Protecting Your Assets in Wisconsin: Estate Planning Essentials

In Wisconsin, the basic estate planning documents you should consider include: 1) A Last Will and Testament that directs how your assets should be distributed; 2) A Durable Power of Attorney for financial matters that allows someone to manage your finances if you're incapacitated; 3) A Healthcare Power of Attorney that designates someone to make medical decisions for you; 4) A Living Will (also called an Advance Directive) that outlines your end-of-life care preferences; and 5) Potentially a Trust, depending on your specific situation and asset level. These documents form the foundation of asset protection planning in Wisconsin.

Whether you need a trust in Wisconsin depends on your specific circumstances. A will may be sufficient if you have a modest estate and straightforward distribution wishes. However, a trust might be beneficial if: 1) You want to avoid probate (which can be time-consuming and costly in Wisconsin); 2) You have minor children or beneficiaries with special needs; 3) You own property in multiple states; 4) You want more control over when and how beneficiaries receive assets; or 5) You're concerned about privacy (wills become public record during probate, while trusts generally remain private). Consider consulting with an estate planning attorney to determine the best approach for your situation.

In Wisconsin, probate is the court-supervised process of validating a will, paying debts, and distributing assets after death. It typically takes 6-12 months but can extend longer for complex estates. You can avoid probate through: 1) Creating a revocable living trust and transferring assets into it; 2) Setting up payable-on-death designations for bank accounts; 3) Using transfer-on-death registrations for securities and vehicles; 4) Holding property in joint tenancy with right of survivorship; 5) Using beneficiary designations on retirement accounts and life insurance policies; and 6) Taking advantage of Wisconsin's 'Transfer by Affidavit' procedure for estates under $50,000 (without real estate) which allows heirs to collect assets without formal probate.

If you die without a will in Wisconsin (called dying 'intestate'), state law determines who inherits your assets. Under Wisconsin's intestacy laws: 1) If you have a spouse but no children, your spouse inherits everything; 2) If you have a spouse and children with that spouse, your spouse inherits everything; 3) If you have a spouse and children from another relationship, your spouse receives half and your children share the other half; 4) If you have children but no spouse, your children inherit everything equally; 5) If you have no spouse or children, assets go to parents, siblings, or more distant relatives in a specific order. This state-determined distribution may not align with your wishes, which is why having a will is important.

To protect assets from long-term care costs in Wisconsin: 1) Consider long-term care insurance while you're healthy; 2) Explore an irrevocable trust (assets transferred at least 5 years before needing care may be protected from Medicaid spend-down requirements); 3) Look into Wisconsin's Medicaid program (called ForwardHealth) and its eligibility requirements; 4) Investigate Wisconsin's Estate Recovery Program to understand what assets may be claimed after death if you receive Medicaid; 5) Consider converting countable assets to exempt assets under Medicaid rules; and 6) Explore a Medicaid-compliant annuity. These strategies require careful planning, often 5+ years in advance, and should be implemented with guidance from an elder law attorney familiar with Wisconsin's specific rules.

To protect your home in Wisconsin: 1) Include it in your will or trust with clear instructions; 2) Consider a Transfer on Death (TOD) deed, which allows property to pass directly to beneficiaries without probate; 3) Take advantage of Wisconsin's homestead protection, which provides limited protection from creditors; 4) Consider joint ownership with rights of survivorship, though this has potential drawbacks; 5) If you're concerned about long-term care costs, explore an irrevocable trust or other Medicaid planning strategies (ideally 5+ years before needing care); and 6) Maintain adequate homeowner's insurance and consider an umbrella policy for additional liability protection. Each option has different implications for taxes, control, and asset protection, so consult with an attorney to determine the best approach.

In Wisconsin, there are two main types of powers of attorney (POA): 1) Durable Power of Attorney for Finances - allows your agent to manage financial affairs if you become incapacitated, and can be effective immediately or only upon incapacity ('springing'); 2) Power of Attorney for Health Care - designates someone to make medical decisions if you cannot. Wisconsin has specific statutory forms for both types, though you can customize them. POAs must be signed before two witnesses who aren't related to you or named as agents. For healthcare POAs, witnesses cannot be your healthcare providers. In Wisconsin, POAs are durable by default (meaning they remain effective if you become incapacitated) unless specified otherwise. You can revoke a POA at any time while competent by creating a written revocation and notifying your agent.

To protect digital assets in Wisconsin: 1) Create an inventory of all digital assets (online accounts, cryptocurrencies, digital files, etc.); 2) Include specific provisions in your will or trust addressing digital assets; 3) Use a password manager and ensure trusted individuals know how to access it; 4) Take advantage of Wisconsin's adoption of the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which allows fiduciaries to manage digital property but respects your privacy choices; 5) Use online tools provided by digital platforms (like Facebook's Legacy Contact or Google's Inactive Account Manager) to designate who can access accounts; and 6) Consider creating a separate digital asset memorandum with access instructions, updating it regularly. Without proper planning, your digital assets may be lost or inaccessible to your heirs.

Wisconsin tax considerations for estate planning include: 1) Wisconsin has no state estate tax or inheritance tax, but federal estate taxes may apply to estates exceeding $12.92 million (as of 2023); 2) Wisconsin does have an income tax that may affect beneficiaries who receive income-producing assets; 3) Transferring assets during your lifetime may have gift tax implications at the federal level; 4) Beneficiaries generally receive a 'stepped-up' basis on inherited assets, potentially reducing capital gains taxes if they sell; 5) Certain trusts may have specific tax advantages or consequences in Wisconsin; and 6) If you own property in other states, you may be subject to those states' estate or inheritance taxes. Consult with a tax professional familiar with Wisconsin tax law to optimize your estate plan for tax efficiency.