Recent Case Highlights the Importance of Clarity and Follow Through In Avoiding Family Disputes

Published by Eileen Kelley on | Permalink

The recent Wisconsin Court of Appeals decision In the Matter of the Living Trust of Margaret Sheedy and Patrick Sheedy highlights not only the importance of clear drafting, but also follow through in avoiding family disputes in estate planning.  The case involves a dispute between six siblings regarding the treatment of their parent’s cabin in two successive trusts.  The first trust, drafted in 1995, in essence divided the cabin between all of the sisters, while a subsequent 2004 trust directed the cabin to be distributed to only one child as a specific bequest.  That trust was later further amended, changing the distribution to back to shared interest to be divided between the children.  The 2004 did not indicate whether it was intended to revoke the 1995 trust.  Although the parents created both trusts together, one parent completed four amendments to the 2004 trust after the death of the other parent.  It was not clear from the 2004 trust whether one of the grantor parents had the ability to amend the trust following the death of the other.

At the time of the surviving parent’s death in 2012, the cabin was titled in the name of the 1995 trust, and it was unclear which of the trusts or trust amendments governed its disposition.   A group of the siblings argued that it was the 1995 trust that controlled the cabin’s disposition because of the title. Unsurprisingly, the sibling who was to receive the cabin outright under the 2004 trust argued that, though that trust did not explicitly revoke the 1995 trust, the 2004 controlled.

Ultimately the Court of Appeals concluded that the 2004 trust revoked the 1995 trust, the cabin title to the 1995 trust was not dispositive, and the surviving parent was able to amend the 2004 trust after the death of the first grantor. The sisters are to share the cabin equally.  However, the real lesson from the Sheedy case is that each of the disputes between the siblings could have been avoided had the trust documents been explicit about their intentions.  The language of the 2004 trust could have easily stated it was revoking the 1995 document.  A simple addition could have also confirmed the ability of a surviving grantor to amend the document.  The additions of these two sentences might have helped avoid prolonged litigation between siblings after the death of their parents. Additionally, the dispute about the ownership of the cabin property by the trust could have been avoided by follow-through on updating the title after the 2004 plans were in place. 

If you have questions about estate planning, please contact a member of the Stafford Rosenbaum Trust and Estates team.  

Filed Under: estate planning, trusts, trusts and estates, children

Facebook Legacy: After-Death Settings

Published by Eileen Kelley on | Permalink

As we reported in Estate Planning for Your Digital Assets, the law is rapidly developing at the intersection of death and social media.  Facebook has announced it will now enable users to direct the disposition their accounts.  Other platforms are likely to follow suit.

Facebook users can now plan what happens to their account at their death. The options include: choosing a “legacy contact” to manage the account, deleting your account permanently after death, or  keeping your account as it is. Previously, family or friends had to notify Facebook that a user had died. Upon verifying the death, Facebook would “memorialize” the account, meaning the account could be viewed but it could not be edited or managed.

Under the new system, the legacy contact may make one last post on your behalf when you die, respond to new friend requests, update your cover photo and profile, and archive your Facebook posts and photos. The legacy contact will not be able to log in as the deceased or see the deceased’s private messages.

Follow these steps to designate a Facebook legacy contact:

  • On the right side of your Facebook page, click on the downward-facing arrow to show the drop-down menu. Click on “Settings.”
  • Choose “Security,” then “Legacy Contact” at the bottom of the page.
  • Choose your legacy contact from your friends list. Choose the options you want your legacy contact to have.
  • You will be offered an option to send a message to your selected legacy contact.

If you have questions about planning for your digital or non-digital assets, please contact a member of the Stafford Rosenbaum Trust and Estates team. 

Coauthored by Holly J. Wilson and Eileen M. Kelley.

Filed Under: trusts and estates, social media, facebook, estate planning

Estate Planning for Pets

Published by Eileen Kelley on | Permalink

An often overlooked component of the new Wisconsin Trust Code, Wis. Stat. § 701.0408 authorizes pet trusts in Wisconsin for the first time.  The new statute creates a new estate planning mechanism for furry family members. 

Previously, a Wisconsin pet owner hoping to direct funds for the care of pets in the event of his or her death had to leave funds indirectly.  The enforceability of a trust created for this purpose was not clear.  But the new law confirms the validity of pet trusts to fund the care of animals in Wisconsin.

A pet trust can be created as a standalone trust or as part of a broader revocable living trust.  An individual can be appointed to carry out the terms of the trust. This need not be the same person selected as trustee of a revocable living trust.  The trust terminates upon the death of the last surviving animal it was designed to care for.  Funds not used for the pets are distributed to the trust’s creator or his or her successors.

Funding is an important consideration for ongoing care of pets. Pet trusts can provide funds for an animal’s needs, including food, toys, and veterinary care.  Pet trusts can also document instructions for care and the trust maker’s wishes for major decisions for the pet.  However, it’s not clear yet how these wishes will be treated by a Wisconsin court. This is why in addition to the funding provided in a pet trust, estate planning for pets should also involve confirming the guardianship of pets and discussing your wishes with your potential pet guardians.  

To speak to one of our animal loving attorneys about providing for your pets in your estate plan, please contact one of the members of the Trust & Estates Team. 

Mr. Fritz, the author's Miniature Schnauzer.

Filed Under: estate planning, trusts and estates, pets

Same-Sex Couples May Now Benefit from Portability of Estate Tax Exemptions

Published by Jared M. Potter on | Permalink

Since 2011, married couples in Wisconsin are able to use portability of estate tax exemptions.  This means that upon the first spouse’s death, their unused estate tax exemption would “port” over to the surviving spouse.  In 2014, each person has an estate tax exemption of $5.34 million, so a person can transfer $5.34 million free of estate tax.  Any amounts over the $5.34 million exemption would be subject to estate tax.  Portability allows a married couple to combine their estate tax exemptions for a total of $10.68 million.  For example, Spouse A dies this year with an estate worth $4 million.  Spouse B would file a federal estate tax return for Spouse A using $4 million of Spouse A’s estate tax exemption and porting over the remaining $1.34 million to Spouse B.  Spouse B now would be able to exclude $6.68 million from estate tax at Spouse B’s death.

On October 6, 2014, the U.S. Supreme Court declined review of the Wolf v. Walker, 986 F.Supp.2d 982 (W.D. Wis. 2014), thus providing marriage equality for same-sex couples in Wisconsin.  Prior to that decision, many same-sex couples prepared estate plans that closely approximated a marriage-like relationship, but likely they did not have portability of estate tax exemptions as part of their estate plan.  With the law change in Wisconsin, same-sex couples should review their prior estate plans to see if planning to use estate tax portability is a good fit. 

Like most estate planning tools, portability has advantages and disadvantages.  One major benefit of portability in estate planning is that it takes advantage of the stepped-up income tax basis of assets twice:  once when the first spouse dies and again when the surviving spouse dies.  Two step-up basis increases in assets that are held for a long time could provide substantial tax savings to a couple.  In contrast, prior to the availability of portability, one typical estate plan was to divert assets equal to the then existing estate tax exemption to a credit shelter trust.  The credit shelter trust estate plan allows for one step-up in income tax basis.  Another benefit of using portability is that it is a simple method of planning without the use of complex trusts. 

As mentioned earlier, there are some disadvantages to portability.  First, in order to use portability, the surviving spouse must file a federal estate tax return.  The filing of a federal estate tax return can be time consuming and costly.  Second, portability planning only provides tax advantages to the spouses and does not take into consideration shielding the assets from taxation for future generations. 

Each couple must weigh the potential advantages and disadvantages of using portability as a method of reducing estate tax.  It is important to discuss whether or not to make changes to your estate plan with an estate planning attorney.  If you have questions about your estate plan, please contact a member of the Stafford Rosenbaum Trust and Estates team.

Filed Under: trusts and estates, estate planning, same-sex marriage

The Best Laid Plans: Avoiding Three Common Estate Planning Mistakes

Published by Eileen Kelley on | Permalink

For many clients working with estate planners, the finished product is carefully packaged and centered around either a Will or Revocable Living Trust.  After leaving the estate planner's office, seemingly innocent decisions can undo the work done to the Will or Trust and negate clients’ intentions.  Three of these common estate planning mistakes are described below. 

Creating Joint or Payable On Death Property.  

For both financial accounts and real property, joint ownership or completing transfer on death designations can quickly create contradictions with an estate plan.   By law, jointly owned property automatically passes to the surviving joint owner upon an owner's death.  This is true both of bank accounts and real estate titled with rights of survivorship.  A Transfer on Death designation directs the account holder to transfer the asset to a specific designee upon the death of the owner.  Both joint accounts and transfer on death designations remove the account or property from the probate estate of the original owner and in many cases this may be a desired result.  But often such designations are undertaken without regard for the overall estate plan and create inconsistencies that frustrate the carefully created plan.   For example, if an individual's Will leaves a certain gift to charity, but the individual later changes his or her bank account to a joint account, there may no longer be funds available in the probate estate to complete the gift in the Will.   Similarly even if a trust leaves a residence to all of the owner's children, if the property is in fact held in joint tenancy with just one of the children, the property will pass to automatically to that child.

Not Updating Beneficiary Designations.

Many people’s largest asset are retirement accounts and life insurance policies. The disposition of these accounts as a general rule is not governed by a Will or Trust.  Instead upon an individual's death, these accounts will be distributed according to the beneficiary designation on file with the account or policy holder.  Often these accounts and policies are employer sponsored meaning beneficiary designations are completed  upon starting a new job and promptly forgotten about.  It's not uncommon to find beneficiary designations directing that benefits be paid in a manner that is vastly different from the disposition in a more recent estate plan.  Therefore, updating beneficiary designations is an essential part of any overall estate plan and ongoing diligence is required to be sure that later beneficiary designations complement the overall estate plan.

Failing to Fund A Revocable Living Trust.  

A Revocable Living Trust only governs the disposition of the assets that are transferred to the Trust. This is typically accomplished by retitling assets, including bank accounts and real estate into the name of the trust.  For many, one of the primary goals of a revocable trust is probate avoidance, but this is only accomplished if all of the assets that otherwise would have been probate assets are instead held in the name of the trust at death.


If you have questions about how to structure your accounts and beneficiary designations to match your estate plan, please contact a member of the Stafford Rosenbaum Trust and Estates team.

Filed Under: estate planning, trusts and estates, children

Five Estate Planning Considerations for People Going Through Divorce

Published by Jared M. Potter on | Permalink

Going through divorce can be very difficult, stressful and painful, so it is not uncommon for divorcing parties to neglect their estate plan. But what would happen if you died during the divorce process or shortly thereafter? Who would make healthcare or financial decisions for you if you were incapacitated during a divorce proceeding? Who would receive your share of the marital estate? Who would care for your children? For most people, these questions would create additional unwanted anxiety. However, with some simple planning, these concerns can be extinguished. Here are five estate planning tips for a person going through a divorce or for someone who recently divorced:

1. Change your power of attorney for health care. During marriage, most people draft powers of attorney for health care (and finances) designating their spouse as the primary agent. This would allow the spouse to make health care decisions if the party is unable to do so. Under Wisconsin law, if your spouse is your agent, then they remain as your agent until judgment of divorce is granted. For someone going through a divorce, they would probably cringe at the thought of their soon-to-be ex-spouse making health care decisions for them. It is a good idea to revoke the previous power of attorney for health care and execute a new power of attorney for health care with new agents chosen by you to make health care decisions if you are unable to do so.

2. Change your power of attorney for finances. Similar to the power of attorney for health care, if you and your spouse drafted a power of attorney for finances during your marriage, it is very likely that the primary agent is your spouse. Under Wisconsin law, if your spouse is your agent and a petition for divorce is filed, then your spouse can no longer act as your agent. While this alleviates the concern of the spouse acting contrary to your interest, it does not provide for another agent to act for you. It is a good idea to revoke the previous power of attorney for finances and execute a new power of attorney for finances with new agents chosen by you to make financial decisions if you are unable to do so. 

3. Draft a living will. A living will is a document that declares whether or not you would like life sustaining procedures instituted in the event that you have a terminal condition or have a permanent loss of consciousness. If you do not revoke the health care power of attorney as suggested above, your spouse may be able to make decisions regarding whether or not you receive life sustaining procedures.

4. Draft a new last will and testament to designate guardians for your children. While your soon-to-be or ex-spouse is the most likely candidate to be the guardian of any minor children, I recommend that the client choose new guardians listed in a last will and testament. In the event that your spouse is deemed unfit to care for the children or was to die, then the designation of new guardians in your last will and testament would serve as evidence of your wishes regarding who should be the guardian of your children.

5. Draft a trust for the benefit of your children. For many divorcing couples, financial concerns are the cause of divorce.  Under Wisconsin law, if you were to die during a divorce, your estate would pass according to your current estate plan. Typically, this would give your estate to your currently divorcing spouse.  However, with a properly drafted revocable trust and last will and testament, if you were to die during divorce your estate plan could divert some of your estate (you cannot completely disinherit a spouse under Wisconsin law) to a trust for your children’s benefit. The trust could list persons other than your ex-spouse as the trustee to manage the assets on the children’s behalf.

It is important to discuss whether or not to make changes to your estate plan with your divorce attorney and estate planning attorney. If your divorce is already pending, there may be temporary orders in place preventing you from making these changes.  If there is not, these simple tips could help protect your estate and your children if tragedy was to strike.

If you have questions about estate planning considerations and your divorce, please contact a member of the Stafford Rosenbaum Trust and Estates team.

Filed Under: trusts, will, trusts and estates, children, divorce

Who needs a Will?

Published by Eileen Kelley on | Permalink

A Will is the formal legal document setting out who receives your property at your death and who should oversee the process of gathering, inventorying and distributing your assets.  Who needs a Will? In short, most people.  

For many the key motivation to creating a Will is to set out who should inherit their property. If an individual dies without a Will, his or her estate is distributed according to a set of laws known as the intestacy statutes.  In a way, these laws make up the government’s best guess as to how an individual would have liked their probate estate to be distributed based on his or her family situation. For example, the Wisconsin intestacy statutes provide that if a married man with no children died without a Will, all of his property would pass to his spouse.  Similarly, the property of an unmarried woman with three children would be divided equally between her children. Having a Will to direct the distribution of property is especially essential for those for whom intestacy makes the wrong guess.  So, who needs a Will?

Single Adults without Children.  With no surviving spouse or domestic partner and no children or descendants, the Wisconsin intestacy statutes say an individual’s estate would be distributed to his or her parents if they are living. This distribution would be one half to each parent. If there are no living parents, the assets would be divided between an individual’s siblings. If no siblings, then to the grandparents; if no grandparents, then to aunts and uncles and on and on until a class of living relatives is found to inherit the assets. Not only can it be costly to identify who the closest relatives are, for many this will not be the desired distribution.

Unmarried Adults without Children.  The intestacy laws make no account for the increase in committed non-married relationships, unless the couple is married or are registered domestic partners.  If an individual in such a relationship dies without a Will, the survivor is not entitled to share in the probate assets in any way.

Blended Families.  Wisconsin’s intestacy laws are quite complicated for blended families.  In essence, the law provides that if a married individual dies without a Will and with children from a previous relationship, that individual’s estate is divided one half to the surviving spouse and one half is further divided among the surviving biological or adopted children. Based on the length of the marriage and the age of the children in some situations this formula may award too much to the surviving spouse and in others too little.  A Will allows for a more thoughtful and situation-specific allocation between children and surviving spouse.  

Those with Informally Adopted Children.  Children who have been raised as if they are a member of the family, but have not been legally adopted are not accounted for in the intestacy laws. Grandparents of un-adopted stepchildren should also be particularly cautious to include them in a Will.

Those with Specific Assets.  For those in first marriage situations, it may seem like the intestacy laws make the right assumption.  Indeed, many couples create Wills leaving all of their property to each other.  But, under the intestacy laws this gift is absolute.  Even if couples want to leave 99% percent of their assets to one another, there likely are some assets that they would direct elsewhere.  For example, the surviving spouse may not be the person the deceased spouse would have chosen to receive grandma’s jewelry or a father’s gun collection.  Additionally, intestacy does not account for items of sentimental value that a particular friend or colleague may enjoy. Estate planning allows an individual to think about and documents his or her wishes for these types of items. This is especially important for valuable items, because a surviving spouse may incur gift tax liability for gifting an item to the intended recipient as the intestacy laws provide that the surviving spouse receives all the property.  There is no gift tax associated with leaving an item to an individual in a Will.

Anyone with Minor Children Needs a Will.  Setting aside the intestacy rules, a Will is the only place that parents can nominate a guardian for their minor children in the event that both parents have died.  Also, unless a Will or Trust further restricts the assets, children who inherit through intestacy have full control of what they inherit when they turn twenty-one.  This may be before they are able to be trusted to wisely invest the assets.  For these reasons a Will is essential for parents of young children.

If you have questions about how intestacy laws would govern your particular situation, or about how a Will or a Trust could better fit your needs, please contact a member of the Stafford Rosenbaum Trust and Estates team.

Filed Under: trusts and estates, wills, children, families

Estate Planning for Your Digital Assets

Published by Michelle Affatati on | Permalink

So your estate plan carefully addresses disposing of your home, car and bank account.  But what about your digital assets? 

There are two different types of digital assets.  One type is assets such as bank and investment accounts that you manage online which are really no different than accounts you manage with a paper trail.  The biggest difference is how these accounts are accessed.  The other type of digital assets are those that only exist digitally – iTunes, Shutterfly,, etc.

There is real value in our digital assets.  Think of the amount of time and money you’ve spent building your iTunes or Kindle library.  A 2011 study by McAfee, Inc. revealed that U.S. consumers placed an average value on their online presence at $55,000.00.  And, of course, many people have gone paperless in managing financial accounts – bank accounts, investment and retirement accounts are frequently handled online.  There is non-monetary value associated with our digital assets too.  What about the volumes of information and photos on Facebook? 

Many people have both types of digital assets and should consider addressing both in an estate plan.  As is typical, laws lag behind reality.  There is very little activity in the Wisconsin legislature or the courts regarding disposition of the ever-growing area of digital assets.  Despite the legislative void, you can, nevertheless, take steps to provide for your digital assets at your death or incapacity. 

The first step is to make an inventory of your digital assets and determine what is important enough to address in estate planning.  This would, of course, include bank and investment accounts, but you may not care if your Pinterest account dies with you.  With this inventory, you should include usernames, passwords, PIN’s, security questions (and answers) – whatever a personal representative or other fiduciary might need to access the digital asset.  This inventory could simply be kept on a piece of paper with your estate planning documents.  There is also a growing availability of online services that purport to safely store all information regarding online accounts in one place.  So although you have wisely used a different password for every online account you have, your personal representative only needs the one username and password to access the online password storage service.

The second step is to review the online accounts to determine if the service itself has provisions or even requirements for dealing with the account at the holder’s death or incapacity.  For example, Google introduced a service in April called “Inactive Account Manager.”   This feature allows a user to designate up to ten people to be notified (after notice to the account holder) when a Google account remains inactive after a certain period of time, and what happens to data stored through Google.  Many websites also include provisions for inactive accounts in the Terms of Service (TOS) language.  You may have unwittingly agreed to such provisions by clicking “I Agree” when you signed up for the online service. 

One current Wisconsin statute allows a person to leave a “separate writing” for tangible assets.  This is typically used to leave a sentimental tangible item to a specific person, without committing to the bequest in a will.  For example, a person might leave a piece of heirloom jewelry or specific artwork to a particular child.  Separate writings may be easily changed from time to time, without the more tedious process of modifying a will or trust.

Although digital assets are not exactly tangible assets (you can’t pick up and move an iTunes library), a separate writing to document and dispose of digital assets may be a viable option.  And like the separate writing for tangible personal property, a separate writing should be kept with your will.  But note that such a separate writing is only as good as you UPDATE it.  Online services often require you to change your password – this also requires an update to a separate writing. 

At the very least, it is advisable to incorporate some type of mechanism in your estate plan for informing your personal representative (or executor), trustee and agent of your digital assets.  The bottom line is that estate planning requires a person to get their financial house and Internet house in order.

Filed Under: estate planning, digital assets, social media