Frequently Asked Questions

Wills & Trusts

Q: I’m single without children. Do I need a will?

Answer: You are just as likely, if not more so, to need a will than someone who is married.

Without a will, your property may not pass to the people you intend. Your estate would follow a specific order set out in the Wisconsin statutes. If you do not have children or a spouse, all your assets would be split evenly between your parents. If they passed away before you, your assets would be split evenly between your siblings, and perhaps their children as well. If you create a basic will, you can control who receives your property.

Having a will also makes things much easier for your relatives who survive you. As part of drafting your will, you would name a Personal Representative, who will be the person in charge of reading your will and distributing your assets. Without a named Personal Representative, a judge would have to appoint someone to do this.  It can also be difficult for surviving relatives to find all your assets and figure out how to open a probate action and distribute your property.

Q: What happens if I die without a will?

Answer: If you die without a will, a probate judge will appoint a person to be the Personal Representative of your estate to distribute your property. This person may not be the person you would have liked to go through your personal property and financial records. Wisconsin law will determine who receives your property if you do not leave behind a valid will or trust. These people may not be the ones you would have wished to receive your assets, and they may not be the people most deserving, or most in need, of your assets. In general, the law will give your assets to the people most closely related to you. If no relatives can be located, your property will go to the state.

Q: Who will receive my assets if I die without a will?

Answer: A person who passes away without a will is said to be Intestate. The Wisconsin Statutes in sec. 852.01 set out a series of rules to control who receives the assets of an intestate estate.

If the decedent (the person who passed away) leaves behind a spouse, and does not have any children from a prior relationship, then that spouse inherits the entire estate.

If the decedent has children from a prior relationship, and leaves behind a spouse, then the spouse keeps their half of the couple’s marital property, and inherits one half of the decedent’s individual property. The other half of the decedent’s individual property gets divided equally among all of the decedent’s children.

If the decedent was unmarried at the time of death, and had children, then the decedent’s assets get divided equally among each of their children. If any of the children had passed away before the decedent, then that child’s share gets divided equally among that person’s children.

If the decedent did not leave behind a spouse, children, or grandchildren, then their assets get divided between their parents.

If there are also no surviving parents, then the assets get divided equally among the grandparents, if living, or else among the grandparents’ descendants.

And finally, if there are no living heirs of any kind as described above, the decedent’s assets are transferred to the State.

Q: What does a Will do? What does it not do?

Answer: A will sets out your wishes for how some of your assets will be disbursed after your death. It can set out an order of inheritance, depending on which of your relatives survive your death. A will names a Personal Representative who is responsible for carrying out the wishes of your will. Naming a Personal Representative will avoid the need for a judge to appoint one, and you can eliminate the need for the Personal Representative to post a bond with the court. You may also be able to avoid the need for ongoing court supervision of your estate.

A will can name a legal guardian for your minor children, and thus eliminate the possibility that a judge would have to choose a guardian. A will can create a trust after your death to set aside funds to provide for the care and well-being of your children. It can avoid the need for court supervision of the minor children’s assets.

A will only governs assets that are a part of your Probate Estate. Your will does not govern the distribution of Non-Probate property, such as real estate jointly owned with the right of survivorship, or IRAs or insurance policies that have designated beneficiaries.

A will cannot give someone the power to control your finances while you are still alive, and it cannot authorize someone to make healthcare decisions for you. A will generally does not authorize someone to make decisions regarding a funeral or burial.

Q: I’ve heard of Holographic Wills. Can I simply hand write my own will?

Answer: A handwritten will signed without witnesses is a “holographic will”. Some states still recognize holographic wills as valid. However, Wisconsin does not. In order for a will to be enforceable in Wisconsin, it must be signed by the person whose will it is (the testator), and also by two witnesses who saw the testator sign and can vouch for their competence. The attorney who drafted will can be a witness, but the witnesses cannot be beneficiaries of the will or their spouses. The witnesses must be legally competent, but they do not have to be over 18 or residents of Wisconsin. If the signing of your will was not properly witnessed by two people, it will be invalid and a court will not enforce it.

Q: What is a Trust? What kinds of Trusts are there?

Answer: In simplest terms, a Trust is a private document that allows a third party, called a Trustee, to control assets on behalf of another person, called a Beneficiary. Trusts can specify rules for how and when the assets are to be used.

Assets in a Trust may be be able to be passed outside of the Probate process, which generally save time and expense.

There are two major categories of trusts: A Revocable Trust, and an Irrevocable Trust.

Revocable Trust allows you to retain control of your assets during your lifetime. You can alter it or dissolve it at any time during your lifetime. A Living Trust is a form of a Revocable Trust. Revocable Trusts may help you avoid Probate. They are still subject to Estate Taxes.

An Irrevocable Trust transfers assets out of your control. It can generally avoid Estate Taxes and the need for Probate. An Irrevocable Trust, as the name suggests, cannot be altered or dissolved after it is created.

Following are common examples of Trusts that may be part of a comprehensive estate plan:

Testamentary Trust: This Trust is created by the provisions of a Will, and goes into effect after your death. This is generally subject to Probate and to Estate Taxes.

Marital or “A” Trust: This Trust provides benefits to a surviving spouse, and is included in the taxable estate of the surviving spouse.

Bypass or “B” Trust: This Trust is often established along with a Marital Trust at the death of the first spouse. It is created to make full use of of the Federal Estate Tax Exemption for each spouse.

Irrevocable Life: This trust excludes life insurance proceeds from your taxable estate.

Qualified Terminable Interest Property Trust (QTIP): This trust provides income to a surviving spouse until their death, when the assets then go to additional beneficiaries. This can take advantage of the full Estate Tax exemption. It is often used in second marriages with children from a prior marriage.

Charitable Trust This trust provides certain assets to a charity, with the remainder going to other beneficiaries.

Q: Should I Have a Will or a Trust?

Answer:  This is not a simple question. Both estate planning strategies have pros and cons, and you should consult with an attorney to decide which plan makes the most sense for you.  In recent years, there has been a lot of discussion about using Revocable Trusts in place of traditional Wills, and while this plan is the most advantageous for many families, it is not right for everyone.  As with any estate planning method, there are both positives and negatives.

Advantages of Using a Revocable Trust:

  • It can avoid Probate. This is the most common reason a Revocable Trust is used. To the extent a Revocable Trust is funded during the person’s lifetime, or provision is made for the transfer of assets following their death, Probate is avoided. This means you avoid court fees, inventory filing, notice, and legal expenses.
  • It is more confidential. If the Revocable Trust is fully funded before the settlor’s death, the details of the trust can remain confidential.
  • Court supervision is generally not required. In Wisconsin, a trust is not subject to continuing judicial supervision unless specifically ordered by the court.
  • It is faster. Without judicial supervision, a Trustee can act quickly if necessary to disburse funds or transfer assets. It is not necessary to wait for approval from a judge.
  • It provides for management of property in a different state. If the estate is subject to Probate, and real estate is owned in a different state, it is necessary to open ancillary Probate in that state. However, a Trust can oversee property in other states, if the property was transferred into the Trust during the lifetime of the Settlor.
  • There are few income tax implications for a Revocable Trust.  Because the creator of a Revocable Trust retains the power to revoke the Trust, they are treated as the owner of the trust assets for income tax purposes. The Trust is disregarded as a taxable entity.

​Disadvantages of Using a Revocable Trust

  • The Trust Must be Properly Funded. The Settlor of a Trust must transfer their assets into the name of the Trust. This requires opening bank accounts or investments in the name of the Trust, and retitling property in the name of the trust. When new assets are acquired, after the Trust is created, care must be taken to ensure the assets are properly titled.
  • The Initial Costs of a Revocable Trust are Generally Higher. Properly drafting a Trust generally requires more legal work than the drafting of a will. It generally requires the client to spend more time with the attorney to discuss how the Trust will be funded and how it will operate. Properly creating a Trust requires the drafting of additional documents, such as a Marital Property Agreement and a Pour-Over Will, to ensure the Trust is fully funded.

Q: How much does a Will or Trust cost?

Answer:  Unfortunately this is not a simple answer. There should not be a single set charge for a will or trust.  Estate planning is not a one-size-fits-all proposition; estate plans vary tremendously in complexity, and each family will require a different set of estate planning documents. Some factors include the size of your estate, whether you have minor children, whether you have children with disabilities, the nature of your assets, and how you want your assets distributed.

At Lippow Law Offices, we rely upon a flat-rate billing model. Clients are not charged by the hour; this ensures that we can spend as much time as necessary to answer all your questions and to make sure all documents are prepared correctly. This also ensures that the client knows from the beginning how much they will be charged for our work.

We offer offer a complementary, no-obligation, initial consultation. At the end of this consultation, you will be told what type of plan is recommended, and what the total cost will be. You can then make the decision to move forward.

Q: Whom should I name to be my Personal Representative?

Answer:  There is not a single answer as to whom you should name as the Personal Representative.

For many people, it makes the most sense to name your spouse or the person who would be the primary beneficiary of your will. That person will have the strongest interest in making sure the probate process goes smoothly, and they will likely have the most knowledge as to the nature and location of your assets.

For some people, it may be advisable to appoint a person who will not be a beneficiary of the will, so they will not have a potential conflict of interest. This may reduce the chances of a beneficiary accusing the personal representative of not acting properly or taking advantage of their role. Particularly with larger or more complex estates, you may want to name a professional such as an accountant or attorney, even though they would be entitled to fees for their work.

You always want to name at least one successor personal representative, in case the first person you chose has passed away or is unwilling to perform. You also want to speak with the named personal representative to make sure they are willing to act.  This will avoid the need for a court to name a personal representative for you, who may not be a person you would have wanted to have the role.

Q: How can I control my Facebook and Gmail accounts after my death?

Answer: Since Facebook began, there has never been a suitable method of controlling your Facebook account after your death. There was no mechanism to notify Facebook what you would want to have happen to your account after your account, and to whom you would want to give control. Following your death, a relative could petition Facebook to deactivate your page, or they could request it be “memorialized”, by freezing the account in place.  But there was no manner to designate who can access your account, or specify what you want to have happen to it.

Now, Facebook gives users the opportunity to specifically control how their account will be handled after their death. Users can now designate a friend or family member on Facebook as a “Legacy Contact.” This person will be able take the following actions following your death:

  • They can change your profile picture and cover photo.
  • They can write an announcement that will appear at the top of your timeline.
  • They can accept friend requests on your behalf, from people who weren’t previously Facebook friends with you.
  • They can be given the option to download an archive of your posts and photos.

The Legacy Contact, however, will NOT be able to edit or delete your posts, so any embarrassing photos or comments will remain. They will not be able to view your direct messages. They will also not be able to make posts from your account that appear to be from you.

Along with traditional estate planning, it is strongly recommended that you take steps to protect and control your digital content after your death. You should always make sure your intended beneficiary has access to usernames and passwords for your online accounts, both financial and social media. Now, with a few clicks, you can ensure that your Facebook account will be properly handled after your death.

To make these changes in Facebook, go to Settings, then Security, then Legacy Contact.

Meanwhile, for the past two years, Google has offered a similar service to control your Gmail and other Google accounts after your death. Delicately called the “Inactive Account Manager”, you can set your Google settings so that after a designated period of inactivity – 3, 6, 9, or 12 months – Google will attempt to contact you by text and email. If you do not respond, Google will take specific actions based on your settings. You can have your data deleted from all your accounts. Or, you can have a designated person receive data from Google services such as Gmail, Drive, and Google+.

You can go to the Google Inactive Account Manager HERE to select your options now.

Q: How can my family inherit my Green Bay Packers Season Tickets?

Answer: Yes, but only a limited manner. For many Wisconsin residents, their Packers season tickets are one of their most prized possessions, and are often passed down from generation to generation. However, the Packers organization places strict rules on how season tickets can be inherited. Planning for the transfer of your Packers season tickets should be discussed as part of your overall estate plan.

If you “own” Packers season tickets, what you really own is an opportunity to purchase a set of tickets each year. The tickets themselves do not give you ownership of any property; rather, they provide you with a revocable license to sit in particular seats under specific circumstances. You do not own your tickets in the same way you own a vehicle or other tangible property. Thus, the Packers organization is allowed to set their own rules for how you can transfer your tickets upon your death.

Upon your death, your surviving spouse can request the transfer to his or her name. If there is no surviving spouse, your surviving children can request a transfer, if they all agree on the recipients.

You can also place a provision in your will to transfer the tickets, but only to a “family member”, which the Packers define as a spouse and “blood relative” who are not more than first cousins. Even if you place a specific provision in your will, you cannot transfer your tickets to friends or more distant relatives; the Packers will not honor the transfer.

In Divorce actions, the ownership of Packers season tickets are occasionally in dispute. Upon a divorce, the Packers will honor retention or transfer between spouses, pursuant to the divorce agreement. Without an agreement, the tickets will revert to the control of the Packers.

When your estate goes through Probate after your death, your tickets will have to be valued along with your other assets. There is no clear rule for how the right to purchase season tickets are valued, since you can not buy or sell your right to purchase tickets on the open market. However, the consensus seems to be to value the tickets according to the Seat User Fee, as you are entitled to a refund of this amount if you turn in your tickets.

Taxes

Q: Will I have to pay estate taxes when I die?

Answer: This is one of the most common questions asked of estate planning attorneys. Many people are concerned about having to pay excessive estate taxes when they die.  However, you probably will never have to worry about paying any Estate Taxes.  Last year, 99.86% of all estates paid no estate taxes.

Currently, there is an Estate Tax exemption of $5.34 million. That means if the total value of your estate upon your death is less than this amount, you will pay no estate taxes at all. In addition, with the proper advance planning, your surviving spouse can use any exemption amount not used by you, meaning that as a couple you can have over $10 million before you are subject to estate taxes.

If you believe you may have an estate worth over $5 million, you still may be able to avoid paying a significant amount of estate taxes with the proper preparation.

Q: Does Wisconsin have an Estate Tax?

Answer:  No.  Currently, Wisconsin does not have an Estate Tax. Wisconsin has had an Estate Tax in the past, but beginning for all deaths occurring on January 1, 2008, Wisconsin does not collect any Estate Taxes.

The only potential Estate Tax you will have to worry about is the Federal Estate Tax, which currently has a $5.34 million per-person exemption.

Q: Will I have to pay income taxes on an inheritance I receive?

Answer: No. As a general rule, an inheritance is not considered “income,” so you will not have to report your inheritance on either your state or federal income tax return.

However, you may later have to pay capital gains taxes on any inherited property or investments that you later sell,, if the asset appreciates further after you inherit it. For instance, if you inherit a house that is valued at $200,000 at the time of the decedent’s death, you will not owe any income taxes, and you will also not owe any capital gains taxes even if the decedent initially bought the property for only $100,000.  However, if you sell the house several years later for $250,000, you will owe capital gains taxes on that $50,000 increase in value.

You will also owe income taxes on income generated from the assets you inherit. For instance, if you inherit an IRA or 401(k), you will have to pay income taxes on any distributions you take out.

Q: Do I have to pay taxes on Life Insurance proceeds?

Answer: We have to keep in mind there are two different taxes to keep in mind: Estate Taxes, and Income Taxes.

Yes, as a general rule, life insurance proceeds are subject to Estate Taxes. Keep in mind, the Estate Tax exemption is currently $5.34 million, so if a total estate, including life insurance proceeds, is under this amount, there will be no Estate Taxes due. If the value of the life insurance proceeds may push the estate above the Estate Tax exemption, there are planning strategies that can be used, including the creation of a Life Insurance Trust.

However, as a general rule, life insurance proceeds are not subject to Income Taxes. Regardless of value, the beneficiary of the life insurance proceeds does not have to pay income taxes on the funds received.

Gift Giving

Q: When do I have to pay gift taxes?

Answer: Every individual receives an annual gift tax exemption of $14,000. Thus, every calendar year, you can give each recipient up to $14,000, with no concern about paying gift taxes, and without having to file a gift tax return. This is a “use it or lose it” exemption; it cannot be carried over from year to year.  If you are married, you and your spouse can give a combined $28,000 per recipient each year.

Even if you gift over $14,000 to a person in a year, this does not mean you will have to pay gift taxes on that amount. Rather, any amount over the annual exemption simply counts against your overall estate tax exemption. Currently, this combined exemption is $5.34 million dollars per person, and it increases each year based on inflation. For instance, if you give a person $20,000 in a year, the first $14,000 will be exempted under the annual exemption, and the remaining $6,000 will be subtracted from your lifetime $5.34 million exemption.

In addition, there are several categories of gifts that are completely exempt from the gift tax, regardless of amount. You do not owe any gift taxes on any gifts to your spouse, to charities, or to 529 college savings plans, for instance.

Q: What are the tax consequences of donating to charity?

Answer: As a general rule, donations to charity are tax-deductible and can help lower your tax bill.  However, there are several tips to keep in mind in order to fully take advantage of the Charitable Tax Deduction.

  • In order for the donation to be tax-deductible, it must be to a qualified charitable organization. You want to look for organizations who have received their 501(c)(3) tax-exempt status.  You can also donate to qualified religious organizations, which are not required to obtain 501(c)(3) status. You can not deduct contributions to specific individuals or political organizations.  You can not deduct the value of your time for services rendered to non-profits.
  • You can only deduct charitable donations on your taxes if you file a 1040, and if you itemize your deductions.   So if you have a simple return and only take the standard deduction, you will not be able to benefit from your donations.
  • You must maintain records of your donations. This can include a bank record or a written communication from the organization containing the amount of the contribution. In order to claim a deduction for a gift of cash or property of $250 or more, you must have a written acknowledgment from the organization describing the property contributed. If your total non-cash contributions are over $500, you must attach IRS Form 8283 to your return.
  • There are limits on the amount of annual charitable tax deductions. As a general rule, you can deduct:

– Cash/monetary contributions up to 50% of your adjusted gross income;

– Property deductions up to 30% of your adjusted gross income;

– Appreciated capital gains assets up to 20% of your adjusted gross income.

Charitable contributions over these limits can be carried over to the following year, for a maximum of 5 years.

Q: How does donating to Edvest 529 college savings plans work?

Answer:  As a general rule, donations to charity are tax-deductible and can help lower your tax bill.   However, there are several tips to keep in mind in order to fully take advantage of the Charitable Tax Deduction.

  • In order for the donation to be tax-deductible, it must be to a qualified charitable organization. You want to look for organizations who have received their 501(c)(3) tax-exempt status. You can also donate to qualified religious organizations, which are not required to obtain 501(c)(3) status.  You can not deduct contributions to specific individuals or political organizations.  You can not deduct the value of your time for services rendered to non-profits.
  • You can only deduct charitable donations on your taxes if you file a 1040, and if you itemize your deductions.  So if you have a simple return and only take the standard deduction, you will not be able to benefit from your donations.
  • You must maintain records of your donations. This can include a bank record or a written communication from the organization containing the amount of the contribution.  In order to claim a deduction for a gift of cash or property of $250 or more, you must have a written acknowledgment from the organization describing the property contributed. If your total non-cash contributions are over $500, you must attach IRS Form 8283 to your return.
  • There are limits on the amount of annual charitable tax deductions. As a general rule, you can deduct:

– Cash/monetary contributions up to 50% of your adjusted gross income;

– Property deductions up to 30% of your adjusted gross income;

– Appreciated capital gains assets up to 20% of your adjusted gross income.

Charitable contributions over these limits can be carried over to the following year, for a maximum of 5 years.

Durable Powers of Attorney for Finances

Q: What is a Durable Power of Attorney for Finances?

Answer: A Durable Power of Attorney for Finances gives authority to another person, called an agent, to make financial decisions and transactions on your behalf. It is called “durable” because the authority survives even if you become incapacitated and are no longer able to make decisions for yourself. However, a Power of Attorney does not survive after your death; you will need a will or other estate planning document to control how your assets are managed after your death.

Durable Powers of Attorney can, if you choose, grant very broad powers to your agent. In addition to managing your bank accounts and investments, your agent can also be authorized to buy or sell real estate, file lawsuits, give gifts, and many other actions.

Q: Can I create my own Durable Power of Attorney for Finances?

Answer: Yes. The Wisconsin Statutes set out a statutory Durable Power of Attorney for Finances that is simple to complete, and is suitable for many people. However, it may not be perfect for you, so you want to read it over carefully, and contact an attorney if you are not sure what any of the provisions mean, or whether they are consistent with your wishes.

You can follow THIS LINKto go to the Wisconsin Department of Health Services website, where you can download or print out your own copy of this form.

If you use the state form, do not change the pre-printed wording of the form unless the instructions indicate you may do so. Changing the forms contrary to their instructions may invalidate the form.

Powers of Attorney for Health Care Decisions and Living Wills

Q: What is a Power of Attorney for Health Care Decisions and a Living Will?

Answer: A Durable Power of Attorney for Health Care Decisions gives you the ability to appoint a family member or friend, 18 years or older, to make health care decisions for you if your doctors determine you can no longer make your own medical decisions.

You can give this person very broad authority to make very important decisions regarding the type of health care you wish to have if you become incapacitated and where there is no hope for recovery.  Your agent will have authority to make informed decisions regarding the right to accept, maintain, end, or refuse any care, treatment, or services to diagnose or treat a physical or mental condition. You can an allow an agent to order the withholding or withdrawal of a feeding tube, or other procedures meant to prolong your life.

A Power of Attorney for Health Care Decisions is different from a Living Will (Declaration to Physicians).  In a Declaration to Physicians, you can specify your wishes about life-support machines or feeding tubes if you become terminally ill or lapse into a persistent vegetative state.  A Declaration to Physicians does not, however, name a specific person to make decisions for you.

Q: Can I create my own Power of Attorney for Health Care Decisions or Living Will?

Answer: Yes. The Wisconsin Statutes set out a statutory Power of Attorneys for Health Care decisions, and Living Wills, that are simple to complete and are suitable for many people. However, they may not be perfect for you, so you want to read the documents over carefully, and contact an attorney if you are not sure what any of the provisions mean, or whether they are consistent with your wishes.

The Wisconsin Department of Health Services website has links where you can download or print out your own copy of these forms.
CLICK HERE for the State of Wisconsin Power of Attorney for Health Care Decisions.

CLICK HEREfor the State of Wisconsin Declaration to Physicians (Living Will).

If you use the state form, do not change the pre-printed wording of the form unless the instructions indicate you may do so. Changing the forms contrary to their instructions may invalidate the form.