Wisconsin Senate Bill SB667

Wisconsin 2023-2024 Regular Session

• Introduced: 11/9/23
• Refer: 11/9/23
• Report Pass: 2/9/24
• Engrossed: 2/20/24
• Refer: 2/20/24
• Enrolled: 3/21/24
• Vetoed: 3/29/24
• Failed: 5/14/24

Caption

Domestic asset protection trusts.

Impact

The implications of SB667 on state laws are significant. By allowing the creation of these safety net trusts, the bill provides individuals and families with a means to structure their estates in a way that limits creditor access to trust assets. It alters existing legal frameworks around asset protection, making it more favorable for individuals to protect their wealth from potential legal or financial liabilities. The new rules would facilitate estate planning strategies, particularly for individuals with considerable assets or those in professions with higher risks of lawsuits.

Summary

Senate Bill 667 introduces the concept of a legacy trust, an irrevocable trust that is designed to offer protection against creditor claims. This new type of trust mandates that it must contain a spendthrift provision, which inhibits beneficiaries from selling or pledging their interests in the trust. The bill specifies that assets within a legacy trust are generally not subject to claims for public support and only remain open to child support claims. This change aims to provide more robust safeguarding of assets for the beneficiaries, particularly in the context of financial difficulties or potential litigation.

Contention

Debate surrounding SB667 may arise primarily around concerns regarding the potential for misuse of these trusts. Critics might argue that the provisions can enable individuals to shield assets from creditors inappropriately, undermining the ability of creditors to recover debts. This concern hinges on the bill’s stipulation that a creditor may not initiate an action if the assets transferred to the legacy trust were not intended to defraud or hinder creditors, raising questions about the implications of intent and the risk of fraudulent transfers. Therefore, while advocates argue that SB667 enhances financial security, detractors may emphasize the need for checks to prevent abuse.