Category: Estate Planning Blog

It’s Not Too Late to Protect Assets

People often believe that when they enter into a nursing home, it is too late to do any planning. However, this could not be further from the truth.  The truth is it’s never too late to legally protect assets.

Just the other day, we helped a client who was already in a nursing home. We gifted part of her estate to her family while she remained eligible for government assistance to pay for her nursing home care.

The client entered the nursing home in January.  We were contacted in April in regards to protecting some of her assets for nursing home.  Her assets were around $130,000.00 and kept in money market accounts.  We used a Medicaid Compliant Annuity which allowed her to gift approximately $58,000.00 to her family.  The remainder of the money will go to pay for her nursing home payments for the next 6 months.  During this time period, we will apply for government assistance which will continue making the payments to the nursing home after her 6 moth payment period expires. This example demonstrates that it is never too late to plan for nursing home.

Cases like this happen all the time, people enter a nursing home and loved ones assume that they it’s too late to do any asset protection planning. Don’t assume that it’s too late! Unless your assets are already gone, it’s never too late.

A phone call to learn about asset protection from nursing home costs won’t cost a thing…but not making that call could cost everything.

Protecting the Family Cottage

It’s that time of year…kids are back to school and if you are a family who is fortunate enough to have a family cottage, lake house or beach house, you may be getting ready to close it up for the season.

The family cottage undoubtedly provides numerous memories for your family.  Whether it be boating, fishing, hunting, swimming, or just time away, these memories are cherished. Every family wants to pass on these memories to their children and their grandchildren.  However, many times problems arise when more than one person owns or inherits property.

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The Risks of DIY Estate Planning

Many of us, including me, enjoy the satisfaction that comes from completing a DIY project. This satisfaction is a result of knowing that I completed a project without having to call a professional and that I saved a lot of money. However, all too often, we “DIY-ers” make a mistake, or something goes wrong with the project. Quickly that feeling of satisfaction turns to frustration when realizing that DIY project wasn’t done right and ultimately the project costs are bigger than they would have been if a professional was hired in the first place.

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Selecting a Guardian for Your Children

Tragedy is an unfortunate reality in this world. It could be a drunk driver running a red light, an airplane crash, or a boating mishap that leaves someone’s children without a parent. In such a case, who would raise your children? Will it be a judge who picks that person, or have you taken the steps to name a guardian in your Will or other estate planning documents?

Few decisions in your life will be as hard as choosing the people to act as guardians for your children if you are unable to act. However, as difficult as it can be to imagine other people raising your children, it is probably the most important decision you can make. The guardian will not only be the person who will be responsible for the welfare of your children, but will also be the one responsible for instilling your values in them.

Of all the key players in your estate plan, do you want to leave the decision of your children’s guardian up to the courts? It has been said that if you can imagine the very worst person to raise your child, this is exactly the person the court will appoint. While I don’t know that is true, it is critically important that you decide now who you would want to raise your children.

How do you go about selecting a guardian? Consider these simple questions:

• Is this person physically able to take on the responsibilities? Is the person battling a
serious disease or disabled? Is he/she too old at this point to raise your toddler who
goes non-stop all day?

• Is this person emotionally able to take on this responsibility? Let’s face it, some
people are not built to raise children. Consider if he/she possess the
temperament and patience to raise your child. Furthermore, he/she may not
have yet achieved the necessary maturity to raise a child.

• Is this person’s life stable and consistent? You may not want to pick the person who
is transferred for their job every year, causing your children to constantly be

• Will this person instill your values in your child? If your religious faith is of critical
importance, then you will want to appoint someone who will fully honor those
wishes. However, beyond your religious beliefs, does this person honor your
value system and will he/she teach your child those values?

• Does this person have the financial means to take on the responsibility? Often, you
should be able to provide for your child’s welfare through insurance or other assets.
However, if this person is financially irresponsible, you might run into issues.

While it’s certainly a tough decision, if you think of these questions in selecting your children’s guardian, you will be able to rest assured that if tragedy strikes, your children will be in the best hands possible.

7 Pieces of a Simple Estate Plan

What would happen if I died?  What would happen if both my spouse and I died tragically and unexpectedly? Who would care for my children? Who would provide for them? Where would they live? Would they be able to go to college?  What would happen to all my personal belongings?

No one likes to think of these types of questions. We would like to think that we will take care of those situations and questions “someday” when we get older. Yet, if we do not answer these questions ourselves someone else, like the courts, will answer these questions for us.

When you think of estate planning do you think of a method in which to answer these types of questions or do you envision a concept that brings up visions of summer homes in the Hamptons and palatial estates. At some point in our lives, everyone needs an estate plan, including the person who does not have a large estate. Quite often the concept of estate planning is misunderstood as something only the rich and famous have to do; but every person should have an estate plan in place.

At its simplest level, an estate plan is a number of legal documents that help protect you and your family in the event of your incapacity or untimely death. However, on a deeper level, it is a process that attempts to anticipate future events and then craft a plan so that your wishes are fulfilled.

At its most basic level an estate plan will consist of seven documents

1.      Will
2.      Living Will
3.      Health Care Power of Attorney
4.      Financial Power of Attorney
5.      HIPAA Release
6.      Personal Property Memorandum
7.      Marital Property Agreement

So, why do you need to make an estate plan? Well if you don’t, the State of Wisconsin will make the decisions for you.  I am willing to bet that the State’s plan does not coincide with your plan in every way.  Unfortunately, the State does not know that you would want one of your siblings to care for your minor children.  The State would not know at what ages to distribute your property and the amount of money to distribute to each of your children either.  By creating an estate plan, you could specify specific individuals, specific time periods, and specific amounts of money.  Your money can then be used for your children’s care and not used elsewhere.   Furthermore, under the State’s plan, you may not give any assets outside of the family unit.  If you wanted to leave some money to your favorite organization, you are out of luck.

So with an estate plan, you should do all of the following:

1.      Designate someone to manage your affairs if you become disabled.
2.      Name a guardian for your children if you pass away.
3.      Provide for your minor children or grandchildren.
4.      Reduce or eliminate Income, Gift, or Estate Taxes.
5.      Give away your family heirlooms and sentimental items in a
Personal Property memorandum.
6.      Designate who gets your estate and how.
7.      Reduce the costs and time for administration of your estate.

The above list probably includes some facet of your estate you would want to control.  Since we have established that you need an estate plan, what is the next step?  You probably have some questions? You should give us a call at Epiphany Law and we can answer those questions.  We pride ourselves in making this process as simple and as painless as possible.  We would love to help you navigate these issues and come up with a plan to meet your wishes.  For more information, visit\estateplanningsimplied.

Nursing Home Trusts

Our senior clients frequently express their concern about losing their estate to the cost of nursing home care. Clients usually want to pass some of their legacy out to their children. With nursing home care costing over $80,000 per year, most people end up paying for care out of their savings until it is gone. Once the assets run out, they are entitled to receive some assistance from the government in the form of Medicaid, but by then, it’s too late.

As the possibility of nursing home care becomes reality, people often do their own planning, which can be more of a detriment than no plan at all.  Do-it-yourself planning is often based on a misunderstanding of the rules or is based on the rules as they existed decades ago.  Careful advance planning can help protect your estate.

Generally, Medicaid funds are not available until a person enters a nursing home and their assets are under $2,000.  As most people are aware, Medicaid will look at transfers made within 5 years prior to the application for Medicaid.  This is what is generally referred to as the “look-back period”.  If the need for long term care is not immediate, your house and other real estate can be transferred into a nursing home trust.  While you and your spouse are in good health, the 5-year look back period runs.  Even though the house and other real estate are in the nursing home trust, you will live in the house and use the property as usual.  You will even get to continue to deduct your property taxes.  At the end of the 5 years, the property will be out of your estate and not susceptible to liens from the nursing home, collection from the State, and will not count against you for Medicaid coverage.

This is an important difference from transferring real estate to your kids. We see many people simply transfer their house and other property outright to their children. While this can work to shield assets from nursing home liens and attachments, it does not provide for your future care. As you are relinquishing control of your property if assets are simply transferred to your children, you run the risk of your home or assets being lost to mismanagement, lawsuits, creditors, or divorce.  Often, the loss of funds is not due to any type of wrong-doing by the children, but rather to events happening in their lives that are out of their control. Furthermore, the nursing home trust may have the added benefit of helping your children avoid many of the unforeseen consequences of having assets transferred into their names.   For example, if your children hold your assets in their name, they may run into problems getting eligibility for their children’s educational financial aid.  Furthermore, because the property was gifted to them, your children may also have to pay capital gains on the sale of the real estate when the property is sold.

If nursing home care is a concern, consider a nursing home trust as part of your estate planning. We will be happy to discuss your options with you.

Yours Truly,

Epiphany Law Estate Planning Team


Almost everyone can turn a modest IRA into MILLIONS of dollars for later generations. Take, for example, a typical couple that has a $100,000 IRA during their lifetime and have named their 20-year old son as the sole beneficiary of the IRA. At their deaths, the son will inherit the IRA. Assuming a reasonable rate of return, if he inherits the IRA at age 20, he may receive over $1,700,000 of income over his lifetime – the result of a concept called “IRA stretch”. The “stretch” occurs when IRA payments are prolonged over the longest possible period of time (taking into account the beneficiary’s age), thus reducing taxes and preserving wealth for future generations. In most cases, however, the IRA that is inherited by the son will produce $0.00. Why? Because 90% of all IRAs left to the next generation are cashed out or squandered within one year of receipt. Therefore, more likely than not, the son will have lost this potential million dollar IRA within 12 months.

In most estates, the IRA is one of the largest assets. The benefits of tax deferral and creditor protection, which we have not yet discussed, can be lost at your death without the proper planning. Generally, IRAs are exempt from the IRA owner’s creditors during his or her’s lifetime. However, once the IRA owner passes away, the IRA is available for the beneficiaries’ creditors because it is no longer a creditor exempt asset according to the United States Supreme Court. For example, if mom left an IRA to her son outright, and the son was going through bankruptcy, the bankruptcy court could satisfy the son’s debts with mom’s IRA.

Another risk is second marriages. An IRA can be “rolled over” to a surviving spouse upon the death of the first spouse, and the surviving spouse becomes the owner of the IRA. The surviving spouse is free, then, to change the beneficiaries of the IRA. Upon remarriage, the surviving spouse may name the new spouse as a beneficiary of the IRA. Upon death, the new spouse then becomes the new owner of the IRA and is free to name their own new beneficiaries. If the original owner of the IRA had planned on the IRA going to their children, they are out of luck. Understanding and planning could have ensured this result.

A standalone retirement trust (commonly referred to as an “SRT”) is an under-utilized tool used to overcome these issues. The IRA will, upon death, flow into the third-party trust instead of passing directly to the beneficiary. The beneficiary can access funds, but creditors cannot. Nor can the beneficiary control who ultimately gets the trust funds upon their death. It will continue to grow, thus preserving the potential for that million dollar IRA.

Yours Truly,

Epiphany Law Estate Planning Team

Healthcare POA and Living Will

At Epiphany Law, estate planning is about “peace of mind.” Yes, it is important to ensure that your “stuff” goes where you want it to go and that you pay the minimum amount to Uncle Sam.  But peace of mind also means that you have planned for incapacity and determined who will take care of you if you cannot do so.

The death of Terri Schiavo ten years ago was widely publicized at the time, but today there is a whole new generation of adults who may not appreciate the lessons taught by her unfortunate story.  At the age of 27, Terri Schiavo suffered a cardiac arrest. She was resuscitated, but was diagnosed as being in a persistent vegetative state. A feud ensued between her husband and her parents as to whether to remove Mrs. Schiavo from life support. Her husband insisted Terri would not want to be kept alive under the circumstances, but her parents vehemently disagreed. Mrs. Schiavo remained on life support as her husband and parents battled for 15 years in the court system through 5 federal lawsuits and 14 appeals. Ultimately, the federal court system sided with Ms. Schiavo’s husband, and her feeding tube was removed.

In yesterday’s blog, we covered the importance of a power of attorney for your financial affairs. Today, we talk about a power of attorney in the context of YOU—your body and your health.  Every good estate plan must include a Power of Attorney for health care decisions. Quite simply, in such a document, you name an agent to make decisions for you about your health and medical care if you are unable to. This document should include important considerations such as withholding life support, decisions while you are pregnant, and placing you in a nursing home. Who you should name is obviously a personal decision. Consider someone local in the event of an accident or emergency, who can make decisions under pressure, and can act based on your wishes, not their own.

After you determine who will act on your behalf, the other equally important part of the equation is telling your agent what those decisions should be. The actions of your agent will have real “life and death” implications—for you and for them. If you don’t clearly articulate your wishes and desires, they will make decisions based on their own values, which might not line up with yours. A clear statement of your intentions about life support, for example, can bring a great deal of peace to a tough choice.

Now that you have the pieces, let’s look back at Schiavo story. Terri had taken the first step and designated her husband as her Power of Attorney, giving him the ability to make decisions for her. She did not, however, have a Living Will, and the courts were left to figure out what she wanted, presented through the eyes of her parents and husband. A clear statement of her intentions would have probably stopped the fight before it started.

“Stuff” is important, and having a plan in place ensures accumulated wealth will pass down to the next generation. Health care documents are arguably the most essential piece of the plan. If you don’t have a plan yet, you should.  At a minimum, you should name an agent and let them know how you feel about your medical decisions. If you don’t, a court will do it for you.

Yours Truly,

Epiphany Law Estate Planning Team

Power of Attorney and Marital Property

The financial durable power of attorney and the marital property agreement are often forgotten pieces of estate planning. Frequently overlooked, both of these documents are necessary to a good plan.

The financial power of attorney is simply a legal document that gives someone authority to conduct financial transactions for you if you are unable to do so. The powers granted under the financial power of attorney can include simple transactions, such as paying your cell phone bill, to more complicated transactions, such as running a business.

An often mistaken belief is that a spouse will automatically have the power to deal with the finances of the other. Meet a hypothetical couple named Dick and Jane, who probably have all of their assets titled jointly, including their house. If Dick is involved in an accident and is left incompetent, can Jane act on his behalf? Without a financial durable power of attorney, Jane can still access joint accounts that they own together; however, Jane is unable to transact any acts involving Dick’s IRA, 401K, pensions, life insurance- even things as simple as a cable bill if Jane is not on the account! Jane would have to be named guardian by a court to make any changes to or withdrawals from these accounts, or even to receive information!

Therefore, it is important to have a properly drafted financial durable power of attorney to take care of your affairs if anything happens to you. This is true even if your spouse is listed on all of your accounts, and even truer if you are unmarried! With a durable financial power of attorney, the acting spouse (or other agent) will have full access to all of the family accounts and will avoid court involvement in the middle of a crisis.

Similarly, the marital property agreement is also frequently overlooked. Wisconsin is a marital property state. Generally, the Marital Property Act presumes that almost all property is owned equally between the spouses.  However, certain assets are individual, such as inheritances. Under the Marital Property Act, Dick’s paycheck would be considered marital property, as would their house. However, Jane’s inheritance from her grandmother is Jane’s individual property. Dick has no automatic right to share in the inheritance. This seems simple enough; however, the Marital Property Act can get confusing.  If any marital property is mixed in with individual property, all of the individual property can become marital property. If Jane mistakenly deposits Dick’s paycheck into the account where she holds her inheritance, the whole account may very well be considered marital property. This could really be a problem if Dick and Jane ever divorce.

How does all of this pertain to an estate plan?  We use the marital property agreement to classify assets of spouses. By defining all of the assets as marital property, we are able to equalize the marital assets for estate tax planning, or to make certain that a spouse receives more favorable tax treatment after death. If a couple is on their second marriage with children from previous marriages, the marital property agreement can allow each spouse to leave individual property to their own children at death.

Dick and Jane’s story, while hypothetical, can and does happen. Ensure these important financial documents are part of your estate plan so a court isn’t in control of your family’s financial future.

Yours Truly,

Epiphany Law Estate Planning Team

Wills vs. Trusts

We all know about “Wills” and “Trusts”, right?  Well, at least we’ve all heard of a “Will” and a “Trust.” Do you really know what they are or what they do? Do you know how they differ, or the advantages of one versus the advantages of the other? Both are very useful, but serve different purposes. Sometimes just one is used in an estate plan, and sometimes both are used. The key is to know the purpose of each document and use them to fulfill your goals.

Wills and Trusts differ in countless ways. One primary difference is when they take effect.  A Will, for example, only takes effect upon death. Prior to death, a Will is nothing more than a list of directions waiting to take control. Upon death, however, a Will directs who will receive your property and appoints a person to carry out your wishes. Trusts, on the other hand, take effect immediately upon execution. A Trust doesn’t have to wait until death to be effective.  In fact, a Trust can manage and distribute profit at any time, before or after death.

Another primary difference between a Will and a Trust is any property owned by a Trust avoids probate. A Will, on the other hand, does not avoid probate. That means when a Will is used, a court will oversee the administration of the Will and ensure the property goes to the proper beneficiary. The probate process typically lasts 9 to 18 months, and can cost thousands of dollars. Because property owned by a Trust avoids probate, that property is transferred to beneficiaries cheaper and more efficiently.

Sometimes it’s best to use a Will and a Trust together. For example, a Will allows you to appoint guardians for minor children. A Trust can help plan for disability or estate taxes.  Because of these reasons, and countless others, the best option may include the use of a Will and a Trust. Under this scenario, we can use the benefits of each document to our advantage, while minimizing the effect of each document’s disadvantages.

As you can see, there is no textbook answer to the age old question, “Should I have a Will or a Trust?” The answer to that question is based entirely upon each person’s facts and circumstances. We at Epiphany Law know not every situation calls for a Will, and not every situation calls for a Trust; we are an excellent resource to consult when preparing an estate plan. Our goal, after all, is to create an estate plan specifically tailored to each client, and to help execute the plan.

Yours Truly,

Epiphany Law Estate Planning Team