing. A representative of a beneficiary, under s. 701.15
, may give written consent for such beneficiary.
A trustee may not sell individually owned assets to the trust unless the sale is authorized in the creating instrument, made with the written consent of all beneficiaries or made with the approval of the court upon notice and hearing.
(3) When mandatory power deemed discretionary.
If a creating instrument expressly or by implication directs a trustee to sell trust property and such property has not been sold for a period of 25 years after the creation of the trust, such direction to the trustee shall be deemed a discretionary power of sale.
(4) Continuation of business by court order. 701.19(4)(am)(am)
In the absence of contrary or limiting provisions in the creating instrument, the circuit court may, where it is in the best interests of the trust, order the trustee to continue any business of a deceased settlor. The order may be issued without notice and hearing, in the court's discretion and, in any case, may provide:
For conduct of the business solely by the trustee, jointly with one or more of the settlor's surviving partners or as a corporation or limited liability company to be formed by the trustee;
As between the trust and the trustee, the extent of liability of the trust and the extent of the personal liability of the trustee for obligations incurred in the continuation of the business;
As between beneficiaries, the extent to which liabilities incurred in the continuation of the business are to be chargeable solely to a part of the trust property set aside for use in the business or to the trust as a whole; and
For the period of time for which the business may be conducted and any other conditions, restrictions, regulations, requirements and authorizations as the court orders.
Nothing in this subsection shall be construed as requiring a trustee to liquidate a business, including a business operated as a closely held corporation, when liquidating the business is not required by the creating instrument or other applicable law.
(4m) Continuation of business by direction of settlor.
If the settlor directs retention of a business that is among the trust's assets in the trust document or by other written means, a trustee may retain that business during the settlor's lifetime without liability.
(5) Formation of business entity.
In the absence of contrary or limiting provisions in the creating instrument:
The court may by order authorize a trustee to become a partner under ch. 178
and transfer trust property to the partnership in return for a partnership interest.
The court may by order authorize a trustee to become a member of a limited liability company under ch. 183
and transfer trust property to the limited liability company in return for an ownership interest.
The court may by order authorize a trustee to organize a corporation for any purpose permitted by ch. 180
, subscribe for shares of such corporation and transfer trust property to such corporation in payment for the shares subscribed.
The court may by order authorize a trustee to form a corporation for any purpose permitted by ch. 181
An order under this subsection may in the court's discretion be issued without notice and hearing.
(6) Registration of securities in nominee.
Unless prohibited in the creating instrument, a trustee may register securities in the name of a nominee.
(7) Proxy voting of stock.
Unless the creating instrument contains an express prohibition or specifies the manner in which the trustee is to vote stock in a corporation or certificates of beneficial interest in an investment trust, the trustee may vote such stock or certificates by general or limited proxy, with or without power of substitution.
(8) Platting land.
In the absence of contrary or limiting provisions in the creating instrument, the court may by order authorize a trustee to plat land which is part of the trust, either alone or together with other owners of such real estate. In such platting the trustee must comply with the same statutes, ordinances, rules and regulations which apply to a person who is platting the person's own land. The order under this subsection may in the court's discretion be issued without notice and hearing.
In the absence of contrary or limiting provisions in the creating instrument, any power vested in 3 or more trustees may be exercised by a majority. This paragraph shall not apply to living trusts created prior to July 1, 1971, or to testamentary trusts contained in wills executed or last republished prior to that date.
A trustee who has not joined in exercising a power is not liable to an affected person for the consequences of the exercise unless the trustee has failed to discharge the trustee's duty to participate in the administration of the trust. A dissenting trustee is not liable for the consequences of an act in which the dissenting trustee joins at the direction of the majority of the trustees if the dissenting trustee's dissent is expressed in writing to the other trustees at or before the time of the joinder.
(10) Restriction on exercise of powers. 701.19(10)(a)(a)
Except as provided in par. (c)
, a person may not exercise any of the following powers conferred upon him or her in his or her capacity as trustee:
The power to make discretionary distributions of trust principal or income if the distributions are to himself or herself or for the discharge of his or her legal obligations.
The power to make discretionary allocations of receipts or expenses as between principal and income if the allocations are in his or her favor.
If a power under par. (a)
is conferred upon more than one person as trustee, a person who is not disqualified to act under par. (a)
may exercise the power for the benefit of the person who is disqualified to act, unless the creating instrument expressly provides otherwise. A special trustee appointed by a court may exercise a power under par. (a)
for the benefit of the disqualified person if no other trustee is qualified to exercise the power.
The person is also the settlor of the trust, and the trust may be revoked or amended by the settlor.
The terms of the creating instrument specifically limit the scope of the power to expenditures and distributions of income or principal on the basis of an ascertainable standard relating to the person's health, maintenance, support, or education such that the person would not be subject to tax under section 2041
of the Internal Revenue Code as a result of having or exercising the power.
The person is the spouse, widow, or widower of the settlor of the trust, and a marital deduction has been allowed for federal gift or estate tax purposes with respect to the trust property that is subject to the power.
The creating instrument negates the application of par. (a)
with respect to the power or indicates that provisions that are similar to par. (a)
do not apply.