Estate Planning & Wills

While most people are familiar with a Last Will and Testament, which often serves as the main document in any solid estate plan, they are often less aware of other important steps and documents that, when combined with a Will, ensure that a person’s property and affairs are handled efficiently upon their death.

The estate planning process can take different forms depending on one’s asset holdings, debt distribution, and family structure. Estate planning professionals, such as elder law attorneys, are vital in the process, working closely with their clients to determine what instruments of estate planning are most applicable, and ensuring that the documentation for each instrument used is properly drafted, filed, and executed. Most commonly, the estate planning process accomplishes the following objectives:

One main goal of the estate planning process is to inform others of your express wishes regarding your medical care and finances should you become incapacitated and unable to express those desires for yourself. Laws regarding the appropriate documents to be used to indicate how others should handle your health care and finances, and the wording of the documents themselves, do vary between states, making it important to work with an estate planning attorney to ensure that your wishes are properly expressed.

The central document of many estate plans is the Last Will and Testament, which describes how one’s assets should be distributed after their death. A will is drafted by an elder law attorney after consideration of a person’s individual circumstances. It names an executor, who is in charge of distributing the testator’s estate, and one or more beneficiaries, who will receive money, property, or another asset from the estate. It is vital to many estate plans, ensuring that one’s assets, including household items, furniture, automobiles, recreational equipment, and other property are distributed among beneficiaries. A will can also provide for guardianship for a testator’s minor children and set aside funds for their care, allow for charitable donations to be made to the organizations and in the amounts desired, and make plans for one’s pets to live with relatives.

Advance Health Care Directives serve to inform medical professionals and family members of your treatment preferences in many different medical situations. A variety of legal documents can be used to indicate advance directives for care, and these documents often work in conjunction with each other and with other estate planning documents. Although the exact document used depends on states’ individual laws, all 50 states allow people to express their wishes for medical treatment and care in the event of terminal illness or severe injury, and to elect someone to communicate on your behalf if you are unable to do so yourself. In Wisconsin, this document is called a Living Will, also known as a Declaration To Health Care Professionals. It allows adults to state their wishes regarding the use of feeding tubes and life-saving measures in case of diagnosis of a terminal condition or persistent vegetative state. After one identifies their desires on the Living Will and signs it with two witnesses, the original document should be kept in a safe location until it is needed. Relatives and trusted friends should be notified of the Living Will’s existence, and a signed copy of it may also be kept on file with medical professionals, if so desired. Then, when a terminal illness or vegetative state occurs, the document is referenced to guide health care providers and family members. It is worth noting, however, that medical providers may opt not to follow a patient’s requests if doing so would cause the patient pain or discomfort that cannot be alleviated through pain relief measures.

Another health care directive that is often used in conjunction with a Living Will is a durable medical power of attorney.This person, also called a health care surrogate or health care proxy, is authorized to make decisions about your medical care and treatments if you are unable to make or express those decisions yourself. It is usually advised to name only one person as your durable power of attorney. This prevents any delays in medical decisions being made because powers of attorney can’t agree or aren’t all present to sign documents. However, it is possible to elect alternative successor powers of attorney to make decisions on your behalf if your first choice is unavailable.

while estate planning is often considered planning for death, it is also encouraged to plan for disability prior to death. This aspect of the estate planning process includes provisions for how someone will support themselves financially if they should become disabled, and how they will pay for their care if they should become incapacitated.

Disability Income Insurance is provided through an employer, an insurance company, or the Social Security Administration. It provides income to people who are unable to work due to a disability, illness, or injury. Policies pay benefits monthly on short- or long-term time frames after a waiting period. Disability Income Insurance is meant to prevent a disruption in income or decrease in quality of life because of periods of disability. It isn’t intended to recoup 100% of a person’s regular income while they are out of work, but does provide between 45% and 65% of their gross income.

Long-Term Care Insurance policies are one way to mitigate the high out-of-pocket costs for long-term care due to chronic illness or disability. Long-term care insurance is typically purchased in addition to other health insurance, as many traditional health insurance plans do not cover long-term care, and even supplemental insurance policies often have limited coverage for services. The most common provider of long-term care insurance is Medicaid. People seeking to qualify for long-term care benefits under Medicaid are subject to a limit on their income and asset holdings, and also usually don’t qualify for coverage until they have used up most of their other resources. People typically become eligible for long-term care insurance when they are no longer able to perform basic hygiene tasks and other activities of daily living. Additionally, long-term care insurance policies also differ in what services and conditions they cover, and sometimes deny coverage due to certain pre-existing conditions, like alcohol or drug dependency. These constraints mean that it is necessary to plan for long-term care well in advance of needing it. Developing a plan to pay for long-term care, whether it be through Medicaid long-term care insurance or another means as part of the estate planning process ensures that you will have access to care when you need it without undue financial burden.

Life Insurance is a means to ensure financial support for your loved ones after your death. Life insurance policies are contracts between insurance companies and policyholders. Upon the death of a policyholder, the contracted insurance company pays a predetermined lump sum to one or more people named as beneficiaries. Depending on the terms of the life insurance policy, a policyholder’s terminal illness or critical condition can also prompt payout. The policyholder funds this payout through monthly or lump-sum premium payments to the insurance company. Some life insurance plans also include provisions for the prepayment of funeral and burial expenses. There are two different categories of life insurance policies:

Options for life insurance policies are often discussed as part of the estate-planning process. They work in conjunction with a last will and testament to ensure that one’s assets are transferred according to their express wishes, and also provide peace of mind that loved ones will continue to be taken care of, even after one’s death.

Another objective of estate planning is to name a guardian to care for your minor children if you should die or be unable to care for them. If you currently share custody of minor children with a spouse or co-parent, sole custody would automatically transfer to the surviving parent upon one parent’s death or incapacity. Listing a guardian on your last will and testament allows you to name who would become responsible for your minor children if both of their custodial parents should die or be unable to provide care.

Designating a guardian in your will first involves carefully choosing the person who will be responsible for your children if you die. Many people consider close family members and friends when selecting a guardian, and narrow down a list of possibilities before ultimately choosing the person who will most effectively raise their children. The named guardian will be responsible for making the best decisions with regards to the minors’ health care, education, and diet, and may also be charged with instilling traditions, beliefs, and morals.

It is also important to consider whether your choice of guardian is likely to be continually able to provide for children physically and financially. For this reason, grandparents may not be the best choice. Although they have already proven that they can effectively raise children, the decrease in mobility and income that often comes with age might inadvertently make them insufficient guardians. People who already have children of their own often make more suitable guardians, provided that your children get along with theirs and can fit into an existing family structure.

After determining the best person to become guardian of your minor children, the responsibilities that this guardian would take on, your expectations for how your children are raised, and any legal processes that could be part of the guardianship should be discussed with them. The primary purpose of this meeting is to determine whether the person you would like to list as guardian agrees to the responsibility. You do not need to discuss every detail of the guardianship with the person, but you are encouraged to provide them with a list outlining your wishes for your children, and to let the person know that you want to list them as guardian of your minor children on your last will and testament.

The final step in designating someone as guardian is to update your will, if you already have one, or to include a provision in a will that is being drafted, naming your children as beneficiaries and specifying whomever you choose to become guardian in your absence. Formally including this person in your will ensures that they will be considered for guardianship, even if they are not related to you.

Another important aspect of many estate plans is to include provisions for continued financial support of loved ones upon your death or incapacity. There are several ways that this can be accomplished depending on your financial circumstances and family situation. During the estate planning process, your attorney will take these factors into consideration and recommend the best financial planning tools for your situation.

One way that people often allow for future financial support of their family members is via trusts. Trusts are agreements that enable a third party, called a trustee, to hold a person’s assets in the form of money, property, or finances for the person who creates the trust, the grantor, for the benefit of a party that the grantor names as beneficiary. Trusts are established for a myriad of reasons, including:

Upon one’s death, their estate goes through a process known as administration or probate. Estate administration can be formal, meaning it is supervised by the court and requires the assistance of counsel, or informal, where it is supervised by a Probate Registrar and can be conducted without an attorney. Estates with asset values of $50,000 or less may also be eligible for a Summary Settlement, a means of estate administration that does not require the assistance of counsel. Another option could be a Summary Assignment, a probate process designed to simplify the settlement of smaller estates that are found to be ineligible for Summary Settlements. In Wisconsin, certain smaller estates may also be eligible for asset transfers outside of the administration process via a Transfer by Affidavit. A Transfer by Affidavit is done via a document provided by the Wisconsin State Bar. As the person who initiates a Transfer by Affidavit has certain legal rights and responsibilities, it is important to consult with an estate planning attorney before completing any forms on behalf of an estate. An attorney can also help to determine which form of estate administration is best given a person’s asset holdings and family structure.

If the deceased person left a last will and testament, the probate process is conducted as follows. First, creditors and other interested parties (heirs, beneficiaries, and personal representatives) are notified of the death, and the existing will is examined to determine who the heirs and beneficiaries are. Then, an inventory is conducted on the estate, and all assets are gathered. After this has been done, the decedent’s outstanding state and federal tax obligations are satisfied, and any claims against the estate are paid off. Finally, parties listed in the person’s estate planning documents as heirs or beneficiaries receive their intended asset payouts, and the disposition of collected assets is recorded.

If the deceased person was intestate, meaning that no will was drafted on their behalf, their assets are distributed according to state intestacy succession laws. In Wisconsin, this means that the decedent’s assets are passed to their heirs. In some cases when there is no last will and testament, the decedent’s estate is divided per stirpes. Along these guidelines, the estate is divided at each generation, with each surviving heir receiving an equal share of the assets.

Funeral and associated costs represent a large portion of a person’s final expense. If not addressed in advance, these and other end-of-life expenses can cause families undo burden during an already stressful time. Fortunately, there are a number of ways to plan ahead for final expenses to reduce financial hardship to family members and ensure that your funeral and burial are carried out as you wish.

Funeral expenses comprise the myriad of services provided by a funeral home after one’s death. This includes embalming and preparing the body for viewing, the cost of the casket, using the facility for a funeral service, and transportation of the body to the funeral home and to the cemetery. These costs often fluctuate based on location, funeral home, and services desired. Fortunately, there are several ways to set aside money for one’s end-of-life expenses.

One such method is through a funeral trust, whereby a person (the trustor) allocates money intended for funeral and burial costs to a trustee. Funeral trusts allow trustors to prepay for their funeral and burial at the current cost for these services, and are not required to pay a price difference if the services paid for appreciate by the time of death. Funeral trusts are irrevocable, meaning that they cannot be modified or cancelled by the trustor during their lifetime. Once the trustor dies, the funds in the funeral trust immediately become available, as they are not subject to probate. After the decedent’s funeral and burial costs are settled, any money remaining in the trust account goes back to the estate or gets paid out to beneficiaries named in the trust. In addition to covering end-of-life costs, funeral trusts are often used during a person’s lifetime to shield assets from being spent down to qualify for Medicaid, as their irrevocability means that they are not considered countable assets under Medicaid’s guidelines.

Another technique used to lessen the financial burden of funeral and burial costs is a pre-need funeral contract. Unlike a trust, preneed contracts allow a person to prepay the funeral home directly for the services that will be provided after death. Pre-need contracts offer a high degree of flexibility. Individuals can specify the goods and services that they intend to use and are therefore paying for, and are also given the freedom to choose which funeral home will be used. Additionally, pre-need contracts allow people to pay for funeral goods and services at their price when the contract is established, and are not charged for any increase in costs that occurs after the prepayment.

Other people opt to cover their funeral and burial expenses via specialized insurance coverage. Burial insurance, also known as funeral insurance or final expense insurance is a type of whole life insurance policy that covers end-of-life expenses, including funeral and burial costs. There are 3 main types of burial insurance policy:

Burial insurance is intended to cover a person’s end-of-life costs, including medical bills, outstanding debts, funeral services, cremation and burial, or legal costs. There are no restrictions on how beneficiaries can use the insurance payout, giving them the freedom to direct the money where it will be most useful.

Estate administration is expensive. Fees for property maintenance and sale, legal fees, outstanding debts, taxes, and estate distribution accrue rapidly, and settling these obligations becomes the responsibility of the estate’s executor. When a deceased person’s estate enters probate, the executor can begin paying debts using the estate’s assets, but executors and other family members often incur cots prior to the start of the probate process. If this occurs, the decedent’s family becomes responsible for paying out-of-pocket, and may request reimbursement from these costs once probate begins. Executors can typically request reimbursement for the following:

In Wisconsin, executor fees make up 2% of the value of the estate, and executors can be compensated for accrued expenses up to 2% of net estate value less the value of distributions made to named beneficiaries. Estate administrators should be careful when accruing expenses on behalf of an estate, as their expenditures can always be challenged by beneficiaries. The probate court has jurisdiction over whether an executor can be reimbursed for any out-of-pocket expenses they incur, making it crucial to consult with an attorney prior to spending money for an estate, or using the estate assets to settle any debts. Probate attorneys can provide guidance on whether expenditures are necessary, what debts should be settled first, and what payments should be made out-of-pocket versus with the estate’s assets. They can also ensure that proper records of payments are being filed, meaning that reimbursement for estate expenses becomes more more likely and beneficiaries are less likely to object to costs incurred on behalf of the estate.