Frequently Asked Questions

What is the most common estate planning mistake? 

The most common estate planning mistake is not making any plan at all.

If an individual dies without a Will or other legal document providing basic distribution instructions, the laws of the decedent’s home state will direct how the estate assets are distributed.  The state courts will select an individual to administer the estate.  The state courts will also select an individual to raise any minor children of the decedent.

A valid Last Will and Testament will allow the desires of the deceased individual to control the distribution and selection process.  If the individual wants to avoid probate, then the preparation of a revocable living should be considered.

What is a Will?

A Will (also called a Last Will and Testament) is a legal document in which a person (the testator) sets forth his or her instructions for the distribution of property upon death.  In addition to designating the individuals or organizations that will receive assets upon the testator’s death, a properly prepared Will should:

  • Identify the person that will serve as personal representative of the estate.  The personal representative will be responsible for the management of the estate until the final distribution of estate assets.  Management activities include the payment of bills and taxes.
  • Identify the individuals that should raise any young children of the testator if both parents of the children are deceased or otherwise unable to act.
  • Place any desired restrictions on the distributions to the estate beneficiaries.  For example, the share of a young child might be held in a trust for the benefit of the child until he or she reaches 24 years of age.

What is a revocable living trust?

A revocable living trust (also called a living trust or a revocable trust) is legal document created during a person’s lifetime that directs how that person’s assets are to be managed during his or her lifetime and also directs how the assets are to be distributed upon death.  Revocable living trusts are generally designed to avoid the need for probate administration.

The person who creates a trust is called the settlor or grantor.  A revocable living trust can be changed or revoked by the settlor, provided that person is alive and is mentally competent.  A revocable living trust generally becomes irrevocable (not subject to changes or revocation) upon the death of the settlor.

The person responsible for the administration of the trust is the trustee.  A person creating a revocable living trust often names himself or herself as the initial trustee.  The trust document will designate the person or organization that will act as the successor trustee is the event of the death or incapacity of the original trustee.  The trust will also contain detailed instructions telling the successor trustee how the trust assets are to be managed and distributed.

An advantage of a living trust is that property can pass to beneficiaries after the death of the settlor without going through probate.  A drawback is that buying, selling and managing assets with a living trust can be more cumbersome while the settlor is alive.  The preparation of a revocable living trust is also more complicated and expensive than a Will.

What is a durable power of attorney?

A durable power of attorney (or simply power of attorney) is a written authorization that allows an appointed individual to act on behalf of another individual.  The person authorizing the other to act is the principal.  The person receiving the authority to act is the agent or attorney-in-fact.

The term durable means that the power of attorney document will remain valid even if the principal becomes incapacitated at a later date.  The principal must be legally competent when the durable power of attorney is created, but the subsequent disability of the principal will not alter the legal authority of the agent.

A durable power of attorney can take effect in one of two ways.  Option one is for the document to take effect immediately upon being signed and notarized.  The other option is to delay the effective date until a future event, such as a determination that the principal is incapacitated.  A power of attorney with a delayed effective date is known as a springing power of attorney because the document must be sprung or triggered before it can be used by the agent.

A durable power of attorney gives a tremendous amount of authority to the agent.  It is essential that the principal selects an agent who is financially knowledgeable and completely trustworthy.

What is a power of attorney for health care?

A power of attorney for health care is a document that authorizes a person to make health care decisions on behalf of another person.  The person making the power of attorney for health care is the principal.  The person receiving the decision making authority is the health care agent.

The principal will generally reserve the right to make his or her own health care decisions for as long as possible.  The health care agent will be allowed to act only if the principal becomes incapacitated at some future date.

It is recommended that the power of attorney for health care include written guidelines that the agent can follow regarding life support and other end-of-life issues.  The principal and agent should also have discussions regarding health care preferences.  Proper instructions and discussions will make the decision making process less stressful for the health care agent.

What is the guardianship of an adult?

An adult guardianship is a legal proceeding in which a court determines that a person who is at least 18 years of age is not competent to make his or her own decisions.  That person is known as the ward.  The court removes the ward’s authority to make decisions and gives that authority to the court appoint guardian.  The guardian is often a relative or friend of the ward, but such a relationship is not required.

In Wisconsin, the guardian can be a guardian of the estate, guardian of the person or both.

A guardian of the estate is appointed by the court when financial activities need to be taken on behalf of the ward.  Financial activities can include selling real estate, making investment decisions, paying bills or pursuing legal proceedings that involve monetary issues.

A guardian of the person makes personal decisions on behalf of the ward.  These decisions include where the ward lives and decisions about medical care.

The removal of the ward’s right to make decisions for himself or herself is an important distinction between a power of attorney and a guardianship.  With a power of attorney, the principal voluntarily gives authority to the agent, but the principal retains his or her legal rights.  These rights including the principal’s authority to revoke the power of attorney at a future date.  A guardianship proceeding does not require the consent of the ward, and the ward does not have the authority to revoke the proceeding.

Guardianship proceedings can place undue stress on a family because of the need to prove that the ward is incompetent or incapacitated.  Those are not labels that most people desire to place upon a family member.   The best was to avoid the need for a guardianship is for a person to properly complete a durable power of attorney and a power of attorney for health care.

In some situations, a guardianship can be necessary despite a family’s best efforts.  For example, an older adult might engage in some compulsive activity that severely endangers the person.   The mere existence of a power of attorney isn’t sufficient to prevent the person from continuing the harmful conduct.  A guardianship will be necessary to legally remove the ward’s decision making authority in that area.

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