After more than seven years of study by attorneys and bankers, the new Wisconsin Trust Code became effective on July 1. The new law is a complete restatement of Wisconsin’s law on trusts and applies to both existing and newly created trusts. You will be impacted by this new law if a trust is part of your current or future estate plan or if you are a beneficiary or trustee of an existing trust.
The WTC is modeled after the Uniform Trust Code, which has now been passed in 30 jurisdictions in the United States. The new law is primarily a set of default statutes – meaning that your estate planning attorney can draft around the new rules. Key provisions include:
- Nonjudicial settlement agreements are authorized as a way to resolve trust disputes.
- Court supervision of testamentary trusts (trusts created under a will) is no longer required.
- The concept of representation has been expanded. For example, a parent can now represent the interests of a minor trust beneficiary.
- Reasons to modify or terminate an existing irrevocable trust have increased. A trustee now has the power to appoint trust assets to a newly created trust (decanting).
- Statutory rules now apply to the creation, administration and termination of a revocable trust.
- Trustee powers are defined. Thirteen trustee duties are specified, including the duty to inform and report to beneficiaries.
- Directed trusts – those that split the investment or distribution responsibilities from a trustee – are authorized.
- Trust protectors are defined and their duties and liabilities are addressed.
- The trustee of an irrevocable life insurance trust is no longer required to determine if a life insurance contract is a proper investment.
- The statute of limitations that applies to a trustee is defined.
Now is a good time to contact your estate planning counsel to discuss a review and update of your estate plan.
Victor Schultz, senior vice president and head of Personal Trust at Prairie Financial Group, a division of Waukesha State Bank, was a co-chair of the WTC study group.