Just ending a busy week with our pro bono educational presentations in libraries throughout Northeastern Wisconsin – we visited Antigo, Chilton, Shawano, and Kaukauna. One of the things that giving so many presentations in such a short timeframe provided was a little bit of insight, some patterns that I was able to observe.
It seems that no matter how many times we repeat it, and how clearly we try to make this information, the incorrect interpretations, the misinformation, misunderstandings, myths and false beliefs, and incorrect interpretations of what’s really going to happen – this misinformation prevails.
Hopefully, you already know this stuff. If there’s something that you take away that you weren’t clear on even better. And if you can share this information with anyone you happen to have a conversation with, please do share, share our information, the podcast, or our newsletter. It’s our mission for 2022 to reach as many people as we can and get good information out there, so families aren’t left in probate purgatory messes simply because people don’t know any better.
K’s BIG FIVE COUNTDOWN:
5. YES, you do have an estate that will need to be addressed and it is very likely that you will have enough at stake to be worth it to do it right. Under Wisconsin law, if someone passes away and their estate is worth less than $50,000, the heirs may not need to go through the probate process., as there are some shortcuts we can take in those circumstances. But to understand this, the word estate does not mean Rockefeller’s millions. The word estate means everything you have, so your car, your clothing, your jewelry, your real estate, your bank account – everything that you have is part of your estate. And if you honestly take a look at and add those figures up, you’ll recognize that you get over $50,000 quite quickly. If you own real estate, chances are high, you’re over that threshold already. Anything over $50,000 and the family is going to have to go through that probate process. That process takes a long time, costs a lot of money, a lot of formalities and frustrations that are imposed upon whoever is taking charge, as well as those additional beneficiaries who are waiting for their inheritances. It costs a lot more money and it causes a lot more work and frustration than if you were to do good planning upfront. So number five – yes, you do have an estate. If you have clothes on your back, you have an estate. Everyone has an estate of some sort. It will need to be addressed if you pass away, and if a caring and comprehensive Legacy plan is not in place, whoever it is that you leave behind will have to go through that probate process. So yes, you do have an estate and yes, it’s worth it to do it the right way.
4. NO, Google is not, (never was, probably never going to be) a good resource for accurate answers to legal questions. Most of the information on Google is relatively generic. Law is very, very specific. Specific to your circumstances, specific to the jurisdiction, and the statutes that are going to apply to your circumstances in that jurisdiction. Never rely on Google when you’re looking at trying to find an answer to what you should do with an estate plan. The information is all over the boards and even from seemingly credible sources, is very, very often inaccurate, sometimes horribly inaccurate, as in just plain wrong. So number four, no, Google is not a good resource for accurate answers to legal questions.
3. NO, a financial power of attorney (durable power of attorney) does not in any way (never did, never going to) have authority to handle the estate after you’ve passed away. When you pass away all of the authorities granted under a financial power of attorney (or a healthcare power of attorney, for that matter) die with you. Those documents appoint what we call agency. An agency is only good so long as the “principal” (primary individual who is appointing those agents and agency) is alive. On the day that you pass away those powers of attorney documents are done. For those who’ve done minimal planning, and we’ve seen this quite often: Someone has a power of attorney in place and that’s all they have. They think it’s all taken care of. The agent under the power of attorney thinks it’s all taken care. Then mom passed away/dad passed away, whatever the circumstances are, and they think “I’m in charge of their estate, I’ve got this power of attorney document.” No, they’re not in charge of the estate. There is no authority under that power of attorney document after the principle has passed away. No, financial power of attorney does not in any way have authority to handle the estate after someone has passed away.
2. NO, naming an executor in a will does not in any way (never did, never going to) give that person legal authority to do anything without the probate court first granting its approval. This is something we’ve seen happens all the time. In phone calls or conversations someone will say “I’m named as the executor in the will and the bank won’t let me do anything with that account.” That’s absolutely right. The bank told you you need papers from the court. That’s because until the probate process is officially open and the court has issued its order approving that authority, the last will and testament with the name in it provides no authority whatsoever. No, naming an executor and a will does not in any way give that person legal authority to do anything without the probate court first granting its approval in a formal order.
1. NO, a last will and testament does not (never did, never gonna) keep your family out of probate This one comes up time and time again, in fact in one of our presentations this past week, even after we repeatedly stated that a last will and testament does not avoid the probate process, one participant in our presentation midway through brought up an exact myth again, insisting, “I thought if I put a last will and testament in place and appointed an executor to take care of everything they didn’t need to go through probate.” So even after we make it very clear in plain words that it is wrong, incorrect, a myth, that misunderstanding was still out there. That tells me the currents of the misinformation are so strong that even after hearing it it’s difficult for someone to lock that in and believe it. So let’s just get this into the chip: No, absolutely not, in Wisconsin a last will and testament does not in any way, never did, never gonna, avoid probate court. A last will and testament is merely a set of instructions that you’ve put down in writing, duly executed and witnessed, that you hope is going to be carried out through that probate process.
There are other tools that are put in place to avoid probate. Our recommendation usually centers on trust based planning. If you want to do this right and truly protect your family from that probate process, no matter what happens, a trust can be an excellent tool to do that. A last will and testament does not. Okay, any questions on that? Are we clear? One more time? Does a last will and testament do anything to keep a family out of the probate court out of the probate process in settling an estate? Rhetorical question, the answer is NO, it does not.
That said, however, I do not want to diminish the importance of a last will and testament in specific circumstances, especially for families with minor children. The last will and testament is the tool used for appointing guardianship or your minor children if something should happen to you before they become adults. So in that way, a last will and testament can be an important tool.
Now for a little discussion beyond the big five. Lying to ourselves. This may come off as a bit harsh, but I see what I see, and I recognize patterns and psychology and how they play out. What people hide behind is often detrimental to themselves. So let’s just shed some light on it. One of the big insights that I got from having conversations with attendees of our presentations this week is that there is a fairly common psychology that’s at play. For those who are looking for information about this estate planning, they’re not always really there to commit to getting good planning in place for those they leave behind – they’re looking for affirmation that NOT doing anything, or doing as little as possible is OK.
We have a natural tendency to want to protect our ego, to feel as though we’ve done the right thing and we’ll seek approval and confirmation of that from others. So a lot of conversations after our presentations start with a pensive, kind of an apologetic shrug of the shoulders, and “I don’t really have that much. So if I just do … is that enough?” Well, I suspect the person kind of knows the answer to that. But what you’re looking for is the easy way out: “can I get away with not doing all of those complicated things that you were talking about, those expensive planning tools?”
If you’re trying to just get by, and you don’t want to spend the time, the effort or the resources to really do the best that you can for your family, let’s not be naive about it. In the world that I live in, working with families, and what we do and see, “just enough” is usually not enough. You have to make your decisions based on what you know, in your heart and in your mind.
I once had a conversation with someone who said we went to five different attorneys to get a specific document created. The first four said you can’t do that. And the fifth one did what they asked. And what I was looking at was a document that was legally invalid and should not have been done, and there are likely to be financial consequences for that family at some point. You’ve either done it right and you let someone who really knows what they’re doing prepare the right kinds of documents that are going to insulate and protect your family, or you haven’t. I’m not here to make everyone feel better about not doing proper planning. I’m here to help people get the right kind of plan in place so their family is protected.
So that’s number six. If you’re looking for cheap and easy just remember someone always pays the price. In the words of Warren Buffet, “Price is what you pay, Value is what you get.”