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Sometimes clients want to avoid probate so badly they overuse beneficiary designations and inadvertently destroy their wishes. Realizing the impact beneficiary designations have on your goals and plan are important considerations we discuss with our clients.
Follow this link to a good article discussing potential pitfalls.
A recent case in the news, namely the handwritten will of music superstar Aretha Franklin, raises the question of whether or not a person living in Wisconsin can do a handwritten will. In the Franklin case, a jury in Michigan had ruled that a handwritten note from the late singer was a valid will.
In 2019, Aretha Franklin’s niece had found three handwritten documents scattered about the singer’s home near Detroit. One, dated 2014 was found underneath the couch cushion. There was another, earlier note from 2010, which had been found under lock and key in the singer’s home. And finally, a more recent will which changed some of the language in the earlier documents.
Apparently, the documents themselves were difficult to read; but the jury concluded that the 2014 note had her name signed at the bottom, with a smiley face written inside the letter “A”, which was apparently typical of her actual signature.
The Franklin case deals with what is known as a “holographic” will, meaning that it is handwritten by the maker, but does not require witnesses. These Franklin wills also highlight the problems associated with these holographic wills. Such wills are valid in some states, but not in Wisconsin. In Wisconsin, a handwritten will may be deemed valid, but it still requires the date of the will and signature of the maker, as well as signing in front of two disinterested witnesses, who also simultaneously sign the document. These safeguards are viewed as essential to ensure the validity of the Last Will and Testament. Even better would be to have the will drafted by a competent attorney and executed with the statutory formalities.
Here at Grosskopf & Burch, we have experience in drafting wills, trusts, and other estate planning documents, and also have experience making sure they are properly drafted, executed, witnessed, and later filed with the Court if necessary.
What is an Advance Directive?
Advance Directive is an umbrella term used for documents you create that either express your wishes regarding health care decisions or name someone who is able to speak for you if you cannot express your wishes yourself. If you do not have someone who can speak for you, a court-appointed guardian will be needed.
In Wisconsin, there are three main documents commonly referred to as Advance Directives: Health Care Power of Attorney, Living Will (officially called a Declaration to Health Care Professionals), and a Do-Not-Resuscitate Order (a DNR).
A Health Care Power of Attorney is an extremely important document to have. In your Health Care Power of Attorney, you appoint someone (your “Agent”) to make medical decisions for you if you are unable to make them on your own. Care should be taken in selecting your Agent, as they will be speaking for you after you have been declared incapacitated and unable to make medical decisions.
A Living Will (or Declaration to Health Care Professionals) is a document that expresses your wishes related to life sustaining procedures if you are in a persistent vegetative state or have a terminal condition. It is important to note that this document does not replace your Health Care Power of Attorney. Your Agent will always override your Living Will when there is a contradiction between the two. This is why we highly recommend having conversations with your Agent about your end of life and other medical wishes.
A Do-Not-Resuscitate Order (a DNR) is only issued by your doctor. You must qualify to have the DNR based on your current medical condition. The DNR is a written document you sign that becomes part of your medical record.
Advance Directives should be part of your comprehensive estate plan. Without a Health Care Power of Attorney, your loved ones will be forced to have the court appoint a guardian for you should you become incapacitated. Planning ahead will save you and your loved ones the time, expense, and emotional toll associated with a guardianship appointment.
Please contact us to discuss your Advance Directive needs.
May has been designated as Elder Law Month by the National Academy of Elder Law Attorneys. Both Peter E. Grosskopf and Aric D. Burch are members of the National Academy of Elder Law Attorneys and invite you to learn more about the practice of Elder Law. Elder Law has changed over the years. It used to be thought of as simply dealing with preparation of documents for our seniors, such as Financial Powers of Attorney or Healthcare Powers of Attorney. Since that time, it has become a larger part of the legal landscape. At a time when Estate and Inheritance Taxes have become nonissues for a great many people across the country, the legal issues facing our elderly have increased many times over. For example, “Elder Law” can include many such things, including:
That is why it is important to make sure that you are dealing with a qualified Elder Law Attorney such as the attorneys here at Grosskopf & Burch. We look forward to meeting with you and assisting you with your needs, now and in the future.
For more information about the advantages of hiring an Elder Law Attorney, please see the article "Why Hire anwww.elderlawanswers.com/why-hire-an-elder-law-attorney-19642 Elder Law Attorney?"
Whether your spouse has just passed away or you have lost your mom or dad, the emotional trauma of losing a loved one often comes with a bewildering array of financial and legal issues demanding attention. It can be difficult enough for family members to handle the emotional trauma of a death, let alone taking the steps necessary to get these matters in order.
Often times, you must go through the probate process. If there is no estate because there is a trust, and you are named as the trustee, the process will be different based on the trust document's specific instructions. In that case, it is recommended you meet with an attorney to make sure you know your obligations and liabilities as trustee.
I want to focus on probate for this post. If you are the personal representative of the will, you first should secure the tangible personal property, meaning anything you can touch such as silverware, dishes, furniture or artwork. Then, take your time while bills need to be paid. They can usually wait a week or two without any real repercussions. It is more important that you and your family have time to grieve.
When you are ready, you should meet with us to review the steps necessary to administer the will and go through probate, which may include
4 Reasons to Consider a Custom Financial Power of Attorney
We all want to save time and money when possible. So, when clients ask me if pulling a generic power of attorney form off the web, like the standard Wisconsin power of attorney for finances, will work, I understand the motivation to put a crucial document in place quickly and economically. A generic form is valid and will give your agent certain powers to manage your finances. However, they do have limitations to be aware of.
Often a generic form will lack provisions that may be necessary for making complex financial decisions to ensure your plan is carried out. We often face navigating more complex financial situations when planning for Medicaid. You should consider the following four factors before using a generic form.
Nearly as important as creating the trust is the concept of "funding the trust." The trust itself is the "vehicle" for your assets; your assets are the "passengers" and must get into the vehicle in order for the trust to do its job properly. If you don’t properly fund the trust, your assets may have to go through Probate, simply to get into the trust! That can defeat some of the purposes for creating a trust.
For Real Estate, this means that deeds need to be prepared and properly executed for transferring ownership of real estate into the trust. Some people prefer not to record the deeds during their lifetime for a variety of reasons. This is acceptable, but we do recommend that the deeds be prepared and be in recordable form. However, sometimes original documents are misplaced or accidentally destroyed; keep this in mind. For vehicles, the same is true. Titles should be prepared in assignable form so that they can be immediately transferred to the trust. Again, some people, for convenience, prefer not to make the actual conveyance through the motor vehicle department during their life.
You should be sure to have your Bank Accounts, Stocks and Bonds, properly transferred so that they are in your trust. Most bankers and stockbrokers are familiar with this process and can assist you in making these transfers, as appropriate.
In addition to transferring assets at the time of creating the trust, it is important that any assets received later should likewise be transferred, or funded, into the trust. For example, many people will change the vehicle that they own, many times. It is important that not only the first car that you have, or car that you own at the time of creating the trust, be placed in the trust, but likewise that any replacement vehicles be properly titled or funded into the trust. So should you receive assets from some other source (gift, inheritance, earnings, etc.) they should likewise be funded or titled in the trust.
The proper title for any of these assets would be, for example: "John A. and Jane A. Smith, trustees of the John A. & Jane A. Smith Trust dated December 31, 20XX, or its successor trustee."
As described above, the Marital Property Agreement, if appropriate, can fund assets into the Trust, at either the death of the first spouse, or the second spouse. The advantage of funding by way of the Marital Property Agreement, verses a Pour Over Will, is that the Marital Property Agreement does not have to go through probate, whereas a Will does.
If you have questions regarding your Trust or any elements of your Estate Plan, please contact our office.
This post continues our series about common problems or issues that arise in the context of Estate Planning. Part one can be found here.
In this post, I want to discuss two common, related problems that occur far more frequently than they should. This is the use or misuse of the Wisconsin Statutory Health Care Power of Attorney and Durable Power of Attorney for finances.
From the attorney’s perspective, what often will happen is that we will meet with client, go through a thorough estate analysis, raise questions and get answers regarding the individual or couple’s choice of agents under both Health Care Power of Attorney as well as the Financial Power of Attorney. Sometimes these discussions can be fairly brief, but in many cases, it can be quite thorough.
At the conclusion and as part of the estate planning process, we draft the Health Care Power of Attorney and Financial Power of Attorney, send it to the client to review; they approve it, and eventually come back to the office to sign and finalize. We will then take care of contacting the agents, to make sure they are aware that they have been named as agents, have them sign the proper forms acknowledging that they are aware that they are agents, and proceed to finish the Estate Plan.
However, we later find that in an emergency, or sometimes not even in an emergency, the client winds up in a doctor’s office or the hospital and some well-meaning assistant, social worker, nurse, etc., will thrust a Health Care Power of Attorney in front of the individual, and say let’s fill this out and sign here. The client does.
What they have unwittingly done is revoke the Health Care Power of Attorney that was painstakingly produced at the attorney’s office. They may have different choices of agents and more commonly than not, they leave large blanks in the document, because they never discussed this.
Even worse, with the Statutory Financial Power of Attorney, much the same thing can happen. Except now it is not at a hospital or clinic, but rather at the insurance agent’s office or a financial advisor, possibly a bank, and someone produces the blank Wisconsin Statutory Power of Attorney, and again it gets quickly signed and unwittingly revokes the one produced at the attorney’s office.
To make this even worse, in my own opinion, the Statutory Financial Power of Attorney in Wisconsin is largely a useless document, because I have seen far too many cases where third parties, such as banks, insurance companies, or other financial institutions, will not accept the Wisconsin Statutory Power of Attorney, and now you have a document that is worthless, except that it revoked the earlier one which likely would have worked.
Then, as if this were not bad enough, sometimes these freely available Statutory Financial Powers of Attorney are used by unscrupulous individuals, who will have a parent who may be vulnerable to influence or threats or intimidation, where they sign such a document, authorizing the unscrupulous person to have access to their accounts, or even to gift money in the accounts to themselves. If you think it doesn’t happen here, you are wrong. There have been numerous cases right here in the Chippewa Valley where elderly folks have been cheated out of hundreds of thousands of dollars by unscrupulous agents who employ these same tactics.
With careful Medicaid planning, you may be able to preserve some of your estate for your children or other heirs while meeting Medicaid's low asset limit.
The problem with transferring assets is that you have given them away. You no longer control them, and even a trusted child or other relative may lose them. A safer approach is to put them in an irrevocable trust. A trust is a legal entity under which one person -- the "trustee" -- holds legal title to property for the benefit of others -- the "beneficiaries." The trustee must follow the rules provided in the trust instrument. Whether trust assets are counted against Medicaid's resource limits depends on the terms of the trust and who created it.
An "irrevocable" trust is one that cannot be changed after it has been created. In most cases, this type of trust is drafted so that the income is payable to you (the person establishing the trust, called the "grantor") for life, and the principal cannot be applied to benefit you or your spouse. At your death the principal is paid to your heirs. This way, the funds in the trust are protected and you can use the income for your living expenses. For Medicaid purposes, the principal in such trusts is not counted as a resource, provided the trustee cannot pay it to you or your spouse for either of your benefits. However, if you do move to a nursing home, the trust income will have to go to the nursing home.
You should be aware of the drawbacks to such an arrangement. It is very rigid, so you cannot gain access to the trust funds even if you need them for some other purpose. For this reason, you should always leave an ample cushion of ready funds outside the trust.
You may also choose to place property in a trust from which even payments of income to you or your spouse cannot be made. Instead, the trust may be set up for the benefit of your children, or others. These beneficiaries may, at their discretion, return the favor by using the property for your benefit if necessary. However, there is no legal requirement that they do so.
One advantage of these trusts is that if they contain property that has increased in value, such as real estate or stock, you (the grantor) can retain a "special testamentary power of appointment" so that the beneficiaries receive the property with a step-up in basis at your death. This will also prevent the need to file a gift tax return upon the funding of the trust.
Remember, funding an irrevocable trust within the five years prior to applying for Medicaid (the "look-back period") may result in a period of ineligibility. The actual period of ineligibility depends on the amount transferred to the trust.
If you have questions regarding your Trust or any elements of your Estate Plan, please contact our office .
This is the first post in a series of posts looking at common problems or issues that arise in the context of Estate Planning but looking at them from different perspectives.
In this first post, I want to address a mistake or problem that commonly occurs, when the parent or parents, add one of their children as a joint owner on their bank accounts.
I have seen this many times over the years, where an individual or couple may have a perfectly good estate plan, wonderfully drafted, properly executed, and then they ruin it by going to the bank or banks, and adding one of their children as a joint owner on their accounts. Often, when asked about it, I am told that the banker recommended it for one of a variety of reasons: either to avoid probate, or to assure that money is immediately available to pay bills and expenses, or because that person was named as the agent under Power of Attorney anyway.
So what’s the problem with this? First of all, under the law, after death, the money in that joint account becomes the property of that surviving joint owner. It is what I call the “Mom must have liked me best” problem. And sometimes that son or daughter will share the money with the other family members, but in my experience, most times they do not.
Secondly, during the lifetime of the parents, even while they are alive, again under Wisconsin Statutes, that joint owner has full and unrestricted access and they can remove any or all of the money with very little recourse to try to get it back.
I was successful in recouping money under such circumstance one time, where a son had removed a substantial amount of money from his mother’s account while his mother was alive. We were successful largely due to the fact that the banker who had set up the joint account testified in court that the mother had explained that she only wanted the son to get this money after her death, not during her lifetime. Even assuming that to be accurate, one questions why the banker didn’t suggest a Payable on Death Beneficiary designation, rather than the joint owner designation. But in any event, we were successful in that case in getting it back, but in most cases, you might not find a banker who handled that particular transaction, or even if you can locate him or her, they may not have any memory, notes or other records about why the joint ownership was selected.
Third, even if that surviving joint owner does share with the rest of the family, they often won’t use it for the intended purpose of paying the bills and expenses, but rather they will have the bills and expenses paid out of the estate and simply pocket the money.
Finally, to make matters worse, the parents might do this on most if not all of their accounts, so that their finely tuned Estate Plan is turned upside down, because the joint ownership designations take precedence over the will, trust, or other Estate Planning documents.
In coming posts, we will talk about other mistakes that people make that can ruin a perfectly fine Estate Plan.
Attorney Aric Burch
The blog posts are based upon the law at the time the post is written. Laws change, so you should not rely on this blog for legal advice. In addition, this blog is not intended to be legal advice, and you should not act upon any information on this blog without discussing your specific situation with your attorney.