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Governor Tony Evers signed Senate Bill 759 (“SB759”) into law on March 21, 2024. SB759 is also known as the Wisconsin Trust Code Trailer Bill (the “Trailer Bill”). The provisions of the Trailer Bill went into effect on March 23, 2024. The Trailer Bill marks the first substantial “adjustment” of the Wisconsin Trust Code (the “Trust Code”) since the Trust Code went into effect on July 1, 2014. Below are some of the most substantial changes to Wisconsin law as a result of the Trailer Bill:

Trustee’s Duty to Inform and Report

Under the Trust Code, a trustee has several duties, among which is the duty to provide certain information relating to a trust to certain beneficiaries of the trust.

The Trailer Bill incorporates several notable changes to this duty. For example, an individual who establishes a trust (a “settlor”) may expand, restrict, or eliminate the right of a beneficiary or a class of beneficiaries to receive information relating to the trust for any period of time (including the lifetime of a beneficiary). A settlor may also, within the trust, appoint a representative for a beneficiary or a class of beneficiaries to receive information on behalf of said beneficiaries. In addition, a trustee is now permitted to limit a report to a beneficiary of a specific dollar amount or specific property to information relating to that specific dollar amount or specific property, rather than information relating to the entire trust.

Non-Judicial Settlement Agreements

Non-judicial settlements agreements (“NJSAs”) have become a common tool used in the administration of irrevocable trusts. Generally, a revocable trust becomes irrevocable upon the death of one or both of the individuals who established the trust—therefore, an NJSA may be a tool utilized in the administration of a variety of contexts for a number of different purposes to provide flexibility in the administration of a trust. Often, NJSAs are the “go-to” tool for practitioners to modify irrevocable trusts—which otherwise would not be modifiable.

With the adoption of the Trailer Bill, the Trust Code now confirms that NJSAs may—among other things—be used to modify or terminate a trust or to remove and replace a trustee. Prior to any NJSA becoming effective, a copy of the NJSA must be given to the settlor(s) (if alive), the trustee, and other fiduciaries (such as trust protectors and directing parties), if they are named in the trust instrument. Moreover, any interested person or other person affected by the NJSA may request that a court approve the NJSA.

Representation

Representation under the Trust Code allows one individual to represent or act in the place of another individual. For example, during the administration of a trust, a parent may serve as a representative of a minor child and a decision consented to by the parent relating to the trust would be binding on that child.

The Trailer Bill expands upon who may be a representative, and in what circumstances representation may occur. For example, those who hold powers of appointment (discussed below) may represent permissible appointees. Similarly, a parent may represent not only a child, but the lineal descendants of that child.  In addition, a settlor may designate a representative within the trust such that the representative may represent and bind a beneficiary within that class.

Claims Against Revocable Trusts

Prior to the adoption of the Trust Code, little was said about the procedure for creditors of a decedent to bring claims against a revocable trust.

The Trailer Bill brings further clarity to when and how creditors of a decedent may bring claims against the decedent’s revocable trust. The procedure established for creditors to bring claims against a revocable trust is modeled after the procedure set forth in Wisconsin’s Probate Code (specifically Chapter 859).

Adoption of the Uniform Trust Decanting Act

Decanting is the process of “pouring” assets from one trust into another. Within certain limits, decanting is often utilized in the administration of irrevocable trusts to accomplish an objective which an original or “first” trust does not, but that a “second” trust can.

Wisconsin became the 16^th state since 2016 to adopt the Uniform Trust Decanting Act. The new act, which now comprises the newly created Subchapter XIII of Chapter 701 of the Wisconsin Statutes, modernizes Wisconsin’s law concerning decanting and aligns us with the nation’s best practices.

Adoption of Uniform Powers of Appointment Act

A power of appointment is a power granted to someone in a will or trust, the holder of which may then appoint those assets to another recipient, as long as the recipient of those appointed assets is permissible under the terms of the document creating the power of appointment. Thus, for example, parents may grant their children the power to appoint their respective trust assets to the children’s own children (i.e., the parents’ grandchildren) or to a charity of the child’s choosing.

With the enactment of the Trailer Bill, Wisconsin became the 13^th state since 2014 to adopt the Uniform Powers of Appointment Act. The new act, codified in Chapter 702 of the Wisconsin Statutes, modernizes Wisconsin’s law concerning powers of appointment and aligns us with the nation’s best practices.

Revisions to the Wisconsin Digital Property Act

The Wisconsin Digital Property Act allows individuals to authorize their appointed fiduciaries (such as personal representatives, trustees, or agents under powers of attorney) access to their digital property.

The Trailer Bill largely keeps in place the prior law, but updates certain provisions of Wisconsin Digital Property Act (Chapter 711) and the Wisconsin Marital Property Act (Chapter 766) to identify the default classification of digital property for marital property purposes.

If you would like to know more about how the Trailer Bill affects your trust, a trust you are the trustee of, or if you would like to establish your estate plan, you may contact Michael Bezoian at (608) 283-5618 or his assistant, JoJean Murphy, at (608) 252-9320.