SB 667 — Relating to: domestic asset protection trusts.

(5)(b) “Creditor"Property meansto athe personextent whoit hasis agenerally claimexempt againstunder a(a) transferorThe andrelease includesor anyrelinquishment transfereeof of,a assigneeproperty of,inter- ornonbankruptcy successorlaw toat the claim.time of a qualified disposition.

(6)est “Debt"that meansis liabilitysubject onto a claim.qualified disposition until the (c) Property held as marital property with rights of release or relinquishment.

(7)survivorship “Disposition"to meansthe aextent transfer,that conveyance,under orthe assignmentlaw governing (b) The exercise of a special power of appointment the marital property interest,at includingthe time of a partial,qualified contingent,disposition undivided,that orresults co-ownershipin a transfer of property interest.to a trustee.

“Disposition"* includesSection an991.11,ISCONSISTATUTES: exercise of a general power of appointment that results in a transfer of property to a trustee but does not include any of the following:

(a)Effective Thedate release or relinquishment of aacts. property interest that is subject to a qualified disposition until the release or relinquishment.

(b)“Every Theact exerciseand every portion of aan specialact powerenacted ofby appointmentthe thatlegislature resultsover inthe agovernor’s transferpartial veto which does not expressly prescribe the time when it takes effect shall take effect on the day after its date of propertypublication.” toWisconsin aAct trustee.− 2 − 2023 Senate Bill 667 (c) A disclaimer under s.

(c) A disclaimer under s.

-(b) 2024Any Legislatureportion -of 4personal -property, LRB-4358/1interest KMS:skwof SENATE(6m) BILL“Domestic 667asset SECTIONpreservation 1trust” (8)means “Investmenta decision"money, meansor adividends decisionof regardingstock that is the retention,subject purchase,of sale,a exchange,quali- tender,trust orcreated otherby actiona affectingwritten instrument, the ownershipterms of orwhich rightsfied disposition is located in anthis investment.state.

(9) “Legacy trust" means a trust created by a written instrument, the terms of which do all of the following:

(a)(c) AppointThe attransferor’s leastlegal oneresidence qualified trustee to accept property that is thein subjectthis ofstate. a disposition, regardless of whether the terms of the trust also appoint a nonqualified trustee.

(b)(a) ExpresslyAppoint designateat theleast lawsone qualified trustee to accept (d) A qualified trustee of thisthe statedomestic toasset governpreserva- property that is the meaningsubject andof effecta disposition, regardless of tion trust has the power to maintain records for the trust whether the terms of the trust,trust inalso wholeappoint a nonqualified on an exclusive or innonexclusive part.basis, prepare or arrange trustee.

(c)for the preparation of fiduciary income tax returns for the (b) Expressly providedesignate thatthe laws of this state to gov- trust, and maintain or arrange for custody in this state of ern the trustmeaning and effect of the terms of the trust, in some orallof the property that is irrevocable.the subject of a qualified whole or in part.

(d)disposition, Includeand a spendthriftmaterial provisionportion thatof appliesthe toadministration an(c) interestExpressly ofprovide athat beneficiarythe in trust property, including an interest of a transferor who is airrevocable. beneficiary.

(10)of “Lien" has the meaningtrust givenis performed in s.this state.

(d) Include a spendthrift provision that applies to an (2)(a) If the transferor is married at the timeofaqual- interest of a beneficiary in trust property, including an ified disposition, this subchapter applies to the following:

interest of a transferor who is a beneficiary.

1.

Any of the transferor’s individual property that is (7) “Investment decision” means a decision regard- the subject of the qualified disposition.

ing the retention, purchase, sale, exchange, tender, or 2.

Anymarital property that is the subject of the qual- other action affecting the ownership of or rights in an investment.

ified disposition if the transferor’s spouse at the time of the disposition was provided with notice of the qualified (9) “Lien” has the meaning given in s.

(11)disposition “Nonlegacyas trust"provided meansin apar. trust that is not a legacy trust.

(12)(b) “Nonqualifiedor trustee"executed a written (10) “Nondomestic asset preservation trust” means consent to the qualified disposition after being provided a trusteetrust whothat is not a qualifieddomestic trustee.asset preservation trust.

(13) “Person" has the meaninginformation givenset forth in s.the notice.

701.0103(11) (17).“Nonqualified trustee” means a trustee who is (b) All of the following apply to a notice of a qualified not a qualified trustee.

(14)(11m) “Property"“Qualified hasaffidavit” themeans meaningan givenaffidavit inthat s.disposition under this subchapter:

701.0103meets (20).all of the requirements of s.

(15)701.1312 “Qualified(2). disposition" means a disposition by a transferor to any trustee of a legacy trust.

(16)1. “Qualified trustee" means a trustee who is not a transferor and to whom one of the following applies:

(a)The Ifnotice shall contain the trusteefollowing islanguage, anin individual,capital theletters, individualat residesor andnear isthe domiciledtop inof thisthe state.notice:

LRB-4358/1(12) -“Qualified 2024disposition” Legislaturemeans -a 5disposition -by KMS:skwYOUR SECTIONSPOUSE 1OR SENATEFORMER BILLSPOUSE 667IS (b)CRE- If the trustee is a trusttransferor companyto orany atrustee bank, the trust company or bank is organized under federal law, state law, or the laws of anothera state,domestic andasset thepreserva- trustATING companyA orPERMANENT bankTRUST maintainsINTO anWHICH officetion intrust. this state.

(18)PROPERTY “SpendthriftIS provision"BEING hasTRANSFERRED. the meaning given in s.

701.0103(13) (25).“Qualified trustee” means a trustee who is not a transferor and to whom one of the following applies:

(19)YOUR “Transferor"RIGHTS meansTO aTHIS personPROPERTY whoMAY directlyBE or(a) indirectlyIf makesthe atrustee dispositionis toan aindividual, legacythe trust,individual includingAFFECTED aDURING settlor,YOUR asMARRIAGE, definedUPON resides and is domiciled in s.this state.

701.0103DIVORCE (23).(INCLUDING THE PAYMENT OF CHILD SUPPORT OR ALIMONY OR A DIVISION OR DIS- (b) If the trustee is a trust company or a bank, the trust TRIBUTION OF PROPERTY IN A DIVORCE), OR AT company or bank is organized under federal law, state THE DEATH OF YOUR SPOUSE OR FORMER law, or the laws of another state, the trust company or bank is subject to supervision by the department of finan- SPOUSE.

(20)cial “Validinstitutions, lien"the hasfederal thedeposit meaninginsurance givencorpora- inYOU s.HAVE A VERY LIMITED PERIOD OF TIME tion, the U.S.

242.01comptroller (13).of the currency, or a successor TO OBJECT TO THE TRANSFER OF PROPERTY of any of them, and the trust company or bank maintains INTO THIS TRUST.

699.015YOU Applicability.MAY, UPON REQUEST TO THE TRUSTEE an office in this state.

UnlessAT theTHE termsADDRESS ofBELOW, aBE legacyFURNISHED trustA provide(14) otherwise,“Transferor” thismeans chaptera governsperson thewho construction,directly operation,or andindirectly enforcementmakes ina thisdisposition stateto of a legacydomestic trust,asset whetherpreser- createdCOPY inOF thisTHE stateTRUST orDOCUMENT. any other state, if any of the following applies:

(1)vation Anytrust, ofincluding the land, rents, issues, or profits that are the subject of a qualifiedsettlor, dispositionas aredefined located in thiss. state.

(2)701.0103 AnyIF portionYOUHAVE ofANY personalQUESTIONS, property,YOU interestSHOULD of(23). money, or dividends of stock that is the subject of a qualified disposition is located in this state.

(3)IMMEDIATELY TheSEEK transferor'sINDEPENDENT legalLEGAL residence(15) is“Valid inlien” thishas state.the meaning given in s.

(4)242.01 AADVICE. qualified trustee of the legacy trust has the power to maintain records and prepare income tax returns for the trust, and all or part of the administration of the trust is performed in this state.

699.02(13). Spendthrift provision;

legacyIF trust.YOU FAIL TO OBJECT WITHIN 30 DAYS, YOU WILL HAVE CONSENTED TO THE TRANS- 701.1302 Applicability.

(1) Unless the terms of a domestic asset preservation trust provide otherwise, this FER OF PROPERTY INTO THIS TRUST.

subchapter governs the construction, operation, and ....

(address) enforcement in this state of a domestic asset preservation 2.

The notice shall contain a description of the prop- trust, whether created in this state or any other state, if any erty that is the subject of the qualified disposition.

of the following applies:

3.

The notice may require that any person who is eli- (a) Any of the land, rents, issues, or profits that are gible to receive information under this subsection be the subject of a qualified disposition are located in this bound by the duty of confidentiality that binds the trustee state.

before receiving such information from the trustee.

Senate Bill 667 − 3 − 2023 Wisconsin Act 4.

The notice shall be provided by the transferor, the written document that is effective during the lifetime of transferor’s agent, the trustee, or another fiduciary of the the transferor or upon the death of the transferor.

domestic asset preservation trust.

(3) The right of a transferor to receive income from 5.

The notice is considered provided to a spouse if the domestic asset preservation trust in accordance with one of the following requirements is met:

the terms of the domestic asset preservation trust.

a.

The notice is delivered to the spouse via certified (4) That a transferor is a beneficiary of the domestic mail, with a return receipt requested.

asset preservation trust regardless of whether the trust b.

The notice is given to the spouse in−person and the qualifies as a charitable remainder annuity trust under 26 spouse acknowledges the receipt of the notice in a signed USC 664 (d) (1) or as a charitable remainder unitrust and notarized document.

under 26 USC 664 (d) (2), even if the transferor has the (c) If a notice is provided under this subsection before right to release the transferor’s retained interest, in whole the qualified disposition, the period to commence an or in part, in the charitable remainder annuity trust or action under s.

701.1306 (3)begins to run on the date the charitable remainder unitrust at any time in favor of one notice is provided.

The period to commence an action to or more of the remainder beneficiaries of the domestic challenge a qualified disposition under this subsection asset preservation trust.

and s.

701.1306 (3) may not exceed the period set forth (5) A transferor’s annual receipt of a percentage of in s.

893.425.

the value of the domestic asset preservation trust assets, 701.1303 Spendthrift provision;

domestic asset as determined in accordance with the terms of the trust, preservation trust.

701.0502 as long as the amount the transferor receives in a year is (1), a spendthrift provision of a legacydomestic asset preserva- not more than the amount defined as the income of the tion trust is not invalid because a transferor or a person domestic asset preservation trust under 26 USC 643 (b) who is treated as a settlor under s.

701.0505 (2) is also a or, for any qualified retirement plan or eligible deferred beneficiary of the legacydomestic asset preservation trust.

(2)compensation Exceptplan asthat otherwiseis providedan inasset thisof section,the adomestic spendthriftasset provision(2) inExcept aas legacyotherwise trustprovided restrainsin boththis voluntarysection, and involuntary transfers of a transferor'spreservation -trust, 2024the Legislatureminimum -required 6distribution, -as LRB-4358/1spendthrift KMS:skwprovision SENATEin BILLa 667domestic Sasset ECTIONpreservation 1defined interest in the26 legacyUSC trust.4974 (b).

Atrust spendthriftrestrains provisionboth involuntary aand legacyinvoluntary trusttransfers isof enforceable(6) underA anytransferor’s applicablepotential nonbankruptcyor lawactual withinreceipt theor meaninguse of 11a USCtransferor’s 541interest (c)in (2)the regardlessdomestic ofasset whetherpreservation theprincipal legacyor trustincome instrumentof makesthe anydomestic referenceasset topreservation thattrust. enforceability.

TheA termsspendthrift ofprovision in a legacydomestic trust,asset includingpreser- intrust aif spendthriftthe provision,potential mayor provideactual forreceipt anyor otheruse restraintis ofthe alienationresult thatvation aretrust permittedis enforceable under theany lawsapplicable nonbank- of thisany state.of the following:

(3)ruptcy Sectionlaw 701.0503within (2)the doesmeaning notof apply11 toUSC a541 spendthrift(c) provision(2) in(a) aA legacyqualified trust.trustee’s discretion.

For purposes of regardless of whether the domestic asset preservation this paragraph, a qualified trustee has discretion with trust instrument makes any reference to that enforceabil- respect to the distribution and use of the principal and ity.

The terms of a domestic asset preservation trust, income of a domestic asset preservation trust unless the including in a spendthrift provision, may provide for any terms of the domestic asset preservation trust expressly other restraint of alienation that are permitted under the provide otherwise.

laws of this state.

(b) A qualified trustee applying a standard that gov- (3) Section 701.0503 (2) does not apply to a spend- erns the distribution or use of principal or income of the thrift provision in a domestic asset preservation trust.

domestic asset preservation trust.

does not apply to a legacy(c) A qualified trustee acting at the direction of an domestic asset preservation trust.

advisor if the advisor’s direction is discretionary or pur- (5) Nothing in this section may deprive a beneficiary suant to a standard that governs the distribution or use of of any exemption right that the beneficiary has under any principal or income under the terms of the domestic asset applicable law after the trust property is received by the beneficiary.preservation trust.

699.03For Impliedpurposes powerof tothis revokeparagraph, or to transfer an interestbeneficiary. in a legacy trust.

Noneadvisor’s ofdirection the following is considereddiscretionary tounless be,the includingtermsofthe in701.1304 combination,Implied a power to revoke aor legacyto trusttransfer ordomestic toasset voluntarilypreservation ortrust involuntarilyexpressly transferprovide oth- an interest in thea legacydomestic trust:asset preservation trust.

(1)erwise. A transferor's power to veto a distribution of income or principal from the legacy trust.

None of the following is considered to be, including in (7) A transferor’s potential or actual right to use real combination, a power to revoke a domestic asset preser- or tangible personal property owned by the domestic vation trust or to voluntarily or involuntarily transfer an asset preservation trust.

interest in the domestic asset preservation trust:

(8) A transferor’s right to possess and enjoy a quali- (1) A transferor’s power to veto a distribution of fied interest, as defined in 26 USC 2702 (b), or property income or principal from the domestic asset preservation held under a qualified personal residence trust, as trust.

described in 26 USC 2702 (c).

(9) A qualified trustee’s mandatory or discretionary 702.02 (7), exercisable by a transferor by will or another writtenpower documentto thatuse isthe effectiveincome duringor theprincipal lifetime of the transferordomestic asset Wisconsin Act − 4 − 2023 Senate Bill 667 preservation trust to pay, in whole or uponin part, income taxes (c) “Fungible asset” means an asset other than money due on the deathincome of the transferor.domestic asset preservation that is interchangeable for commercial purposes and the trust.

(3)properties The right of awhich transferorare toessentially receiveidentical. income from the legacy trust in accordance with the terms of the legacy trust.

(4)(10) That a transferorqualified istrustee, awhether beneficiarypursuant ofto the legacy trust regardless of whether the trust qualifies as a charitable remainder annuity trust under 26 USC 664 (d) (1)“Money” LRB-4358/1means -cash 2024 Legislature - 7 - KMS:skw S ECTION 1 SENATE BILL 667 or as a charitablecash remainderequivalent. unitrust under 26 USC 664 (d) (2), even if the transferor has the right to release the transferor's retained interest, in whole or in part, in the charitable remainder annuity trust or charitable remainder unitrust at any time in favor of one or more of the remainder beneficiaries of the legacy trust.

(5)qualified Atrustee’s transferor'sdiscretion, annual receipt of a percentage of the value of the legacy trust assets, as determined in accordance with the terms of the trust,domestic as(2) longSubject asto thesub. amount the transferor receives in a year is not more than the amount defined as the income of the legacy trust under 26 USC 643 (b) or, for any qualified retirement plan or eligible deferred compensation plan that is an asset of the legacy trust, the minimum required distribution, as defined in 26 USC 4974 (b).

(6)(3) Aand transferor'ss. potential or actual receipt or use of principal or income of the legacy trust if the potential or actual receipt or use is the result of any of the following:

(a)701.1311 A(4), qualifieda trustee'screditor discretion.asset preservation trust, or the direction of an advisor may not bring an action of any kind, including an action pays any of the following:

Forto purposesenforce ofa thisjudgment, paragraph,an aaction qualifiedat trusteelaw hasor discretionin withequity, respector toan the(a) distributionA andtransferor’s usedebt ofthat is outstanding at the principaltime andaction incomeforan ofattachment aor legacyother trustfinal unlessor theprovisional termsrem- of the legacytransferor’s trustdeath. expressly provide otherwise.

(b)edy, Aagainst qualifieda trusteeperson applyingwho amade standardor thatreceived governsa thequalified distribution(b) orThe useexpenses of principaladministering orthe incometransferor’s disposition, against a trustee of thea legacydomestic trust.asset preserva- estate.

(c)tion Atrust, qualifiedor trusteeagainst actingor atinvolving theany directionproperty ofthat anis advisorthe if(c) theAny advisor'sestate, directiongift, isgeneration−skipping discretionarytransfer, or pursuantsubject toof a standardqualified thatdisposition governsor theis distributionotherwise orheld useby ofinheritance principaltax oron incomebehalf underof the termstransferor ofor the legacytransfer- trust.a domestic asset preservation trust, except that, subject to or’s estate.

For(11) purposesA ofprovision thisin paragraph, an advisor's direction is discretionary unless the termsdomestic ofasset thepreservation legacys. trust expressly provide otherwise.

(7)701.1307, Aa transferor'screditor potentialmay orbring actualan rightaction toagainst usea realqual- ified disposition of an asset if the transferor made the trust that transfers all or tangiblepart personalof propertythe ownedtrust byassets to the legacytrans-qualified disposition with the intent to hinder, delay, or feror’s estate or revocable trust.

-defraud 2024the Legislaturecreditor. - 8 - LRB-4358/1 KMS:skw SENATE BILL 667 SECTION 1 (8) A transferor's right to possess and enjoy a qualified interest, as defined in 26 USC 2702 (b), or property held under a qualified personal residence trust, as described in 26 USC 2702 (c).

(9)(12) A qualifiedtransferor trustee'sis mandatorya orbeneficiary discretionaryof powerthe todomestic use(3) theA incomecreditor ormay principalbring ofan theaction legacyagainst a qualified asset preservation trust toand pay,is inauthorized wholeto orreceive ina part,pay- ment of income taxesor dueprincipal onfrom thea incomequalified ofannuity thedisposition legacyunder trust.sub.

(10)(2) Thatonly aif qualified trustee, whether pursuant to the qualifiedcreditor trustee'ssatisfies discretion,one the terms of the legacy trust, or the direction of an advisor pays any of the following:

(a)interest, Aas transferor'sdefined debtin that26 isCFR outstanding25.2702−3 at(b), theor timea quali- (a) The creditor was a creditor of the transferor'stransferor death.when fied unitrust interest, as defined in 26 CFR 25.2702−3 (c).

(b)the Thequalified expensesdisposition ofwas administeringmade and the transferor'screditor estate.com- 701.1305 Transferor’s powers.

(c)(1) AnyA estate,transferor gift,of generation-skippingmences transfer,the oraction inheritancewithin taxthe onlater behalf of the transferorfollowing: or the transferor's estate.

(11)a Adomestic provisionasset inpreservation the legacy trust thathas transfersonly allthe orpowers partand ofrights thethat trustare assetsgranted to the transferor'stransferor estateby orthe revocabletrust trust.1.

(12)Eighteen Amonths transferorafter is a beneficiary of the legacy trust and is authorized to receive a payment of income or principal from a qualified annuitydisposition. interest, as defined in 26 CFR 25.2702-3 (b), or a qualified unitrust interest, as defined in 26 CFR 25.2702-3 (c).

699.04instrument. Transferor's powers.

(1)An Aagreement transferoror ofunderstanding, aexpress legacyor trust2. has only the powers and rights that are granted to the transferor by the trust instrument.

AnSix agreementmonths orafter understanding, express or implied, between the transferorcreditor anddiscovers a trustee that attempts to grant or permitreason- theably retentionshould ofhave greaterdiscovered rights or authority than is stated in the trustqualified instrumentdisposition. is void.

LRB-4358/1implied, -between 2024the Legislaturetransferor -and 9a -trustee KMS:skwthat SECTIONFor 1purposes SENATEof BILLthis 667subdivision, (2)a Notwithstandingcreditor s.is considered attempts to grant or permit the retention of greater rights to have discovered a transfer at the time a public record or authority than is stated in the trust instrument is void.

699.03,(2) theNotwithstanding termss. of a legacy trust may grant a transferor, whether or not the transferor is a trustee, the power to do any of the following:

701.1304, the terms of a is made of the transfer.

domestic asset preservation trust may grant a transferor, (b) Thecreditor becomes a creditor after the qualified disposition is made, and the creditor commences the whether or not the transferor is a trustee, the power to do action no later than 18 months after the qualified disposi- any of the following:

tion.

(4) In an action against a qualified disposition under (c) Direct trust investments.

(d)sub. Execute any other managerial duties.

699.05(2), Limitationseach oncreditor actions,has remedies,the burden of proving by clear and claims.convincing evidence that the transferor made the (d) Execute any other managerial duties.

qualified disposition with the intent to hinder, delay, or 701.1306 Limitations on actions, remedies, and claims.

(a)defraud “Cash" means the coinscreditor. or currency of the United States or any other nation.

(b)Proof “Cashby equivalent"one meanscreditor that a monetarytrans- instrument(a) or“Cash” devicemeans thatthe iscoins commonly or routinelycurrency acceptedof insteadthe ofUnited cash,feror includingmade a certifiedqualified disposition with the intent to hin- States or uncertifiedany check;other nation.

moneyder, order;delay, or defraud that creditor is not proof that the (b) “Cash equivalent” means a monetary instrument transferor made a qualified disposition with the intent to hinder, delay, or defraud any other creditor and does not or device that is commonly or routinely accepted instead of cash, including a certified or uncertified check;

money invalidate any other transfer of property to the domestic order;

negotiable instrumentasset orpreservation antrust. instrument endorsed in blank or in bearer form;

securitiesinstrument issued or guaranteedan byinstrument theendorsed Unitedin States,blank a state, or ain state(5) orSubject federalto agency;s.

funds701.1311 on(4), depositwith inrespect to a savingsquali- orbearer checkingform; account or any similar account;

fundssecurities onissued depositor inguaranteed by the fied disposition, a moneycreditor markethas accountonly orthe similarrights account;and reme- dies that are provided in this section and s.

or701.1307. demand deposit account, time deposit account, or savings deposit account at any bank, savings and loan association, brokerage house, or similar institution.

(c)United “FungibleStates, asset"a meansstate, anor asseta otherstate thanor moneyfederal thatagency; is interchangeable for commercial purposes and the properties of which are essentially identical.

(d)funds “Money"on meansdeposit cashin a savings or achecking cashaccount equivalent.or any similar (6) Subject to sub.

(2)(8), Subjectan toadvisor sub.may not be found account;

(3)funds andon s.deposit in a money market account or liable for damages a person suffers in connection with a similar account;

699.10 (4), a creditor may not bring an action of any kind, including an action to enforce a judgment, an action at law or indemand equity,deposit oraccount, antime actiondeposit fordomestic anasset attachmentpreservation ortrust otherunless finalthe or provisional remedy, against a person whoaccount, made or receivedsavings adeposit qualifiedaccount disposition,at againstany abank, trusteesavings ofdemonstrates aby legacyclear trust,and orconvincing -evidence 2024that Legislaturethe -and 10loan -association, LRB-4358/1brokerage KMS:skwhouse, SENATE BILL 667 SECTION 1 against or involvingsimilar anyinstitu- propertyadvisor’s thatactions isviolated the subjectlaws of athis qualifiedstate, dispositionthat orthe istion. otherwise held by a legacy trust, except that, subject to s.

699.06,advisor aacted creditorknowingly mayand bringin anbad actionfaith, againstand athat qualifiedthe dispositionSenate ofBill an667 asset− if5 the− transferor2023 madeWisconsin theAct qualifiedadvisor’s dispositionactions withdirectly caused the intentdamages tosuffered hinder,by delay,701.1307 orCreditor defraudclaims against qualified dispo- the creditor.person.

(3)sitions. A creditor may bring an action against a qualified disposition under sub.

(2)(1) onlyIfacreditor’s ifclaim theagainst creditora satisfiesqualified onedispo- of(7) theSubject following:to sub.

(a)(8), The creditor was a creditortrustee of thea transferordomestic whenasset thesition qualifiedunder dispositions. was made and the creditor commences the action within the later of the following:

1.701.1306 is successful, in whole or in part, preservation trust may not be found liable to a person who all of the following apply:

Eighteenis monthsnot aftera beneficiary or a transferor of the domestic asset (a) The creditor may recover damages from trust preservation trust unless the person demonstrates by assets only to the extent necessary to satisfy a transferor’s clear and convincing evidence that the trustee’s actions debt to the creditor and any part of the qualified disposition.disposi- violated the laws of this state, that the trustee acted know- tion that is not used to satisfy the debt remains subject to ingly and in bad faith, and that the trustee’s actions the domestic asset preservation trust.

2.directly caused the damages suffered by the person.

Six(b) monthsAny afterother thequalified creditordisposition discoversto ora reasonablytrustee shouldof havethe discovered(8) the(a) qualifiedSubject disposition.to s.

For701.1311 purposes(4), ofno thisperson subdivision,may adomestic creditorasset ispreservation consideredtrust toand havethe discovereddomestic aasset transferbring atan theaction timeof any kind related to a publicqualified recorddisposi- ispreservation madetrust ofremain valid, including a qualified dis- tion if the transfer.period under sub.

(b)(3) Thein which a creditor becomesmay position of a creditorpartial, afterco−ownership, or undivided interest bring an action against the qualified disposition that is made,the andin theproperty creditorby commencesa thetransferor actionwhose notransfer laterwas thanthe 18subject monthsbasis afterof the qualifiedaction disposition.has expired.

(4)of In an action against a qualifiedcreditor dispositionclaim under sub.s.

(2),701.1306. each creditor has the burden of proving by clear and convincing evidence that the transferor made the qualified disposition with the intent to hinder, delay, or defraud the creditor.

Proof by one creditor that a transferor made a qualified disposition with the intent to hinder, delay, or defraud that creditor is not proof that the transferor made a qualified disposition with the intent to hinder, delay, or defraud any other creditor and does not invalidate any other transfer of property to the legacy trust.

(5) Subject to s.

699.10 (4), with respect to a qualified disposition, a creditor has only the rights and remedies that are provided in this section and s.

699.06.

LRB-4358/1 - 2024 Legislature - 11 - KMS:skw S ECTION 1 SENATE BILL 667 (6) Subject to sub.

(8), an advisor may not be found liable for damages a person suffers in connection with a legacy trust unless the person demonstrates by clear and convincing evidence that the advisor's actions violated the laws of this state, that the advisor acted knowingly and in bad faith, and that the advisor's actions directly caused the damages suffered by the person.

(7) Subject to sub.

(8), a trustee of a legacy trust may not be found liable to a person who is not a beneficiary or a transferor of the legacy trust unless the person demonstrates by clear and convincing evidence that the trustee's actions violated the laws of this state, that the trustee acted knowingly and in bad faith, and that the trustee's actions directly caused the damages suffered by the person.

(8) (a) Subject to s.

699.10 (4), no person may bring an action of any kind related to a qualified disposition if the period under sub.

(3) in which a creditor may bring an action against the qualified disposition that is the basis of the action has expired.

(a) includes an action to(c) enforceIf a judgmentcourt enteredis bysatisfied athat courtthe ortrustee otherdid authorizednot adjudicativeact body, in lawto orenforce equity,a againstjudgment entered by a trusteecourt or advisorother ofautho- abad legacyfaith trustin accepting or againstadministering anythe personproperty involvedthat inrized theadjudicative counselingbody, in connectionlaw with, or theequity, drafting,against preparation,a execution,trustee administration,was orthe fundingsubject of athe legacyclaim trust.under s.

For701.1306, purposesall of this paragraph, “counseling in connection with, or the drafting, preparation, execution, administration, or fundingadvisor of a legacydomestic trust"asset includespreservation anytrust of those actions related to any limited partnership, limited liability company, corporation, or similarfollowing entityapply: if the limited partnership interests, limited liability company interests, stock, or other similar ownership interests in the relevant entity are subsequently the subject of a qualified disposition.

(9)against Ifany moreperson thaninvolved onein qualifiedthe dispositioncounseling isin madeconnec- to1. a legacy trust, all of the following apply:

-The 2024trustee Legislaturehas -a 12first -lien LRB-4358/1against KMS:skwthe SENATEproperty BILLthat 667tion SECTIONwith, 1or (a)the Fordrafting, purposespreparation, ofexecution, determiningadmin- whetherwas athe creditor'ssubject claimof againstthe aclaim qualified disposition is barred under sub.s.

(3),701.1306 eachin qualifiedan dispositionistration, shallor befunding evaluatedof individuallya withoutdomestic regardasset preservation amount equal to anythe subsequententire qualifiedcost, disposition.including attorney fees, trust.

(b) For purposes of determiningthis paragraph, “counseling in con- properly incurred by the ordertrustee in whichdefense propertyof isthe paid,action applied,nection with, or distributedthe fromdrafting, apreparation, legacyexecution, trust,or allproceedings ofagainst the followingqualified apply:disposition.

1.administration, or funding of a domestic asset preserva- 2.

A payment, application, or distribution of money is considered to be made from or with the money most recently received or acquired by any trustee of a legacy trust except to the extent that it is proven otherwise beyond a reasonable doubt.

2.

A payment, application, or distribution of a fungible asset is considered to be made from or with the fungible asset most recently received or acquired by any trustee of a legacy trust except to the extent that it is proven otherwise by clear and convincing evidence.

(c) Adistribution to a beneficiary is considered to have been made from the most recent transfer to the legacy trust.

699.06 Creditor claims against qualified dispositions.

(1) If a creditor's claim against a qualified disposition under s.

699.05 is successful, in whole or in part, all of the following apply:

(a) The creditor may recover damages from trust assets only to the extent necessary to satisfy a transferor's debt to the creditor and any part of the qualified disposition that is not used to satisfy the debt remains subject to the legacy trust.

(b) Any other qualified disposition to a trustee of the legacy trust and the legacy trust remain valid, including a qualified disposition of a partial, co-ownership, or undivided interest in property by a transferor whose transfer was the subject of a creditor claim under s.

699.05.

LRB-4358/1 - 2024 Legislature - 13 - KMS:skw S ECTION 1 SENATE BILL 667 (c) If a court is satisfied that the trustee did not act in bad faith in accepting or administering the property that was the subject of the claim under s.

699.05, all of the following apply:

1.

The trustee has a first lien against the property that was the subject of the claim under s.

699.05 in an amount equal to the entire cost, including attorney fees, properly incurred by the trustee in defense of the action or proceedings against the qualified disposition.

2.

(a) is subject tion trust” includes any of those actions related to any to the fees, costs, and preexisting rights, claims, and limited partnership, limited liability company, corpora- interests of the trustee and of any predecessor trustee that tion, or similar entity if the limited partnership interests, has not acted in bad faith.

limited liability company interests, stock, or other similar (d) If a court is satisfied that a beneficiary of the legacyownership trustinterests did not act in bad faith in receiving a distribution from the legacyrelevant trust,entity theare creditor'ssubse- recoverydomestic ofasset thepreservation qualified disposition is subject to the right of the beneficiary to retain that distribution if the distribution was the result of an exercise of a trust powerdid ornot ofact discretion vested in abad trusteefaith orquently advisor and that power or discretion was exercised before the creditorsubject commencedof thea action against the qualified disposition.

in receiving a distribution from the domestic asset preser- (9) If more than one qualified disposition is made to vation trust, the creditor’s recovery of the qualified dis- a domestic asset preservation trust, all of the following position is subject to the right of the beneficiary to retain apply:

that distribution if the distribution was the result of an (a) For purposes of determining whether a creditor’s exercise of a trust power or of discretion vested in a claim against a qualified disposition is barred under sub.

trustee or advisor and that power or discretion was exer- (3), each qualified disposition shall be evaluated individ- cised before the creditor commenced the action against ually without regard to any subsequent qualified disposi- the qualified disposition.

tion.

(c), a trustee is not consideredconsid- (b) For purposes of determining the order in which ered to have acted in bad faith solely because the trustee property is paid, applied, or distributed from a domestic accepted the property that is the subject of the recoverablerecover- qualifiedasset disposition.preservation trust, all of the following apply:

2.able qualified disposition.

1.

A payment, application, or distribution of money 2.

(d), a beneficiary, including is considered to be made from or with the money most a beneficiary who is a transferor, is not considered to have recently received or acquired by any trustee of a domestic acted in bad faith solely because the beneficiary accepted asset preservation trust except to the extent that it is a distribution made in accordance with the terms of the legacyproven trust.otherwise beyond a reasonable doubt.

3.domestic asset preservation trust.

2.

A payment, application, or distribution of a fung- 3.

(c) and (d), a creditor has the ible asset is considered to be made from or with the fung- burden of proving by clear and convincing evidence that ible asset most recently received or acquired by any a trustee or a beneficiary acted in bad faith.

-trustee 2024of Legislaturea -domestic 14asset -preservation LRB-4358/1trust KMS:skwexcept SENATEto BILLthe 667 SECTION 1 (2) A court shall award costs and reasonable attorney extent that it is proven otherwise by clear and convincing fees to a prevailing party in a final judgment in an action thatevidence. is wholly or partially brought under this section or s.

699.05.that is wholly or partially brought under this section or s.

699.07(c) TrustA advisors;distribution to a beneficiary is considered to 701.1306.

have been made from the most recent transfer to the 701.1308 Trust advisors;

default fiduciaryfidu- status.domestic asset preservation trust.

ciary status.

(2), any personper- Wisconsin Act − 6 − 2023 Senate Bill 667 son is eligible to serve as an advisor of a legacydomestic trust.asset 2.

(2) A transferor of a legacy trust may serve as an advisor only in connection with investment decisions related to trust assets.

(3) Notwithstanding s.

701.0818 (2), an advisor is a fiduciary unless the terms of a legacy trust expressly provide otherwise.

699.08 Rules regarding discretion.

Except as otherwise provided under the terms of a legacy trust, each trustee and each advisor of the legacy trust has the greatest discretion permitted by law in connection with all matters of trust administration, trust distributions, and any other trustee or advisor decision.

699.09 Discretionary interest not property of a beneficiary.

No person, including a beneficiary, has a property interest in property of a legacy trust to the extent that the distribution of that property is subject to the discretion of a qualified trustee or advisor, whether acting alone or in conjunction with another person, including a person authorized to veto a distribution from the legacy trust.

699.10 Miscellaneous provisions.

(1) If there is a conflict between a provision of this chapter and s.

242.07, the provision of this chapter shall control.

(2) A statement in a trust instrument that the trust is governed by “the laws of this state" or a statement to similar effect is considered to expressly designate the laws of this state to govern the validity, construction, and administration of the trust and satisfies s.

699.01 (9) (b).

LRB-4358/1 - 2024 Legislature - 15 - KMS:skw SECTION 1 SENATE BILL 667 (3) A disposition by a nonqualified trustee to a qualified trustee of a legacy trust is not disqualified from being a qualified disposition on the sole basis that the nonqualified trustee is a trustee of a trust that is a nonlegacy trust.

(4) A valid lien that is attached to property before the property is the subject of a qualified disposition survives the disposition, and the trustee of the legacy trust takes the property subject to the lien and subject to any agreements that created or perfected the lien.

Nothing in this chapter may be construed to authorize any disposition that is prohibited by the terms of an agreement, note, guaranty, mortgage, indenture, instrument, undertaking, or other document.

(5) A trust administered under the laws of another state or a foreign jurisdiction is considered to be a legacy trust if all of the following apply:

(a) The trustee of the trust complies with the requirements in the trust instrument and any applicable requirements under the laws of the state or foreign jurisdiction in which the trust is being administered.

(b) 1.

The trustee or other person having the power to transfer the domicile of the trust declares in writing that the trustee or other person intends to transfer the domicile of the trust to this state.

2.

preservation trust.

is a person other than the trustee, the declaration is (2) A transferor of a domestic asset preservation trust delivered to the trustee.

may serve as an advisor only in connection with invest- (c) At the time of or immediately following the transfertrans- ofment thedecisions trusteerelated to this state, the trust satisfiesassets. the definition of a legacy trust under this chapter.

Sfer ECTIONof 20Initialthe applicability.trustee to this state, the trust satisfies the defini- (3) Notwithstanding s.

(1)701.0818 This(2), actan firstadvisor appliesis toa qualifiedtion dispositionsof madea ondomestic theasset effectivepreservation datetrust ofunder this subsection.sub- fiduciary unless the terms of a domestic asset preserva- chapter.

(END)tion trust expressly provide otherwise.

(6) Subsection (1) and ss.

701.1302, 701.1306, 701.1309 Rules regarding discretion.

Except as 701.1307, and 701.1310 do not apply to the collection of otherwise provided under the terms of a domestic asset taxes and debts owed to or being collected by the depart- preservation trust, each trustee and each advisor of the ment of revenue.

domestic asset preservation trust has the greatest discre- 701.1312 Transferor’s affidavit required.

(1) tion permitted by law in connection with all matters of Except as provided in sub.

(4), a transferor shall sign a trust administration, trust distributions, and any other qualified affidavit before or substantially contemporane- trustee or advisor decision.

ously with making a qualified disposition.

701.1310 Discretionary interest not property of a (2) A qualified affidavit shall be notarized and shall beneficiary.

No person, including a beneficiary, has a contain all of the following statements under oath:

property interest in property of a domestic asset preserva- tion trust to the extent that the distribution of that property (a) The property being transferred to the domestic asset preservation trust was not derived from unlawful is subject to the discretion of a qualified trustee or advi- activities.

sor, whether acting alone or in conjunction with another (b) The transferor has full right, title, and authority person, including a person authorized to veto a distribu- to transfer the property to the domestic asset preservation tion from the domestic asset preservation trust.

trust.

701.1311 Miscellaneous provisions.

(1) If there is a conflict between a provision of this subchapter and s.

(c) The transferor will not be rendered insolvent 242.07, the provision of this subchapter shall control.

immediately after the transfer of the property to the domestic asset preservation trust.

(2) A statement in a trust instrument that the trust is (d) The transferor does not intend to defraud any governed by “the laws of this state” or a statement to sim- creditor by transferring the property to the domestic asset ilar effect is considered to expressly designate the laws of preservation trust.

this state to govern the validity, construction, and admin- istration of the trust and satisfies s.

701.1301 (6m) (b).

(e) There are no pending or threatened court actions (3) A disposition by a nonqualified trustee to a quali- against the transferor, except for any court action identi- fied trustee of a domestic asset preservation trust is not fied by the affidavit or an attachment to the affidavit.

(f) The transferor is not involved in any administra- disqualified from being a qualified disposition on the sole tive proceeding, except for any proceeding identified by basis that the nonqualified trustee is a trustee of a trust the affidavit or an attachment to the affidavit.

that is a nondomestic asset preservation trust.

(4) A valid lien that is attached to property before the (g) The transferor does not contemplate at the time property is the subject of a qualified disposition survives of the transfer the filing for relief under the federal bank- the disposition, and the trustee of the domestic asset ruptcy code.

preservation trust takes the property subject to the lien (3) A qualified affidavit is considered defective if it materially fails to meet the requirements set forth in sub.

and subject to any agreements that created or perfected (2), but a qualified affidavit is not considered defective the lien.

Nothing in this subchapter may be construed to authorize any disposition that is prohibited by the terms due to any of the following:

of an agreement, note, guaranty, mortgage, indenture, (a) Any nonsubstantive variances from the language instrument, undertaking, or other document.

set forth in sub.

(2).

(5) A trust administered under the laws of another (b) Any statements or representations in addition to state or a foreign jurisdiction is considered to be a domes- those set forth in sub.

(2) if the statements or representa- tions do not materially contradict the statements or repre- tic asset preservation trust if all of the following apply:

(a) The trustee of the trust complies with the require- sentations required by that subsection.

ments in the trust instrument and any applicable require- (c) Any technical errors in the form, substance, or ments under the laws of the state or foreign jurisdiction method of administering an oath if those errors were not in which the trust is being administered.

the fault of the affiant, and the affiant reasonably relied (b) 1.

The trustee or other person having the power upon another person to prepare or administer the oath.

to transfer the domicile of the trust declares in writing that (4) (a) A qualified affidavit is not required from a the trustee or other person intends to transfer the domicile transferor who is not a beneficiary of the domestic asset of the trust to this state.

preservation trust that receives the disposition.

Senate Bill 667 − 7 − 2023 Wisconsin Act (b) A subsequent qualified affidavit is not required in (a) If 2023 Senate Bill 759 is enacted into law and connection with any qualified disposition made after the creates s.

702.102 (11), the language “special power of execution of an earlier qualified affidavit if that disposi- appointment” in ss.

701.1301 (6) (b) and 701.1304 (2) of tion is a part of, is required by, or is the direct result of a this act is changed to “nongeneral power of appoint- prior qualified disposition that was made in connection ment.” If 2023 Senate Bill 759 is not enacted into law, the language “special power of appointment” in ss.

701.1301 with that earlier qualified affidavit.

(6) (b) and 701.1304 (2) of this act is unchanged.

(5) If a qualified affidavit is required under this sec- tion and a transferor fails to timely sign a qualified affida- (b) If 2023 Senate Bill 759 is enacted into law and vit or signs a defective qualified affidavit, then, subject creates s.

702.102 (11), the language “, as defined in s.

702.02 (7),” in s.

701.1304 (2) of this act is void and is to the normal rules of evidence, that failure or defect may deleted.

If 2023 Senate Bill 759 is not enacted into law, be considered as evidence in any proceeding commenced the language “, as defined in s.

702.02 (7),” in s.

701.1304 pursuant to s.

701.1306, but the domestic asset preserva- tion trust or the validity of any attempted qualified dispo- (2) of this act is not void and is retained.

SECTION 2.Initial applicability.

sition shall not be affected in any other way due to that (1) This act first applies to qualified dispositions failure or defect.

made on the effective date of this subsection.

SECTION 1m.

0Nonstatutory provisions.

SECTION 3.Effective date.

(1) R ECONCILIATION PROVISIONS.

(1) This act takes effect on July 1, 2025.