State Codes and Statutes

701.19

701.19 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.

701.19(2)

(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.

701.19(2)(b)

(b) 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.

701.19(2)(c)

(c) 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.

701.19(2)(d)

(d) 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.

701.19(3)

(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.

701.19(4)

(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:

701.19(4)(am)1.

1. 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;

701.19(4)(am)2.

2. 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;

701.19(4)(am)3.

3. 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

701.19(4)(am)4.

4. 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.

701.19(4)(e)

(e) 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.

701.19(4m)

(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.

701.19(5)

(5) Formation of business entity. In the absence of contrary or limiting provisions in the creating instrument:

701.19(5)(a)

(a) The court may by order authorize a trustee to become a partner under ch. 178 or 179 and transfer trust property to the partnership in return for a partnership interest.

701.19(5)(aL)

(aL) 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.

701.19(5)(b)

(b) 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.

701.19(5)(c)

701.19(5)(d)

(d) An order under this subsection may in the court's discretion be issued without notice and hearing.

701.19(6)

(6) Registration of securities in nominee. Unless prohibited in the creating instrument, a trustee may register securities in the name of a nominee.

701.19(7)

(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.

701.19(8)

(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.

701.19(9)

(9) Joint trustees.

701.19(9)(a)

(a) 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.

701.19(9)(b)

(b) 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.

701.19(10)

(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:

701.19(10)(a)1.

1. 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.

701.19(10)(a)2.

2. The power to make discretionary allocations of receipts or expenses as between principal and income if the allocations are in his or her favor.

701.19(10)(b)

(b) 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.

701.19(10)(c)

701.19(10)(c)1.

1. The person is also the settlor of the trust, and the trust may be revoked or amended by the settlor.

701.19(10)(c)2.

2. 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 or 2514 of the Internal Revenue Code as a result of having or exercising the power.

701.19(10)(c)3.

3. 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.

701.19(10)(c)4.

4. 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.

701.19(10)(d)

(d) Section 701.24 (3) governs the applicability of this statute.

701.19(11)

(11) Protection of 3rd parties. With respect to a 3rd person dealing with a trustee or assisting a trustee in the conduct of a transaction, the existence of trust power and its proper exercise by the trustee may be assumed without inquiry. The 3rd person is not bound to inquire whether the trustee has power to act or is properly exercising the power; and a 3rd person, without actual knowledge that the trustee is exceeding the trustee's powers or improperly exercising them, is fully protected in dealing with the trustee as if the trustee possessed and properly exercised the powers the trustee purports to exercise. A 3rd person is not bound to assure the proper application of trust property paid or delivered to the trustee.

701.19 - ANNOT.

History: 1971 c. 66; 1979 c. 175 s. 50; 1991 a. 316; 1993 a. 112, 160, 486; 1995 a. 336; 1999 a. 85; 2005 a. 216, 253.

701.19 - ANNOT.

Cross-reference: See s. 112.01, the Uniform Fiduciaries Act on protection of third parties.

701.19 - ANNOT.

Cross-reference: See s. 112.02, which provides for suspending powers of a testamentary trustee in military service.

701.19 - ANNOT.

Cross-reference: Chapter 881 and s. 223.055 contain limitations on investments by trustees.

701.19 - ANNOT.

The loss of future profit to an estate through the disposal of a parcel is damage chargeable to the trustee or personal representative only if the parcel was not needed for liquidity. In re Estate of Meister, 71 Wis. 2d 581, 239 N.W.2d 52 (1976).

701.19 - ANNOT.

Fiduciary and estate liability in contract and in tort. Dubis, 55 MLR 297.