Category Archives: Estate Planning

ESTATE PLANNING FOR DIGITAL PROPERTY

Most of us, to some extent, live in a very digital world. We communicate by email or text. We socialize online, seek our entertainment online, manage our assets and finances online, store our photos, music, and other digital property. . .online.  From our health care, to our home security, we are ever increasingly being pulled into the matrix.

But what happens to all of our digital property if we become incapacitated, or when we die? Most people don’t plan for these events. That lack of planning can cause unexpected consequences for the loved ones who are left dealing with our affairs. Continue reading →

Estate Planning Avoids Ancillary Probate for Vacation Homes

Do you own a second home or vacation property? Is it located in a state other than the state in which you live? Without the proper planning, dealing with the home or property upon your death can become a very expensive matter.

Ancillary Probate

Often times, a probate proceeding is required in order to deal with the disposition of real estate and other assets upon a person’s death. If the deceased person owned real estate in more than one state, a probate proceeding may be required in each state where such properties are located. Often times, a probate must be started in a person’s home state, (where he or she resided), and an additional probate proceeding, known as an ancillary probate, must be started in each of the other states where the person owned real estate. This process can result in the need to hire an attorney in each state where a probate proceeding is required, potentially resulting in significant and unexpected legal fees and expenses. Continue reading →

WHAT HAPPENS TO YOUR LIMITED LIABILITY COMPANY WHEN YOU DIE?

With all of the business entity choices available to new and existing businesses, a Limited Liability Company (LLC) can be a great entity choice for many types of businesses. They are easy to form, and they help protect your personal assets from the debts and liabilities of the business and its employees. An LLC doesn’t require the strict record keeping, paperwork, or operating formalities that a corporation requires. LLCs also provide flexible income tax options, and they don’t have the strict ownership restrictions of a corporation. Because of these positive qualities, LLCs are often the entity of choice for many businesses. However, most people who create an LLC fail to plan for the disposition of their LLC interest upon their death. Continue reading →

Beware of Scams Offering to Set up Your Revocable Living Trust

 

A revocable living trust is a very popular and effective estate planning tool. But consumer protection agencies, like the Wisconsin Bureau of Consumer Protection, caution consumers to be careful shoppers when it comes to establishing a living trust.

What is a Revocable Living Trust?

A trust is a written instrument that designates one or more individuals to manage property for the benefit of others. A trust is revocable if the terms of the instrument allow you to change or terminate the trust during your lifetime, provided that you are competent to do so. A trust is living if you establish it during your lifetime.

There are three parties to a trust. The settlor is the person who creates the trust. The trustee is the person who is designated to manage the trust and its property. The beneficiaries are the individuals who are entitled to receive the income and assets of the trust as directed in the trust instrument. For many people who establish a revocable living trust, they serve all three of these roles during their lifetime and competency. Continue reading →

The New SECURE ACT May Require a Revision of your Estate Plan

On December 20, 2019, President Trump signed into law the “Setting Every Community Up for Retirement Enhancement Act” (the SECURE Act). This new law changes how IRAs and certain other retirement benefits must be treated after death. These changes are significant, and they may affect your existing estate plan.

With just a few exceptions, which I will explain below, the passage of the new SECURE Act eliminates the ability of a beneficiary of your retirement plan to stretch their receipt of those proceeds out over an extended period of time.

For example, in the case of an IRA, prior to the SECURE Act your beneficiary had the option to stretch his or her required annual minimum distributions over his or her life expectancy. This allowed the beneficiary to defer income tax while permitting the balance to compound. This was a very nice benefit, especially for beneficiaries who were much younger than the owner of the IRA. But now under the SECURE Act, most beneficiaries inheriting an IRA (or other defined contribution plans) will be required to completely withdraw all plan assets within 10 year of the date of the owner’s death. Continue reading →

ESTATE PLANNING AND WISCONSIN MARITAL PROPERTY LAW

Wisconsin’s Martial Property Code is a comprehensive set of statutes that are riddled with complex details and exceptions. The marital property laws apply to spousal property rights during the marriage, in the event of a divorce, and also upon death. Failing to create an estate plan that takes the marital property laws into account can have unintended and even disastrous consequences at death.

What is the Purpose of the Marital Property Law?

The Marital Property Act was initially passed in 1986 with the intention of creating financial equality between spouses. The law acknowledges that both spouses contribute to a marriage in many ways, financially and otherwise, and whatever assets or income they acquire during the marriage should belong to them equally. This economic partnership also provides a spouse with an easier access to credit if his or her income is less than that of the other spouse.

Continue reading →

SHOULD YOUR TRUST BE THE BENEFICIARY OF YOUR IRA?

An Individual Retirement Account (“IRA”) is a type of investment account that allows an individual to save money for retirement, with the earnings on the account potentially being tax deferred until they are later withdrawn at retirement. (Withdrawals from a Roth IRA can actually be tax free provided certain conditions are met).

In addition to the benefit of tax deferment of the earnings, contributions to a Traditional IRA can often be tax deductable, and the rules for deductibility vary depending upon a participant’s marital status and modified adjusted gross income.  Contributions to a Roth IRAare not tax deductable because they are made with money on which the individual has already paid taxes.

Passing on IRA Benefits After Death

IRAs are a common retirement tool for many people. But what happens to the remaining proceeds of an IRA account when the owner dies?  Many individuals assume that their IRA account will be distributed pursuant to the terms of their Last Will and Testament, with the account becoming part of their probate estate.  But the truth is that many IRA accounts are not subject to probate because the plan participant had established a beneficiary designation on the account during his or her lifetime. Establishing beneficiary designations on an IRA account can be a good way of keeping the asset out of probate, but it’s important to understand the pros and cons of the different beneficiary options.  Continue reading →

WHAT HAPPENS TO A PERSON’S TANGIBLE PERSONAL PROPERTY WHEN THEY DIE?

When someone dies, the disposition of their personal items, heirlooms and keepsakes are often the greatest source of contention among their surviving family members. However, during their lifetime many people fail to make arrangements to direct how those personal items should be distributed upon their death. Sometimes they make verbal assurances to certain family members during their lifetime, promising to leave them certain items upon death, but those promises are never put into writing. In order to avoid conflicts over the distribution of such items, and possibly avoid a lifetime of hard feelings between surviving relatives, it’s important to properly address these issues in your estate plan.

WHAT IS TANGIBLE PERSONAL PROPERTY?

The term tangible personal property refers to items of a personal nature, including things such as household goods, furniture, furnishings, jewelry, precious stones, photographs, books, silverware, china, crystal, antiques, paintings, sculptures and other works of art, collections, clothing, tools, machinery, equipment, appliances, automobiles, watercraft, recreational vehicles and equipment, pets, and other such personal effects

Tangible personal property does not include assets such as money, real estate, securities, stocks, bank accounts, investment accounts, promissory notes, IOU’s, or similar assets. Continue reading →

GIFTS, DIVESTMENTS, AND MEDICAID ELIGIBILITY. YOUR GENEROSITY MAY AFFECT YOUR BENEFITS.

As people get older it’s a natural desire to help their children financially, or perhaps make gifts to their grandchildren or other family members. But that generosity may later affect their eligibility for Medicaid benefits if they ever need long-term care.

WHAT IS MEDICAID?

Medicaid is a program that provides health coverage and long-term care to millions of Americans, including eligible low-income adults, children, elderly adults, and people with disabilities. Although the program is administered under federal guidelines and partially funded with federal funds, it is administered independently be each state.

MEDICAID AND LONG-TERM CARE

With the advancements in medical technology, people are living longer than ever before. As a result, it’s not unusual for them to outlive their financial resources. For those individuals who may require long-term care at some point during their lifetime, without the ability to pay for such care, Medicaid is often the program to which they turn. For those who meet the program’s strict asset and income guidelines, Medicaid can provide life-saving benefits to cover the costs of a nursing home or other long-term care. However, the program rules are extremely complex, and great care must be taken in order to comply with them. Actions that people take now could affect their eligibility for benefits in the future. Continue reading →

What You Need to Know About Powers of Attorney

A power of attorney document permits the recipient—usually a trusted relative or friend—to exercise specific financial or medical decisions on your behalf. While you can find sample power of attorney (POA) forms online, it is in your best interests to work with an estate planning lawyer who can help you tailor the documents to your specific situation and wishes.

How a Power of Attorney Works

Comprehensive power of attorney documents cover financial and healthcare decisions. They grant certain powers to the person you designate as your agent, who will manage specific financial matters or make medical decisions on your behalf if you become too sick to manage these matters and make decisions for yourself. A living will specifies your medical treatment and end-of-life preferences if you become unable to state those preferences due to an illness or accident. Continue reading →