Want A Life Estate? Do it NOW

There has been a lot of discussion amongst ourselves here at Lubinski, Reed & Klass, S.C. and among other elder law attorneys, around the State as to how best advice our clients interested in planning for nursing home assistance in light of the changes to estate recovery in Wisconsin. How these new rules affect one of the more popular planning tools in medical assistance, life estates, has been a major topic.

The State of Wisconsin Department of Health Services has released a memo indicating that, amongst other things, life estates created ON OR AFTER August 1, 2014 would be subject to Estate Recovery.  Generally, this means that the State will value the life estate as of the date of death of the life estate holder and be reimbursed for the medical expenses it paid of behalf of that person and/or that person’s spouse up to the value of the life estate.  As the memo is written, this rule will not apply to life estates created before August 1, 2014.

There is a small window of opportunity for people that wish to make a gift of their home and retain the right to live there by using a life estate, without this new recovery rule applying.  There are still many unanswered questions regarding these estate recovery rules.  A life estate is not a good plan for everyone.  If you are interested in looking into this further, contact an experienced elder law attorney as soon as possible.

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

Pursuant to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, nothing contained in this communication was intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.  No one, without our express prior written permission, may use or refer to any tax advice in this communication in promoting, marketing, or recommending a partnership or other entity, investment plan or arrangement to any other party.

Maybe Lawyers Aren’t So Useless After All

A question I get rather frequently is: “Can’t I just go online and do this myself?  Why should I pay you to draft my will?”  If you have this thought, I encourage you to read this article.

If you personally don’t understand the law regarding wills, and how precise language can completely change your intent, then printing a form off of the internet is a bad idea.  Saving money in attorney fees now can cost your loved ones much more in the future.  It pays to make sure that someone who knows how to draft a will does it correctly.

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

Pursuant to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, nothing contained in this communication was intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.  No one, without our express prior written permission, may use or refer to any tax advice in this communication in promoting, marketing, or recommending a partnership or other entity, investment plan or arrangement to any other party.

 

Facebook After Death in Wisconsin

Many states have laws that would treat a decedent’s Facebook page (or similar online account) as a digital asset to be controlled by the personal representative of a person’s estate.

In considering those laws, I became curious as to how this issue would be handled right now in Wisconsin.

Although I don’t believe Wisconsin has dealt with this issue specifically, it seems to me that the probate statutes already give the personal representative the power to manage a decedent’s online accounts.  Online accounts are not distinguishable from other “property” as defined by statute, and the personal representative is tasked with collecting, managing and distributing all of the decedent’s estate.  Similarly, even if probate was unnecessary due to the size of the decedent’s estate, a special administrator could be given the same authority.  I think the difficulty will be in dealing with the company that hosts the account.  It also raises the question of whether a digital account of a Wisconsin resident is even Wisconsin property in which the courts would have jurisdiction to deal with.  I imagine the terms of service on these accounts (i.e. that million word thing that nobody reads that you are presented with when you sign up) would give some guidance.

Even though an online account such as a Facebook page probably doesn’t have actual monetary value (except perhaps in the case of a business page) the contents of the account could certainly have emotional value to the decedent’s family similar to a photo album or a diary.  It will be interesting to see how this law shifts in the future, and whether Wisconsin will pass similar laws specifically targeted at online assets.

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

Pursuant to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, nothing contained in this communication was intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.  No one, without our express prior written permission, may use or refer to any tax advice in this communication in promoting, marketing, or recommending a partnership or other entity, investment plan or arrangement to any other party.

Sixteen Year Old + A Million Dollars = ???

To follow up on my earlier post about beneficiary designations, it is also extremely important to consider minor beneficiaries.  Do you really want your teenager to have unfettered access to your million dollar life insurance policy?  How about your pension?  IRA?

Making sure that your minor beneficiaries are taken care of financially after you pass away is not as simple as it might seem.  One step is to make certain there is something in your Will to protect your assets from your minor beneficiary until you believe they can handle it.  This can be done in a variety of ways, including, but not limited to: testamentary trusts or Uniform Transfer to Minors Act accounts.

Step two follows along with my earlier post on beneficiary designations.  As with adults, your Will does not control what happens to certain assets (i.e. life insurance, annuities, etc.) upon your death, unless the beneficiary is your Estate.  In order to make sure your assets pass to your minor beneficiaries in the best way possible, your attorney should review each individual policy or account to see how beneficiary designations are allowed.  Some accounts will allow a testamentary trust to be named as beneficiary, some require other language or methods to make sure the assets are protected.

Of course there are many methods by which your goals can be accomplished other than what has been mentioned in this post.  The best advice is to speak with your estate planning attorney.  If you have young children, or other minor beneficiaries that could inherit something from you, this is an area that needs to be addressed.

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

Pursuant to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, nothing contained in this communication was intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.  No one, without our express prior written permission, may use or refer to any tax advice in this communication in promoting, marketing, or recommending a partnership or other entity, investment plan or arrangement to any other party.

Wisconsin’s New Medicaid Law: A Word of Caution

The latest state budget, signed into law in June, included a number of important changes to Wisconsin’s Medicaid Program.  Rather than totally reinventing the wheel, I want to provide a link to the excellent series of blog posts written by an attorney in southern Wisconsin, which explains various parts of the new law.

This a very complex topic, so most people who don’t have hands on experience with Medicaid are probably going to have a difficult time understanding why the law change is so important. I would like to leave you with this piece of advice: If you or your spouse, or your parents are on Medicaid, are in need of Medicaid now, or might need it in the future, it is vital that you contact an attorney who understands this area of law. There are new procedures in place that affect one’s ability to sell a home, which were not in place previously. In addition, the new Wisconsin laws seem to require that if a Medicaid applicant wants to transfer the family farm or other business to a family member, it must be done with a cash sale at fair market value, in order to pass muster. Doing things incorrectly can have even more wide-ranging and long lasting effects than before, so contacting an attorney who can deal with these issues has never been more important.  It is possible that much of this new law will be struck down if challenged in court, which will only further confuse planning in the future.

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

Pursuant to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, nothing contained in this communication was intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.  No one, without our express prior written permission, may use or refer to any tax advice in this communication in promoting, marketing, or recommending a partnership or other entity, investment plan or arrangement to any other party.

 

What If I Don’t Have a Will?

A common question we get at our office is “What happens to my belongings if I don’t have a will?”  A large number of people don’t have wills either because they don’t believe they need one, don’t think they can afford to have one drafted, or are apathetic.

In Wisconsin, if you die without a proper will, you have died “Intestate”.  The rules of intestate succession are provided in Wisconsin Statute Sec. 852.01.  The most basic family situations have property flowing to the following classes of people, if they are alive at your death: 1) spouse/domestic partner, 2) issue, which is loosely defined as: children, grandchildren, great-grandchildren, etc., 3) parents, 4) siblings, and deceased siblings’ children (nieces and nephews), 5) grandparents (1/2 to maternal, 1/2 to paternal, or their surviving issue), 6) The State of Wisconsin school fund.

A few things are obvious from the above list: First, it is pretty unlikely that your property will escheat to the state (please note that escheat is not the same thing as owing the state money at your death.  The above progression is after all bills are paid).  Second, things get pretty complicated pretty quickly if there are few close relatives alive.  Sometimes finding these people is a tremendous challenge.

Another thing to realize is there are further complications in the statute when there are multiple marriages and multiple sets of children involved and someone dies intestate.  In this situation, the decedent’s spouse will only receive HALF of the decedent’s property (less some exceptions), while the other half would go to any issue that is not from the spouse.  This seems to be the most common situation where property passes unexpectedly, usually much to the chagrin of both the spouse and the children of both the surviving spouse and the other mother(s).  Many thousands of dollars are spent on attorney fees arguing about who gets what, when the situation could have been avoided with a relatively inexpensive will.

Keep in mind that these rules only apply to probate assets.  The probate/non-probate asset explanation is the subject of another post, but simply put, if you a direct beneficiary on something (life insurance, pension, annuity, 401(k)), these rules will usually not apply.

The bottom line is that it is better to be safe than sorry, especially given the variety of family situations in today’s world.

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

Pursuant to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, nothing contained in this communication was intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.  No one, without our express prior written permission, may use or refer to any tax advice in this communication in promoting, marketing, or recommending a partnership or other entity, investment plan or arrangement to any other party.

Beneficiary Designations and Estate Planning

When we meet with clients to discuss their estate planning, we always ask about beneficiary designations on such things as life insurance and retirement accounts.  What most people don’t realize is that depending on how your assets are held, having these beneficiary designations set up correctly can be as important as having a will or other planning device.

Beneficiary designations allow assets to pass outside of the will, and outside of the reach of probate.  Whether this is good or bad depends on your individual circumstances.  What most people don’t realize is that unless the policy or account names your Estate as beneficiary at your death, what your will says is meaningless as to who receives the value of these policies or accounts.

Incorrect beneficiary designations can cause all sorts of problems after death.  Young children can inherit large sums of money.  Disabled individuals can inherit, and lose their disability benefits.  Beneficiary designations may name individuals that you no longer wish to inherit your estate.  Plans themselves may create odd situations if the named beneficiary is deceased.  These are just a few of many problems that could arise.

Beneficiary designations are very important to discuss when putting together your estate plan with your attorney.  Bring a list of your life insurance policies, IRAs, annuities, 401(k), Pension, etc. along with you to your appointment.  If you have copies of the actual policies, bring those as well.  It is too important to ignore the possible ramifications of these designations.

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

Pursuant to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, nothing contained in this communication was intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.  No one, without our express prior written permission, may use or refer to any tax advice in this communication in promoting, marketing, or recommending a partnership or other entity, investment plan or arrangement to any other party.

Relative Dies. No Money. Lots of Bills. Now What?

A common question we receive when taking in a new estate, especially for someone who doesn’t have a lot of money, is “My relative has all of these credit card bills, and almost no money.   Do I have to pay those bills out of my pocket because I’m named in the will?”

The basic answer is no.  Unless you have personally guaranteed the decedent’s debt, the debt is only the responsibility of the decedent’s estate.  If you are administering an estate, either as a personal representative named in a will, or in some other capacity, you are responsible to make sure creditors are paid to the extent there are assets, and to make sure the creditors are paid in the correct order.  However, if there is are no assets left, and the debt is the sole responsibility of the decedent, the creditor is out of luck.

 The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

Pursuant to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, nothing contained in this communication was intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.  No one, without our express prior written permission, may use or refer to any tax advice in this communication in promoting, marketing, or recommending a partnership or other entity, investment plan or arrangement to any other party.