Estate Planning Considerations in Wisconsin During the COVID-19 Pandemic

Reviewing your estate plan regularly is a good idea to ensure it still meets your wishes. You will want to make sure it addresses changes such as marriages, divorce, births, and deaths, and that it is in compliance with federal and state laws.

The COVID-19 pandemic has created an interest in creating estate plans for people who are young and old, single or married, with children or without. Whether you already have an estate plan that could be updated, or would like to have a plan, it’s important to consider what you should do to ensure your wishes are met. It is also imperative that you take steps to avoid or minimize variable and unnecessary taxes related to your estate.

Wills and Trusts in Wisconsin – the basics of what they can do

In short, a will or a trust is a legal document that sets forth your wishes regarding the distribution of your property and the care of any minor children or special needs family members in the event you pass away. A will or trust helps to avoid state laws governing what happens to your estate.

In a will or trust, you can select the person you wish to administer your estate. Without a will, called intestacy, the courts will appoint someone to do this.

Also, you can set forth the distribution plan for your assets in a will or trust. Your goals are likely different from the state’s intestacy laws, which provide for outright distributions to next of kin.

If you have a will or a trust, now would be a good time to review the dispositive and fiduciary appointment provisions of your last will and testament and revocable living trust. You will want to ensure those provisions are current and do not require any revisions.

Healthcare Power of Attorney – why you need one

The Power of Attorney for Healthcare form makes it possible for adults in Wisconsin to authorize individuals (called healthcare agents) to make medical decisions on their behalf. This is important so healthcare providers have someone to turn to for possible life-or-death decisions in the event the patient is unable to communicate or is incapacitated.

Financial Power of Attorney – you need this, too

A Financial Power of Attorney form enables you to appoint an individual (called an attorney-in-fact) to handle your finances if you are incapable of doing so. Your attorney-in-fact will pay your bills and safeguard your finances if you are laid up.

Tax savings opportunities – important considerations in the current economic market

For estates subject to estate taxes, the current market conditions provide an excellent estate planning opportunity.

While assets are temporarily depressed in value, more value can be transferred out of the estate with an increased likelihood of appreciation being passed to beneficiaries.

Below are some estate and gift planning ideas to help you during the COVID-19 pandemic:

  • Create and fund Grantor Retained Annuity Trusts (GRATs).
    • With a decrease in asset values, coupled with low interest rates, this statutory vehicle can be used to pass value to the next generation.
  • Convert an IRA to a Roth IRA.
    • Tax is paid on the value of the assets on the conversion, but then the assets continue to grow tax-free, and all withdrawals are income tax-free.
  • Make outright gifts or gifts in trust with the currently depressed fair market value of assets.
  • Make or refinance loans, including intra-family loans.
    • Again, with interest rates being low, loans and sales of assets in exchange for notes are attractive estate-planning techniques.
  • Remember, use of discounts with gifts still applies.
    • Use partnerships or other types of entities for discounted giving.
  • Harvest capital losses.
    • Talk to your financial advisors and prepare tax projections that would help you determine whether this is appropriate for your situation.
  • Create a charitable gift plan.
    • Gifting low basis assets to charity still makes sense.
    • Gifting of assets to Charitable Remainder Unitrusts (CRUT) can provide an income stream to you, as well as a charitable gift deduction.

Experienced estate planning attorneys in Wisconsin         

Murphy Desmond has experienced attorneys who can help you with estate planning, gifting strategies, and minimizing estate taxes. Contact the firm at 608.257.7181 to discuss your situation. We maintain offices in Madison, Appleton, Janesville, and Dodgeville, Wisconsin.

Published April 13, 2020

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