Month: February 2013

Fair and Equal Inheritance for Your Children

Some parents dream of the day when their children will take over a family business. For those whose children have the same passion for the same line of work or business, seeing this occur can be a “dream come true.” For others, their dream becomes complicated if for some reason their child or children are not remotely interested in the family business, or the children have different levels of interest. Consequently, having a plan in place is important so that the business is handed down appropriately.

If there are no children interested in continuing to run the family business, there are a couple of alternatives. One is simply to sell the business altogether. The other would be to name someone outside the family to be the successor. In either of these situations, the children would not be burdened with the day-to-day operations but they could still benefit from the sale or the profits from it.

Where it gets sticky is when there is one child who wants to take over the family business and the other who doesn’t. Unfortunately, giving shares of the business to the children equally might create future conflict if there are disagreements about the way the company is being run, among other things.

There are advanced planning tools available that can facilitate an equal and equitable transfer. This will help to avoid unpleasant situations that can arise from simply giving the business to the kids and letting them sort it out.

Here are some estate planning tips on how inheritance equalization can be accomplished from an experienced Wisconsin probate and estate planning lawyer. These tips are particularly important because in many family-owned businesses most of the assets are tied up in sweat equity. If there is one child that has been more involved in the business than others, you have to consider whether their illiquid equity will factor into the distribution of the assets of the estate to the other children.

One solution is to equalize inheritance between children with the use of life insurance. Essentially, the children who are going to take over the business will inherit stock in it and those who are not involved will receive an equal amount from a life insurance policy naming them as beneficiary, in addition to other assets that are not business related.

Another option is to simply sell the business, or name a successor from outside the family to run it. In either of these scenarios, the children can benefit from its sale or the profits from its continued operation.

If you do not have adequate assets outside the business and are unable to insure your life for enough to even things out, your next question should be: Which goal is primary? 1. to make certain that your children are treated fairly and equally, or 2. to make sure the business has the best chance of surviving.

Careful Estate Planning Remains Vital for Same-Sex Couples, Even as Domestic Partnership Registry Survives Court Challenge

Wisconsin’s 2009 statute creating a domestic partnership registry survived a key court challenge, as a state appeals court upheld the constitutionality of the law recently. Even though the statute survived the lawsuit, its scope is still limited in nature, making a thorough estate plan a must for same-sex couples.

In its December ruling, Wisconsin’s 4th District Court of Appeals ruled that, when the state’s voters decided in 2006 to amend the state Constitution to ban gay marriage, that referendum did not bar the establishment of the sort of same-sex partnership registry created by the legislature three years later. Because the domestic partnership registry affords registered same-sex couples 43 enumerated rights, as opposed to the 200+ rights or privileges granted to married couples under state law, the court decided that the registry legislation did not create a “legal status identical or substantially similar to that of marriage,” and, as a result, was constitutional.

Although the Wisconsin registry provides several essential rights, it only goes so far, and registering a partnership with the state is not a substitute for careful, complete estate planning. As Fair Wisconsin, a rights group that defended the partnership legislation before the Court of Appeals, explained in its reference guide regarding the registry: “these privileges are limited and do not take the place of having a health care power of attorney, disposition on death authorization, HIPAA authorization, and similar documents that provide much stronger protections.”

The registry legislation does not give registered partners any rights regarding important items like funeral or burial arrangements or care for minor children. Additionally, certain couples may not qualify for registration. For example, if one partner is transgender, and the state does not identify them as members of the same sex, the state may not allow them to register under the law.

The law, however, does provide several essential rights and privileges, including the right to visit a registered partner in the hospital and to inherit from a deceased partner, even without a will. Recent cases in other states highlighted the importance of rights like visitation. In one 2007 example, an Indiana man sought guardianship over his partner of 25+ years after the partner suffered a stroke. The stricken man’s parents asked the court to appoint them guardians.

Is It Time For Scheduled Maintenance On Your Estate Plan?

When we purchase new cars the dealership issues us a maintenance schedule that we must follow in order to keep it in proper running order and to ensure that we comply with necessary warranty requirements. The same thing holds true when we purchase a new set of tires. In order to get the most mileage out of them and for proper wear, rotate them every 7,000 miles.

The bottom line is that proper maintenance is necessary to make your car or truck perform well and tire rotation is necessary to get the maximum mileage out of your tires. We accept these marching orders and make certain we comply with the regular maintenance schedule.

When was the last time you thought about reviewing your estate plan to determine if it was in need of maintenance? In order for your estate plan to do everything you intend it to do, now might be a good time to examine it and see if changes ought to be made. Chances are that your family, your assets, your wishes and needs have changed over time since your initial estate plan was put into effect.

For example, if you are a mature couple, the initial simple will you had drafted for your family as a young couple would hardly be considered sufficient for your estate planning today. Perhaps your family was incomplete and as a growing family more children came along. Maybe you are no longer married to the person listed as the primary beneficiary in your will, on your life insurance policy or on your retirement accounts. Perhaps health issues have entered into the equation that need addressing, as well as provisions for the grandchildren who are now such an integral part of your life.

Just like your car or your tires, there comes a time when nothing is going to solve the problem except to replace them. The same is true for out-of-date estate planning tools that no longer are in touch with your family, assets and the current tax laws.

Here are a few tips from an experienced Wisconsin probate and estate planning lawyer to help you be on the lookout for times in your life that call for examination and maintenance of your estate plan. Even if there have been no major changes during the year, make sure to examine your plan every December so that necessary changes, if any, can be initiated at the beginning of the New Year.

Some events that might cause you to consider updating your estate plan are:

  • Marriage
  • Divorce
  • Death of a spouse
  • Birth of a new child or children
  • Declining health
  • Increased or declining assets
  • Trustee or guardian’s incapacity to serve

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