Not really a blog post, but I would like to share with everyone that I am now a certified yoga instructor. How does that help me in my law practice? Not sure yet, but it was another type of challenge for me to master. I guess I am finding it is not enough to just be in an intellectual space all day, the physical is just as important. I will use my new skill as needed for charitable events and such. As of now, I am leading a community practice on Sundays at 6:15 pm at Kadish Park. In the cooler/rainy weather we move to the Quaker House. Everyone is welcome. Would love to see you.
Wisconsin can sometimes be in the forefront of estate planning legislation and they have done it again this month in passing new laws regarding the handling of digital property. Digital property would be such items as an email account, facebook, linkin, or twitter account. The Wisconsin law governs the disclosure of digital property in a person’s estate to a personal representative or special administrator, to an agent under a power of attorney, to a trustee of a trust, or to a conservator or guardian of a protected person. Instructions can be made for disclosure to such representatives through a will, trust, power of attorney, or other governing instrument.
The ability access such accounts and modify them or cancel them is an important one in this day and age of highly utilized technology. The new law does not change or impair the rights of the digital provider under the entity's service agreement, but it does advance the cause of the user's representative to handle matters for or on behalf of the user.
Perhaps it is time to review your documents to ensure that that you have provided such authorization in your documents and your digital assets can be controlled along the same manner as your physical assets.
This week an old client I hadn't seen or heard from in 9 years called and sheepishly told me he went to see another attorney some years ago and begged me to allow him to return to me for his estate planning. He didn't have to beg, of course I am pleased to see him and told him that repeatedly. He feels he was conned into seeing this other attorney by a financial planner who was after his business. The planner offered a free review of his financials and then insisted on him getting new estate documents with the planner's attorney referral.
Please don't ever allow yourself to feel pressured by any of your advisors. You have the right and the power to ask questions, take your time to consider matters, do your homework and really investigate who you are working with. Ask the advisor if there is a relationship and what the relationship is with any of the referrals made.
As to his "new" documents they aren't bad, but they aren't good either. They contain a lot of boiler plate that is not applicable to him or his situation. The "new" attorney did get him to execute a financial power of attorney which I was never able to get him to create, (good for them) but they also created a revocable trust that was totally unnecessary and serves no legitimate purpose in his plan. I am going to fix things up for him and hopefully the next time he feels pressure to do something, even from me, he asks questions and gets answers.
Recently a woman came to my office, her partner of 32 years had just died rather suddenly at age 70. Neither of them had children, nor had they been married to any one else nor to each other. I was very sad to tell her that there was nothing I could do for her. His legal heirs would be his nieces and nephews, regardless of the fact that there was no close relationship with any of them. Wisconsin does not recognize common law marriages. In fact there are only a very few states which recognize common law marriages. Not only did she not have any inheritance rights to his investment and bank accounts, she also would not be entitled to his social security. What she did have were the funeral bills and creditors calling her for payment for his last medical expenses. Luckily she is not liable for his bills, but she still has to deal with the annoyance of the phone calls during her time of grief.
I can't stress the importance of an estate plan for everyone, but it is even more important for those who are not married. If nothing else if you don't engage an attorney to provided you with estate planning services, those who are not married should at least use payable on death (also known as transfer upon death) accounts for their bank accounts and investments to transfer assets to their partner if that is the objective. These beneficiary designation forms are obtained from the financial institution and may be changed as often as the person wishes. Of course, this does nothing to help with other types of assets nor does it give a person the right to make medical decisions or financial decisions while the partner is living which is part of why it is so very important to see an estate planning attorney.
Today, a client told me that he was honored that his parents selected him out of the four children to act as the Personal Representative of their estates, but now after acting as such for the past couple of months he wasn’t so sure it was an honor. It has been a daunting task for him. This isn’t the first time I have heard this complaint from a client and I am sure it won’t be the last.
But let me digress a moment and define what I am referring to before I explain further. The term personal representative is another word for an executor (male) or executrix (female). Back when I was in law school the title was changed to ‘personal representative’ to make the language gender neutral.
Now the job of the personal representative in an estate varies depending on the situation. But in general he or she is responsible for marshaling all of the assets, paying the bills, providing an accounting of such, selling such assets (if they need to be converted to cash), cancelling all the household and personal accounts and then distributing everything according to the Will.
Cancelling household and personal accounts can be time consuming. Just think about the last time you had to call the cable company to cancel or modify your subscription. You might have been in voice mail hell for hours. Marshaling all the assets may take time and detective work if records are not kept current or are disorganized. Besides that issue, each stock transfer company or brokerage house has their own rules and requirements for liquidation and of course a ton of paper work. Before selling a house owned in an estate the house may have to have repairs made and thus, there is the calling and arranging for contractors and workers. The personal representative may also need to be on site to see that the job is done according to plan. There are also certificates of compliance to obtain and the scheduling of inspections from the village/town/city where the house is located.
Consequently, in selecting a personal representative, you want someone who is organized, patient and has the time available. Knowledge of financial matters and the basic ability to keep records and balance check books would help too.
So who do you select? Generally one of the kids who is in town. But maybe that is not always best. Are there alternatives? Your attorney can act as the personal representative. Do I act as such? Yes, on occasion. I really do decline most requests unless it is a situation where there really is no one else. Ethically we are not to place ourselves in the position so that a client feels we are the client’s only choice. However, I am thinking more and more, that since I do have the skill set necessary, perhaps I should be more open to acting as such when clients do ask me. Obviously the choice is ultimately yours, but if nothing else in the planning stage I would encourage discussing the future responsibilities with your intended selection before just naming them as such in your document.
Note: In Wisconsin the personal representative is entitled to compensation for acting as such. As a general rule they are entitled to 2% of the estate. If your attorney is acting as the personal representative they may receive the percentage or they may bill based on their customary hourly basis, but not both.
I hope that this is of help to you and again feel free to comment or ask questions.
Effective July 1, 2014, Wisconsin has adopted new legislation affecting trusts. The new law is based on the Uniform Trust Law provisions and pertains to all types of trust. Most of the new law is very helpful and will be quite favorable. For example, pet trusts are now official and sanctioned in Wisconsin. Before they were allowed by the discretion of the courts. There are still some issues unresolved and a few things that clients may not like. One of the possible issues that may be distasteful for some is the requirement of giving notice to potential future beneficiaries of a trust. Many individuals will not like that requirement. With the change in law, it may very well be time for clients to review with their legal counsel their current trusts to make sure that the trust is in conformity with the law or override the law if that is what they desire.
My mother sends me emails everyday sent to her by others. Some are funny, some are charming and others are just plain wrong. Today's email was about the current tax rates and how someone can send out such erroneous information is beyond me. So if there is any misconception out there about the current (2014) tax rates let me clarify.
The Federal estate tax rate maximum is 40%. That is the rate applied to estates or to gifts in excess of $5,350,000 and only to transfers to someone other than a spouse. The amount of $5,350,000 is adjusted each year in accordance with inflation. Transfers to a spouse have no transfer tax applied to such a transfer. The top Federal capital gains rate is 20%, however an additional tax maybe applied to high income earners of an additional 3.8% for a total tax rate of 23.8%. Collectibles are taxed at 28%. The top Federal income tax rate is 39.6% and also may have the additional 3.8% tax applied for high income earners. Social security tax on wages is an additional 15.3% - one half is paid by the employer and one half is paid by the employee. Social security tax is a combination of social security and medicare tax.
Knowing the tax rates is just as important as paying attention to your investments. So work with your accountant or your tax advisor to understand your particular tax situation.
I know you are all wondering what in the world is a gamete. Well that is your reproductive material - either sperm or ova. Why the heck would I, an estate planning attorney, be writing about that. Well I will tell you. In this wonderful world of modern medicine, reproductive technology has a tremendous impact on estate planning. The freezing of ova and sperm for later usage is no longer the story line from a science fiction book or movie, it is now almost a common place practice and rapidly expanding. Today - in the U.S. alone there are over 6 million children conceived using some type of reproductive technology. Sometimes these children are born long after a parent/grandparent's death. These posthumously conceived children are real possibilities and planning for such a possible eventuality - whether it is for your children or grandchildren - is an important component of an estate plan. So in the interest of being thorough I am going to ask you about your feelings and thoughts with regards whether you would like such children to inherit or not when discussing your estate plan. It is also important to plan for the eventual disposition of remaining gametes in an estate plan. Thus, I am going to be a bit nosy, and ask you if you are storing genetic material, or if your children are. I prefer to be proactive and not leave such an important consideration to chance, particularly when there is so little judicial precedent. I am going to guess that you have some definite opinions as well and would like to see your desires with regards to inheritances for these children set forth in writing. Of course having an estate plan is even more important for you to create if you are using medical reproductive technologies as there may not be a right under Wisconsin law for posthumously conceived children to inherit if there is no Will. Thus, if you want to provide for such children you must have a testamentary document in place.
Recently, the Wisconsin Supreme court decided that third parties (in this case step-children) could sue to invalidate a second marriage after the biological parent and step-parent were deceased and thereby, if successful, alter the estate plan set up by the deceased. This decision, although based on very unique and specific facts, reminded me that even the best thought out and executed estate plans can go awry. The easy remedy to this is to make sure to consult with legal counsel when any major changes in one's life occur including a remarriage. It is also important to disclose any possibility for potential dissension within the family to your legal counsel when creating your estate plan. I guess the old adage, an ounce of prevention is worth a pound of cure, even applies to one's estate plan.
One of my favorite things to do in an estate plan is to create pet trusts. Being an animal lover myself, I understand the importance of a pet in a household and the bond shared between human and animal. It is a misnomer that pet trusts are just for the rich or for the eccentric. Pet trusts are for those individuals who for one reason or another need to protect their animals. Most often, the clients who request pet trusts are single and with no children, but that is not always the case. Recently I created a very complicated pet trust for quite a number of animals residing with a rather young couple who had a strong desire to make sure that the animals would be properly cared for if something should happen to one or both of them. Each pet trust I have created is unique and different just as all animals are unique and different. Cats don't like changes very much and one of the pet trusts which I created, that is currently operational, allowed for a caregiver to move into the home to take care of the cats. When the last cat dies, (which we hope will be many years off) the caregiver may purchase the residence for a nominal amount in exchange for the caregiver's services. But for now, the caregiver is living in the home rent free and the trust is paying for the vet bills and expenses of the house and cats. The cats are doing well - happy and health in their own home and the caregiver is providing them with all the love and care they need.