Month: June 2012

Transferring a Valuable Collection to Loved Ones in Wisconsin Following Your Death

Most people think of cash, stocks, bonds, life insurance policies, and real estate when they create their estate plan. Many people overlook a collection of artwork or other items they have amassed over the course of their lifetime. Passing on a prized collection can be tricky because most collectors have an emotional attachment to their items their heirs may not necessarily share. Additionally, the financial value of a lifetime collection may be difficult to ascertain. Too often, a collector fails to properly catalogue and appraise his or her collection. This can take children and other heirs years to accomplish. Several estate planning steps may make it easier to pass your collectibles on after your death.

If you plan on bequeathing your collection to children or other loved ones, it is important to know its value in order to avoid unwanted tax consequences. Unfortunately, many collectors are unaware of the current value of their collection. An extensive collection should always be appraised prior to any transfer. If you have a substantial art collection, it may also be a good idea to contact the Internal Revenue Service’s (IRS) art advisory panel. The panel will determine the overall tax value of the collection. One of the benefits of doing this is that the value is binding on the IRS, but not on the collector. Additionally, the IRS may discount the value of an art collection if you own a great number of pieces by a particular artist as the sale of your collection may flood the market.

In order to reduce the tax bill on any type of collection, individuals may choose to begin distributing less expensive items prior to their death by utilizing the federal gift tax exclusion of $13,000 per year. It is also a good idea to ensure any gifted collectibles are appraised and a gift tax return is filed with the IRS. Despite that no tax will be due on gifts that do not exceed $13,000, the return will be readily available in case of any possible future audits.

Sometimes, descendants are eager to keep a valuable collection in the family. Other times, children and grandchildren do not necessarily have a desire to maintain what were once your prized possessions. In order to keep a garage sale sign off of your lawn, a collector may choose to begin selling or auctioning off valuable items prior to death. If you are not ready to part with your collectibles, you should have a conversation with your descendants regarding which items are the most valuable and which can be sold easily. Collectors may also have the entire contents of an extensive collection auctioned off upon their death.

Many collectors choose to donate their collections to a museum or other charity. Unfortunately, some collections may be immediately sold by the charity to raise money. In order to defray preservation expenses, museums in particular may also request a cash contribution in addition to any donated artwork. In such cases, establishing a charitable remainder trust may be helpful in order to lower a donor’s tax liability. It is important for a collector to understand ahead of time that doing so may cause a collection to be broken up.

Proper estate planning requires an evaluation of both traditional and nontraditional types of wealth. Oftentimes, a variety of financial and emotional factors will come into play. Additionally, unexpected tax and other consequences may have an effect on how you choose to transfer your wealth at death. In order to protect the financial future of your loved ones, you are advised to consult with a skilled Wisconsin estate planning attorney.

Estate Plan Modifications in Wisconsin

A comprehensive estate plan should be dynamic and will often require modification as your circumstances and wishes change over time. A marriage, divorce, new addition to your family, amended state or federal laws, and an overall shift in priorities may require an adjustment to your estate plan. Additionally, assets placed into popular trust instruments may also require amendment when an individual’s circumstances change.

Estate plans are normally easy to modify or repair when a person is alive and has not suffered any impairment to his or her mental faculties. Too often, however, problems with an estate plan do not surface until after an individual’s death.

Wisconsin law dictates how a will or trust may be modified. Generally, an irrevocable estate planning instrument can be modified following a person’s death using one of three methods: construction, reformation, and amendment. A court may correct or modify an ambiguous provision in a will or trust document through construction proceedings. Such proceedings are also used when an estate planning document has failed to account for a contingency that has come to fruition. During a construction proceeding, a court seeks to determine specific provisions based on the overall intent of a planning document. If determining a decedent’s intent becomes impossible, the court will use statutory preferences to determine who will inherit a particular asset.

A reformation proceeding is usually used to fix simple and unambiguous mistakes such as the misspelling of a name in estate planning documents. A reformation proceeding may also seek to change an estate plan retroactively in order to insert a necessary and obvious clause that was somehow overlooked. Because reformation may not have an effect on how a trust is taxed, it is especially important to ensure your trust documents are created by a knowledgeable Wisconsin trusts attorney. By hiring an experienced professional to help you create your trust documents, you can ensure your estate does not become subject to unnecessary or unwelcome tax consequences.

Although amendments are normally allowed for a revocable trust, this is not generally the case with an irrevocable trust. A well written irrevocable trust will, however, include a provision that allows administrative and other amendments so long as the amendment does not have an impact on the dispositive trust provisions.

In order to fully protect your loved ones, it is essential to repair outdated estate planning documents prior to your death. By taking care of this in time, you are in control. Relying on the courts to ascertain your intent later can be both costly and time consuming. Because state and federal tax laws and your wishes can change, it is a good idea to have a relationship with a capable Wisconsin estate planning lawyer to review your estate plan on a regular basis.

Everyone in Wisconsin Can Benefit From an Advance Care Directive

Many people are reluctant to discuss their end of life wishes. Unfortunately, unexpected health problems like a heart attack often occur before the issue is forced out into the open. When an aging parent or other family member suffers a health scare without an advance care directive in place, it can potentially make already tough decisions even more unbearable for loved ones.

According to the AARP, nearly three-fourths of Americans have not created an advance care directive. An advance directive is a written document designed to clarify an individual’s wishes with regard to medical care in the event of incapacitation. In the State of Wisconsin, a Power of Attorney for Health Care and a Living Will, or Declaration to Physicians, are the only recognized types of advance care directives.

Advance care directives are not just for the elderly or infirm. Anyone over the age of 18 should make their wishes clear to protect loved ones from the guilt, anger, fighting, and indecision that can arise following the unexpected incapacitation of a family member. News cases such as the tragic and bitter seven-year battle between Terri Schiavo’s husband and parents in Florida further highlight the need for every person to create a living will. Although Schiavo entered a permanent vegetative state in her 20’s and was unable to communicate, her loved ones could not agree regarding what type of medical measures she would have wanted. An advance care directive would have outlined her wishes and protected her family members.

Many Wisconsin residents fail to consider the importance of creating an advance care directive until they are in the midst of a medical emergency. Sometimes, individuals will not consider putting their end of life wishes in writing until they find themselves in a hospital setting or answering questions posed by health care professionals. Others don’t think about choosing a health care decision-maker until they prepare other legal documents like a living trust to transfer their assets at death.

Anyone can become incapacitated by an unexpected accident, brain aneurism, stroke, or a variety of other causes. By failing to create a health care power of attorney and living will, a person who becomes incapacitated may be subject to health care decisions he or she would not have chosen. If you would like to make your medical and end of life decisions known to your relatives, it is a good idea to speak with a capable Wisconsin estate planning lawyer to help you create an advance care directive.

All of the Will Packages and Trust Packages from Krause Law Offices LLC contain both a Power of Attorney for Health Care and a Living Will.

Estate Planning is Important for Same-Sex Domestic Partners in Wisconsin

Increasingly, states in the U.S. are permitting domestic partnerships, civil unions, and marriage for same-sex couples. Although New York, Iowa, Connecticut, Massachusetts, New Hampshire, Vermont, and Washington, D.C. allow same-sex partners to marry, Wisconsin does not. The state has, however, allowed for registered domestic partnerships since August 3, 2009. 2009 Wisconsin Act 28 formally recognized domestic partnerships in the state and governs many legal aspects of the relationship between partners. Provisions of the Act can affect estate planning, property rights at death, wrongful death actions, employee benefits, and health care decision-making for registered domestic partners. Because the Act is not comprehensive, domestic partners in Wisconsin can still benefit from advance planning with regard to both the distribution of assets and healthcare matters.

Under the Act, a domestic partnership in Wisconsin may take one of two forms. First, a limited purpose or state employee domestic partnership is recognized by the legislation. This type of partnership relates to state employee benefits and is only available to employees of the State of Wisconsin. The partners involved in this type of relationship may be either opposite or same-sex.

The other type of same-sex domestic partnership is available to anyone. The partnership is recognized in Wisconsin once a couple obtains a declaration of domestic partnership from the county clerk where they reside and records the declaration with the register of deeds. The definition of a same-sex domestic partnership is outlined in Wisconsin Statutes Chapter 770.

Domestic partnership law in Wisconsin affects joint property ownership, real estate transfer fees, family and medical leave, and access to health insurance. The legislation also allows a surviving same-sex partner to inherit in a similar manner to a surviving spouse under Wisconsin intestacy laws and affects the transfer of personal and real property interests upon death. For example, a registered domestic partner may inherit household items, jewelry, and motor vehicles under the law. In Wisconsin, a registered same-sex partner is also afforded visitation in a variety of health care settings, may consent to organ donation, and has access to health records after a partner’s death. Additionally, the Act automatically revokes same-sex partnership benefits established through any governing instrument as soon as a domestic partnership is terminated. Wisconsin Statutes Section 854.01(2) defines a governing instrument extremely broadly to include trusts, insurance policies, retirement benefits, annuity contracts, wills, powers of attorney, and other planning documents.

Because many critical subjects are not addressed by Wisconsin domestic partnership laws, it is always a good idea to consult with an experienced Wisconsin estate planning attorney to ensure your end of life wishes are followed. For example, domestic partnership laws do not address who will determine or authorize funeral and disposition arrangements upon the death of a partner or how minor children will be cared for after a partner’s death. As with traditionally married couples, a thoughtful estate plan should always be created in order to protect loved ones and transfer assets in accordance with a decedent’s wishes. A capable Wisconsin trusts attorney can explain your various estate planning options.

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