Anderson O’Brien, LLP hosted the Fall 2023 Estate Planning Seminar. Four of our skilled attorneys presented on these topics: Protecting Your Assets from Probate and Guardianship, Protecting Your Assets from Liability, and Protecting Your Assets from Nursing Home and Long-Term Care Costs. Attorney Rich Fuller served as our master of ceremonies.
There are a number of factors to consider before agreeing to take on the responsibility of serving as Personal Representative of someone’s estate. If a friend or family member has asked you to serve in any of these roles, it is important for you to think carefully about your ability to take on the responsibilities of the role and whether you are prepared for the legal obligations expected of you. As an attorney who practices in the estate settlement area, I have helped numerous Personal Representatives successfully handle estate administrations. The job of Personal Representative, however, can be somewhat daunting to someone who has never had the experience of serving, and should not be taken lightly.
A Personal Representative (also called “Executor”) is the person appointed to administer the estate of someone who has passed away. The Personal Representative is responsible for gathering and safeguarding the assets of the deceased, ensuring that all debts and expenses of administration are paid, and distributing the deceased person’s assets to the beneficiaries named in the deceased person’s Will. In addition, the Personal Representative is responsible to report to the Court during the various stages of administration of the estate.
Importantly, being named in a person’s Will is only a nomination, not an actual appointment. Before serving, a person nominated as Personal Representative must first be appointed by the Court before they can officially serve in that capacity.
What factors should you consider when deciding whether or not to accept the nomination?
- Do you have the skills necessary to serve? A Personal Representative must be well-organized, detail-oriented, and have the ability to take on the responsibility of handling the financial assets that belong to the estate.
- Do you have the time necessary to serve? Consider how close you live to the decedent. The estate will be handled in the county where the deceased passes away, and there will likely be financial institutions, agents, accountants and legal professionals that you will need to meet with in the decedent’s county of residence. There may be multiple beneficiaries that require your time and patience to explain the process and timelines.
- Are you comfortable with the responsibility of acting as a fiduciary? A fiduciary’s duty is the obligation to act in someone else’s interest rather than your own. While that may seem like a common-sense approach to handling the estate of someone who has died, the most common disputes in probate administrations involve accusations that a personal representative has breached their duty to administer the estate in the best interest of the beneficiaries.
What if you decide not to serve? If you consider all of the factors and decide you do not want to take on the role as Personal Representative, the next steps depend on timing.
- Before Death Occurs
If someone asks you to serve as Personal Representative or notifies you that they have already named you in their Last Will and Testament, you can still decline the role. Simply advise them that while you are honored to be considered, you are unable to accept. If the Will has already been prepared, they will need to notify their attorney that an amendment, or Codicil, will need to be prepared to change the provisions regarding the nominated Personal Representative.
- After Death but Before Appointment
If you are nominated in the Will, but have not yet been formally appointed, you can notify the beneficiaries and heirs that you do not intend to serve. You should then file a Declination to Serve with the probate court. Most Wills provide for an alternate Personal Representative to serve in the event the first nominated Personal Representative is unwilling or unable to serve.
- Resignation After Acceptance
If you have already been formally appointed as the executor by the probate court, but wish to resign, you must file a formal resignation with the probate court. The Court may require a hearing to accept the resignation and notice will need to be given to the heirs and beneficiaries before a new Personal Representative can be appointed. You may continue to have ongoing responsibility to protect the estate until the new Personal Representative is issued letters of authority to act on behalf of the estate.
Relinquishing the responsibility to act as Personal Representative should not be taken lightly. If you have already been appointed by the Court, it is important to seek legal advice about best practices for discontinuing your responsibilities while protecting the estate and the rights of the heirs and beneficiaries. Please reach out to one of our experienced estate planning attorneys to help with this process.
We often hear this scenario: you handwrite your final wishes and sign the document before storing it in your safe, bank box or another safe place. Is this document a valid Last Will and Testament to carry out your wishes?
In Wisconsin, this handwritten document is considered a “holographic” will. A holographic will is a handwritten document that is signed by the testator, being the person who intends to formalize their distribution intentions, but is not witnessed or notarized. Under Wisconsin law, such a will is not properly executed and is not considered a valid Last Will and Testament.
For a Will to uphold and truly carry out the final wishes of a testator, the document must be properly executed with a number of formalities. First, the document must be signed by the testator, either by the testator or with assistance of another person with the testator’s consent, or by another person with the testator’s direction and in the testator’s conscious presence.
Second, the document must be signed in the conscious presence of two witnesses. Alternatively, the testator may implicitly or explicitly acknowledge the signature on the Will or acknowledge the Will itself in the conscious presence of the two witnesses.
The two disinterested witnesses must sign the Will. These two witnesses shall be disinterested, meaning that they do not stand to inherit from the testator’s estate via the Will and they are not listed as fiduciaries in the Will.
A witness’s signature is not considered proper if the witness does not either actually witness the testator’s signing or receive the above-described acknowledgement from the testator. For example, a Will cannot be signed by a third-party at a different location without any acknowledgement from the testator. Further, Wisconsin does not allow for the signing of Wills via video conferencing.
You may also further protect your intentions by self-proving your Will at the time of execution if you sign your Will under oath and witness. To formalize this self-proved Will, you should sign your Will in the presence of a notary public and receive an official seal.
If you have questions about your estate planning options and whether a Will or another document is the right fit for your intentions, the experienced estate planning attorneys at Anderson O’Brien, LLP are happy to meet with you to discuss your options.
The thought of preparing an estate plan can be overwhelming. This is especially true if you are completing the estate planning process for the first time. You may have a long list of questions or perhaps you may not know where to begin. An experienced estate planning attorney can help guide you through the process. There are several things you can do to help ensure your first meeting with that attorney is as productive as possible.
Compile a List of your Assets and Liabilities.
There is no one-size-fits-all solution in estate planning. Your individual family, assets and goals should guide your plan. When preparing for your initial meeting to discuss your estate plan, it is very helpful to bring a list of your current assets and liabilities. Some examples of assets are: funds in savings accounts, owned vehicles and retirement accounts. Some examples of liabilities are: taxes owed, credit card debt and mortgage debt. In addition to current values, it is also important to provide the attorney with information regarding how the assets are titled and whether you have any existing beneficiary designations. This information will help the attorney recommend the most appropriate plan for you and discuss estate tax and probate avoidance concerns.
Consider Who You Want to Play a Role in Your Estate Plan.
To have a comprehensive estate plan, you must nominate people and/or entities to act in certain capacities on your behalf. Below is a list of some of the different roles they may play in your estate plan as well as some considerations to think about before your initial appointment.
- Personal Representative. Your personal representative, also known as your executor, will handle the settlement of your estate upon your death. In most instances, the personal representative selects an attorney for the estate and works with that attorney throughout the process.
- Guardian. Perhaps the biggest decision for people with minor children is the selection of a guardian. This is the person who will be responsible for the care and custody of your minor children upon your death. The guardian of the estate oversees the child’s property, while the guardian of the child is responsible for the child’s day-to-day care.
- Trustee. Depending on the size and complexity of your estate, there are several trusts that may be appropriate for your circumstances. Some trusts are created in a separate document, while some are integrated right into your will. When there are minor children, we always recommend some form of trust for their protection. The trustee will be responsible for managing the assets of the trust, employing advisors to help with the trust, generally tracking the beneficiary’s needs and ensuring the trust is administered according to its terms.
- Durable General Power of Attorney. A Durable General Power of Attorney nominates an agent and alternate agent to act on your behalf regarding the management of your property and other financial issues. You may establish your Durable General Power of Attorney to be effective immediately or to become effective at a later time when you voluntarily activate it or when a physician certifies that you are incapacitated.
- Health Care Power of Attorney. A Health Care Power of Attorney allows you to name an agent and an alternate agent to make health care decisions on your behalf if appropriate medical personnel certify that you are incapacitated, including end of life decision-making.
Decide on Your Beneficiaries.
Perhaps it goes without saying but an essential part of any estate plan is designating who you wish to leave your assets to upon your death. Prior to your initial meeting, you should consider who you want to name as the primary and contingent beneficiaries in your estate plan. Also, you can leave a bequest (property given to someone through a will) to a beneficiary in a variety of ways. You may leave a beneficiary a specific asset or dollar amount. Alternatively, you may name beneficiaries to receive a percentage of your overall estate. Finally, you should consider whether you want your beneficiaries to receive their bequests outright, or if you want to place certain restrictions on the bequests to help ensure the funds are managed appropriately for minor beneficiaries or those with special needs. This can often be accomplished by using a variety of different trusts that fit your situation.
When you have completed the above steps and you have your documents in order, please reach out to one of our experienced estate planning attorneys, they would be happy to assist you.
Given the rapidly increasing cost of long-term care in a nursing home or assisted living facility, many couples inquire about how to protect their assets from being consumed by such costs, particularly their retirement accounts which often account for the majority of their wealth. While the Medicaid program is designed to provide payment for long term care costs for those who cannot afford the monthly cost, it is only available to those who qualify financially. A major determining factor for Medicaid eligibility is the amount of resources (assets) that are available to pay for care. An applicant for Medicaid cannot qualify for assistance if they possess excess assets, including the value of their retirement accounts. The Medicaid program also looks at the assets of the spouse in determining whether the applicant qualifies for assistance.
For married couples, the spouse who needs long term care (the “institutionalized spouse”) can only have $2,000. The spouse who does not need long-term care (the “community spouse”) can have the residence, vehicle, personal property and their own retirement accounts. They can also have a community spouse resource allowance that is based on the total countable assets that the couple has at the time of applying for Medicaid (between a minimum of $50,000 and a maximum of $130,380). Although the community spouse’s retirement accounts are not counted, all retirement accounts of the institutionalized spouse are counted in determining the asset limit. This can be very problematic when the institutionalized spouse has larger retirement accounts than the community spouse. Normally, the institutionalized spouse cannot just transfer their retirement accounts to their spouse without triggering income tax on the entire amount transferred.
The exception is a transfer of a “qualified” retirement asset that is divided by a Qualified Domestic Relations Order (QDRO). Qualified plans include: 401(k) plans, profit sharing plans, pensions, 403(B) plans and some forms of Simplified Employee Pension (SEP) IRAs. QDRO’s are typically thought of as a mechanism to divide assets when a couple divorces; however, if the retirement account is held in a “qualified plan” it can be divided by a QDRO without having to go through a divorce. Although a court order is required, it can be obtained in an action in family court for property division of a married couple, or through a guardianship action for transfer of the ward’s assets to a spouse, and no divorce action is required. Whether to bring the action in family action or a guardianship action will vary depending upon the circumstances, but either will accomplish obtaining the necessary court order. Importantly, if the retirement account is an IRA, then a legal separation action must be filed in family court. Federal law provides that non-qualified retirement assets that are transferred from one spouse to another are not taxed if “transferred under a divorce or legal separation instrument.”
The benefits of the transfer of retirement accounts are numerous. Once a retirement account is transferred, the community spouse will become the owner of the qualified plan, without triggering any tax. The account will be considered an exempt retirement asset of the community spouse and will not interfere with the institutionalized spouse’s eligibility for Medicaid. Furthermore, any income received from the retirement account will not be considered available to pay the institutionalized spouse’s care costs and will not be available for estate recovery.
Although the transfer of a retirement account can be accomplished at the time one spouse needs care, it is important to think about advanced planning so that if retirement accounts need to be transferred pursuant to legal action, you have given each other the authority to do so under your durable general powers of attorney or other documents in case the institutionalized spouse is unable to sign the documents necessary to participate in the planning. Consult with a qualified elder law attorney who can be sure that you have the necessary documents in place for this important advanced planning.
The Wisconsin legislature enacted 2019 Wisconsin Act 90 on February 5, 2020. The Act expands the provider types that can determine whether a person is incapacitated for purposes of activating a power of attorney for health care, declare that a patient has a terminal illness or is in a persistent vegetative state for purposes of invoking a living will.
Under prior law, an incapacity determination could only be made by two physicians, or by one physician and one licensed psychologist. Under the new law, an incapacity determination may be made by two physicians, or by one physician and one of the following individuals: i) a licensed psychologist; ii) a registered nurse who is currently certified as a nurse practitioner by a national certifying body approved by the Board of Nursing; or iii) a licensed physician assistant (PA) who a physician responsible for overseeing the PA’s practice affirms is competent to conduct evaluations of the capacity of patients to manage health care decisions. The new law does not affect the other applicable criteria for determining that a person is incapacitated, including that the providers must still personally examine the patient and cannot be a relative or have a claim to a portion of the person’s estate.
According to State Representative Patrick Snyder, who helped introduce the legislation, several communities in Wisconsin depend solely on advanced practice clinicians, like PAs and registered nurses, for their care because the closest physicians are many miles away and, for these communities, and others that rely heavily on advanced practice clinicians, the Act will allow for a continuity of care that was prohibited under prior law.
If you previously signed a power of attorney for health care or living will under the prior law, you may consider having your document reviewed and potentially updated if you wish to take advantage of this recent law change.