Wills, Trusts, and Estate Planning

If you die “intestate” (without a will), Wisconsin’s laws of descent and distribution will determine who receives your property by default. A state's plan often reflects the legislature's guess as to how most people would dispose of their estates and builds in protections for certain beneficiaries, particularly minor children. That plan may or may not reflect your actual wishes, and some of the built-in protections may not be necessary in a harmonious family setting. A will allows you to alter the state's default plan to suit your personal preferences.

A will provides for the distribution of property owned by you at the time of your death in any manner you choose (subject to the forced heirship laws of some states that prevent disinheriting a spouse and, in some cases, children). Your will cannot, however, govern the disposition of properties that pass outside your probate estate (such as certain joint property, life insurance, retirement plans, and employee death benefits) unless they are payable to your estate. 

Wills can be of various degrees of complexity and can be utilized to achieve a wide range of family and tax objectives. If a will provides for the outright distribution of assets, it is sometimes characterized as a simple will. If the will establishes one or more trusts, it is often called a testamentary trust will. Alternatively, the will may leave probate assets to a preexisting inter-vivos trust (created in your lifetime), in which case it is called a pour-over will. In either case, the purpose of the trust arrangement (as opposed to outright distribution) is to ensure continued property management and creditor protection for the surviving family members, to provide for charities, and to minimize taxes. 

Aside from providing for the intended disposition of your property to your spouse, children, etc., several other important objectives may be accomplished in your will. 

• You may designate a guardian for your minor child or children if you have survived the other parent and, by judicious use of a trust and appointment of a trustee, eliminate the need for bonds and supervision by the court regarding the care of each minor child's estate. 
• You may designate an executor of your estate in your will and eliminate the need for a bond; in some states, the designation of an independent executor will eliminate the need for court supervision of the settlement of your estate. 
• You may choose to acknowledge or otherwise provide for a child (e.g., stepchild, godchild, etc.) in whom you have an interest, an elderly parent, or other individuals. 
• If you are acting as custodian for the assets of a child or grandchild under the Uniform Gift (or Transfers) to Minors Act, you may designate your successor custodian and avoid the expense of a court appointment. 
• Good planning can also enhance your support of religious, educational, and other charitable causes.

A will does not govern the transfer of certain types of assets, called non-probate property (see below), which by operation of law or contract pass to someone else on your death. For example, real estate and other assets owned with rights of survivorship pass automatically to the surviving owner. Likewise, an IRA or insurance policy payable to a named beneficiary passes outside the will.

Wills are signed in the presence of witnesses, and certain formalities must be observed. A later amendment to a will is called a “codicil” and must be signed with the same formalities. In some states, the will may refer to a memorandum disposing of tangible personal property, such as furniture, jewelry, automobiles, etc., which may be changed from time to time without the formalities of a will.

The term trust describes the holding of property by a trustee (which may be one or more persons or a corporate trust company or bank) following the provisions of a written trust instrument for the benefit of one or more persons called beneficiaries. A person may be both a trustee and a beneficiary of the same trust. A trust created by your will is called a testamentary trust, and the trust provisions are contained in your will. 

If you create a trust during your lifetime, you are described as the trust's grantor; the trust is called a living trust, and the trust provisions are contained in the trust agreement or declaration. The provisions of that trust document will usually determine what happens to the property in the trust upon your death.

A living trust may be revocable (subject to change and terminated by the grantor) or irrevocable. Either type of trust may be designed to accomplish the purposes of property management, assistance to the grantor in the event of physical or mental incapacity, and disposition of property after the death of the grantor of the trust. 

Trusts are not only for the wealthy. Many young parents with limited assets choose to create trusts either during life or in their wills for the benefit of their children in case both parents die before all their children have reached an age deemed by them to indicate sufficient maturity to handle property. This permits the trust estate to be held as a single undivided fund to be used for the support and education of minor children according to their respective needs, with the eventual division of the trust among the children when the youngest has reached a specified age. This type of arrangement has an obvious advantage over an inflexible division of property among children of different ages without regard to their level of maturity or individual needs at the time of such distribution.

You may be entitled to receive some type of retirement benefit under an employee benefit plan offered by your employer or have an Individual Retirement Account (IRA). Typically, a deferred compensation or retirement benefit plan will provide for the payment of certain benefits to beneficiaries designated by the employee in the event of the employee's death before retirement age. After retirement, the employee may elect a benefit option that will continue payments after his or her death to one or more of the designated beneficiaries. Certain spousal annuities are mandated by law and may be waived only with the spouse's properly witnessed signed consent. The various payment options will be treated differently for tax purposes. Any person entitled to retirement benefits should seek competent advice as to the payment options available under his or her retirement plan and the tax consequences of each.

If you own life insurance on your own life, you may either: 

(a) designate one or more beneficiaries to receive the insurance proceeds upon your death, or 

(b) make the proceeds payable to your probate estate or a trust created by you during your lifetime 

or by your will. 

If the insurance proceeds are payable to your estate, they will be distributed as part of the general estate following the terms of your will or, if you die without a will, the distribution will be according to the applicable laws of intestate succession. If the proceeds are payable to a trust, they will be held and distributed in the same manner as other trust assets and may also be free of creditors' claims. Insurance proceeds that are payable directly to a minor child will generally necessitate the court appointment of a legal guardian or conservator. This can be avoided by having a trust designated as a beneficiary or a custodial account under the state-transfers-to-minors law. 

Insurance plays an important role in estate planning and should be coordinated with all other aspects of your estate plan. The laws about the taxability of insurance proceeds are complex, however, so all matters about life insurance must be carefully reviewed with your attorney and insurance advisor. 

A power of attorney healthcare is the appointment of a person to whom you grant authority to make medical decisions in the event you are unable to express your preferences. Most commonly, this situation occurs either because you are unconscious or because your mental state is such that you do not have the legal capacity to make your own decisions. Normally, a single individual is appointed as your healthcare proxy, though quite commonly, one or more alternate persons are designated in the event your first-choice proxy is unavailable. As with the living will, medical professionals will make the initial determination as to whether you can make your own medical treatment decisions. The health care proxy is a durable power of attorney specifically designed to cover medical treatment.

A living will is your written expression of how you want to be treated in certain medical conditions. In Wisconsin, this document may permit you to express whether you wish to be given life-sustaining treatments in the event you are terminally ill or injured, to decide in advance whether you wish to be provided food and water via intravenous devices ("tube feeding"), and to give other medical directions that impact the end of life. "Life-sustaining treatment" means the use of available medical machinery and techniques, such as heart-lung machines, ventilators, and other medical equipment and techniques that will sustain and possibly extend your life, but which will not by themselves cure your condition. In addition to terminal illness or injury situations, Wisconsin law permits you to express your preferences as to treatment using life-sustaining equipment and/or tube feeding for medical conditions that leave you permanently unconscious and without detectable brain activity.

Regardless of which document you draft; their purpose is to allow you to express your preferences concerning medical treatment at the end of your life. By expressing such preferences in a written legal document, you are ensuring that your preferences are made known. Physicians prefer these documents because they provide a written expression from you as to your medical care and designate for the physician the person, he or she should consult concerning unanswered medical questions. Rather than the physician having to obtain a consensus answer from your family as to your treatment, the physician knows your preferences and knows who you want to provide decisions when you cannot do so.

These documents provide your expressed wishes, rather than making the family guess your desires. Making your wishes known in advance prevents family members from making such choices at what is likely one of the most stressful times in their lives. Further, providing such information and designating a health care proxy means that the physician knows whose direction is to be followed in the event your family disagrees as to what medical treatment you would want.

Your estate planning attorney at Brabazon Law Office can provide you with each of these documents. Generally, these documents require at least two witnesses. It is the policy of some hospitals and other medical institutions not to permit their employees to witness the signing of such documents. In most states, there are other restrictions as to who may witness such documents. Generally, the persons who act as witnesses are not permitted to be individuals entitled to any inheritance because of your death, either by will or by state law. Often the law does not permit persons to witness such documents if they are related to you by blood or by marriage, or if they are responsible for the payment of your medical bills. In any event, the witnesses must be adults. When you are ready to finalize your estate planning documents, Brabazon Law Office will have witnesses available to assist in the execution of your documents.

While all states recognize advance health care directives, the law varies as to recognizing a document prepared in another state. It is not necessary to prepare additional documents in case you might vacation in another state. However, if you spend a considerable amount of time living in more than one state, you should consider having advanced directives prepared in each of the states in which you spend significant time.

Should you change your mind as to your living will decisions or your choice of health care power of attorney, you can simply destroy the document you have and create a new one. Once you have a living will, health care power of attorney, or advance health care directive, you should keep it among your important papers. Make sure a responsible adult, such as the named health care proxy, knows where you keep these documents. If you have a regular physician who keeps your medical records, you should provide a copy of the documents to him or her for your medical records. In the event you are admitted to a hospital you should take these documents with you at the time you are admitted and permit the hospital to place copies into your medical files. It is also a good idea to discuss the decisions you have made in your documents with family members so that they may better know and understand your wishes concerning these matters.