County Claims on Residence for Delinquent Property Taxes

County Claims on Residence for Delinquent Property Taxes

If you own real estate in Wisconsin, you are familiar with the annual property tax bills that arrive in the mail each December.  You are also aware that you are required to pay your tax installments to the County Treasurer by January 31st and/or July 31st of each year.  When a landowner does not pay property taxes for that year, the local County Treasurer will issue the landowner a tax certificate for the delinquent taxes.

Generally, the landowner has a two-year period to pay delinquent taxes and redeem their property from the County.  After those two years have passed and a landowner has failed to pay taxes to redeem the property, the County may obtain the property by 1) recording a tax deed with the Register of Deeds, 2) foreclosing the tax certificate, or 3) foreclosing the tax liens against the property.  During each of these processes, the landowner has another chance to reclaim the property.  Under the first process, the owner may reclaim the property any time before the County Treasurer records the tax deed.  Under the second process, the owner may reclaim the property before the property is sold at a foreclosure sale.  Under the third process, the owner may reclaim the property within eight weeks after the County Treasurer publishes notice of the foreclosure of the tax liens in the newspaper.

If the owner misses any of these opportunities to reclaim the property, the County will acquire title to the property through one of the three above-described processes.  Once the County acquires the property, the County may sell the property to a willing buyer.  At this point, the owner’s very last option to reclaim their property is to purchase it back from the County.

But is that really the last chance?  If the County acquires the property by recording a tax deed, the owner has an additional three years from the date of recording to commence an action to reclaim the property.  The original owner would need to be successful in obtaining a judgment against the County, which can involve a long and costly litigation process.

So, what does this all mean for buyers who purchase unredeemed property from the county?  Buyers should be aware of the risk that the original owner has three years to commence an action to recover the possession of the property, even after the buyer purchases the property from the County.  Although the likelihood that an original owner would go through the time and expense of commencing a civil action is very low, buyers must be aware of the three-year risk and should consider the risk as they decide to purchase the property.

 

Maximizing Bequests with Charitable Contributions

Maximizing Bequests with Charitable Contributions

Many Americans wish to leave a donation to their favorite charity, community foundation or nonprofit organization when they pass away. You may be one of them. Often people decide to donate by gifting a specific dollar amount or percentage from the residue of their estate. However, you could make the most of your philanthropic intention by designating your selected organization as a beneficiary of your tax-qualified retirement plan.

Qualified retirement plans are IRS-approved retirement accounts in which income accumulates, tax-deferred, over time. These types of accounts remain the leading form of a retirement account because they allow individuals to grow their pre-tax contributions over the course of their working career. Common examples of these accounts include non-Roth IRAs, employer-sponsored 401(k)s, profit-sharing plans, and public sector 403(b) plans, as well as other tax-deferred plans.

Rather than administering your retirement account as part of your estate and making a specific bequest in the form of a cash gift to the organization, you can name the organization as a direct beneficiary of your retirement account. By naming the organization as a direct beneficiary, you will notice a double tax benefit. First, your estate will not be required to pay federal estate taxes, if the value of your estate is greater than the federal estate tax exemption, because the retirement account will receive a charitable deduction. Second, charitable organizations are tax exempt, meaning that the organization is not required to pay federal or state income taxes on the gift it receives. The organization will receive the entire balance of the account, making the most of your gift.

Another tax benefit to consider arises if you intend to give part of your estate to charity and part of your estate to individual beneficiaries. When an individual beneficiary, such as a child, receives your qualified retirement account, the IRS requires the individual to pay income taxes on the distribution. Therefore, the individual would not receive the full retirement account value. In this circumstance, you should consider leaving these individuals the remaining non-qualified accounts from your estate, such as post-tax investment accounts, Roth IRAs and common stocks. By gifting qualified accounts to a charitable organization and gifting non-qualified accounts to individual beneficiaries, you will maximize the amount you leave to all beneficiaries. Being mindful about your beneficiary designations allows you the opportunity to minimize tax payments and to make the most of your legacy gift.

If you plan to leave a percentage of a qualified retirement account to a charitable organization and the remainder to a noncharitable beneficiary, you should be aware of impacts to required minimum distributions of your beneficiaries. The timeline for the required minimum distribution for the noncharitable beneficiary may be accelerated and the individual would not be able to take the required distributions over their life expectancy. You should be on the lookout for associated tax implications before finalizing your estate plan.

An estate planning attorney, such as the skilled attorneys at Anderson O’Brien, can offer guidance as you consider a charitable gift as part of your legacy to leave a lasting impact on your community or a charitable cause that is meaningful to you.

 

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