The officials for our school district, municipal, and other institutional clients often inquire about estate planning resources and legal counsel. This article is intended to provide an introduction to estate planning and to remind you that our firm has the capability of assisting individuals with estate planning and other related legal issues.
One topic that every person dreads, but is of utmost importance, is estate planning. There are two (2) major considerations when delving into estate planning. The first is to avoid probate, which is court involvement in transferring assets owned by the deceased out of the deceased’s name. In essence, you want to ensure that you own the least amount of assets possible at your passing to avoid probate. The other consideration (primarily for older individuals) is Medicaid planning, to ensure that the individual’s assets are not expended on their care by the nursing home or assisted living facility. Specific planning can be done to prevent this from occurring. Assets may be gifted to individuals prior to the five (5) year look-back-period prior to the individual entering the nursing home or assisted living facility or a Medicaid trust may be utilized.
The first facet of estate planning is the drafting of the will or trust document. The will is the document that lays out where you want the residue of your estate to be directed, if you have any special bequests or special items that you want to go to specific individuals and who you want to oversee the administration of your final affairs (paying your final bills and distributing the residue of your estate to the individuals you have directed). A trust is a separate legal entity that permits parties to transfer their assets to. The trust will survive the individual upon their passing. The trust is operated by the trustee, whose direction is granted through the trust agreement. The drafting of the will/trust is essential if you have specific feelings as to where you want your assets to go upon your passing and who will act as your children’s guardian and trustee in the unfortunate event that they are left without both parents before they reach the age of majority. There are specific wills that can be drafted to fund a trust upon the passing of both parents (to provide for the needs of the children). If you die without a will, the Wisconsin statutes dictate where the residue of your estate will be distributed. Typically, it will be distributed to your closest blood relative, first going down your bloodline and then up your bloodline if there are no recipients found.
The second facet of estate planning is the drafting of the powers of attorney. The powers of attorney are comprised of several documents. First, the healthcare power of attorney. This is the document that will dictate your major healthcare decisions and who you have designated to make the remaining healthcare decisions on your behalf. The healthcare power of attorney is activated when you are declared incompetent by two (2) physicians. The healthcare power of attorney is typically supplemented by the living will, which is an extension of the healthcare power of attorney. The living will addresses whether you want life sustaining procedures or hydration and nutrition when you are in a persistent vegetative state. The last document that supplements the healthcare power attorney is the Authorization for Final Disposition of Remains. This document will dictate who will make decisions as to how your remains will be handled after you have passed. Second, the durable or financial power of attorney. The durable power of attorney can be effective immediately or it can be a springing power of attorney that is activated by either two (2) doctors declaring you incompetent or your written activation of this document. This document will allow the individual(s) you have designated to make financial decisions on your behalf based upon the areas you have notated in this document. The powers of attorney are as important as the will/trust decision because accidents happen, and people get sick at any age. Without this document, your loved ones would be forced to have to obtain a guardianship over you to make both healthcare and financial decisions on your behalf, which can be expensive and timely.
The third and final facet of estate planning is the titling of your assets. This is important for probate and Medicaid reasons. In a lot of situations, the proper titling of assets can avoid probate altogether and protect assets from Medicaid. Some considerations regarding the titling of assets may include transferring real property through either a transfer on death deed, life estate or outright transfer of the real property to a third party, beneficiarizing certain accounts, like investment accounts, and putting payable on death designations on financial institution accounts. The goal is to limit the assets that you have at your passing to less than Fifty Thousand Dollars ($50,000.00), which will allow you to transfer any assets that are titled in your name at your passing through a simple form called a transfer by affidavit, as opposed to full-blown probate.
For questions regarding this article, please contact the author,
or your Strang, Patteson, Renning, Lewis & Lacy, S.C., attorney.