Wisconsin Estate Planning

Want to be in Charge of Your Own Funeral?

For people who like to plan and don’t trust anyone else to get the details right, estate planning and even funeral planning can provide peace of mind.

If you watched the funeral of the former President George H. W. Bush, you may have noticed how smoothly everything went. Every detail was planned out, with nothing left to chance. Few of us have such a large funeral, but we will all have some kind of funeral, and planning in advance can make everything easier for those we leave behind.

Hometown Life’s article, “Planning your funeral can help ease loved ones’ burden,“ explains that the first issue when it comes to planning for when we’ll no longer be here, is to make certain we have an up-to-date estate plan. You may want a will or trust, and you should ask your estate planning attorney to help you decide and keep it current. Remember that a variety of family events can impact your estate plan. If you don’t have an estate plan, you need to get one!

When preparing your estate plan, you must address certain realities you may not want to deal with. However, just kicking the can down the road or doing nothing can create significant issues for your family.

Another issue to consider is whether to pre-plan your funeral. Death always occurs at the wrong time, and it’s always emotional and stressful for those left behind.

In many cases, it makes sense to do some planning for your funeral. Perhaps it’s nothing more than selecting the funeral home you’d like and also the casket. That can be a big help to your family, because in the midst of grieving and not wanting to look cheap, many families overpay for a funeral. If you pre-plan your funeral and choose the type of casket and other services you want ahead of time, you’re eliminating those decisions from your family and most likely saving your family a significant amount of money.

If you do ahead and pre-plan your funeral, here a few other issues you should consider:

• Do you want to be buried? If so, where?
• If you want to be cremated, what do you want to happen to your ashes?
• What type of memorial service do you want (if any)?

Details about funerals are not typically incorporated into a will. However, you can write a letter to your family and explain what you want, what arrangements you have made in advance and any contact information the family may need for either the funeral home, the cemetery, etc.

Reference: Hometown Life (December 12, 2018) “Planning your funeral can help ease loved ones’ burden“

Millennials Need an Estate Plan Too

Live long enough, and you learn that life can change in a heartbeat. Young adults don’t always know this, but they need to have an estate plan as much as older people.

Whether you are a Baby Boomer or a millennial, you need to have an estate plan. With the help of a good estate planning attorney, someone in their 20s and 30s can get their estate plan done easily enough. Even if they think they’re immortal, says Wealth Advisor in, “Estate Planning Isn’t Only for the Old and Wealthy,” young adults need estate plans.

First, people can draft a will to provide directions regarding what happens to their assets, such as who will inherit both financial and personal items. Virtual assets like social media accounts should also be included. You should make a list of usernames and passwords for all your accounts and be sure that a trusted relative or friend has access.

Another important part of estate planning is to designate the beneficiaries for all company-sponsored life insurance and 401(k) plans to avoid probate issues. You can also set up a payable-on-death account from your bank.

As part of estate planning, you should also name a healthcare proxy and a general durable power of attorney. These two documents allow your trusted agent to make medical and financial decisions in the event you’re incapacitated. If you want to give your proxy specific instructions, create an advance directive, known as a living will.

As you work through these actions with your estate planning attorney, you’ll see that estate planning is not just for the old and wealthy.

It can bring you peace of mind and provide clarity to your loved ones and family, if you should pass away unexpectedly.

Make 2019 the year that you have an estate plan created. Think of it as a gift for yourself and for your loved ones.

Reference: Wealth Advisor (December 20, 2018) “Estate Planning Isn’t Only for the Old and Wealthy”

The Biggest Retirement Risks? The Ones You Don’t Know About

You know that health care, taxes and not saving enough for retirement can derail retirement. However, what about the risks you never saw coming?

Consider these three risks to retirement says Wealth Advisor in the article, “The Three Risks To Prepare For In Retirement.” They are a little less obvious than the ones you usually worry about, but no less dangerous for your later years.

1. Complacency. Don't let yourself fall victim to complacency risk. This involves feeling smug or uncritical satisfaction with your own achievements. In this case, it’s thinking that you have your retirement plan all set and forgetting about it.

Instead, conduct a retirement inspection to protect against this risk of complacency. An easy way to review your retirement, is by using a retirement income calculator tool. You can input your information, including the amount that you’re saving annually, and the age you plan to retire. The calculator tool will give you a rough estimate of your likelihood of reaching your goal. You want to have a cushion for unforeseen expenses, like medical costs and long-term care. Therefore, if the results look “just okay,” dig deeper and figure out a way to save more.

2. Emotional. This type of risk has the tendency to be highest during periods of market extremes. If you let your emotions influence your investing strategy, it can really damage your retirement prospects.

However, with an asset-allocation strategy, you can manage this risk by setting it and putting it in writing. Many asset-allocation tools leverage financial experts to explain how to choose investments that align with your risk tolerance, time horizon and financial goals.

3. Longevity. Planning for retirement can be complex, and there are many components that must be considered. If you underestimate how long you might live, you might outlive your savings.

However, you can be more precise with an actuaries longevity illustrator. This tool is designed to provide you with perspective on your longevity risk—the uncertainty of how long you and your spouse/partner might live. It will let you appreciate the risks of outliving your economic resources.

There’s one more risk that can trip you up, and put your family and surviving spouse into a spin: not having an estate plan. You need an estate plan, including a will, Power of Attorney, health care proxy and other documents, depending up on your personal and business situation. An estate plan protects you when you are incapacitated, whether that’s a temporary or permanent state and protects your family when you have passed. Start the year off right with a visit to your estate planning attorney.

Reference: Wealth Advisor (December 20, 2018) “The Three Risks To Prepare For In Retirement”

 

The Sooner You Complete Your Estate Plan, The Better

Among the top three reasons for an estate plan are to make sure that your assets are distributed according to your wishes, helping your loved ones from having to pay more taxes than necessary and if possible, avoiding having your estate go through probate.

When there are minor children or family members with special needs, it’s critical to have an estate plan, advises the Capital Press in the article, “Ag Finance: Why you need to do estate planning.”

While it’s likely that most adult children can work things out, even if it’s costly and time-consuming in probate, minor young children need protection. Wills are frequently written, so the estate goes to the child when he reaches age 18. However, few teens can manage big property at that age. A trust can help, by directing that the property will be held for him by a trustee or executor until a set age, like 25 or 30.

Probate is the default process to administer an estate after someone’s death, when a will or other documents are presented in court and a personal representative is appointed to manage it. It also gives creditors a chance to present claims for money owed to them. Distribution of assets will occur only after all proper notices have been issued and all outstanding bills have been paid.

Probate can be expensive. However, wise estate planning can help most families avoid this and ensure the transition of wealth and property in a smooth manner. Talk to an experienced estate planning attorney about establishing a trust. A living trust can be amended or revoked at any time, if circumstances change.

With a trust, it makes it easier to avoid probate because nothing’s in the individuals name and the property can transition to the beneficiaries without having to go to court. Living trusts also help in the event of incapacity or a disease, like Alzheimer’s, to avoid conservatorship (guardianship of an adult who loses capacity).

Distributing an estate that has an abundance of land, but not necessarily liquid assets, requires the experience of an estate planning attorney who routinely works with farm families. When some children work on the farm and others do not, it can become a bit tricky. An experienced estate planning attorney can help you and your family work through the process to ensure that your heirs are treated fairly.

Reference: Capital Press (December 20, 2018) “Ag Finance: Why you need to do estate planning”

What If I Don’t Want My Inheritance?

It sounds crazy, but there are many good reasons why someone would not want to receive an inheritance. Making sure that you are not forced to receive assets must be done very carefully, so you’ll need an estate planning attorney on your team.

An estate waiver, also known as an inheritance waiver or disclaimer, releases a person from the right to claim assets in the event of another person’s death. You’ll need such a waiver, if you don’t want to be stuck with state or federal taxes based on the value of the estate, or you don’t want a piece of real estate that is located far from where you live. Another reason for not wanting an inheritance: you may be in the middle of litigation or a divorce and the last thing you want is to increase your assets.

Whatever the reason, this article from Investopedia, “How Inheritance and Estate Tax Waivers Work,” provides some tips to consider when deciding on an inheritance or estate waiver release.

Waiver Form Language. The waiver must have specific words to be considered complete and binding. The heir must state her name, along with the name of the deceased individual. A general waiver of all benefits as to the estate of the decedent is appropriate. However, if any specific items were personally designated to the heir, or if the heir has an entitlement to any items, a waiver should list the specific items being waived. The waiver also should state that the decision is being made freely and without coercion to be legally binding.

The Legal Process. Every state has its own laws that govern wills and estates. As a result, each state has a different set of rules relating to waiving an inheritance or estate. However, generally, the disclaimer must be a written document that is filed with the court having jurisdiction over the estate. The executor of the will must get a copy of the disclaimer. In order for the waiver to be valid, the heir can’t receive compensation or other benefits for agreeing to revoke rights for certain items.

Timing and Taxes. A waiver is typically due up to nine months after the decedent's death. If the deadline passes for filing, the heir must take possession of the distributed assets. Any federal and state estate or inheritance taxes are also due nine months after the date of death. The taxes are calculated based on the taxable estate value, and these taxes must be paid before assets are distributed to the beneficiaries.

Legal Consequences of Waiving Rights. After filing a waiver, the estate’s personal representative has complete responsibility for the distribution of assets. A waiver can’t direct that another person receives the waived assets.

An estate planning attorney from your state will know the laws governing how waivers work. The language or actions required vary from state to state, and some laws are based on the relationship between the heir and the deceased. Eighteen states have restrictions on the use of waivers, and in many cases, these are related to the date of death. Your estate planning attorney will help guide you through the process.

Reference: Investopedia (October 1, 2018) “How Inheritance and Estate Tax Waivers Work”

When Livestock is Part of Your Estate

Do your heirs understand the history and value of your livestock? If not, start educating them now, including discussing how they fit into your estate plan.

Assets like the family home and land are what most ranchers and farmers think about, when they are talking with their estate planning attorney about dividing assets among their children. However, an estate plan for a ranch family or farmer has to address more than whether or not the on-farm child gets the first option on buying farm assets.

A Beef Magazine article asks, “Are your livestock covered in your estate plan?” The article notes that this “first chance” needs to cover a wide range of assets like equipment, vehicles, personal items and livestock.

Maintaining an itemized list of these assets can help your family recognize their true value. This is especially important, when you consider the value of livestock. When you take the herd to the sale barn, they’ll all bring commercial price. However, do your heirs understand how much you paid for that purebred herd sire five years ago? How about the semen in the tank? Seedstock producers or commercial producers who paid premiums for specific animals, know that the value of these animals isn’t as obvious as the current market price at the auction barn. Therefore, the way in which these cattle should be handled after the current operator dies, needs to be included in the estate plan.

Many ranchers and farmers are looking at livestock trusts. These are written declarations of how the farm owner would like livestock to be cared for after the owner’s death, along with resources and instructions for handling such livestock.  Livestock trusts are particularly important, if a rancher’s heirs aren’t involved in the ranch operations. The trust can detail the cattle’s veterinarian and nutritionist contact info, as well as preparations for who will feed the livestock and for how long, if the rancher dies. It can also discuss what happens, if the death is during or immediately prior to calving season or at weaning, as well as how the hired hand is paid.

In addition, if the heirs elect to sell the livestock, the trust can instruct them on the best way to market these valuable cattle to ensure the best price, along with information about a trucking company to haul the livestock and a breed representative who could work with perspective buyers. The sale of semen and embryos must also be addressed.

The ensure that these assets are valued properly, share your knowledge about the livestock. Speak with an estate planning attorney, and consider bringing family members to meet with the estate planning attorney to make sure everyone understands your plan for the future.

Reference: Beef Magazine (December 14, 2018) “Are your livestock covered in your estate plan?”

Retirement is Ten Years Away: What You Need to Do Right Now

People start thinking in more concrete terms about retirement, when the concept becomes a reality, often about ten years out. That’s when the planning has to get real.

Both football and retirement planning have a “red zone,” where the game is won or lost, says Investopedia in a recent article, “5 Things to Do 10 Years from Retirement.” For NFL teams, the red zone is 20 yards from the goal line, and in retirement, the red zone starts ten years from your targeted retirement date. If you’re approaching the retirement red zone, it’s time to huddle up!

1. Figure Out What Retirement Means to You. Before you start making financial plans, be clear on what retirement means to you. It may mean working 40 hours instead of 60 or never working another day for the rest of your life. Whatever you like, it's important to have some idea of what you want to do every day. From there, you can start to shape a financial plan to support your retirement vision.
2. Determine How Much Money You’ll Spend Every Month. Once you've defined what your retirement will look like, you can begin planning for it financially. First, determine how much you'll be spending every month on your retirement budget. Many pre-retirees just don’t know how much they need to live on a monthly basis. An accurate retirement plan will be based on your monthly household expenses.
3. Examine Your Sources of Income in Retirement. While looking at your spending, be aware of all the types of income you'll have during retirement, such as Social Security, a pension, a 401(k) or an IRA. There are choices that will have to be made, if you have a pension. The timing for collecting Social Security payments is also important.
4. Rework Your Investment Strategy. The way you’ve been investing for the past 30 years, is not how you should invest for the next 30. Younger people focus on accumulation, but when you’re in or nearing retirement, you need to concentrate on income and keeping pace with inflation. Diversification is important, but what's more powerful than diversification is asset allocation.
5. Consider Hiring a Financial Professional. You can do-it-yourself, since there are many inexpensive funds and research information available. However, there's much more that goes into creating a comprehensive retirement plan than just investments. Your retirement plan should address your need for income, estate planning, survivorship planning, insurance needs, business continuation, inflation, and other points.

To continue the analogy, retirement success in the red zone means good planning, including having an estate plan in place. If you fumble the ball at this point, your retirement won’t be celebrated with a Gatorade shower. Start planning now, so you can enjoy the victory.

Reference: Investopedia (September 7, 2018) “5 Things to Do 10 Years from Retirement”

Think Differently About Estate Planning

If someone wanted to give you a gift that would make your life less stressful and help you save a lot of money and time, we bet you’d welcome it.

Consider starting a new tradition with your family, suggests the Brainerd (MN) Dispatch in the article “Give the gift of estate planning to loved ones this holiday season.” When you devote the time and resources to making sure that you have an estate plan prepared, you’ve given your family the gift of less stress and guilt. They’ll have all the proper legal documents to avoid a host of problems.

When you pass away, your family will be dealing with stress, grief and emotional hardships. If you fail to create a will or other legal documentation, the process for your family to access your assets will be long and expensive. The probate process can take many months and money to distribute assets to your spouse, children, and grandchildren.

Without a will, there's also no guarantee that your assets will pass as you intended. For example, if you have a stepchild you reared as your own or aren’t married but in a serious relationship when you die, then many states do not recognize that stepchild or your significant other. These individuals may not get any of your assets, because there's no legal documentation linking them to your estate.

Lifetime giving is a great way to see that the money you are donating, goes to good use. There are also tax deductions that go along with these gifts. You may not consider charitable giving as a part of your estate plan right now but discussing how much and when to give with your estate planning attorney, can decrease your taxable estate. That could result in more money for your family in the future.

If you do plan to leave a donation after you're gone, there are several options to accomplish this. You can create a trust, scholarship fund, or donor advised fund to leave a legacy of giving to the causes you support. Because there are so many options available, your estate planning attorney and financial advisors are your best resources to help you decide which course of action will fit your circumstances and best meet your needs.

Yes, the estate planning process does require some time, and some decisions have to be made. However, that’s no different than making decisions when planning a vacation. Your estate planning attorney will guide you through the planning process, make sure that legal documents are correctly prepared and give you and your family peace of mind. That’s a worthwhile gift.

Reference: Brainerd (MN) Dispatch (December 8, 2018) “Give the gift of estate planning to loved ones this holiday season”

When the Diagnosis is Alzheimer’s, What Should You Do?

People who receive a diagnosis of Alzheimer’s disease, an incurable type of dementia, are overwhelmed by hopelessness. But two authors want to change that.

The authors of a new book, “Better Living With Dementia,” say it’s time to break the “cycle of despair” that accompanies an Alzheimer’s diagnosis. The Washington Post discussed this new perspective with the well-credentialed authors in a recent article, “Learning To Live Well With Dementia.”

Author Laura Gitlin is dean of the College of Nursing and Health Professions at Drexel University and Chair of the Department of Health and Human Services advisory council on Alzheimer’s Research, Care and Human Services. Her co-author is Nancy Hodgson, the Anthony Buividas endowed term chair in gerontology at the University of Pennsylvania.

These leading experts on care for people with cognitive impairment, say that while there’s no cure for Alzheimer’s, there are many things that can be done to make life better for people with dementia and their caregivers.

At a minimum, people newly diagnosed with dementia should consult with the Alzheimer’s Association, the Lewy Body Dementia Association, the Association for Frontotemporal Degeneration and the government’s website, alzheimers.gov. These are all great sources of information and potential assistance. Individuals and families should also get referrals to elder law attorneys, financial planners, adult day centers, respite services, caregiver support services and other resources.

About 70% of people with Alzheimer’s and other types of dementia live at home. Few professionals ask about patients’ living conditions, even though these environments play a major role in shaping people’s safety and well-being. It’s not uncommon for professionals to fail to let patients know what to expect as dementia progresses. This can fosters isolation, which worsens their sense of despair.

Even small steps could help improve quality of life. For example, give focused attention to the home setting itself. Hire an occupational therapist, ideally with expertise in dementia, to do a home assessment and recommend modifications. It’s also important to know what to expect. Individuals with dementia and their caregivers will find their needs changing as their illness progresses.

Initially, the most critical need may be getting a reliable diagnosis and understanding more about the type of dementia identified by your physician. A new study by Johns Hopkins University reports that 60% of people with dementia haven’t been diagnosed or aren’t aware of their diagnosis.

Further, depression and anxiety may need to be addressed, because people can struggle with the reality of a diagnosis, withdraw from work or social activities and worry about the future. Looking for ways to keep people engaged with meaningful activities can become a challenge.

In the final stage, severe dementia, people need sensory stimulation, like enjoyable music or a fragrant bouquet of flowers. Addressing distress, discomfort and pain are the big care challenges.

The challenge for family members and caregivers is to let dementia patients know that they belong and are surrounded with warmth and affection, at every stage of the disease. Even if they cannot acknowledge the presence of family and friends, their company is important.

Reference: The Washington Post (August 9, 2018) “Learning To Live Well With Dementia”

Don’t Make This Common Estate Planning Gaffe: Check Your Beneficiary Designations

When was the last time you even remembered which of your accounts have beneficiary designations? If you don’t remember, it’s time to check them.

Life insurance, IRAs, bank accounts and investment portfolios all have beneficiary designations.

Investopedia says that outdated beneficiary designations can cause problems in its article, “The Importance of Updating Retirement Account Beneficiaries.” There have been many cases of retirement account owners who have been divorced and remarried, but failed to update their beneficiary designations.

If you forget, you may find that your designated beneficiary isn’t who you want it to be. That can frequently be the case in the event of a divorce, remarriage or if new children or grandchildren were welcomed to the family since your retirement plan account was started. If you named a charity as your beneficiary years ago, it may no longer exist.

It is good if you are reviewing your estate plan regularly. However, remember that retirement accounts with beneficiary designations aren’t part of your probate estate and aren’t governed by the provisions of your will, so it is important to keep these retirement documents updated.

Retirement account beneficiary designations are often neglected: they don’t get the attention they need!

Failing to update beneficiary designations can be very frustrating for the family. They’re the ones who will need to go to court to get a legal determination of the true beneficiary. The judge’s decision may not be what the deceased would have wished.

There can also be an issue, if some children are named as beneficiaries, but the document isn't updated to include those who were born after the initial designation. That’s why you should update your beneficiary designation right after any change in family status—and review it periodically, so they never are out-of-date or incorrect.  You should always have a contingency beneficiary.

Another option is to draft customized beneficiary designations to address "what-if" situations.

If you don’t name a beneficiary, the beneficiary may be determined by federal or state law, or by the plan document that governs your retirement accounts. For qualified plans like profit-sharing plans, 401(k)s, and money purchase pension plans, federal regulations automatically designate the spouse of the account owner as the beneficiary. The spouse has to approve of any other designation, and this must be in writing and notarized. If the retirement account owner is single, her estate may be the default beneficiary.

An IRA plan's documents also provide a default designation, if the designated beneficiary predeceases the IRA owner. The default options vary among IRA custodians and trustees. While the default options rid any administrative responsibilities from account owners, they may not reflect their preferences. As a result, account owners should review the plan document and be certain that they update their beneficiary designations regularly.

Many IRA plan documents have default beneficiary options, so if you designate two people as your beneficiaries and one predeceases you, the share that belonged to the deceased beneficiary automatically goes to the surviving beneficiary. If you have a customized designation, you can instruct how that portion would be distributed, instead of having it default to the surviving beneficiary.

When you sit down with a qualified estate planning attorney, make a complete inventory of your assets and include the names of your beneficiaries and contingency beneficiaries. Don’t leave this detail out, or you’ll risk creating a real problem for your family.

Reference: Investopedia (2018) “The Importance of Updating Retirement Account Beneficiaries”