701.0814 Discretionary powers; tax savings.
(1) Notwithstanding the breadth of discretion granted to a trustee in the terms of the trust, including the use of such terms as “absolute," “sole," or “uncontrolled," the trustee shall exercise a discretionary power in good faith and in accordance with the terms and purposes of the trust and the interests of the beneficiaries. A court may not determine that a trustee abused its discretion merely because the court would have exercised the discretion in a different manner or would not have exercised the discretion.
(2) Subject to sub. (4), and unless the terms of the trust expressly indicate that a provision of this subsection does not apply, all of the following apply:
(a) A person other than a settlor who is a beneficiary and a trustee, directing party, or trust protector of a trust that confers on the trustee, directing party, or trust protector a power to make discretionary distributions to or for the trustee's, directing party's, or trust protector's personal benefit may exercise the power only in accordance with an ascertainable standard.
(b) A trustee, directing party, or trust protector may not exercise a power to make discretionary distributions to satisfy a legal obligation of support that the trustee, directing party, or trust protector personally owes another person.
(3) A power whose exercise is limited or prohibited by sub. (2) may be exercised by a majority of the remaining trustees, directing parties, or trust protectors whose exercise of the power is not so limited or prohibited. If the power of all trustees, directing parties, or trust protectors is so limited or prohibited, the court may appoint a trustee, directing party, or trust protector with authority to exercise the power.
(4) Subsection (2) does not apply to any of the following:
(a) A power held by the settlor's spouse who is the trustee, directing party, or trust protector of a trust for which a marital deduction, as defined in section 2056 (b) (5) or 2523 (e) of the Internal Revenue Code, was previously allowed.
(b) A trust during a period when the trust may be revoked or amended by its settlor.
(c) A trust if contributions to the trust qualify for the annual exclusion under section 2503 (c) of the Internal Revenue Code.
History: 2013 a. 92.