Nonjudicial Settlement Agreements in Wisconsin

September 26, 2018

Under Wisconsin law, nonjudicial settlement agreements can be used to modify trusts that otherwise would be considered irrevocable without court action. With a nonjudicial settlement agreement, an irrevocable trustA trust that cannot be terminated, revoked or amended by the creating person. In Wisconsin and in estate planning an irrevocable trust can refer to a trust that is set up to protect assets from a nursing home and Medical Assistance if prepared and funded well in advance. See Using Trusts to Protect Assets from Nursing Homes which appears incapable of being updated, can sometimes be updated without having to go to court. Wisconsin Statute 701.0111 provides part of the relevant law covering these nonjudicial settlement agreements.

Wisconsin Revocable Trusts and Nonjudicial Settlement Agreements

A revocable trustA trust created during lifetime that can be terminated, amended, or modified by the person creating it. A Revocable Trust is often used in Wisconsin to avoid probate and provide for the orderly and proper distribution of assets upon death of its creator and to provide for management of assets and property if the creator of the trust becomes incapacitated. can typically be updated or changed by the person who created the trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries. while alive and competent. The person who establishes a revocable trustA trust created during lifetime that can be terminated, amended, or modified by the person creating it. A Revocable Trust is often used in Wisconsin to avoid probate and provide for the orderly and proper distribution of assets upon death of its creator and to provide for management of assets and property if the creator of the trust becomes incapacitated. is often referred to as the settlorThe person or persons who create a trust. This person is often also called a Grantor. or the grantorSee Settlor.. Many revocable trusts can also be updated by the surviving spouse depending upon the terms of the trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries.. As such, our estate planning lawyers willA written document that sets forth and names the personal representative who will be in charge of overseeing the probate process and names the specific bequest and residual beneficiaries of property who are to receive and inherit assets and property through probate. A Will does not avoid probate, and must be properly drafted and executed to be legal. A Will can also avoid the use of a surety bond in many instances and can help utilize an “informal” Wisconsin probate process if it has the proper clauses and attestation clause. not cover revocable trusts in this article.

When a Trust is Irrevocable or When Does a Trust Become Irrevocable?

Some trusts are set up as irrevocable trusts from the start by the settlorThe person or persons who create a trust. This person is often also called a Grantor. and cannot be changed by the settlorThe person or persons who create a trust. This person is often also called a Grantor.. For example, Medicaid asset protection trusts are set up as irrevocable trusts.

In Wisconsin, most revocable trusts become irrevocable upon the passing of the settlorThe person or persons who create a trust. This person is often also called a Grantor., especially if there is no surviving spouse. Therefore, often a trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries. established as a revocable trustA trust created during lifetime that can be terminated, amended, or modified by the person creating it. A Revocable Trust is often used in Wisconsin to avoid probate and provide for the orderly and proper distribution of assets upon death of its creator and to provide for management of assets and property if the creator of the trust becomes incapacitated. willA written document that sets forth and names the personal representative who will be in charge of overseeing the probate process and names the specific bequest and residual beneficiaries of property who are to receive and inherit assets and property through probate. A Will does not avoid probate, and must be properly drafted and executed to be legal. A Will can also avoid the use of a surety bond in many instances and can help utilize an “informal” Wisconsin probate process if it has the proper clauses and attestation clause. become irrevocable upon the happening of a certain event such as death of the settlorThe person or persons who create a trust. This person is often also called a Grantor..

For example, let’s say that mom and dad set up a revocable trustA trust created during lifetime that can be terminated, amended, or modified by the person creating it. A Revocable Trust is often used in Wisconsin to avoid probate and provide for the orderly and proper distribution of assets upon death of its creator and to provide for management of assets and property if the creator of the trust becomes incapacitated. to avoid probate. Once mom and dad have passed away that trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries. may no longer be a revocable trustA trust created during lifetime that can be terminated, amended, or modified by the person creating it. A Revocable Trust is often used in Wisconsin to avoid probate and provide for the orderly and proper distribution of assets upon death of its creator and to provide for management of assets and property if the creator of the trust becomes incapacitated.. It may become an irrevocable trustA trust that cannot be terminated, revoked or amended by the creating person. In Wisconsin and in estate planning an irrevocable trust can refer to a trust that is set up to protect assets from a nursing home and Medical Assistance if prepared and funded well in advance. See Using Trusts to Protect Assets from Nursing Homes which cannot be updated without a court order or without the use of a nonjudicial settlement agreement.

Who Can Approve Nonjudicial Settlement Agreements?

This is actually a complicated question, but for purposes of this article, we willA written document that sets forth and names the personal representative who will be in charge of overseeing the probate process and names the specific bequest and residual beneficiaries of property who are to receive and inherit assets and property through probate. A Will does not avoid probate, and must be properly drafted and executed to be legal. A Will can also avoid the use of a surety bond in many instances and can help utilize an “informal” Wisconsin probate process if it has the proper clauses and attestation clause. assume that all interested persons and beneficiaries would sign and approve of the nonjudicial settlement agreement. Therefore, normally at least all of the beneficiaries of the trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries. and the trusteeThe person or company named in a trust to manage property and assets of a trust. Usually a trust will name an initial trustee or co-trustees and successor trustees. A trustee has the duty to act in the best interest of the person for whom they are managing the funds and is considered a Fiduciary. Most people that set up Revocable Trusts to avoid probate, name themselves as Trustee and also name successor trustees to take over upon death or upon incapacity. would need to approve the changes contemplated by the nonjudicial settlement agreement.

Nonjudicial Settlement Agreements to Avoid Court Action

A nonjudicial settlement agreement can avoid the expense of going to court. It can avoid a trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries. matter becoming a public court matter. However, a nonjudicial settlement agreement cannot be used to accomplish something that violates the general purpose of the trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries. or that a court could not approve. If the terms and conditions of the nonjudicial settlement agreement could not be approved by a court, it is not allowed under Wis. Stats. 701.0111(4).

Key Reasons to Use Nonjudicial Settlement Agreements

There several reasons to use a nonjudicial settlement agreement to update a Wisconsin trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries.. The following are some of the more salient reasons:

• Resignation or appointment of a trusteeThe person or company named in a trust to manage property and assets of a trust. Usually a trust will name an initial trustee or co-trustees and successor trustees. A trustee has the duty to act in the best interest of the person for whom they are managing the funds and is considered a Fiduciary. Most people that set up Revocable Trusts to avoid probate, name themselves as Trustee and also name successor trustees to take over upon death or upon incapacity.: This can occur when there is no acting trusteeThe person or company named in a trust to manage property and assets of a trust. Usually a trust will name an initial trustee or co-trustees and successor trustees. A trustee has the duty to act in the best interest of the person for whom they are managing the funds and is considered a Fiduciary. Most people that set up Revocable Trusts to avoid probate, name themselves as Trustee and also name successor trustees to take over upon death or upon incapacity. or no other way to easily have a trusteeThe person or company named in a trust to manage property and assets of a trust. Usually a trust will name an initial trustee or co-trustees and successor trustees. A trustee has the duty to act in the best interest of the person for whom they are managing the funds and is considered a Fiduciary. Most people that set up Revocable Trusts to avoid probate, name themselves as Trustee and also name successor trustees to take over upon death or upon incapacity. appointed. For example, when the last named trusteeThe person or company named in a trust to manage property and assets of a trust. Usually a trust will name an initial trustee or co-trustees and successor trustees. A trustee has the duty to act in the best interest of the person for whom they are managing the funds and is considered a Fiduciary. Most people that set up Revocable Trusts to avoid probate, name themselves as Trustee and also name successor trustees to take over upon death or upon incapacity. no longer wants to act, all of the persons interested in the trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries. could agree to appoint a successor trusteeThe person or company named in a trust to manage property and assets of a trust. Usually a trust will name an initial trustee or co-trustees and successor trustees. A trustee has the duty to act in the best interest of the person for whom they are managing the funds and is considered a Fiduciary. Most people that set up Revocable Trusts to avoid probate, name themselves as Trustee and also name successor trustees to take over upon death or upon incapacity.. In the past, court action would have likely been required to name a new trusteeThe person or company named in a trust to manage property and assets of a trust. Usually a trust will name an initial trustee or co-trustees and successor trustees. A trustee has the duty to act in the best interest of the person for whom they are managing the funds and is considered a Fiduciary. Most people that set up Revocable Trusts to avoid probate, name themselves as Trustee and also name successor trustees to take over upon death or upon incapacity..
• Interpretation or clarification of a confusing or ambiguous trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries. provision: For example, a trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries. is unclear if grandchildren were to be included for a deceased child’s share, or there is contradictory language, but everyone agrees that grandchildren were to be included.
• Approval or waiving of a trusteeThe person or company named in a trust to manage property and assets of a trust. Usually a trust will name an initial trustee or co-trustees and successor trustees. A trustee has the duty to act in the best interest of the person for whom they are managing the funds and is considered a Fiduciary. Most people that set up Revocable Trusts to avoid probate, name themselves as Trustee and also name successor trustees to take over upon death or upon incapacity. accounting
• Clarification of distribution provisions: For example, a trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries. may need greater clarity about how assets are to be distribute to a beneficiaryA person who will receive something, possibly cash or real estate or personal property, through a Will or trust or income from a Will or Trust. A beneficiary can be a Specific Bequest beneficiary or a Residual beneficiary.. Or it may need to be updated to comply with the settlor’s intention when the settlorThe person or persons who create a trust. This person is often also called a Grantor. inadequately updated the trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries..
• Changing the “situs” or location of the trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries. for governing laws: For example, if everyone involved in the trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries. has moved to Wisconsin, but the trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries. was created in another state and was to be governed by the laws of another state. It might be beneficial to update the trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries. to have Wisconsin trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries. laws apply.
• Inclusion of  certain powers or terms to save taxes: See our recent article about tax situations where an irrevocable credit shelter trust may need updating.
• Documenting actions and agreements to remedy disputes: For example, where there is a trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries. dispute and all of the parties agree how to settle the dispute, a nonjudicial settlement agreement can be used to update the trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries., detailing how to fulfill the settlement agreement.
• Alteration of a trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries. to achieve the results intended by the settlorThe person or persons who create a trust. This person is often also called a Grantor.: A settlorThe person or persons who create a trust. This person is often also called a Grantor. may have established a trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries., and then have written directions or discussed changes with the trusteeThe person or company named in a trust to manage property and assets of a trust. Usually a trust will name an initial trustee or co-trustees and successor trustees. A trustee has the duty to act in the best interest of the person for whom they are managing the funds and is considered a Fiduciary. Most people that set up Revocable Trusts to avoid probate, name themselves as Trustee and also name successor trustees to take over upon death or upon incapacity. without actually legally making these changes. A nonjudicial settlement agreement can be used to update the trustThe arrangement creating the legal ownership of assets by a trustee for the benefit of the Settlor and/or other beneficiaries. to comply with the wishes of the settlorThe person or persons who create a trust. This person is often also called a Grantor..

We Can Guide You Through Nonjudicial Settlement Agreements

At Wokwicz Law Offices, we have successfully updated many trusts through the use of Wisconsin nonjudicial settlement agreements. Our work helped clients avoid the cost and hassle of public court action. If you are dealing with an irrevocable trustA trust that cannot be terminated, revoked or amended by the creating person. In Wisconsin and in estate planning an irrevocable trust can refer to a trust that is set up to protect assets from a nursing home and Medical Assistance if prepared and funded well in advance. See Using Trusts to Protect Assets from Nursing Homes that needs to be updated by agreement of the parties, please contact us or call 262-658-2181 to discuss how we help.