Step Off

Posted on Oct 1, 2024 by

Last week I wrote about the importance of wholistic estate planning, especially with blended families. The impact of Wisconsin’s marital property law can result in unintended consequences.

This week, I was hoping to continue that discussion to show how different pieces of the estate planning puzzle can work together – or if not done properly, or without proper communication – how they can create havoc within a family.

For example, I routinely meet with children after their parent has passed away. They will often bring in their parents’ will that leaves everything to them, and sometimes even a prenuptial agreement classifying each spouse’s assets as their individual property – not marital.

The kids are looking for help to have their parent’s assets transferred to them, however, these documents don’t paint the whole picture. If their parent has named their spouse (the kids’ step-parent) as the sole beneficiary of their retirement accounts and life insurance, those funds transfer directly to the spouse. In addition, their parent may have also added the spouse as a joint owner on bank accounts and investments, and sometimes real estate. Again, those assets transfer to the surviving spouse, despite what the will says.

Another scenario involves a parent passing away leaving everything to the surviving spouse. Then, the step-parent subsequently passes away and the kids come in to see me. Again, they typically bring in a will showing that all of the surviving step-parent’s assets get divided into two halves, with one half going to each family.

However, just like in the prior example, if the step-parent has named their own children as the beneficiaries of their retirement accounts and life insurance, and set up their bank accounts, investments, and real estate as Payable On Death (POD) or Transfer on Death (TOD) to their children, once more, those assets transfer solely to their children, despite what the will says.

Other times, the step-parent has updated their will after the first spouse’s death to leave everything just to their children – cutting the step-kids out. Without a joint will or a prenup to prevent this (and assuming the step-parent was of sound mind and not under duress when signing the new will), the step-kids are out of luck.

Finally, designating agents on powers of attorney for health care and for finances can be dicey. If a person names his or her spouse as their agent, the spouse may act without involving that person’s children, or vice versa. Naming a spouse and a child as co-agents may allow them to both be in the loop, but can also create a stalemate if they can’t see eye-to-eye.

The same can hold true for nominating a personal representative, or executor, to carry out a person’s wishes at death. For that reason, some families consider hiring a corporate trustee to oversee their affairs. Having a neutral party act can take a lot of emotion out of the process. While corporate trustees charge a fee for their services, to maintain family harmony, it is often money very well spent.

So, make sure you look at all of the pieces of your plan so they work together and your assets get to where you want them to go. In addition, communicate that plan to your families so that there are no surprises. The last thing you want is for a UFC match to break out at your funeral.



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Reg P. Wydeven

Elder Law and Estate Planning Attorney at McCarty Law LLP
Hoping to follow in his father’s footsteps from a young age, Reg’s practice primarily consists of advising individuals on estate planning, estate settlement and elder law matters. As Reg represents clients in matters like guardianship proceedings and long-term care admissions, he feels grateful to be able to offer families thorough legal help in their time of need.
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