The document provides an overview of standard estate planning tools including wills, powers of attorney for healthcare and finances, probate, trusts, and long-term care issues. It discusses how wills identify beneficiaries and direct probate, powers of attorney appoint agents, probate transfers title to heirs, trusts can avoid probate and reduce taxes, and long-term care options include Medicare, Medicaid, and insurance. The conclusion emphasizes proper estate planning maximizes bequests while poor planning maximizes taxes.

1. DE PERE AT DAWN
Estate Planning 101:
How to Plan for the Unthinkable
Richard E. Nell
Nell & Associates, S.C.
April 18, 2012

2. Standard Estate Plans
• Wills
– It’s never a bad idea to have a will
– Identify Beneficiaries, how estate is divided
– Specify ages of distribution, if applicable
– Name an Executor/Personal Representative

3. Standard Estate Plans
• Durable Power of Attorney for Healthcare
– Appoints an agent to make medical decisions on
your behalf
– Effective only after 2 physicians determine
incapacity
– Can be as specific or general as you wish
– Need for guardianship can arise without a
healthcare POA

4. Standard Estate Plans
• Durable Power of Attorney for Finances &
Property
– Appoints an agent to manage all things financial and
real estate
– Can be designed to be effective immediately or
effective upon incapacity
– Need for guardianship arises without
a financial POA

5. Probate
• The legal process by which title to property is
transferred to heirs by a court
• Probate Assets: assets held in a decedent’s name
alone with no beneficiary or P.O.D. designation
• Non Probate Assets: assets transferred by terms of
document creating non-probate status
• Admitting a Will to Probate
– A Will does not avoid the need for probate, but rather gives
direction to the probate court
– The Will must be probated to be effective
– Beneficiary designations and asset titling trump Will
language

6. Probate
• Alternative forms of Court Administration for
Probate Estates less than $50,000
– Transfer by Affidavit
– Summary Assignment
– Summary Settlement
• Costs of Probate—should it be avoided?

7. Trusts in Estate Planning
• Living Trusts
– Assets transferred to trust during life of grantor
– Irrevocable: generally can reduce estate taxes and
individual income taxes (not always a good idea)
– Revocable: generally do not enable grantor to
avoid estate taxes or income taxes
• Testamentary Trusts
– Funded upon death of grantor
• Common purposes are to minimize
estate taxes and provide for long-term
distributions

8. Estate Taxes
• Federal Estate Taxes
– $5,120,000 estate exemption
– 2013 – $1,000,000 taxed at 55%
– The Gross Estate
• §2031 IRC – “the value…of all property, real or personal, tangible
or intangible, wherever situated.”
• Includes probate and non-probated assets; §2033 IRC – the values
of all property in which the decedent had an interest at the time of
his or her death.
• Wisconsin Estate Taxes
– Wisconsin does not have an estate tax, inheritance tax or
tax paid by a recipient of a gift at this time

9. Estate Taxes
• Taking Advantage of the Unlimited Marital
Deduction
– Unlimited marital deduction on property passing
outright to citizen spouse or certain types of trusts
– Results in $0 estate taxes due on first death, but
wastes estate tax exemption of 1st spouse to pass
– Estate tax exemption of 1st spouse to pass can be
maximized through use of bequests which do not
quality for marital deduction (outright to children;
to credit shelter trust)

10. Long-Term Care Issues
• Medicare
– Covers 100 days of long-term care in a skilled nursing
facility
• Medicaid
– Deficit Reduction Act of 2005 brought about significant
changes to divestment rules
• Paying for long-term care
– Medicaid
– Long-term Care Insurance
– Private Pay—likely the most common

11. Estate Planning Wrap-Up
• Proper Estate Planning will maximize bequests
to family, friends, pets and
charitable organizations.
• Poor Estate Planning will maximize taxes to
the state and federal government.