Wisconsin Statutes 702.17 – Rights of creditors of the donee
Current as of: 2023 | Check for updates
|
Other versions
Terms Used In Wisconsin Statutes 702.17
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Donee: means the person in whom the power of appointment is created or reserved. See Wisconsin Statutes 702.02
- Donee: The recipient of a gift.
- Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
- General power of appointment: means a power exercisable in favor of the donee, the donee's estate, the donee's creditors, or the creditors of the donee's estate, whether or not it is also exercisable in favor of others. See Wisconsin Statutes 702.02
- Person: includes all partnerships, associations and bodies politic or corporate. See Wisconsin Statutes 990.01
- Power of appointment: means a power to appoint legal or equitable interests in real or personal property. See Wisconsin Statutes 702.02
- Property: includes real and personal property. See Wisconsin Statutes 990.01
- Revocable trust: A trust agreement that can be canceled, rescinded, revoked, or repealed by the grantor (person who establishes the trust).
- Special power of appointment: means a power of appointment that is not a general power of appointment. See Wisconsin Statutes 702.02
- Trustee: A person or institution holding and administering property in trust.
(1) General policy: general power of appointment. If the donee has a general power of appointment, any interest which the donee has power to appoint or has appointed is to be treated as property of the donee for purposes of satisfying claims of the donee’s creditors, as provided in this section.
(2) During lifetime of the donee. If the donee has an unexercised general power of appointment, and can presently exercise the general power of appointment in favor of the donee or the donee’s creditors, any creditor of the donee may by appropriate proceedings reach any interest which the donee could appoint, to the extent that the donee’s individual assets are insufficient to satisfy the creditor’s claim. Such an interest is to be treated as property of the donee within ch. 816. If the donee has exercised such a general power of appointment, the creditor can reach the appointed interests to the same extent that under the law relating to fraudulent conveyances the creditor could reach property which the donee has owned and transferred.
(3) At death of the donee.
(a) Except as provided in par. (b), if the donee has at the time of the donee’s death a general power of appointment, whether or not the donee exercises the general power of appointment, any creditor of the donee may reach any interest which the donee could have appointed or has appointed, to the extent that the claim of the creditor has been filed and allowed in the donee’s estate or filed with and approved by the trustee of a trust that is revocable, as defined in s. 701.0103 (22), by the donee or jointly by the donee and the donee’s spouse but not paid because the assets of the estate or revocable trust are insufficient.
(b) If the donee fails to exercise a general power of appointment, in whole or in part, that the donee has at the time of the donee’s death and neither the donee nor the donee’s spouse is the donor of the power, a creditor of the donee may not reach an interest subject to the power, to the extent the power was not exercised.
(4) Assignment for benefit of creditors. Under a general assignment by the donee for the benefit of the donee’s creditors, the assignee may exercise any right which a creditor of the donee would have under sub. (2).
(5) Third parties in good faith protected. Any person acting without actual notice of claims of creditors under this section incurs no liability to such creditors in transferring property which is subject to a power of appointment or which has been appointed; and a purchaser without actual notice and for a valuable consideration of any interest in property, legal or equitable, takes such interest free of any rights which a creditor of the donee might have under this section.
(6) General policy: special power of appointment. If the donee has a special power of appointment, property subject to the donee’s special power of appointment is exempt from a claim of a creditor of the donee or the donee’s estate.