11/9/2015. November 12, 2015 Marquette University Law School Atty. Ian J. Thomson

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1 November 12, 2015 Marquette University Law School Atty. Ian J. Thomson I. How can drafting a will help my client? II. What is probate and how can I help my client avoid it? III. When is a real property beneficiary designation a good option? IV. When do Medicaid divestment issues come into play? 1

What happens if a client dies without a will? Issues with holographic wills. The Wisconsin statutory basic will and basic will with a trust. The self-proving affidavit.

2 What happens if a client dies without a will? Issues with holographic wills. The Wisconsin statutory basic will and basic will with a trust. The self-proving affidavit. Limitations of the Wisconsin statutory basic will and basic will with a trust. Example of a short will. Issues of incapacity, comprehension, and undue influence. Safekeeping the original will. Generally intestate succession is governed by Wis. Stat (a) To the spouse or domestic partner except: Wis. Stat (continued) (b) To the issue, per stirpes, the share not passing to the spouse 2

Wis. Stat. 852.01 (continued) (c) To parents (d) To siblings and their issue (f) To grand-parents and their issue, half to maternal side and half to paternal side. Wis. Stat. 852.01 (continued) Survivorship of 120 hours If no heirs found estate may escheat to the capital of the Wisconsin school fund.

3 Wis. Stat (continued) (c) To parents (d) To siblings and their issue (f) To grand-parents and their issue, half to maternal side and half to paternal side. Wis. Stat (continued) Survivorship of 120 hours If no heirs found estate may escheat to the capital of the Wisconsin school fund. Be aware of Wis. Stat regarding the surviving spouse s one-half interest in marital property. Hand written wills are generally not enforceable. Wis. Stat Every will in order to be validly executed must be in writing with in writing generally interpreted to mean typed. 3

Created by the legislature. See Wis. Stat. 853.50-.62 for statutory will language. Language must be used verbatim to qualify as a statutory will. See example of statutory will available from the web.

4 Created by the legislature. See Wis. Stat for statutory will language. Language must be used verbatim to qualify as a statutory will. See example of statutory will available from the web. See example of properly formatted statutory wills. See also self-proving affidavit at Wis. Stat The self-proving affidavit helps confirm that the testator and the witnesses were in the same room together Generally decreases the likelihood of a legal challenge of the validity of the will. Directions are not clear. The PDF available from the legislature s website is not user ready and should not be used. Potential issues with holographic additions. Syntax requirements on the face of the document are not clear. Limits to number of dispositions and guardians. Very limited to distribute residuary estate. 4

The very short will is one option for a clinic where guardianship is paramount. Less complete than the statutory will, but may be able to accomplish the client s goals.

5 The very short will is one option for a clinic where guardianship is paramount. Less complete than the statutory will, but may be able to accomplish the client s goals. May be better than intestacy for the client. See example of the short will. The clinic setting does not give one much time to know a client. The clinic setting does not afford one an opportunity to research the client s history. Inquire whether a client has ever been formally deemed incapacitated. Wis. Stat (7). Wis. Stat : Any person of sound mind 18 years of age or older may make and revoke a will. Confirm any comprehension issues volume, language, vocabulary before execution. Wis. Stat (7). Wis. Stat :... Undue influence: The 4-element test to prove undue influence requires showing: 1) susceptibility to undue influence; 2) opportunity to influence; 3) disposition to influence; and 4) coveted result. Alternatively undue influence may be proved under a two prong test by showing: 1) the existence of a confidential relationship between the testator and favored beneficiary; and 2) suspicious circumstances surrounding making the will. In re Estate of Kamesar, 81 Wis. 2d 151, 259 N.W.2d 733 (1977). See also In re Estate of Taylor, 81 Wis. 2d 687, 260 N.W.2d 803 (1977). Feel free to ask companions to step out of the room. 5

6 The court will enforce the original will. Copies of a will are generally not enforceable. Fire safe, safe deposit boxes, locked drawers are better than nothing, but in case of robbery, eviction, failure to pay, etc. may not be the best option. Can deposit for safekeeping with the register in probate, Wis. Stat Generally safer and cheaper, especially if someone has a reason to destroy the original has access to the original. Questions? The reason for probate, general informal probate process, timeline, and costs. Probate vs. non-probate assets. Types of Administration Methods to convert probate assets to nonprobate assets. Probate concerns in the clinic setting. 6

For an example of what probate looks like to a client, see A Personal Representative s Guide to Informal Estate Administration in Wisconsin at https://www.wicourts.

7 For an example of what probate looks like to a client, see A Personal Representative s Guide to Informal Estate Administration in Wisconsin at elfhelp/docs/probateguide.pdf Probate generally determines what the estate owes in taxes and to creditors, and supervises the distribution of an estate s assets. For most families probate takes time and money to accomplish simple tasks. Transfer the title of a house so it can be sold Transfer a solely owned bank account Financially and emotionally unpleasant for clients. May take 8-18 months to close out an average estate. Professional fees and court fees add up, less to heirs. Assets held in the decedent s name at the time the decedent died are considered probate assets. Be aware of Wis. Stat regarding the surviving spouse s one-half interest in marital property. Non-probate assets are those assets with beneficiaries selected, like life insurance or bank accounts. Most non-revocable trust assets are nonprobate assets. 7

8 Formal vs. Informal Administration, Summary Settlement, Summary Assignment, Transfer by Affidavit There is a $50,000 threshold for probate assets for Summary Settlement, Summary Assignment, and Transfer by Affidavit. The estate planner s goal is generally to reduce the value of the probate estate to less than $50,000. Designate Payable On Death (POD) beneficiaries. Life Insurance 401(k) Investments Bank accounts beware joint checking accounts, nominate a Power of Attorney while living and POD beneficiaries Designate specific people, classes of people (siblings), or charities as beneficiaries and avoid using your name or Estate of as a beneficiary. Consider designating real property beneficiaries. Most trusts fall outside the scope of the clinics. Advise clients seeking to convert substantial assets to consult with an attorney outside of the clinic setting. Clients records may not be up to date make a list of assets and follow up with them. The probate process is long. If clients need to open a probate case consider a referral for longterm case management. 8

9 Questions? Reasons to designate a beneficiary for real property. Example of Designation of TOD Beneficiary. Problems with drafting a TOD Deed. Concerns with TOD Deeds in a clinic setting. Wis. Stat A client s home is often their largest asset The average home will exceed the $50,000 threshold to avoid probate administration. If a home becomes a probate asset the holding cost of the home may become a burden while probate is pending. Transferring a title outright may have practical problems later on. 9

10 See example of Designation of TOD Beneficiary State Bar of Wisconsin form Be extremely careful with legal description. Be extremely careful with homestead selection. Be extremely careful with parcel ID. Be precise with owner s property status Joint Tenants? Survivorship Marital Property? Use BLACK ink. Potential for misuse be sure to carefully confirm identity. Generally unable to run a title report at the clinic. May be able to cross reference information on public land or tax records. Filing fees apply. Be sure to counsel any client that the TOD Deed is useless if not recorded. 10

11 Questions? General terms and concepts. Wisconsin s Medicaid Edibility Handbook (MEH). Divestment and the problem with divestment for the purpose of qualifying for assistance. Wisconsin s estate recovery program. Wis. Stat USC 1396p. See Chapter 17 Wisconsin s Medicaid Eligibility Handbook (MEH) h-ebd/meh.htm. 11

12 "Institutionalized person" means someone who: Participates in Community Waivers, or Has resided in a medical institution for 30 or more consecutive days, or Is likely to reside in a medical institution for 30 or more consecutive days, as attested to by the medical institution. Effective January 1, 2014, the look back period is 60 months for all divestments. The look back period is a period of time prior to application or entry into an institution. A divestment that has occurred in the look back period or any time thereafter can cause the applicant or member to be ineligible. The look back period begins when an individual is both institutionalized and has applied for Long Term Care Medicaid or has requested one of the Home and Community-Based Waiver or Managed Long Term Care programs. When you count backward, start counting with the month before the date of application or entry into the institution as month one. When determining which date to use, use the most recent date. "Date of application" is the date the applicant or his or her representative signs the application. If he or she does not sign the application, it is not a complete application and no divestment penalty can be imposed. Exceptions to the look back period Must show the divestment was not made with the intent of receiving Medicaid. Must present evidence that shows the specific reason for the transfer was not to qualify for Medicaid. Verbal assurances are NOT sufficient. Physician statements, insurance agents, insurance documents, bank records can support statements. 12

Exceptions to the look back period Made arrangements to provide for long term care needs by having sufficient financial resources or long-term care insurance for at least 5 years at the time of

13 Exceptions to the look back period Made arrangements to provide for long term care needs by having sufficient financial resources or long-term care insurance for at least 5 years at the time of transfer. Life expectancy at the time of transfer was less than 5 years. Person s health and age at the time of divestment gave no expectation they would need care for the next 5 years. Regular and unbroken pattern of charitable giving <15% of income not considered intent to divest. Exceptions to the look back period Assets spent on support of dependent relatives living with the individual, but dependent must claim relative as a dependant for IRS or otherwise provided more than 50% of care for the dependent. Common attempts at divestment Selling a house for less than fair market value. Adding a child to a checking account and letting the child make large withdrawals. Large cash gifts. Giving a house as a gift. 13

14 Consequences of divestment Generally any divestment deemed to be for the purpose of qualifying for Medicaid will be calculated as follows: The value of the divestment will be divided by the average nursing home private pay rate penalty of $ The result will be the number of days the person who made the divestment will be ineligible for assistance. For example: $100,000 house given away 3 years before application = $100,000 / $ or 414 day if ineligibility. The estate recovery will generally recover available probate assets to recoup costs of certain public assistance the decedent used during the decedent s lifetime. People who benefit from Wisconsin Medicaid, BadgerCare Plus, Wisconsin Chronic Disease Program (WCDP), the Community Options Program (COP) or non-medicaid Family Care during their lifetime may be subject to Wisconsin s estate recovery program. Recovery occurs through probate. Questions? 14

15 November 12, 2015 Marquette University Law School Atty. Ian J. Thomson 15

Basic Will Drafting and DL Wills

AFLSA/JACA Legal Assistance Division Basic Will Drafting and DL Wills Capt Monica Lewallen Air Force Legal Services Agency Topics Will Drafting Concepts Client Interviews Estate Concepts The Other Documents