Posts Tagged ‘wisconsin’

Revocable living trust and pour over will. Why do I need both?

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The Question. Why do we have a pour over will when we already have a revocable living trust in our estate plan? Isn’t that repetitive?

Let’s try to answer this age old question.

Quick clarification. Your Trust is the Boss. Your trust is your featured estate planning tool for moving your assets to the next generation. Your Pour over will (Called pour over because it names the trust as beneficiary) should be a smaller player in the whole scheme of things, but it is a necessary role player.

For those folks with one, after you develop your trust document …you add your assets into your trust. This is accomplished by changing the title of the property into the name of the trust or by setting the trust in as the beneficiary of a certain asset. (IE: life insurance). Then, when you die, the assets stay in the trust avoiding the need for a probate of the assets it holds on your behalf.

Here are a three reasons why a pour over will is still necessary….

  1. Guardians. A pour over will can do an important things that a living trust document cannot do. If you have minor children and want to name a guardian for them — someone to raise them if you and the other parent die before they reach adulthood — you must use a will to do that.


  1. Human Error. Lets face it. We all make mistakes. One big reason to write a pour over will is that a living trust covers only property you have transferred, in writing, to the trust. Almost no one transfers everything to a trust. And even if you do scrupulously try to transfer everything, there’s always the chance that you’ll acquire property shortly before you die and not have time to put it into your trust. If you don’t think to (or aren’t able to) transfer ownership of an asset to your living trust, it won’t pass under the terms of the trust document. Anything not transferred into your trust prior to your death could instead be subject to probate and distributed under your pour over will. In short, a pour over will acts as a safety net and sends a “forgotten asset” back into your trust.


  1. Satisfying the rules for paying a decedent’s last bills. The law says that an estate pays the last bills. The pour over will contains language that passes that statutory obligation from the Personal Representative of an empty estate to the trustee under the trust. This language, coupled with special language accepting the responsibility under the trust, make the bill paying process seamless.


Of course, there is more to all of this. The key for anyone with a trust is to seek counsel. Get your questions answered. Also know that a trust is a beautiful thing, but it never acts alone. It always needs the reliable sidekick called a pour over will in order to accomplish its mission.

What is a Guardian ad Litem?

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Many parents handle their family law matters without an attorney and often the first time they’re surprised is when a guardian ad litem gets involved. I can’t find the statistic, but I recall hearing that over 80% of the family law cases in Rock County do not have either party represented by an attorney.

Even without an attorney, the beginning stages of a custody case usually make sense. You show up to the initial hearing, the judge asks whether the parents agree on a plan, and, if the answer is no, the judge sends the parents to mediation. The case ends if a deal is reached at mediation. If not, the parents are notified that a guardian ad litem has been appointed. At this point, most parents typically ask, “who the hell is that?”

The guardian ad litem (“ad litem” means “for the suit”), or GAL, is a court-appointed attorney whose job is to advocate for the best interest of the child. And yes, this person is always an attorney per Wisconsin law. (As a side note, I’ve always thought that social workers, child therapists, and teachers would all be better suited for the role than lawyers, but so far the Wisconsin legislature hasn’t asked for my opinion.) To figure out what is in the child’s best interest, GALs will usually interview the parents, the child (if they’re mature enough), and other people with information like teachers or medical providers. At the end of their investigation, the GAL will make a recommendation to the judge about how they think the case should be decided.

The judge can ignore the GAL’s recommendation, but in practice, the judge will almost always adopt the recommendation or something close to it. That means that the GAL is often times the most important decision-maker in the case.  I’ll write more about guardians ad litem and how to work with them in future posts, but the important thing to remember for now is that they will be incredibly important to your case and you should treat them accordingly.

Be Careful with Your Website Pictures

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A few clients over the years have received nasty letters from trolls law firms claiming that the pictures on my clients’ websites infringe on their client’s intellectual property rights. Along with the letter comes an offer to settle the case, typically for a few thousand dollars.

I usually have to give the client the bad news: that picture you took off the internet is someone else’s property, they do have a claim (albeit a small one) against you, and you are better off paying a couple thousand bucks now rather than pay me at least that much to fight it when you’ll probably lose anyway.

Although my clients have been out some money, at least I would personally never make that mistake having seen what they went through. Oh no, no, no, I would never be stupid enough to make that same mistake. And certainly never on this blog!

Did I make that mistake on this blog? Of course!

But, I got tripped up in an unexpected way. I knew I couldn’t just take any picture off the internet, so I used a tool in google’s image search that allows you to sort images by their “usage rights.” I picked the one that said “labeled for reuse” and figured I was home clear. The troll photographer, however, had attached terms that could only be viewed if I went to the picture’s original web page, specifically that someone could use the image for free but had to credit the photographer. I didn’t credit the photograph and after receiving a letter from his legal troll lawyer, I’m a little lighter in the wallet.

I’m using pictures of my cats from here on out.

Wisconsin Child Support Changes in the Works

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Whether it’s part of a divorce or a standalone custody matter, child support is an issue in many of my cases. Based on feedback from my clients, most people who pay it think they have to pay too much and most people who receive it don’t think they get enough. Wisconsin uses formulas to determine child support amounts, so the fact that both sides are usually unhappy with the amount leads me to believe that the formulas are right about where they need to be.

But not everyone agrees. A wealthy divorced dad and his attorney teamed up in 2013 with their local legislator, Joel Kleefisch, to write a bill that would lower child support payments for high-income earners. (Surely, the fact that the dad was a major contributor to Kleefisch’s campaign had nothing to do with having the representative’s ear.) That bill was unsuccessful, but similar terms are now being proposed again. Specifically, the proposal would cut child support for income between $300,000 and $500,000 to about half of what it is under the current guidelines.

Admittedly, things can get wonky with extremely high-income earners because the formula can lead to six-figure per year child support payments. Judges, however, do have the power to deviate from the formula in these cases under current law and typically do a good job of doing so. So, taken as a whole, I’d be for leaving things as they are–a view shared by the committee tasked with looking at the proposed changes and the Family Law Section of the Wisconsin Bar. But some practitioners are for it.

I’ll keep you updated when a final decision is made.

Compressed Tax Brackets on Irrevocable Trusts

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What is this rumor I have heard about compressed tax brackets and irrevocable trusts?

Great question.

The answer to the question is something everyone should be aware of when deciding to use a trust as the means to distribute assets after death.

When your trust becomes irrevocable, it has compressed tax brackets when compared to the tax brackets of individuals.

Income tax brackets that apply to irrevocable trusts:

If taxable income is:      The tax is:

Not over $2,500          15% of the taxable income


Over $2,500 but          $375 plus 25% of

not over $5,800           the excess over $2,500


Over $5,800 but          $1,200 plus 28% of

not over $8,900           the excess over $5,800


Over $8,900 but          $2,068 plus 33% of

not over $12,150         the excess over $8,900


Over $12,150              $3,140.50 plus 39.6% of

the excess over $12,150

Income tax brackets for individuals: Single Filers

10% – $0 to $9,225

15% – $9,225 to $37,450

25% – $37,450 to $90,750

28% – $90,750 to $189,300

33% – $189,300 to $411,500

35% – $411,500 to $413,200

39.6% – $413,200+

Why do we care …. and what should we do?

It is usually a goal of the families we work with to minimize the taxes paid in a given situation. The upshot of the bracket differences is that, after your death, if you keep enough gain in the irrevocable trust, the gain will typically end up taxed at the higher rates than if the beneficiaries receive the gain and the related tax. Knowing this is a possibility, most of the gain in the irrevocable trust over a given calendar year should be distributed to the beneficiaries via care and maintenance payments and other discretionary distributions rather than held in the trust and taxed. If it is paid to the beneficiary, the beneficiaries rate is used.

One recent example that comes to mind is the small family-held business where the shares are held by the irrevocable trust. The business can be run in various ways (e.g., salaries to the employees or dividends declared to shareholders) in such a way that the income retained in the trust is not excessive. Another alternative is to have the ownership of the entity transferred out of the irrevocable trust sooner rather than later and run externally or sold.

Who decides what to do when the trust faces these issues?

All of these decisions are usually provided in the trust language and leaves these tax decisions in the full discretion of the trustee. The trustee can then, as time progresses, weigh tax options and respond accordingly.

Get What You’re Owed From Your Old Job

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When someone leaves a job, especially when it’s on bad terms, it’s unfortunately common for the employer to stiff the former employee on their last paycheck. Commission salespeople and those who the employer believes aren’t in a position to fight back are particularly vulnerable.

Maybe you didn’t get the commissions you’re owed. Maybe you weren’t paid the overtime you were supposed to be paid. Maybe you earned that yearly bonus but were conveniently fired right before it was supposed to be paid out. All of these could form the basis of a wage claim.

Wisconsin doesn’t take these types of claims lightly, and if your employer is found guilty of not paying wages it was supposed to, you might be eligible to receive double your unpaid wages and find the employer responsible for paying your attorney fees.

So if you weren’t paid what you’re owed, give us a call to see if there’s anything you can do about it.

What To Do When You’re Arrested

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We don’t do criminal law here at Shannon Law, but that doesn’t mean we’re not committed to helping you out with some basic legal things about how to handle your arrest.

The first, most important, piece of advice comes from Jim Carrey in Liar Liar:

Assuming you don’t follow that advice and you find yourself in handcuffs (or you didn’t break the law, but find yourself in handcuffs anyway), the next thing to do is stay calm. Don’t fight the officer. Don’t yell at the officer. Usually, the police don’t have to immediately tell you why you’re being arrested, so don’t look like an idiot and demand that they do. Just stay calm and follow the officer’s instructions.

While you are staying calm, do this: SHUT UP! After you shut up, shut up some more. As Supreme Court Justice Robert H. Jackson said, “any lawyer worth his salt will tell the suspect in no uncertain terms to make no statement to the police under any circumstances.” There is literally nothing you can say that will help your case.

“But I want to say something,” you protest. OK. OK. You can say two things: first, you can state your identification (or, even easier, give the police your ID). The second thing you can and should say is: “Officer, I do not want to talk to you. I want to speak to my attorney.”

The next words you say–no matter how long you have to wait–will be to the attorney of your choosing. (I’d suggest Richard McCue at 608-295-4522 or Scott Schroeder at 608-752-2555). Once you tell him or her that you haven’t said anything, your attorney will be very happy with you (and even happier once you put a retainer down) and you’ll be in the best position to defend yourself in court.

Living without Legal Capacity: Powers of Attorney and Guardianship – What does it all mean?

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What happens if you are in an accident and, due to that accident, you are unable to understand enough to handle your affairs?  What if you have dementia that makes it so you cannot understand things?  Is there a solution?

The answer is yes. The law offers tools to assist you.

Health care power of attorney, durable financial power of attorney, and guardianship are legal tools available to help you during your incapacity.  These complex tools offer a method to appoint someone to act for you if you become incapacitated. With a power of attorney, you choose who you want to act for you. In a guardianship proceeding, the court chooses who will act for you.

Durable Financial and Health Care Power Of Attorney

In Wisconsin, both the durable financial and the health care power of attorney are valuable estate planning documents. They are contracts under which you delegate authority to another.  They allow you to appoint another to act in place of you for financial or health care purposes during your lifetime.  This is particularly helpful when and if you become incapacitated. There is a principal and the agent. The principal is the person authorizes another to act in his or her stead. The agent is the principal’s appointed decision maker.

With a durable financial power of attorney in place, your agent may pay bills and otherwise manage your financial affairs if you cannot do so yourself.  Your health care agent can make decisions about your medical care when you are unable to do so. Both powers of attorney remain in place until your death or until you revoke them.

Executing powers of attorney is a private and relatively inexpensive way to decide who will have the legal authority to carry out your financial and health care decisions if you can no longer do so.


A guardianship is handled through the probate court in a situation where a person is already mentally incompetent. If you become incapacitated, the court may, through a court order, appoint a substitute decision maker for you.  There is a guardian and the ward. The ward is the person who is no longer able to take care of his or her own affairs. The guardian is the ward’s substitute decision maker.

A guardianship can be temporary, but often becomes permanent after the court learns that the ward needs a permanent guardian. The guardian is typically authorized by the court to make legal, financial, and health care decisions for the ward. A guardianship action is an expensive and public process that involves a loss of an individual’s freedom and dignity. You will want to avoid this process if you can.

Why all three?

Knowing that a guardianship involves a loss of an individual’s freedom and dignity, Wisconsin law looks to avoid the appointment of a guardian unless a less restrictive alternative proves to be ineffective. The powers of attorney for finances and healthcare are two of the main alternatives available. Often, if drafted and executed properly, powers of attorney can help you avoid the need for a guardianship altogether.  Knowing this, it is very important to have these in place to avoid the expense and stress associated with the guardianship process.

Guardianships are still necessary and prevalent. The main reason for this is that many people never put the powers of attorney in place. Sometimes this is because they are unaware of the need. Other times folks fail to execute powers of attorney because they do not want to bother with or pay for them. However, it is good for you to know that it is too late once you lose capacity. You cannot sign a power of attorney if you cannot understand it. In that case you would have to use the guardianship system.

Sometimes a guardianship is unavoidable even if you have powers of attorney in place. For example, there are times when an individual wonders or is otherwise at risk. In that case, even if the powers of attorney are in place, a guardian will need to be appointed in order to handle affairs when a court orders a person under a guardianship to live in a type of facility. This process is called protective placement. While expensive, it is essential to have the court involved if someone is taking away your personal liberty.

Baker Manufacturing Meets the Taxman

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If you drive a car, I’ll tax the street;

If you try to sit, I’ll tax your seat;

If you get too cold, I’ll tax the heat;

If you take a walk, I’ll tax your feet.

— The Beatles, “Taxman” (1966)

Up next in our series of posts covering lawsuits featuring Evansville is this case from the Truman presidency.

Baker Manufacturing Company, founded in the early 1870s, has been long been a bedrock of Evansville. Generations of locals have worked there and I’m sure many of our city councils have enjoyed Baker’s leadership position as far as Evansville’s tax base in concerned. But just after World War II, it looks like the Evansville taxman got a little greedy.

The dispute started in 1949 when the city, for tax purposes, assessed Baker’s personal property at 60 percent of its full value. When Baker learned that the rest of the town’s personal property had been assessed at 35 percent, however, this justifiably caused Baker to go “WTF” and call a Zack Morris timeout on the city (note: research could not confirm that Baker President John Gordon Baker actually used these terms in 1949).

When Baker challenged the city, the parties first duked it out at a meeting on August 23, 1949. When Baker tried to question the city assessor on why he assessed Baker at a higher rate than everyone else, Evansville’s city attorney shut down the questioning by arguing that state statute protected the assessor from having to answer Baker’s questions. Unsurprisingly, the meeting went nowhere and the issue remained unresolved.

The parties met again, informally, a month later. This meeting was “filled with recrimination and ending in a wrangle and abrupt adjournment,” according to the Wisconsin Supreme Court (spoiler alert: this case ends up at the Wisconsin Supreme Court).

A month after that, the city gave Baker ten hours’ notice–state statute required at least 48 hours’ notice–that it would hold a formal meeting that night to decide the issue. Baker and its attorney didn’t show up and in a shocking turn of events, the city determined that its tax assessor had been right all along.

Apparently the city felt the need to prove the old adage that “pigs get fat, hogs get slaughtered,” so the following year it assessed Baker’s real estate at 100 percent of its value and assessed the rest of the town’s real estate at between 60 and 70 percent of its value. To add insult to injury, the city also started taxing Baker property that it had not taxed in previous years (surely this had nothing to do with the fact that 1949 and 1950 were some of the most profitable years in Baker’s history and surely the city wasn’t interested in getting a piece of those profits for itself). The parties repeated the previous year’s farce, with the city attorney again not allowing the assessor to answer questions regarding how he decided to tax Baker at a higher rate than anyone else or start taxing property that had never been taxed before. After the hearings, the city again determining that the assessor was in the right.

Baker decided enough was enough and sued the city. The case ultimately ended up in the Wisconsin Supreme Court, where the court declined to rule. Instead, it took shots at both parties–Evansville for acting arbitrarily and refusing to explain why it did so and Baker for having its attorney act as both an advocate and a witness in the case–before ultimately sending the case back to the lower court to be decided. What happened in the lower court isn’t clear, but one assumes that the parties settled the issue and, fortunately, the parties have avoided court in the 65 years since.

Transfer-On-Death Deed: The Best Thing Since Sliced Bread

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A transfer-on-death deed, or TOD deed has proven to be a simple, inexpensive, and effective tool to transfer a real property interest at the death of the owner, and has become very popular with attorneys, property owners, and beneficiaries alike. The reason TOD deeds have become so popular is that the transfer of the land under a TOD deed can work to avoid both the after death expenses of probate, and the upfront planning expenses of a trust.

The TOD deed has been available in Wisconsin since 2005 and in Minnesota since 2008. If a landowner in these jurisdictions properly completes and files a TOD deed with the register of deeds, title to the real estate passes directly to the beneficiary or beneficiaries named in the TOD Deed when the landowner dies. This is similar to how title passes in a joint tenancy deed or a pay-on-death designation for a bank account.  The beneficiary takes ownership of the property upon the death of the present owner without the need to probate the property.

A landowner can change her mind with a TOD deed designation too. If circumstances change after a landowner designates someone to receive the real estate using a TOD deed, the landowner can revoke her TOD deed or simply replace it with another one naming someone else. If the property is sold by the landowner to a third party, the TOD deed terminates at that time.

The TOD deed can also reduce some risks from third parties. This is because even though individuals are named as beneficiaries under a TOD deed, they have no ownership rights until after the death of the landowner. This lack of ownership rights in the real estate helps avoid problems. For example, if a landowner adds her son, her grandson, or her daughter as beneficiary under a TOD deed, the real estate cannot end up as a divisible asset in her son’s divorce, a liquidated asset in her grandson’s bankruptcy, or with liens on it from her daughter’s creditors.

The TOD deed may be the most effective way for a landowner to pass real estate to desired beneficiaries. However, careful consideration should always be given to determine if the TOD deed is appropriate for your particular circumstances.