Wisconsin Act 20 amends Wis. Stat. s. 701.065, effective for deaths of Settlors or beneficiaries that occur on or after October 1, 2013, regardless of when the trust was created or funded. The amendment affects Living Trusts, both revocable and irrevocable, and Self-Settled and Pooled Special Needs Trusts.
Living Trusts. Under new Wis. Stat. s. 701.065(5)(b)(1), if the Settlor of a Living Trust, or if the predeceased spouse of a Settlor of a Living Trust, at any time received any recoverable public benefits, the Trustee is required to provide written notice of death to the DHS within 30 days after the death of the Settlor and before any property held in the trust is distributed. The Trustee is to provide demographic information about the Settlor and the Settlor’s predeceased spouse, a copy of the trust document, and documentation supporting the value of the trust on the Settlor’s date of death.
The DHS then has the right to recover amounts paid on behalf of the Settlor or the Settlor’s predeceased spouse. The deadline for the DHS to file a claim is four months after the date of the Trustee’s notice. The Trustee is required to pay the amount of the claim within 90 days after receipt. If the Trustee distributes property from the trust before the claim is made, the Trustee is required to provide information about the distributed property and to whom it was distributed or transferred. The DHS is then entitled to recover on the claim from the persons to whom the property was distributed or transferred.
Self-Settled Special Needs Trusts and Pooled Trusts (WisPact). Wis. Stat. s. 701.065(5)(c)(1) provides that a Trustee must provide notice of the death of the beneficiary of a Self-Settled Special Needs Trust or Pooled Trust within 30 days after the beneficiary’s death and must pay the DHS for any medical assistance paid on behalf of the decedent, as required under the terms of the trust, within 90 days of receipt of a claim from the DHS. If a Trustee fails to comply with the notice and repayment, the Trustee is personally liable to the DHS for any costs incurred in recovering amounts paid on behalf of the decedent and for any recoverable amounts that the DHS is unable to collect from persons to whom the property was distributed. After the death of the beneficiary of a Pooled Trust, such as WisPact, the Trustee may retain up to 30% of the balance in the decedent’s account.
In light of these changes, Trustees may need to revise their policies and procedures to provide for appropriate information gathering at the acceptance of trusteeship and periodically throughout the trust administration to be sure to obtain information regarding public benefits. Procedures should include checklists for providing appropriate notices and payment of filed claims.
Other considerations include the timing of the payment of specific bequests and distributions and the need to anticipate and address possible conflicts of interests with fiduciary duties. Trustees have a duty to administer trusts in the interests of all beneficiaries and a duty of confidentiality. The new law requires providing copies of otherwise confidential trust documents and may require the delay of distributions to beneficiaries, both of which conflict with these duties.