A will is an essential planning tool for everyone, even for young people without many assets. Some advantages of a will include:

• You say who gets your property
• Allows for nomination of guardian for minor children
• A "simple" will is relatively inexpensive
• A will can protect up to $1,300,000 from federal estate taxes (1999 figures, for a married couple)

• Probate is usually required if solely owned assets exceed $10,000
• Does not control jointly owned property
• "Simple" will may increase estate taxes
• A matter of public record
• Does not eliminate guardianship in case of incapacity

Probate is a court proceeding at death. The following are the most common complaints about probate: (1) the expense of attorney's fees, personal representatives' fees, court costs, and administrative expenses usually total 2-6% of the gross estate, or more; (2) delay of four months to one year or more to complete distribution of assets to beneficiaries; and (3) no privacy since the probate proceeding is a public record.

NOTE: Wisconsin has informal probate. Probate in Wisconsin is often less expensive and faster than probate in other so-called "bad probate" states.

8) Is a trust the only way to avoid probate? There are several other ways to hold property so that it will not go through probate.

• Joint tenancy or survivorship marital property
• Pay-on-death assets (P.O.D.)
• Deeding real estate to children, reserving a life estate (may also be useful in protecting property from nursing home costs)
• Property passing by marital agreement per Wisconsin law.
• Life insurance proceeds
• Retirement plan benefits
• Small estates (less than $10,000)

When property is titled in joint tenancy each person owns an undivided interest in the whole property. When one of the owners dies, the property is automatically owned by the remaining owner(s). The deceased owner cannot pass his interest by will. The opposite of joint tenancy is tenancy in common. Unlike joint tenancy, the interest of a tenant in common does not terminate upon his death, and he can pass the property to his heirs. There are some advantages to joint ownership: It avoids probate and there is little or no setup cost. However, for married couples, holding assets as "survivorship marital property" is usually a better way to utilize these advantages.

10) What are the disadvantages of joint tenancy?

• May create a death income tax problem because only one-half of the value of each asset receives "new basis"
• Loss of exclusive control of the asset
• Subject to claims of joint owner's creditors
• Joint-owner can assert exclusive ownership
• May disrupt distribution plans if intended beneficiary dies first or becomes incapacitated
• Does not eliminate need for guardianship
• Potential estate tax problems

Marital property law became effective in Wisconsin on January 1, 1986. With many exceptions, the effect of the law is that the assets held by a wife are also the assets of the husband, and vice-versa. Also, the debts incurred by the wife are also the debts of the husband, and vice-versa.

A couple can enter into a Marital Property Agreement either before or after marriage, to clarify the "classification" of their assets--whether the assets are "marital" property, called opting in to the marital property law, or "individual" property, called opting out of the marital property law. There are advantages to both marital and individual classification of property, dependent upon the unique situation of each couple.

12) What are some advantages of classifying property as marital?

• Each spouse owns a one-half interest in every asset
• Upon the death of the first spouse, the surviving spouse receives a "full new basis" in every asset, usually saving money on capital gains taxes
• Assets can be classified as "survivorship marital property" so they will automatically be owned by the surviving spouse and will not be subject to probate upon the death of the first spouse

• Spouses can maintain their personal ownership of selected assets without "sharing" ownership with their spouse
• May serve to protect one spouse's assets from the claims of the other spouse's creditors
• Useful for couples who have children from a prior relationship, and who wish to keep their assets separate for eventual distribution to their children

A Durable Power of Attorney (general power) is a document you sign naming someone to have essentially the same powers for management of financial affairs as you have. The person can be given the right to do everything from signing your checks and entering contracts on your behalf to making insurance claims for you.

MAIN ADVANTAGES: Convenience and the probable elimination of the need for a guardian over assets. It is possible to gift assets if the document is worded properly. (Guardianship: a court proceeding during life.)

15) What are some disadvantages of a guardianship over assets?

• Expenses: Attorney's fees, guardian ad litem fees, court costs, and administrative expenses
• Delay: Once the need for a guardianship is established, it takes time to go through the court proceeding for appointing a guardian
• No privacy: Proceeding is a public record
• Record-keeping requirements for the guardian

A Health Care Power of Attorney is a document you sign appointing someone to make health care decisions on your behalf, including decisions about termination of life-prolonging medical procedures. The document only goes into effect if two physicians will state that you are no longer able to make or communicate your own health care decisions.

MAIN ADVANTAGES: Allows you to communicate your health care beliefs and desires, and probable elimination of the need for a guardian over your person. The disadvantages of a guardianship over your person are similar to those for a guardianship over assets.

17) What are the current tax laws to consider in estate planning?

• Wisconsin has no inheritance or gift tax any longer; there is a Wisconsin estate tax that applies to cases involving federal estate tax
• During life you can make unlimited gifts to your spouse and gifts of up to $10,000 per person per year to anyone else without incurring federal gift tax liability
• At death you can leave an unlimited amount of assets to your spouse and a total of $650,000 (1999 death-this figure is going up over the next seven years) to others, tax-free
• By giving all your assets to your spouse, without proper planning, you can waste one spouse's lifetime exemption