Month: December 2017

What Tax Returns do I Need to File as an Executor of an Estate?

Acting as the personal representative to an estate comes with a lot of responsibility, none the least of which is ensuring that all the proper paperwork is filled out and submitted to the proper authorities. While Wisconsin has essentially done away with the estate tax, executors still need to turn in tax returns on behalf of the deceased and ensure any outstanding taxes from the estate’s income are paid.

According to the State of Wisconsin Department of Revenue, more than one-tax form is required for deceased taxpayers. Those forms include:

  • Individual Income Tax Return
  • Fiduciary Income Tax Return(s)
  • Wisconsin Estate Tax Return
  • Wisconsin Inheritance Tax Return

The estate’s representative must file a tax return using Form 1, 1A, 1NPR, or WI-Z, for a decedent from the beginning of the year to the date of death if the decedent had a filing requirement. Furthermore, the executor needs to file tax returns for any other years the deceased was responsible for but did not file the appropriate tax documents.

The filing requirements for tax years beginning in 2016 are as follows:

  • Single person
    1. Under age 65 – gross income of $11,080 or more
    2. Age 65 or older – gross income of $11,330 or more
  • Married persons filing jointly
    1. Both spouses under 65 – $20,610 or more
    2. One spouse 65 or older – $20,860
    3. Both spouses 65 or older – $21,110
  • Married person filing separately
    1. Under age 65 – gross income of $9,830 or more (each spouse)
    2. Age 65 or older – $10,080(each spouse)
  • Head of household
    1. Under age 65 – gross income of $14,100 or more
    2. Age 65 or older – gross income of $14,350 or more
  • Part-year resident or nonresident – gross Wisconsin income of $2,000 or more

If the gross income of the estate is $600 or more, the estate’s representative needs to file Fiduciary Income Tax Returns using a Form 2, Wisconsin Fiduciary Income Tax for Estates or Trusts. Gross income means all income, before deducting expenses, reportable to the state, which is received in the form of money, property, or services.

Wisconsin has not had an estate tax on deceased’s estates since December 31, 2007 nor an inheritance tax since January 1, 1992. The state advises anyone with questions about estate and inheritance taxes for deaths occurring after the respective deadlines to contact the Department of Revenue at (608) 266-2772 to obtain the appropriate forms. An experienced Wisconsin estate and probate lawyer can also help executors fill out all the necessary paperwork.

Madison Trust and Estate Lawyers

The estate lawyers of Krause Donovan Estate Law Partners, LLC practice law in the areas of Probate, Wills, Estate Planning, and Trusts. We assist clients in and around Madison, Wisconsin with all matters related to estate planning, trusts, and probate matters. Our dedicated attorneys will even make house calls if you are unable to come to our office.

Contact our office by calling (608) 268-5751 to schedule a consultation or use our online contact form.

Health Care Power of Attorney: What Are Your Intentions During Incapacity

While planning for a catastrophic accident is something we may never want to think about, creating a health care power of attorney for someone to act in our best interest in the event that we become incapacitated is an important aspect of estate planning. Even in cases in which we make a full recovery, we still may need someone to take care of our finances or act on our behalf for a period of time while we recover.

In Wisconsin, these legal arrangements are called “durable powers of attorney” and allow someone to name another individual as the “attorney in fact” to make important healthcare decisions when someone faces an end of life scenario. Some of the scenarios where someone may have to exercise their durable power of attorney over another could be cases where someone is on a respirator or has severe brain damage and  unlikely to make a recovery.

Wisconsin law 155.01 et seq. Allows individuals to create a durable power of attorney for:

Designation of another for purpose of making informed decisions in the exercise of the right to accept, maintain, discontinue, or refuse any care, treatment, service or procedure to diagnose, maintain, or treat physical or mental condition. Feeding tube may be withheld or withdrawn unless it would cause pain. Agent may not consent to withholding or withdrawing of orally ingested nutrition or hydration unless provision is medically contraindicated

The legal requirements for someone to act as an attorney in fact are that the person must be at least 18 years old and of sound mind and body. The agreement must be in writing, voluntarily executed, with a signature and date. The power of attorney may be registered with the probate court in the county where the person lives.

Furthermore, treating physicians must carry out the order in good faith and in instances in which doctors or hospitals will not comply with directives, the attorney in fact must transfer the incapacitated person to another hospital. Doctors who comply in good faith with directives by the attorney in fact are immune from civil liabilities, as well.

Who you may choose to act as your attorney in fact is entirely up to you but it is strongly suggested that the individual be someone you know and trust. If you are married, this may be your spouse and if you are single, this could be a parent or sibling who will understand and execute your intentions when facing difficult decisions in the event of a catastrophic accident or adverse medical event.

Madison Trust and Estate Lawyers

The estate lawyers of Krause Donovan Estate Law Partners, LLC practice law in the areas of Probate, Wills, Estate Planning, and Trusts. We assist clients in and around Madison, Wisconsin with all matters related to estate planning, trusts, and probate matters. To request a consultation, reach out to our experienced attorneys online.

What is at Stake if You Pass Away Without a Will?

Creating a will and planning your estate is an incredibly important process that all adults need to think long and hard about, especially if they have children. Without a last will and testament, vital decisions about your estate will be left up to the courts or someone who might not be the best choice to oversee the process.

If you are married and believe you might not need a will because your spouse will naturally inherit the home and raise the children, you may not be taking into account some of the worst case scenarios. Should the unthinkable happen and both you and your spouse pass away with minor children, the decision over who will raise the children will be up to the courts if neither of you took the time to craft a will.

In that scenario, a court will need to choose a guardian to raise the children and oversee any assets that pass down. Letting a judge decide who will take care of your children can end up being an extremely emotional situation for some families, particularly if surviving family members disagree over who is best suited to take on the responsibility. If for no other reason than the sake of minor children, couples need to create a will spelling out who exactly will become their children’s guardian.

Even if you do not have children, a probate court will need to appoint a personal representative to your estate to oversee the dispersal of assets to your heirs. Again, you would be putting important decisions in the hands of a judge who has no idea what your final wishes would be and whether or not the personal representative is truly the best individual to handle the challenge.

Often times, individuals create some kind of trust to keep their estate from passing through the sometimes long and costly process of probate. While a trust is an excellent way to have an expedient and efficient transfer of assets, it still does not address all your end of life decisions the way a last will and testament does.

Again, a trust does not address who will be the guardian of your minor children and may not cover all the income your estate may receive after your passing, particularly if you died in an accident and may receive funds from a wrongful death lawsuit. Additionally, you may not have all your real property transferred to trusts or have personal property you would want a beloved family member to cherish after your passing.

Madison Trust and Estate Lawyers

The estate lawyers of Krause Donovan Estate Law Partners, LLC practice law in the areas of Probate, Wills, Estate Planning, and Trusts. We assist clients in and around Madison, Wisconsin with all matters related to estate planning, trusts, and probate matters. Our dedicated attorneys will even make house calls if you are unable to come to our office.

Contact our office by calling (608) 268-5751 to schedule a consultation or use our online contact form.

Estate Planning for Your Family Farm

Planning for your family farm’s future is a unique combination of estate and business planning, requiring attention to detail and understanding of family dynamics. Furthermore, because some farms can be capital intensive and have many assets, family farmers need to take into account how taxes and the probate process might have an impact on the state of the farm after it passes to the next generation.

While every family farm is unique, there are some common considerations that Wisconsin farmers usually take into account when creating their estate plans. Because these decisions can have a significant impact on the quality of life during retirement and the farm’s existence, families need to be proactive and open with each other about the farm’s future.

First and foremost, family farmers need a succession plan on whether or not a child will continue to run the family business. These days, as more and more rural young people move to the suburbs and the cities, most parents cannot count on the children to stay on the farm and run day-to-day operations.

When one or more children do agree to take over the family farm, integrating family into the business operations and management can be more difficult than one would think. Some of the most common familial issues can include parents unwilling to cede total control to the children, the ability for the farm to produce enough income if two children take over, managing styles, and the pace of modernizing assets.

Like other estate plans, farmers need to make decisions on powers of attorney to make decisions on medical care and end of life scenarios should they be seriously injured in an accident, whether that be on the farm or anywhere else. Powers of attorney allow a trusted person, usually a spouse or family member, to make financial and medical decisions in the event the individual is incapacitated.

Additionally, farmers need to decide whether to create a trust or leave their assets to heirs in a last will and testament. Should the farm be left to heirs in a will, the estate will need to pass through probate and could end up being an expensive and time consuming process depending on the circumstances and the state of the farm.

Often times, family farmers choose to create a living revocable trust to pass the farm onto a child under the Wisconsin Marital Property Act. Wisconsin is one of the only states in the country that permits a living trust to be funded after the death of the Grantor while still avoiding probate. Although there are many more things to consider when passing on a family farm, including taxes and finances, these are some of the biggest issues to start with and discuss with an experienced Madison trust and estate lawyer.

Madison Trust and Estate Lawyers

The estate lawyers of Krause Donovan Estate Law Partners, LLC practice law in the areas of Probate, Wills, Estate Planning, and Trusts. We assist clients in and around Madison, Wisconsin with all matters related to estate planning, trusts, and probate matters. Our dedicated attorneys will even make house calls if you are unable to come to our office.

Contact our office by calling (608) 268-5751 to schedule a consultation or use our online contact form.

How Long Does Probate Take in Wisconsin?

The time it can take for an estate to pass through probate court in Wisconsin depends on many factors including the size of the estate, debts to be paid, and whether or not any interested parties contest the language of the deceased’s last will and testament. While there are any number of issues that may come up during probate, planning ahead and taking a few simple steps can help expedite the process as quickly as possible and ensure your heirs and beneficiaries receive their share of the estate.

Wisconsin probate laws require estates be closed within 18 months but some counties have even adopted ordinances aimed at reducing the amount of time to 12 months. If, for whatever reason, the executor cannot pass the estate through probate in time, he or she may ask the court for an extension for more time to perform the necessary duties to account for assets, liquidated holdings, and pay creditors if necessary.

For small estates with few assets and creditors, the process may take as little as six months if the executor in charge of the estate does his or her due diligence in cataloging assets and informing creditors about the deceased’s passing. Furthermore, the personal representative of the estate must file income tax returns for the deceased as well as income tax returns for any income earned by the estate after the decedent’s death.

In cases in which estates go beyond the prescribed amount of time to close, the courts may take the extreme step of removing the executor and replacing him or her with someone else to represent the estate. While it is a rare step, it is not uncommon and that is why testators need to choose a competent and trustworthy person to oversee their final wishes and make the process go as smoothly as possible.

One circumstance that can have tremendous impact on the length of the probate process is whether or not an interested party like an heir or creditor steps in to contest the last will and testament. Whether it is a jilted family member or a business partner, these challenges need to be heard by the courts and can drag the whole process out for months.

Fortunately for beneficiaries, state law allows executors to dispense portions of the estates to heirs once the period for creditors to file their claims has past. Depending on the situation, additional disbursements could be made once the executor sets aside funds to pay any income taxes the estate has incurred.

Madison Trust and Estate Lawyers

The estate lawyers of Krause Donovan Estate Law Partners, LLC practice law in the areas of Probate, Wills, Estate Planning, and Trusts. We assist clients in and around Madison, Wisconsin with all matters related to estate planning, trusts, and probate. Our dedicated attorneys will even make house calls if you are unable to come to our office.

Contact our office by calling (608) 268-5751 to schedule a consultation or use our online contact form.

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