On December 14, following the signature of Governor Scott Walker, Wisconsin trust law took on a dramatically new look when 2013 Wisconsin Act 92 took effect. This act adopted the Uniform Trust Code, with minor modifications, as the law of the Badger state.
Introduced into the legislature on November 4, after almost a decade of study, the proposed revision of the state’s trusts laws sailed through both the Senate and the Assembly with very little opposition.
The Uniform Trust Code (UTC) was promulgated by the National Conference of Commissioners on Uniform State Laws in 2000 with the intention of being a vehicle that would both update and standardize the law of trusts in the United States. It was subsequently modified in relatively minor ways in 2001, 2003, 2004, and 2005.
The model code was enthusiastically received by many in the legal community, and it was quickly endorsed by the American Bar Association, the ABA Section on Property, Probate and Trust Law, and the American Association of Retired Persons (AARP). Wisconsin’s adoption now raises to 27 the number of jurisdictions that have enacted the model statute since 2000 (26 states and the District of Columbia).
Many states have made their own modifications to the model act, and while this is true for Wisconsin, the Wisconsin changes appear to be relatively minor, especially compared to a state like Virginia which made significant modifications.
In regard to Wisconsin’s neighbors, the UTC has been adopted in Michigan, but not in Minnesota, Iowa, or Illinois.
Although the sudden adoption of the UTC by the Wisconsin legislature in December caught many observers, including this writer, by surprise, there has long been wide-spread agreement that the Wisconsin law of trusts, which was last significantly modified in 1971, was particularly thin and somewhat out of date.
The primary effect of the new statute will be to modify the “default rules” that apply when trust instruments fail to provide a complete answer to the question of what rules govern the trust. In that regard, the new code makes it easier to modify or terminate trusts and to replace trustees. It also creates greater flexibility in regard to issues of trust management, including the transfer of assets from one trust to another.
The new act also devotes an entire article to revocable trusts, the use of which has skyrocketed in recent years. It does not appear to affect the application of Wisconsin’s unique Rule against Perpetuities.