(1) In this section: (a) “Beneficiary with a disability” means a beneficiary of a first trust who the special-needs fiduciary believes in good faith is an individual with a disability. (b) “Special-needs fiduciary” means, with respect to a trust that has a beneficiary with a disability, any of the following: 1. A trustee or other fiduciary, other than a settlor, that has discretion to distribute part or all of the principal of a first trust to one or more current beneficiaries. 2. If no trustee or fiduciary has discretion under subd. 1., a trustee or other fiduciary, other than a settlor, that has discretion to distribute part or all of the income of the first trust to one or more current beneficiaries. 3. If no trustee or fiduciary has discretion under subds. 1. and 2., a trustee or other fiduciary, other than a settlor, that is required to distribute part or all of the income or principal of the first trust to one or more current beneficiaries. (c) “Special-needs trust” means a trust the trustee believes would not be considered a resource for purposes of determining whether an individual with a disability is eligible for the supplemental security income program or the medical assistance program. (2) A special-needs fiduciary may exercise the decanting power under s. 701.1311 over the principal of a first trust as if the fiduciary had authority to distribute principal to a beneficiary with a disability subject to expanded distributive discretion if all of the following apply: (a) A 2nd trust is a special-needs trust that benefits the beneficiary with a disability. (b) The special-needs fiduciary determines that exercise of the decanting power will further the purposes of the first trust. (3) In an exercise of the decanting power under this section, the following rules apply: (a) Notwithstanding s. 701.1311 (3) (b), the interest in the 2nd trust of a beneficiary with a disability may do any of the following: 1. Be an account in a pooled trust for the benefit of the beneficiary with a disability described in 42 USC 1396p (d) (4) (C) that includes the trust retention provisions permitted by 42 USC 1396p (d) (4) (C) (iv). 2. Contain payback provisions complying with reimbursement requirements of Medicaid law under 42 USC 1396p (d) (4) (A) or (C). (b) Section 701.1311 (3) (c) does not apply to the interests of the beneficiary with a disability. (c) Except as affected by any change to the interests of the beneficiary with a disability or by the effects on remainder beneficiaries of a transfer to a 2nd trust under par. (a), if the special needs fiduciary has limited distributive discretion over the principal of the 2nd trust, or if there are 2 or more 2nd trusts, the 2nd trusts in the aggregate must grant each other beneficiary of the first trust beneficial interests in the 2nd trusts that are substantially similar to the beneficiary’s beneficial interests in the first trust.
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