Attorney Thomas B. Burton answers the following question: "Does an Irrevocable Trust Need to be Notarized in Wisconsin?"
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Hello, I'm Attorney Thomas Burton and welcome back to our popular Question & Answer Series here on the channel. Today's question comes from West Bend, Wisconsin and the writer asks the following -
"Does an irrevocable trust need to be notarized in Wisconsin? I have customers with an irrevocable trust. It is not notarized. Does it need to be? I know the state of Wisconsin does not require it for revocable trust for it to be valid but is it any different for an irrevocable trust?"
So excellent question and you're correct that under state law, a revocable trust is not required to be notarized in the state of Wisconsin, all that's required is that the settlor, the creator of the trust sign the trust. Now as best practice, we often recommend you do that signature in front of a notary public because oftentimes, banks and financial institutions like to require a notarized copy or notarized, signed and notarized version of the trust. So it is not strictly required to be signed in front of a notary but at my office, best practice what we do is have the client sign it and notarize their signature at the same time. So later, if it does need to be presented to a bank, financial institution or other entity, it's all right on there.
In Wisconsin, the statutes governing trust is in the Wisconsin trust code and it would apply to both revocable and irrevocable trust and like I said, it's not required that the grantor sign in front of a notary but whenever possible, I like to have the grantor acknowledge their signature in front of a notary.
Let's say the trust was signed many years ago, it could later be presented and acknowledged in front of a notary by the grantor assuming they're still alive. So you want to look at Wisconsin statute 701.0401 - methods of creating a trust and the statutes state a trust may be created by any of the following -
1. a transfer of property to another person as trustee during the settlor's lifetime, the settler's the creator of the trust, by will or by other disposition taking effect upon the settlor's death.
2. A declaration by an owner of property that the owner holds identifiable property as trustee or declaration by any person who intends to create a trust with the expectation that property of the person or others will be transferred to the trust.
3. An exercise of a power of appointment in favor of a trustee,
4. A court pursuant to its statutory or equitable power, so that's saying a court can create a trust.
5. A guardian of the estate or conservator acting with authority of the court, a representative payee or an agent under a power of attorney that expressly grants authority to create a trust.
6. Any other manner authorized by statute, regulation, common law or other provisions, having the effect of law.
So that's how a trust can be created, then we look at Wisconsin statute 701.0402 - the next statute in line, requirements for creation and sub 1 says, "A trust is created only if all of the following are satisfied -
A. the settlor of the trust has capacity as defined in subsection 4 to create the trust unless the trust is created by court order or by an agent or guardian of the estate conservative or representative payee with authority to act. So, if it's the settlor creating it, first they have to have the capacity to create a trust. Second, the settlor indicates an intention to create the trust or a statute, regulation, common law, other provision having the effect of law, judgment or decree creates or authorizes the creation of a trust.
The trust has a definite beneficiary or is one of the following - sub 1 a charitable trust, sub 2 a trust for the care of an animal as provided in 701.0408, so this is new in Wisconsin, you can now create what's called a pet trust or a trust for an animal. Three a trust for a non-charitable purpose is provided in 701.0409 and
D. the trustee has duties to perform,
E. The same person is not the sole trustee and sole beneficiary. So for a trust to be valid, you can't, it means self-settled, you can't totally be the only trustee and the only beneficiary, there has to be others in one of those roles and 2, a beneficiary is definite if the beneficiary can be ascertained at the time the trust is created or in the future. So earlier it said, it had to have a definite beneficiary.
3. A power in a trustee or trust protector, trust protector to select a beneficiary from an indefinite class is valid if the power is not exercised within a reasonable time, the power fails and the property subject to the power, passes to the persons who would have taken the property had the power not been conferred. So that's talking about a power of a trust protector or a trustee to later select a beneficiary.
4. The capacity required to make a trust, to create a trust is the same as the capacity to make a will. So earlier remember, I said the settlor has to have capacity to create the trust and the test for capacity is the same test as the capacity to make a will in the state of Wisconsin and that test has been defined in the case law and the statutes.
Remember, the trustor, the settlor must have capacity and then they must indicate an intention to create the trust. In Wisconsin, an oral trust is even valid, however best practice, we recommend the trust always in writing and signed by the settlor, signed and dated and like I said, going back to the beginning, the notary having someone notarize their signature is optional, it's not required by statute but in my opinion, it's best practice to do it whenever possible.
In your specific case, wondering if this irrevocable trust is valid, where it's not notarized, I would say based on the case law, the notary requirement does not alone mean it's invalid. You would have to look at all the other factors to determine if it's valid or invalid and to do that I recommend you work with a qualified estate planning and trust attorney, if you have further questions about whether to honor that irrevocable trust document. I know when I'm creating an irrevocable trust for a client because those trusts can be even more complex than a revocable trust because you can't change them later, I would prefer to have that document signed in front of a notary and again, if the settlor is still alive, perhaps they could acknowledge it in front of a notary before it's presented to whoever needs to act on a document.
So great question, thank you for asking. For the other viewers watching, if you're thinking about creating a trust, hopefully this has been helpful to you to know what exactly is needed in order to create a valid trust in Wisconsin. If this video has been helpful to you, please consider giving it a LIKE so that others can see and benefit from this information as well.
Thanks for watching and we'll see you next time.
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