Wisconsin 2023-2024 Regular Session

Wisconsin Assembly Bill AB648

Introduced
11/8/23  
Refer
11/8/23  

Caption

Domestic asset protection trusts.

Impact

The bill significantly alters the landscape of asset protection by enabling individuals to shield assets from creditors through the establishment of legacy trusts. This form of trust allows a transferor to control, manage, and potentially benefit from their assets in a way that mitigates exposure to creditor claims. This change is expected to encourage estate planning strategies that focus on preserving wealth while offering creditors limited recourse against the assets once they are placed in a legacy trust. By defining specific actions that constitute fraud against creditors, the bill also aims to prevent abuse of the legacy trust system, ensuring that it is utilized for legitimate planning purposes.

Summary

Assembly Bill 648 introduces a new legal framework for 'legacy trusts' in Wisconsin, establishing irrevocable trusts that incorporate specific protections against creditor claims. A key feature of these legacy trusts is the requirement of a spendthrift provision, which prohibits beneficiaries from transferring their interests in the trust, thereby safeguarding the assets from creditor claims with some exceptions. Under the provisions of this bill, while the assets in a legacy trust are protected from claims for public support, they remain accessible for child support claims, representing a balanced approach to asset protection while fulfilling child support obligations.

Contention

However, the bill is not without contention. Critics may argue that it creates opportunities for individuals to evade legitimate financial obligations by placing assets into trusts with the intention of avoiding creditor claims. Furthermore, the limited recourse available to creditors raises concerns about the potential for misuse of the legacy trust to hinder legitimate claims against individuals with outstanding debts. Supporters of the legislation argue that these trusts will promote financial security and responsible estate planning without negatively impacting the ability of creditors to recover debts under certain circumstances.

Companion Bills

No companion bills found.

Previously Filed As

WI SB667

Domestic asset protection trusts.

WI HB1394

To Update The Law On Spendthrift Trusts; And To Allow For The Creation Of A Domestic Asset Protection Trust.

WI HB4376

Relating to self-settled asset protection trusts.

WI SB2317

Relating to self-settled asset protection trusts.

WI HB4058

Relating to self-settled asset protection trusts.

WI SB500

Relating to self-settled asset protection trusts.

WI HB771

AN ACT relating to trusts.

WI SB1207

Qualified spendthrift trusts

WI SB648

Relating to trusts.

WI HB1850

Trust; creating the Uniform Trust Code; definitions; creditor claims; revocable trusts; trustees; duties and powers of trustee; trustee liability; severability; effective date.

Similar Bills

WI SB667

Domestic asset protection trusts.

CT SB00397

An Act Concerning Adoption Of The Uniform Trust Code, The Connecticut Uniform Directed Trust Act And The Connecticut Qualified Dispositions In Trust Act.

OK HB3962

Trust; Oklahoma Trust Reform Act of 2024; directed trust; qualified dispositions; duration of trust; effective date.

KY HB720

AN ACT relating to disposition of property.

TX HB2428

Relating to the adoption of the Texas Uniform Disclaimer of Property Interests Act.

CT HB07104

An Act Concerning Adoption Of The Connecticut Uniform Trust Code.

NC S160

Transfer on Death Deeds

HI HB186

Relating To The Uniform Trust Code.