Wisconsin Statutes 701.0802 – Duty of loyalty
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Terms Used In Wisconsin Statutes 701.0802
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Contract: A legal written agreement that becomes binding when signed.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Decedent: A deceased person.
- Fiduciary: A trustee, executor, or administrator.
- Following: when used by way of reference to any statute section, means the section next following that in which the reference is made. See Wisconsin Statutes 990.01
- Litigation: A case, controversy, or lawsuit. Participants (plaintiffs and defendants) in lawsuits are called litigants.
- Person: includes all partnerships, associations and bodies politic or corporate. See Wisconsin Statutes 990.01
- Property: includes real and personal property. See Wisconsin Statutes 990.01
- Trustee: A person or institution holding and administering property in trust.
(1) A trustee shall administer the trust solely in the interests of the beneficiaries.
(2) Subject to the rights of persons dealing with or assisting the trustee as provided in s. 701.1012, a sale, encumbrance, or other transaction that involves the investment or management of trust property and is entered into by the trustee for the trustee’s own personal account or that is otherwise affected by a conflict between the trustee’s fiduciary and personal interests is voidable by a beneficiary affected by the transaction unless any of the following applies:
(a) The transaction was authorized by the terms of the trust.
(b) The transaction was approved by the court.
(c) The beneficiary did not commence a judicial proceeding within the time allowed by s. 701.1005.
(d) The beneficiary consented to the trustee’s conduct, ratified the transaction, or released the trustee in compliance with s. 701.1009.
(e) The transaction involves a contract entered into or claim acquired by the trustee before the person became trustee.
(3) A sale, encumbrance, or other transaction involving the investment or management of trust property is presumed to be affected by a conflict between personal and fiduciary interests if it is entered into by the trustee with any of the following:
(a) The trustee’s spouse.
(b) The trustee’s descendants, siblings, parents, or their spouses.
(c) An agent or attorney of the trustee.
(d) A corporation or other person or enterprise in which the trustee, or a person that owns a significant interest in the trustee, has an interest that might affect the trustee’s best judgment.
(4) A transaction not concerning trust property in which the trustee engages in the trustee’s individual capacity involves a conflict between personal and fiduciary interests if the transaction concerns an opportunity properly belonging to the trust.
(5)
(a) An investment by a trustee in securities of an investment company or investment trust to which the trustee, or its affiliate, provides services in a capacity other than as trustee is not presumed to be affected by a conflict between personal and fiduciary interests if the investment otherwise complies with the prudent investor rule in s. 881.01. In addition to receiving compensation for acting as trustee, the trustee may be compensated by the investment company or investment trust for providing those services out of fees charged to the trust. If the trustee receives compensation from the investment company or investment trust for providing investment advisory or investment management services, the trustee shall at least annually notify the persons entitled to receive a copy of the trustee’s report under s. 701.0813 (3) of the rate and method by which that compensation was determined.
(b) A trust company acting in any fiduciary capacity with respect to a trust may purchase any service or product, including insurance or securities underwritten or otherwise distributed by the trust company or by an affiliate, through or directly from the trust company or an affiliate of a syndicate or selling group that includes the trust company of an affiliate, provided the purchase otherwise complies with the prudent investor rule in s. 881.01 and with s. 881.015. Compensation for the service or product must be reasonable and not prohibited by the instrument governing the fiduciary relationship. The compensation for the service or product may be in addition to the compensation that the trust company is otherwise entitled to receive.
(6) In voting shares of stock or in exercising powers of control over similar interests in other forms of enterprise, the trustee shall act in the best interests of the beneficiaries. If the trust is the sole owner of a corporation or other form of enterprise, the trustee shall elect or appoint directors or other managers who will manage the corporation or enterprise in the best interests of the beneficiaries.
(7) This section does not preclude the following transactions, if fair to the beneficiaries:
(a) An agreement between a trustee and a beneficiary relating to the appointment or compensation of the trustee.
(b) Payment of reasonable compensation to the trustee.
(c) A transaction between a trust and another trust, a decedent‘s estate, a guardianship of the estate, a conservatorship, or a custodianship of which the trustee is a fiduciary or in which a beneficiary has an interest.
(d) A deposit of trust money in a regulated financial-service institution operated by the trustee.
(e) An advance by the trustee of money for the protection of the trust.
(8) The court may appoint a trustee, trust protector, or directing party to make a decision with respect to any proposed transaction that might violate this section if entered into by the trustee.
(9) A trustee is not liable for releasing information, including a copy of all or any portion of the trust instrument, to any deceased settlor’s heir-at-law or other person indicating that the person is not a beneficiary of the trust if the trustee reasonably believes that doing so will not harm the beneficiaries of the trust and that doing so will reduce the likelihood of litigation involving the trust.