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Understanding Estate Planning In Wisconsin

Understanding Estate Planning In Wisconsin

When you think about the future, you’re likely concerned about protecting what you’ve worked for and making sure your loved ones are safe. The right estate plan helps you do both. However, in Wisconsin, this process can come with some unique twists. 

In this post, we’ll guide you through everything you need to know about creating the perfect estate plan in the Badger State. We’ll discuss the essential documents and strategies that will help you make the most of your legacy. With the right plan and a little professional help, you and your loved ones will have plenty of peace of mind.

Let’s get started!

What Is Estate Planning?

Estate planning involves setting up a strategy for how your assets will be handled and shared before and after your passing. The proper plan makes sure your assets are transferred to those next in line in the way you’ve always envisioned it. It also helps minimize what you’ll owe Uncle Sam and provides vital instructions for your care if you become unwell.

An estate plan includes legal documents (more on those later) that specify how your property should be managed, who will make decisions for you, and how your minor children will be cared for. The main purpose of these documents is to prevent disputes within your family while making sure your honest intentions are respected. 

Estate planning also involves designating beneficiaries for your assets. This could include setting up something like a transfer on death designation, allowing specific assets to skip probate and go straight to your chosen recipients.

Note: Please don’t think estate planning is just for the ultra-wealthy. This process is important for anyone wanting to decide what happens to their property and assets, ensure their loved ones are cared for, and make their healthcare preferences clear.

What Makes Estate Planning In Wisconsin Unique?

Estate planning in Wisconsin has some unique characteristics that set it apart. Understanding these nuances can help you make better decisions about how your assets will be handled in the future. Consider the following:

Community Property Laws: Wisconsin is one of the few states that upholds community property laws. This means most assets acquired during your marriage are considered jointly owned. When one spouse dies, their share of the community property typically transfers over to the surviving spouse, unless a will or other legal document specifies otherwise. This unique law can significantly impact how your estate is divided as well as the taxes that are involved.1 

Inheritance Laws: If you pass away without a will in Wisconsin, the state’s inheritance laws will determine how your assets are distributed. Typically, your estate will first go to your spouse and children. However, if you have no spouse or children, it might be distributed to other, potentially more distant relatives. It’s very important to understand these laws. With the right plan in place you can make sure your preferences are adhered to, rather than defaulting to state law.2

Please Note: You can learn more about Wisconsin’s unique laws by reviewing the rules under Wisconsin’s Marital Property Act. Visit the State Bar of Wisconsin’s website here. This site provides more details that might apply to your unique estate planning situation in relation to your marriage and passing.3

Understanding Probate In Wisconsin

In Wisconsin, like elsewhere, probate is the legal process to authenticate your will and allocate your assets. This involves submitting the will to the court, cataloging your estate’s assets, settling any debts and taxes, and distributing the remaining assets to your beneficiaries. The duration of this process can vary quite a bit. It can range from several months to over a year. It will depend on the conditions of your estate. 

However, by being proactive with your estate planning and understanding estate planning law, you can establish trusts and draft a will, making this process a lot smoother. You can even create a plan that avoids probate altogether, saving your loved ones a lot of time and hassle.

Essential Estate Planning Documents

The quality of your estate plan depends on the legal documents you have in place. The proper paperwork will ensure your wishes are followed and provide clarity and direction for your loved ones. Here’s a breakdown of what to look for: 

Wills: Think of a will as the bedrock of your estate plan. Your will is what determines who gets your assets after you pass away and designates who will take care of your kids. Remember, without a will, the state of Wisconsin will decide who gets what, which may or may not align with what you want. 

Trusts: Trusts can be very powerful in helping you manage your assets before and after your passing. A trust allows you to move assets directly to the hands of your beneficiaries, skipping probate and possibly reducing estate taxes. That said, there are several trust options available. These include revocable and irrevocable trusts, each with their own set of benefits and limitations. Be sure to get clear on your objectives for having a trust and weigh the pros and cons before incorporating one into your estate plan. Not every situation will require this level of planning. 

Power of Attorney: A power of attorney gives a trusted person the legal authority to make decisions for you if you’re unable to do so yourself. Financial power of attorney makes sure your finances are managed according to your wishes, avoiding potential conflicts and maintaining continuity in your financial affairs.

Healthcare Directives: Also known as a healthcare power of attorney, this documentation lets you appoint someone to make medical decisions on your behalf if you can’t do so. It often includes a living will, which details your medical treatment preferences in specific scenarios. Having these healthcare directives are particularly important. They can provide your loved ones with enormous relief during very challenging times. 

Other Important Legal Documents: These might include guardianship designations for minor children, beneficiary designations for retirement accounts and life insurance policies, and transfer on death deeds for real estate. The exact paperwork you need will depend on you and your unique estate planning circumstances. 

Strategies To Reduce Your Taxable Estate

You’ve worked hard to get to where you are. Don’t let a strategic oversight prevent you from leaving all you can to those you love and the causes you care about. Below are several strategies to help minimize estate taxes:

Annual Exclusion: Every year, you can gift up to a certain amount per person without incurring gift taxes. For 2024, this caps out at $18,000 per recipient. This strategy allows you to reduce the size of your taxable estate gradually while providing for your family and friends. If you’re married, you and your spouse can give twice the amount ($36,000 in 2024) to each person.

Lifetime Exclusion: In addition to annual gifts, you have a lifetime gift tax exclusion amount. This maxes out at $13.61 million in 2024. Using this exclusion strategically can help you transfer significant assets tax-free over your lifetime. 

Direct Education Payments: You can also reduce your taxable estate by paying for someone’s tuition directly to the educational institution. These payments won’t count against your annual or lifetime gift tax exclusions. If you’re looking to put loved ones through school while protecting your wealth, this can be a stellar option.

Direct Medical Payments: Similar to education payments, paying medical expenses directly to the provider is another savvy way to reduce your taxable estate. These payments also do not count against your annual or lifetime gift exclusions.

Donor-Advised Funds: By creating a donor-advised fund, you can make charitable contributions and receive immediate tax deductions. You’ll be able to recommend grants from the fund as time goes on. You can also make multiple years’ worth of contributions at the same time, which can be a shrewd tax move depending on your situation. 

What Professionals Help With Estate Planning In Wisconsin? 

When it comes to creating the right estate plan, you’ll want multiple professionals at your side. Here’s a look at some of the expertise you’ll want in your corner during the process:

Estate Planning Attorneys: A skilled Wisconsin estate planning attorney is essential for creating and maintaining your estate plan. They can help you draft wills, trusts, powers of attorney, and healthcare directives. They’ll also be instrumental in making sure legal documents comply with state law and reflect your wishes. 

Tax Professionals: Understanding the tax implications of your estate planning decisions can get overwhelming fast. That’s where a tax professional comes in. They can offer valuable insights into how to minimize estate and gift taxes, structure your estate to take advantage of tax-saving opportunities, and maintain compliance with all relevant federal and state tax laws. 

Financial Advisors: A financial advisor helps integrate your estate plan with your overall financial plan. They’ll help you consider your investments, retirement planning, and wealth management, making certain that your estate plan aligns with your long-term financial goals. 

Estate Planning In Wisconsin FAQs 

How much does estate planning cost in Wisconsin?

In Wisconsin, the cost of estate planning can differ significantly based on the complexity of your situation and the professionals you choose. Estate plans that are simple, such as basic wills and powers of attorney, might cost a few hundred dollars. More complex plans, involving trusts and extensive legal documents, can easily start costing thousands. That said, the right estate plan can save you and your loved ones plenty of headaches, time, taxes, and other expenses. 

Do you need an attorney to settle an estate in Wisconsin?

Although it’s possible to settle an estate without legal assistance, consulting with a Wisconsin estate planning attorney is highly recommended. They can make the process smoother and reduce stress. An attorney can guide you through probate, help manage and distribute assets, make sure all legal requirements are met, and much more. 

Does an estate have to go through probate in Wisconsin?

Not all estates require probate in Wisconsin. Smaller estates (i.e. those valued at $50,000 or less), may be eligible for a simplified probate process. 4 Additionally, assets held in trust or designated with transfer on death beneficiaries can bypass probate. 

However, many estates do undergo probate, which involves validating the contents of your will, settling outstanding debts, and distributing your assets under the supervision of the court system. So, if you want to spare your loved one this expensive and often time-consuming process, put the right estate plan in place!

When should a person begin estate planning?

It’s never too early to start estate planning. You can begin as soon as you have assets to protect or dependents to care for. Major milestones in life like marriage, having a baby, or purchasing a home are important times to either start or update your estate plan. You’ll also want to conduct regular reviews once you have a plan in place. This helps make sure it’s aligned with your current circumstances and wishes.

Let Us Help You With Estate Planning In Wisconsin 

At Uncommon Cents Investing, we understand the importance of a well-structured estate plan. We have several estate planning attorneys and tax experts within our highly vetted network, and can recommend professionals to help you through the process. That said, we’re also happy to collaborate with any pros already on your team!

Don’t wait until it’s too late. Contact us today to schedule a consultation and make sure the right estate plan is in place. Let us help you achieve the inner peace that comes with knowing your legacy and your loved ones are secured. 

Citations:

  1. https://www.investopedia.com/personal-finance/which-states-are-community-property-states/#:~:text=The%20nine%20community%20property%20states,Texas%2C%20Washington%2C%20and%20Wisconsin
  2. https://www.nolo.com/legal-encyclopedia/intestate-succession-wisconsin.html
  3. https://www.wisbar.org/forPublic/INeedInformation/Pages/Marriage-Marital-Property.aspx
  4. https://www.nolo.com/legal-encyclopedia/wisconsin-probate-shortcuts-32038.html#:~:text=Simplified%20Probate%3A%20Summary%20Settlement%20of%20Small%20Estates&text=If%20you%20leave%20behind%20a,Ann.
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More About the Author: Sheena Hanson

Sheena is a highly regarded financial professional known for her clear explanations and practical advice on complex financial matters. She earned her CERTIFIED FINANCIAL PLANNER™️ designation in 2010 and holds a Bachelor of Science degree in Finance from the University of Wisconsin LaCrosse.