Legal Protection For Your Peace Of Mind

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:

  • Provide clear instructions for your care and and the administration of your finances if you should become incapacitated
  • Include provisions for disability income insurance, long-term care insurance, and life insurance
  • Name a guardian for the care and inheritance of any minor children
  • Arrange for the financial support of family members
  • Distribute your estate according to your wishes
  • Develop a plan to settle funeral and other debts
  • Minimize costs incurred for care and to administer your estate
  • Why Can't I Just Use A Fillable Form I Found Online To Draft My Will?

    There are a myriad of online sources that offer the ability to input personal information to generate estate planning documents without an attorney. Although these methods may seem attractive for their perceived convenience and lower cost, they often lack the level of customization required to properly incorporate all of your wishes or account for unforeseen circumstances. Additionally, these online sources may or may not be legitimate, and could return sub-par documents or unnecessary costs.

    While seeking counsel for estate planning can seem daunting or time-consuming at first, doing so can actually save time in the long run. Allowing a qualified attorney to assist with drafting estate planning documents ensures that each document is drafted correctly and properly incorporates all of your desires. While a small time commitment is required to create a proper estate plan, putting time in to memorialize your wishes provides long-term peace of mind for you and your loved ones.

    1. Instructions For Care And The Administration Of Finances

    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.

    2. Provisions For Disability Income Insurance, Long-term Care Insurance, And Life Insurance

    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:

    • Protection Policies work by providing a benefit, most often as a lump-sum payment, to one or more named beneficiaries after the occurrence of a single event, like the policyholder’s death. An example of this type of policy is term insurance.
    • Investment Policies exist to grow a policyholder’s capital as the policyholder makes payments on their premium. Whole life, universal life, and variable life policies are examples of investment 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.

    3. Naming A Guardian For The Care And Inheritance Of Minor Children

    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.

    4. Arranging For Financial Support Of Family Members

    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:

  • To limit spending by specifying how and when money can be used
  • To set aside money for specific purposes such as medical bills or college tuition
  • To safeguard finances for children or grandchildren until they are old enough to be responsible with them
  • To provide for the future costs of care of a spouse or disabled relative
  • To allow for donations to charities and other causes
  • To facilitate the transfer of assets between parties
  • There are five main types of trust:

    • Revocable Living Trust: This type of trust can be modified by you at any time after it is established. This allows you to maintain more control over your assets while you are living. Upon your death, the trust becomes irrevocable, which means that it can no longer be changed or cancelled. Revocable trusts can be established with a smaller dollar amount, at which point they are referred to as unfunded. Once the grantor adds substantial funds to the trust, it becomes funded, and the trustee begins to carry out their contracted duties. Alternatively, revocable trusts can be funded right when they are established, or funded only upon the grantor’s death upon direction from a pour-over will signed by the grantor. It is also possible to designate a revocable living trust as the beneficiary of one’s assets in order to fund it while avoiding probate. An estate planning attorney can help determine the correct time to fund your revocable trust. Naming family members as beneficiaries of a revocable living trust allows assets to be transferred to them upon your death. This often serves to shorten the time needed to administer your estate, and can sometimes make it possible to avoid probate altogether. Unlike the probate process, the administration of assets from a revocable living trust does not require the court’s involvement.
    • Irrevocable Trust: These trusts cannot be modified or changed after their creation. Once a person places assets in an irrevocable trust to fund it, they immediately give up control of those assets. Irrevocable trusts come with their own set of benefits. They act as a receptacle for an estate’s taxable assets, lowering tax liability for grantors with large estates. Irrevocable trusts can also protect grantors’ assets from seizures by creditors and to satisfy court actions. Finally, this type of trust is commonly used in estate planning to ensure financial security for those with disabilities. People who receive income from Social Security Disability and other assistance programs can be named as beneficiaries on irrevocable trusts without losing government benefits due to additional income.
    • Testamentary Trust: This type of trust is created through a person’s last will and testament, and is contained within the will itself. This means that the trust is not explicitly created and funded until the grantor’s death. Most often, testamentary trusts are created solely for the benefit of someone who will receive a larger sum of money from the grantor’s estate, such as a child, grandchild, or other relative. Funding testamentary trusts tends to be simple; the trusts are written into a will when it is created, and are funded through a life insurance policy that pays out when the policyholder dies. A testamentary will is subject to its own terms, so it can be created and administered as the grantor wishes. The grantor can also choose to modify or cancel the trust during their lifetime through modification of the will. Testamentary trusts allow for the transfer of assets from one generation to another. When the creator of the trust dies, the trust goes through the probate process with the estate. During probate, assets are administered to named beneficiaries according to the terms of the trust set forth in the last will and testament.
    • Marital Trust: Intended to provide financial support to a surviving spouse, marital trusts can also be used to transfer assets to a grantor’s children or grandchildren. Marital trusts allow one’s assets to pass to their surviving spouse free of taxes, and also protect the assets from creditors. The grantor funds the trust with an initial principal payment, plus any additional assets they choose to place in the trust for future benefit of their spouse, children, or grandchildren. The amount in the trust upon the grantor’s death is used to maintain the survivor’s financial stability. The surviving spouse can then use the same marital trust to pass on additional assets to the couple’s children and grandchildren upon the surviving spouse’s death. Marital trusts are often used by couples with high net worth estates because they allow assets to be transferred to beneficiaries tax free. They also afford the grantor control over how frequently and in what amounts money may be withdrawn from the trust. This makes it possible to provide longer-term support for beneficiaries if desired, and also prevents the trust’s funds from being wasted due to financial irresponsibility.
    • Bypass Trust: Also called a AB Trusts or Credit Shelter Trusts, bypass trusts enable affluent married couples to receive maximum exemptions on assessed estate taxes. This method involves creating two separate trusts, one for each person, after one spouse dies. The deceased spouse’s portion of the estate, up to an applicable exclusion amount, is put into one of the trusts, known as the bypass trust. This trust is irrevocable, and passes on to beneficiaries like the couple’s children or grandchildren. The surviving spouse’s portion of the estate is placed into the other trust and is used for that spouse’s expenses for the rest of their lifetime. Sometimes, it is also possible to put the deceased spouse’s assets that exceed the applicable exclusion amount into this second trust. Upon the surviving spouse’s death, this second trust also passes to named beneficiaries. Separate people can be named as beneficiaries of each trust if the grantors desire, making it feasible for couples with sufficient assets to provide for multiple generations. Bypass trusts are only used in certain circumstances, and are often expensive to create. The IRS regulates the creation and use of this type of trust, making it vital to consult with an estate planning attorney to determine whether bypass trusts are plausible for your financial situation, and to make sure that they are established and administered correctly.

    5. Distributing Your Estate

    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.

    6. Developing A Plan To Settle Funeral Costs and Other Debts

    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:

    • Simplified issue policies do not require a medical exam, but insurers may ask a series of health questions to determine eligibility for coverage. People can be ineligible for simplified issue policies due to risky behavior, pre-existing conditions, or smoking.
    • Guaranteed issue coverage does not require a person to answer questions or undergo a medical exam to determine coverage eligibility. Because of this, it is considered more risky for the insurer, and therefore costs more for coverage. Guaranteed issue policies often have modified benefits provisions. This means that the full death benefit, or payout to beneficiaries, isn’t available until the policy has been in effect for a period of time. If the insured person should die before the end of this waiting period, beneficiaries only receive a partial payout, unless the death is accidental.
    • Pre-need insurance policies involves contracts between an insured person and a funeral service provider. The insured person pre-selects products and services that they would like included in their funeral or burial, and upon their death the contracted funeral provider receives the policy’s payout.

    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.

    7. Minimizing Costs Incurred For Care And Estate Administration

    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:

  • Funeral and burial preparation costs, cremation, costs for a casket or urn, cemetery fees, and obituary publication fees. Some funeral homes will wait until probate begins to send payment invoices, while others may require that payments be made even before probate begins, hence the need for reimbursement. Funeral and burial costs should be amongst the first debts to be paid.
  • Estate administration costs, such as filing fees, court costs, and other expenses associated with probate
  • Property maintenance and sale fees, including costs associated with hiring appraisers, Realtors, and other professionals
  • Costs incurred by the executor of the estate in fulfilling their legal obligations, including transportation costs, mileage reimbursement, and charges associated with obtaining death certificates
  • Legal and attorney’s fees incurred during the estate administration process, and reasonable legal fees in the event that the estate is sued
  • Costs associated with caring for or finding arrangements for the decedent’s pets
  • 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.