Introduction
While you're living and healthy, you value being able to make your own
decisions about your finances, property, health care, and raising your
children. Should you die or become incapacitated, you hope others will
handle these matters for you according to your wishes.
The
only way to assure that will happen is through estate planning. This
process involves weighing various personal and financial decisions and
creating legal arrangements to carry out those decisions. This brochure
looks at key estate-planning tools: wills, living trusts, powers of
attorney, and living wills.
What is a will? A will is a written document that allows you to designate: - who
will receive your estate (your property that does not pass by
beneficiary designation or joint ownership arrangement; see more below)
after you die;
- who will raise your children if you die while they're still minors, and your spouse is unavailable to care for them;
- whether your beneficiaries receive their inheritance outright or in a trust; and
- who
will serve as your personal representative – that is, the person who
will pay your bills and taxes and distribute the rest of your estate to
your beneficiaries. (For more on personal representatives, see the
State Bar of Wisconsin's pamphlet, "Probate.")
When should I write a will? If you have accumulated some assets, and you care who will receive those assets after you die, it's time to write a will.
Anyone
with minor children definitely should have a will. In it, you can name
the person you want to raise your children, should something happen to
you and your spouse. Discuss this carefully with the prospective
guardian, to be sure he or she is up to the job. Also, name an
alternate guardian in your will as a backup.
On the other
hand, if you're a young adult, have no children, and own few
possessions, you probably don't need a will yet. The state would
distribute your possessions to your parents. But if you'd rather leave
your car to your girlfriend, or your prized Spider Man comic book
collection to a favorite nephew, then a simple will is a good idea.~Why
is a will important?
What if I die without a will? In
this case, the court appoints a personal representative who distributes
your entire estate to your surviving spouse – unless you have children
from outside your current marriage. In that case, your spouse retains
half the marital property and receives half your individual property,
with the rest of your estate split equally among all your children,
from this marriage and outside it. (See also the State Bar of
Wisconsin's pamphlet, "Marital Property.")
If you have no
spouse or surviving children or descendants of children when you die,
your estate goes to other surviving relatives. State law lists the
order of inheritance as follows: parents, brothers and sisters, nieces
and nephews, grandparents, and descendants of grandparents. The state
school fund receives your assets if you leave no heirs closer than the
descendants of your grandparents.
If you leave behind minor
children and have named no guardian in a will, a court must choose a
guardian. Ask yourself: Is that a decision you want someone to make for
you?
Having a judge decide who will raise your children can be
emotionally wrenching for other family members. Also, court-supervised
guardian-ships entail extra costs. Avoid the upset and expense by
naming a guardian in your will.
Finally, bear in mind that if
you have no will, the court will appoint a personal representative to
administer your estate. Having a will allows you to choose this person.
Also, you can stipulate in your will that the personal representative
need not post a surety bond, thus saving money for your estate.
What types of property pass to your beneficiaries outside of a will? These include: - Survivorship
marital property – goes directly to a surviving spouse. An example
would be a house that has both spouses' names (and only their names) on
the title.
- Property that is jointly owned – goes to the surviving owner(s).
- Life
insurance proceeds and funds in IRAs and other retirement plans – go
directly to beneficiaries you listed on the appropriate forms.
If
all your property falls into the above categories, and you have no
minor children, you might think you have no need for a will. You may be
right. On the other hand, a will may still be wise.
For
example, both you and your spouse, or other joint owner, could die at
the same time. A will would enable you to name alternate beneficiaries.
Also, you could save on estate taxes, thus leaving more to your
beneficiaries, by using a will to set up a trust.
What makes a will legal? To
be valid, your will must be in writing, and you must date and sign it.
At least two witnesses also must sign the will. They can do this after
they watch you sign it. If they weren't present then, you can state to
them that the signature is yours, and then the witnesses can sign. The
witnesses should not be beneficiaries named in the will or your heirs
as designated by law.
Can I write my own will? Yes,
if you comply with all the above-mentioned requirements to make your
will valid. But if in creating your will, you encounter any questions
or complexities you don't understand, it's a good idea to see your
attorney. Remember, this document must spell out all the conditions for
transferring your assets. And, if you have minor children, it names
their guardian.
A will is an important document. You'll want
to be sure it correctly expresses your wishes and that it's legally
enforceable. A lawyer can give you advice about not only your will, but
also other aspects of estate planning you might otherwise overlook.
We'll discuss some of those later.
How does someone challenge my will? A person can attempt to prove in court that: - you were under duress or undue influence when making your will;
- you were incompetent or unable to understand the results of your will when writing it; or
- your will does not meet the requirements that make it valid, as listed earlier.
How can I change my will? You
have two options. You can simply write a new will, which automatically
replaces an older one. Or you can add a supplement, called a codicil,
to your existing will. For a codicil to be valid, it must satisfy the
same legal requirements as those mentioned for a will.
Where should I keep my will? Place
your will where it's safe from theft, fire, or other damage. A
safe-deposit box is one possibility. You also may deposit it with the
register in probate for your county.
Be sure your personal
representative knows where your will is. Some people also give a copy
to their personal representative. You'd want to do this, for instance,
if you include funeral preferences in your will. Usually the reading of
a will doesn't happen until after a funeral. So you'd want your
personal representative to have a copy on hand, to be able to carry out
your funeral wishes.
Is a will written in another state legal in Wisconsin? To
be valid in Wisconsin, the will must comply with the laws of one of the
following: Wisconsin, or the place where you properly signed your will,
or the place where you lived when you properly signed your will.
Be
aware, however, that Wisconsin has a marital property law. If your will
is from a jurisdiction with no such law, you should have an attorney
review your will. That way you can assure it still achieves the results
you intend.
What is a trust created by a will? You
can use your will to create a trust upon your death. The trust holds
your property for another person's benefit. For example, a trust may
provide an income for your spouse. Or it can hold property for your
minor children until they become adults.
You name a trustee to
oversee the trust. The trustee can be either a trusted individual (a
friend, relative, or professional advisor) or a financial institution
(a bank, brokerage firm, or trust company). The trustee is responsible
for protecting the assets, paying out income earned, and terminating
the trust as your will instructs.
What is a living trust? You
can create a living trust to control your property while you are alive.
The trustee then would control your property after you die. Under this
arrangement, you sign documents to give your property to the trust. As
long as you're living, the property usually is treated the same for tax
purposes as if you still owned it.
An advantage of a living
trust is that property can pass to heirs after you die without going
through probate. A drawback is that buying, handling, or selling assets
held in a living trust may be more cumbersome while you're alive. Ask
your attorney how a living trust would affect your property.
For more information, see the section on
Revocable Living Trusts.
If I have a living trust, do I still need a will? Yes.
A will would be important for several reasons. You may have property
that never got transferred to your trust while you were alive. You
would need a will to transfer that property to your trust after your
death. Or your estate might receive money after your death. For
instance, if your death was the result of an accident, your estate may
receive wrongful death benefits. Again, you would need a will to
transfer this money to the trust.
You also need a will in
order to name a personal representative. That's not part of setting up
a living trust. A personal representative can take certain actions on
behalf of your estate that a trustee cannot, such as pursuing a
wrongful death claim.
What is a durable power of attorney? This
authorizes another person, called an agent, to act for you in financial
matters. The agent's rights to act on your behalf depend on what you
say in your durable power of attorney document. These rights might
include the authority to sign legal documents, pay bills, buy and sell
real estate, and take other actions on your behalf. Choose a person you
trust absolutely.
A durable power of attorney can take effect
in one of two ways. If you wish, it can take effect immediately. Or you
can provide that before the durable power of attorney takes effect, two
physicians must state, in writing, that you are incapable of handling
your affairs. The latter is called a "springing" durable power of
attorney.
A durable power of attorney ends at your death. Your
agent retains no further authority to handle your finances. If you want
your agent to settle your financial affairs after you die, you need to
name that person as your personal representative in your will.
What is a durable power of attorney for health care? This
arrangement gives your agent the authority to make health-care
decisions for you when you're unable to make them yourself. This is a
heavy responsibility for anyone to assume. Be sure you discuss your
health-care preferences with your agent, so he or she knows what you'd
want. This makes the agent's job much less difficult during what may
already be a stressful time.
To create a durable power of
attorney for health care, you can use the standard state form. Or, an
attorney can create an individualized document for you. Either way, a
durable power of attorney must meet specific requirements for it to be
valid.
Can I have the same agent for both finances and health care? Yes,
one person can serve as both. If you feel you need to name two
different agents, be sure they can work together. This would avoid a
situation, for instance, in which your agent for finances could
interfere with health-care decisions by refusing to pay certain medical
bills.
What is a living will? A
living will is a separate legal document, not a part of your will. And,
it's not the same as a durable power of attorney for health care. The
latter allows your agent to make health-care decisions for you. A
living will, on the other hand, allows you to state in writing your
preferences about life-prolonging medical treatment.
In a
living will, you can declare that you wish medical professionals to
withhold or withdraw life-sustaining procedures or non-orally ingested
food and water – if you are in an incurable condition, or you're near
death, or you're in a persistent vegetative state.
Your living
will takes effect only when you become incapacitated, cannot speak for
yourself, and there's no hope for your recovery.
Your durable
power of attorney agent also can make these sorts of end-of-life
health-care decisions for you, if you grant that power. If you have
both a living will and durable power of attorney for health care, the
latter rules if there is any conflict between the two.
The
current law regarding living wills went into effect Nov. 25, 1991. If
your living will was written before then, you should have your attorney
review it to be sure it still expresses your wishes.
For more information on durable power of attorney for health care and living wills,
see the section on
Health Care.
Last updated: October 2004 |
