ESTATE PLANNING FOR SECOND MARRIAGES AND BLENDED FAMILIES
 
I am getting remarried and I have children from before the marriage, do I need planning?: Yes, in a second marriage, if you want all of your money to go to your spouse or if you want to allow your spouse to remain in your home, but you want to make sure your children get the home after your spouse is deceased, an estate plan is necessary.

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• If I have a child from a previous marriage why would I need a will?: In Wisconsin, if you pass away without a will, there are statutes that dictate who will receive your property. In the event that you have a child that is not also your spouse’s child, half of your property would go to your spouse and the other half would go to your child or children. If you want your spouse to have more than half of your property, then you must indicate that desire in a will.
• I want my spouse to be able to stay in our home for life, and then have the home go to my children, how do I do this?: A QTIP trust allows you to leave an asset that you own, such as your home, to your spouse for use during his or her lifetime, and then pass on the property to your children. This process will be discussed further in a future article.

 
What happens to property that is only in my name?: Wisconsin is a marital property state. That is, any property obtained during the marriage (while in Wisconsin) is presumed to be co-owned with your spouse. This is true even if these assets are titled in the name of just one spouse. However, property from before the marriage, titled in the name of only one spouse, will likely be considered the sole property of that spouse, so long as the property is not co-mingled with the other spouse’s property. It is important, therefore, to consider how you would want your property to pass, and have an attorney examine your beneficiary designations and execute a marital property agreement to ensure that your property will pass in that manner.
 
What if we want to keep our property separate, to ensure that we can leave our property to our children?: This requires an opt-out marital property agreement. Under an opt-out marital property agreement, all of your assets are divided based on how they are titled. If they are titled in your name, they are your individual property to bequeath as you desire. Similarly, if they are titled in your spouse’s name, they are your spouse’s individual property, to bequeath as your spouse desires.

•  Is there any down-side to an opt-out marital property agreement?: The downside of the opt-out marital property agreement is the loss of a tax-friendly provision which allows for a full adjustment in basis on all marital property when one spouse dies. Since your spouse’s property will not be marital property, that property will not receive a new basis like it would when all property is considered marital property.

 
What if we want to ensure that all of our property goes to our spouse?: This situation requires the opposite of the opt-out marital property agreement described above. An opt-in marital property agreement will allow all of your property, no matter how titled, to be considered to be marital property. This ensures that half of all property will be considered as owned by each spouse, and any surviving spouse can thereby get a new basis in all property on the death of the first spouse to die. Further, it is important to have a new will and/or revocable trust created to assure that your spouse will receive your property when you die.
 
This has just been a brief glimpse of the estate planning that many individuals need. For more information, please feel free to call Attorney Heller-Neal at (262) 902-0595 or email: [email protected].
 
Derrick Heller-Neal is a solo lawyer located in Racine, Wisconsin.

ESTATE PLANNING FOR INDIVIDUALS WITH CHILDREN
I have just had a child/ I have children, what estate planning do I need to do?--When you have a child, it is of the greatest importance to have an estate plan. A good estate plan will help to protect the well-being of both you and your child.  This article focuses on the use of different estate planning tools as they specifically relate to your child. For most individuals with a child, a basic estate plan should include a will, testamentary trust, power of attorney for finances, power of attorney for healthcare, and an authorization for final disposition. If you have more than one child, even if you already created an estate plan when you had your first child, you should consider having the estate plan updated to include a children’s trust, which keeps your money in a single fund to be used for any child's care as needs arise.
 
THE CHILDREN’S TRUST
 
Why have a testamentary children’s trust?--A trust serves three purposes:

• it allows you to choose a person (the “trustee”)who you want to manage your child’s property;
• it allows you to treat your children fairly with the money you leave them; and
• it allows you to choose when your child is old enough to receive their inheritance.

How does a trust treat children fairly?--A trust allows your money to be used on your children in exactly the same manner as it would if you were alive. As parents, we do not separate each child’s money into shares, which are used until the child runs out of money. We give the money to the children as the need arises. A single-pot trust acts in the same way. In a single-pot trust, the inheritance is kept as a single fund, distributed to each child as the need arises. It may later be broken into individual trusts for each child after they exit high school or college or reach an age you determine.   

What is a trust?--A trust is a relationship. You choose an individual (the “trustee”) to manage the money and property you designate, and distribute the money and property to an individual (the “beneficiary”) as you dictate in the trust document. The trust document itself sets out the boundaries of the relationship, including the property that is a part of the trust, who the trust is benefiting, the times and purposes for which the funds in the trust should be spent, and when the trust will end.
                
The Will
 
What is a Will?--A will is a legal document that indicates your desires regarding how your property and dependents should be taken care of after your death.
 
Do I need a will?--Yes, a will accomplishes three main purposes:

• it allows you to name a guardian for your children,
• it allows you to dictate whom should receive your property after you die, and
• it allows you to appoint a person (the “personal representative”) who will ensure that your desires are achieved.

 
Who will take care of my child if I die?--Who takes care of your child in the event of your death depends on whether you have elected a guardian for your child under your will. If you fail to elect a guardian under your will, the court will appoint an individual to care for your child.

What if I elect a guardian under my will?--An election of an individual for guardian does not guarantee that person will be appointed guardian. While Wisconsin courts generally follow the election made in the will, they will deviate in the following events: 

1. if the person elected in the will is not willing to become guardian for the child, the court will be forced to select a different guardian;
2. if the court determines that appointing the individual elected in the will as guardian is not in the best interests of your child, the court will select a different guardian; and
3. if the biological parent of the child is still alive, the court will likely disregard any guardian listed in the will and give the child to its biological parent.

What if I know someone who would be amazing at raising my child, but is not good with money?--It is possible to appoint more than one person as a guardian of your child. There are two types of guardians: the guardian of the person and the guardian of the estate. The guardian of the person is effectively the substitute parent for the child, making day-to-day child-raising decisions. The guardian of the estate manages and controls the money that you leave to your child. This way you can choose the best person to raise your child, and leave the money management to someone more suited to that task.
               
THE POWER OF ATTORNEY DOCUMENTS
What is a Power of Attorney for Finances?--A Power of Attorney for Finances and Property is a document in which you (the “principal”) name another individual (the "agent") to manage your finances and property. You determine the money and property you want the agent to have authority over, as well as the authority you want the agent to have. The authority can be broad or specific, depending on your preference. A power of attorney for finances may be “durable,” meaning that your agent may manage your finances in the event of incapacity or incompetence.
 
What is a Power of Attorney for Healthcare?--A Power of Attorney for Healthcare is a different document, in which you (the “principal”) name another individual (the “agent”) to make healthcare decisions for you if you lack capacity to do so yourself. You may indicate your expectations for your end-of-life care or nursing home care within the document. A Power of Attorney for Healthcare or a guardianship is required if you want to allow someone the authority to place you in a nursing home or other long-term-care facility.

Why have these documents?--If you are injured, and unable to say what you want, the only legal method available for you to express your wishes is to explicitly appoint someone who will be responsible for seeing that your desires are carried out. Therefore, whether you are single or married, poor or rich, these documents are necessary for everyone.
 
THE AUTHORIZATION FOR FINAL DISPOSITION
 
Do I really need to think about my funeral?--No, but is it really fair to leave your loved-ones to plan, wondering whether they are doing what you would have wanted? Your death will be a hard time for your family. Doing some of the work yourself by writing down an outline of how you would like your funeral to be held can help ease the burden your family will feel.  An authorization for final disposition is a document that can help put these plans into action.
 
What is the authorization for final disposition?--An authorization for final disposition allows you to appoint an individual who will be responsible for taking care of arrangements for your funeral. The document allows you to indicate whether you want to be cremated or not, whether you want any religious activities performed, what the funeral should include, and what funds should be used to pay for the funeral.
 
Conclusion
 
The documents above are only some of the estate planning tools that are used to plan for individuals with children. Other tools may include spendthrift trusts (in the event you have a child that cannot manage their money), asset protection trusts for individuals with disabilities (to ensure that they do not lose benefits), and additional planning for blended families. For more information about these issues, be sure to check back on March 28th, when we will discuss these situations.
 
This has just been a brief glimpse of the estate planning that many individuals with children need. For more information, please feel free to call Attorney Heller-Neal at (262) 902-0595 or email: [email protected].
 
Derrick Heller-Neal is a solo lawyer located in Racine, Wisconsin.

Links for the following article are provided at the bottom of this page.

Articles mentioned in this document: "Long Term Care Insurance: Is it Worth It?" ; “Protecting Your Spouse from Loss due to Medical Bills.”