Month: May 2012

Formal and Informal Probate Administration in Wisconsin

Probate is the legal procedure used to transfer someone’s assets after their death. Any Wisconsin estate that is valued in excess of $50,000 must go through the probate administration process unless the property is subject to certain exemptions. For example, assets placed in a revocable living trust or life insurance proceeds are not subject to probate. Whether or not probate is required, any written will left by a deceased person must be filed with the county’s Register in Probate within 30 days.

A personal representative (sometimes known as an “executor”) is someone designated to administer the assets of a deceased person’s estate. Oftentimes, a personal representative is nominated in a decedent’s will. Still, a personal representative cannot begin the execution of his or her duties until appointed by a court. The responsibilities of a personal representative include creating an inventory of the decedent’s assets, paying any outstanding debts, managing the property included in the estate, paying taxes and administrative costs, and distributing the deceased person’s property in accordance with the law.

There are two primary types of probate in Wisconsin, informal and formal. Which process is used will depend upon a number of factors. Informal probate is the administration of a deceased person’s estate without continuous court supervision. Instead, informal probate is supervised by a Probate Registrar. Although consulting a Wisconsin probate attorney is usually wise, doing so is not required by law for informal probate administration. Informal administration is the most commonly used form of probate in Wisconsin.

Formal probate administration is supervised by a judge. Formal probate is required in a number of instances and Wisconsin statutes require the estate’s personal representative to procure the assistance of an attorney. A deceased person’s estate must be administered using formal probate where a will requires it, if the individual who is nominated to serve as a personal representative in the will declines, and where a decedent died intestate and all interested parties do not consent in writing to informal administration. Additionally, formal administration will be required where an interested party demands it.

All Wisconsin estates must be settled as quickly as is reasonably possible. Even so, it is impossible to settle a probate case in less than 4 months, and 6 months is usually a bare minimum. As a benchmark, all probate matters in the state should normally be closed within one year of commencing. That said, it is very common for estates to take longer than this to be completed, especially where real estate must be sold, the decedent had a legal claim against another when they died, or business interests are involved.

Each individual county also has the discretion to require speedier completion of probate administration. The legal requirements regarding probate administration are discussed in Chapters 851-882 of the Wisconsin Statutes. For assistance with probate matters, it is a good idea to consult with a knowledgeable Wisconsin estate planning lawyer early on in the process.

Common Wisconsin Estate Planning Mistakes

Have you thought about how your death will affect the financial health of your loved ones? Proper estate planning is an essential tool to ensure your money and other assets are transferred according to your wishes after you are gone. Even the most financially savvy individuals can make estate planning mistakes. Some common estate planning errors are discussed below.

The first mistake many people make is to rely on Wisconsin intestacy laws and fail to create an estate plan at all. By doing this, it is almost assured that your assets will not be distributed in the way you or your loved ones would have preferred. By taking the time to create even a simple estate plan, you are more likely to leave your assets to those you intended.

Another common mistake many people make when planning their estate is to use online or do-it-yourself estate planning documents. Sure, they sound easy to use but such boilerplate resources rarely take into account the tax implications of your decisions or individual state requirements. Additionally, cobbling together a variety of do-it-yourself documents is not a good recipe for creating a cohesive estate plan. You can protect your loved ones more fully by consulting with an experienced Wisconsin estate planning lawyer instead. An attorney will help you create an estate plan that takes into account your individual personal and financial situation.

Also, choosing the wrong trustee or executor can cause no end to problems. Choosing the child who seems badly to want that position can have bad consequences. Often it is a good idea to use a bank trust department as executor or trustee. This prevents a lot of mistrust and mishandling of assets destined for loved ones. Sometimes appointing co-trustees or co-executors can reduce mistrust. However, that can also lead to disputes between the named trustees or executors.

An often overlooked item in many estate plans is the designation of beneficiaries and titling of accounts. No matter what your estate planning documents may say, assets such as retirement accounts will transfer to the person or persons designated by you as the beneficiary. Additionally, any property held jointly with a right of survivorship will automatically transfer to the survivor upon your death. It is important to ensure beneficiary designations and property titles accurately reflect your wishes. A forgotten beneficiary designation may result in an asset transfer to the wrong person or unintended tax consequences.

It is also important to fully maximize annual gifts to reduce future estate tax bills. Although estate tax exemptions exist for spouses, charitable donations, and other expenditures, wealthy individuals with a large number of assets should use gifts strategically. An individual may also gift up to $13,000 per year to loved ones tax free. Although Wisconsin currently does not have an estate tax, the federal estate tax exemption is $5.12 million for 2012. That number is scheduled to be reduced to $1 million beginning in 2013. Your estate plan should always factor in known or potential changes in the law.

Finally, when creating your estate plan you should consider whether to leave gifts to your adult children in trust. We live in a litigious society with a high divorce rate. By creating a trust for your adult child, you have the ability to ensure the assets you worked hard to accrue benefit your offspring and are protected from their creditors and former spouses. Depending on your financial situation, failure to consider utilizing a trust as a mechanism to transfer your assets to loved ones may be a mistake.

Using Estate Planning to Protect Your Wisconsin Family Farm

Transferring the assets associated with a family farm at your death often requires an especially unique estate plan. With proper estate planning, you may be able to reduce or eliminate estate taxes, avoid probate, and address potential liquidity issues. First, it is a good idea for Wisconsin family farmers to begin transferring the operating assets of the farm as soon as all parties involved are comfortable with the process. Farmers may also transfer their assets more easily by forming a business organization such as a limited liability company. Such an organizational structure also has the potential to ensure a smoother transition by allowing you to separate farm ownership and management.

Careful estate planning can also lower the taxes your loved ones will be required to pay upon your death. While you are living, you may make qualified transfers to your spouse and charities, and give up to $13,000 tax-free each year to anyone you choose. It is important to note that gift transfers made during your lifetime will also transfer your tax basis. If the property is later sold, the recipient will owe taxes on the appreciated value. If a transfer is instead made after your death, the tax basis will become the fair market value of the property. Consequently, it is a good idea to thoroughly consider the tax implications for any property transfer you may choose to make.

Before transferring any assets, however, it is a good idea for any farmer to first consider funding his or her own retirement needs. Farming families in particular should consider potential liquidity issues, as farms are often cash-poor despite ownership of many assets. This situation can make an equitable division amongst children and other family members more difficult. Parents with non-farming children that will be included in the estate plan should also consider diversifying their assets prior to death. Additionally, if a particular family member is more involved in the farming operation than others, it is important to consider whether that sweat equity will play a factor in how assets are divided upon your death. If assets will be distributed in a unique way, you may want to communicate your wishes to your family prior to your death in order to maintain family relationships.

Proper estate planning can make asset and farm management transitions flow more smoothly. Estate planning tools like a living trust can help you avoid probate, avoid guardianship if disability arises, name a guardian or guardians for your minor children, and name a personal representative who will administer your estate according to your wishes. By working with a skilled Wisconsin estate planning lawyer, you may also be able to defer income taxes on retirement accounts and make the transition for your loved ones easier following your death.

Using a Revocable Living Trust as an Estate Planning Tool in Wisconsin

A revocable living trust is often used in Wisconsin as the backbone of a comprehensive estate plan. Individuals or couples often use living trusts to do everything that a will normally does, without many of the hassles that go with probating wills.

A revocable living trust is a written agreement that names a trustee to manage your property for the benefit of certain named beneficiaries. So long as you are mentally competent, such a trust may be amended or terminated at any time, although a revocable living trust generally becomes irrevocable (not changeable) upon the creator’s death. In the State of Wisconsin, a written trust agreement must explicitly state whether the trust was designed to be revocable. If the trust agreement does not expressly state that the trust may be revoked, it is normally deemed an irrevocable trust.

When you create a revocable living trust in Wisconsin, you will select beneficiaries who will receive any income from the trust assets. They will also receive any property in the trust according to your direction. You must also select one or more trustees to manage the trust according to your written wishes. A trustee may be anyone you choose, as long as the person you select is a competent adult. Most individuals with a revocable living trust name themselves to serve as a trustee or co-trustee. Additionally, a spouse, friend, or other relative is frequently chosen to act as a backup (successor) trustee. Any trustee selected should be someone who is capable of properly managing and distributing the trust assets upon your death. It is also a good idea to select an alternate successor trustee to step in if the original successor trustee is not willing or is incapable of serving as a trustee.

Individuals or couples who create a revocable living trusts (known as “grantors”) will name themselves as the initial beneficiary. After the grantor or grantors die, the trust is normally distributed to their children, or other named beneficiaries, but sometimes the trust is kept in place for years to provide income for one or more beneficiaries while they are growing up, or while they are incapacitated.

A revocable living trust may be funded or unfunded. Once property is placed in the trust, it is funded. It is very important to fund a living trust if you want your heirs to get the most benefit from it. Sometimes people have revocable living trusts drafted, but do not fund the trusts during their lives. This sometimes triggers a probate at their death, and defeats the whole purpose of having the trust in the first place. We at Krause Law Offices LLC always ensure our clients’ trusts are fully funded, so probate is avoided and our clients’ heirs have a smooth transition in the end.

There are several benefits to using a revocable living trust as a Wisconsin estate planning tool. One benefit is that you may specify in the trust agreement exactly how you would like your assets to be managed in the event of an unexpected disability. Because of this, once a revocable living trust has been established, it may be used in lieu of a conservatorship or guardianship. Another benefit is that such a trust document allows you to provide financial resources and name guardians for your minor children. Additionally, a revocable living trust may speed up the distribution of your assets as such trusts are not subject to probate in Wisconsin. Because of this, such a trust can provide a time and expense savings and added confidentiality regarding your estate. If you are considering establishing a revocable living trust, it is a good idea to contact a knowledgeable Wisconsin trusts attorney.

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