Why and how to organize your financial and legal affairs

Why and how to organize your financial and legal affairs

  • 15 Dec Off
organize your-financial-and-legal-affairs

Why Organize Your Affairs

It’s not easy to think about what might happen if you become unable to handle your own affairs.  But illness and infirmity are as unpredictable as they are inevitable.  It’s impossible to know when they will strike you or what form they may take.

Acknowledging your mortality is even more difficult.  Even those you might reasonably expect to know better are not exempt from the tendency to avoid end-of-life decisions.

May people have inventories in their heads about what they own, which accounts are worth how much, and where to find the keys to the safe deposit box.  Others have only a vague idea of where everything is, but assume family members will be able to piece things together.  In either case, if you don’t commit details to paper, the individuals you expect to help out or take over will have difficulty gathering the information they need at what is likely to be a time of stress.

Planning for emergencies also means taking stock of relationships.  You may discover that some of your earlier choices are no longer appropriate and need to be changed.

The time you spend now will make it easier for loved ones when you are no longer able to handle your affairs yourself.

Tell your family about any advance plans you have made.

Wills, Beneficiaries and Estate Plans

Some assets, such as those that are jointly owned, name a beneficiary, or have a payable-on-death designation, can transfer fairly simply without a will.  The remaining assets will have to pass through probate court.  If this happens, legal fees and lengthy delays may prevent heirs from receiving their full inheritances in a timely manner.

Remember that even a well-drawn will must be validated by the probate court and be able to withstand challenges.

The executor also called a personal representative, carries out the terms of the will.  Duties vary depending on the size and complexity of the estate.  Minimally, the job entails validating the will in probate court, taking control of assets, paying bills and taxes, and distributing the estate.  To do so, the executor will likely have to work with family members, an attorney, and an accountant. 

An executor need not be someone with specialized knowledge of taxes or estate law.  He or she should be willing to arbitrate disputes, see outside help from professionals when necessary, and carry out the terms set forth in the estate plan honestly and effectively.

If you already have a will and other estate planning documents in place, such as transfer-on-death designations, review them with your attorney if you have not done so within the past five years.  This is particularly true if you have experienced a change in your financial or personal circumstances such as a change in residence, the death of a spouse or close family member, marriage, divorce, remarriage, adoption, or the birth of a child or grandchild.  Make sure your beneficiaries are the people and institutions you still wish to inherit your asset and that the executor is still the person best suited to the job.

Another part of your planning is to review the names on all jointly held accounts to ensure property passes to survivors according to your wishes.  Property that is jointly held with a second husband or wife, for example, passes directly to the surviving spouse.  This could have the unintended consequences of disinheriting children from a first marriage.

Review IRAs, 401 (k) plans, life insurance policies, property titles, pension plans, and other assets with named beneficiaries to make sure that beneficiaries have actually been named and remain appropriate.  When naming beneficiaries, consider “what if” scenarios.  What if a beneficiary predeceases you?  What if you name two beneficiaries and one predecease you?  With some accounts, you can address these issues by naming a contingent beneficiary.  Some beneficiary forms clearly spell out your options.  If they do not, your best bet is to ask an attorney for clarification.

Living Wills and Trusts

A trust is a legal and financial arrangement between the creator of the trust, or grantor, and the trustee, the person or institution designated to manage trust assets on behalf of the trust beneficiary.

Trustees fulfill a particularly difficult role because they have enormous responsibility and often some discretion in deciding how to distribute money.  Do not choose someone who is likely to write checks whenever beneficiaries make a request.  On the other hand, some trustees use their authority to gain control over family members.  So choose carefully.

A living trust takes effect during the lifetime of the person who created it and is either revocable or irrevocable.  A revocable living trust gives the person setting up the trust greater flexibility in controlling the assets, even to the extent of taking them back.  The advantage of this type of trust is that it will allow assets to pass to others, such as children or grandchildren, without going through probate court.  Although subject to estate taxes, the property in the trust passes quickly and privately to the trust maker’s chosen beneficiary.

The assets in an irrevocable living trust are not part of the taxable estate of the person who created it because they are owned by the trust.  Generally, people create an irrevocable trust to shift ownership of assets so they will not be subject to estate taxes, or to protect assets from creditors.  With irrevocable trusts, the creator relinquishes the right to dissolve the trust.  He or she may, nonetheless, reserve specific rights regarding administration, such as the right to be consulted on investments.

A testamentary trust is set up within a will, but does not take effect until the grantor’s death and exists as long as the trust document states.  Unlike a living trust, a testamentary trust is not private and confidential.  Rather, since it is part of a will, a testamentary trust goes through probate court and is public record.  These trusts also are subject to annual accounts that must be filed in the probate court, which make them more expensive to maintain than living trusts.  They are most commonly used to allow a parent to leave assets to young children and to identify the trustee responsible to managing those assets for a specified time frame.

A living will allows you to declare your wishes with respect to the kind of medical treatment you wish to receive in the event you become unable to make your own health-related decisions.

A living will serves as a guide for your health care agent or anyone else, such as doctors and family members, who may be making decisions about your treatment.  Even if you think your family knows what you would want done, a living will provides a written record of your preferences.  This is valuable from a legal perspective and also helps loved ones who may have to make difficult decisions.

You must use a form that has been approved for use in your state.  Local hospitals or your attorney may be able to provide you with the appropriate form.  For the state of Wisconsin, you can go to https://www.dhs.wisconsin.gov/forms/advdirectives/f00060.pdf and download a living will for you to fill out.


Takes effect during the lifetime of the grantor

         REVOCABLE                               IRREVOCABLE

  • Can be extinguished                   Cannot be extinguished
  • Avoids probate                            No longer part of the estate
  • Not part of will, private                Not part of will, private
  • Subject to estate taxes               Not subject to estate taxes

       Common use:                              Common use:

  • Allows assets to pass                  Protects assets from
  • Quickly to heirs                           estate taxes and creditors



Takes effect upon death of the grantor

  • Exists as long as grantor stipulates
  • Goes through probate
  • Part of will, public
  • Requires annual accounting

Common use:

To leave assets to young children and name a trustee

Financial and Medical Powers of Attorney

A financial power of attorney is a legal instrument that confers on another person the authority to make decisions and conduct transactions on your behalf.  The scope of authority is specifically described in th edoucment and can be very narrow or very broad, according to your wishes.  A power of attorney remaines in force only for your lifetime.  You can choose to revoke a power of attorney at any time for any reason.

A power of attorney for health care, or health care proxy, empowers someone to act on your behlf should you become unable to communicate or make decisions for yourself.

You should choose your health care agent carefully and discuss your wishes as expressed in your living will with that person.  Make it clear under precisely which circumstances you do or do not wish these procedures to be used, and, if you choose, for what length of time these procedures should be performed.

Guardians for Minors

Guardians oversee the care and custody of minor children or disabled individuals and administer their assets.  Make sure to choose someone you trust to raise your children in a loving, nurturing, and stable environment – and deiscuss guardianship with the person you select to make sure he or she has carefully considere the role.  This iss a decision you should make with your heart as well as your head.

Instructions for guardianship should be stated in the will to ensure probate court can appoint the guardian(s) seamlessly following the death.  If the will does not name a guardian, the court will choose someone whom it deems will serve the best interests of the child.

Medicare, Medicaid and Long-Term Care Insurance

Even the most well-thought-out estate plan may be derailed by a health crisis that could decimate your assets.  One of the most serious threats to retirees’ finances is the need to extended nursing or home health care.  According to a 2012 MetLife mature Market Survey, the average cost for a nursing home in the U.S. exceeds $90,000.00 per year for a private room ($248.00 a day) and $81,000.00 for a semi-private room.  However, the costs vary widely depending on the facility and the location.

Medicare does not cover long-term custodial care in nursing homes, in assisted-living facilities, or at home.  Medicaid, the government health program for the indingent, does cover nursing home care, but has strict eligibility requirements that include income and asset limitations.  (Medicaid asset transfer rules make it difficult to feign poverty in orfder to qualify for coverage.)

Many of the early long-term care policies offered limited coverage for high prices.  Som eof the most objectionable features of earlier policies-such as those requiring prior hospitalization before admission to a nursing home or exclusiong for Alzheimer’s disease-have been eliminated from more recent policies.  If you hold one of the older policies, review its provisions and modify the policy if necessary.

Despite imporovements, long-term care insurance is still complex and expensive, and underwriting stgandards are strict.  If you wait until you have serious health problems to apply, you will probably be rejected.  On the otyher hand, if you buy a policy when you are in your 50’s or 60’s , you may pay thousands of dollars over the years for a policy that you might never use, that you might eventually drop if the premiums become unaffordable, and that might not provide enough coverage.

Medicare does not cover some medical expenses, including dental care, eye care, co-insurance and deductibles, and some tests.  Medigap policies aim to fill in any coverage gaps left by Medicare.  A policy that may be a good value to one person may not be useful to another.  For information that can help you evaluate your options: www.medicare.gov or call 1-800-MEDICARE (1-800-633-4227).


The Federal Trade Commission’s Funeral Rule enables consumers to obtain informaiton about costs.  Among other provisions, the Funeral Rule requires that providers give price information over the telephone (which relieves consumers of subtle pressure tactics that may be employed in a face-to-face meeting with funeral personnel).  It also requires providers to supply, on request, a general price list of all items and servies offered.

Under the Funeral Rule, funeral directors who offer cremation services are prohibited from telling you that state or local law requires a casket for direct cremation and must make an unfinished wood box or alternative container available.

It’s best to avoid prepaying a funeral home.  Most states don’t provide adequate legal protectionif you move out of state or change your mind about your chosen arrangements and seek a refund.

There are alternatives to prepaid arrangements that can save your survivors the expense of your funeral and proide more flexibillity.  Once choise is to purchase a life insurnace policy with a death bentefit adequate to cover the costs of the funeral you desire.

The Funeral Consumers Alliance recommends an option that is sometimes referred to as a Totten Trust.  This is a separate account held at a bank and is designated as “payable-on-death” or “transfer-on-death”.  You select a beneficiary by filling out a few simple forms and depositing into the account any amount of money you wish.  When you die, the money does not have to go through probate and is immediately released to the beneficiary upon confirmation of his or her identy and presentation of a death certificate.

Until then, however, only you, and not the beneficiary, can access the account.  The funds remain in your name, they are portable, and the interest accrues in your account. 

If you want to donate your body to secience, many large medical centers accept human reamins for purposes of teaching or research.  In most instances, the facility will pay a donation fee upon receipt of the body.  For informaiton about the forms you must complete and th procedures you must follow, contact the medical facility to which you wish to donate your remains.  All such dations are revocable by alternate instructions prior to death.

Tell your family about any advance plans you have made.

10 Thing the Executor of Your Estate Should Know 

  1. The estate will have to be settled whether the will exists or note.  Distribute assets according to the decedent’s wishes if a will does exist.
  1. If a will does exist, it needs to be filed within a few days of the death. Refer to www.statelocalgov.net for information about state laws that apply to you.
  1. Secure unoccupied real estate and other vulnerable assets to ensure everything is passed to its intended heirs.
  1. Determine which assets, if any, will need to pass through probate court.
  1. You will need multiple death certificates , one to transfer each major asset.
  1. Hopefully, the forms in this guide have been filled out in detail, and you won’t have to do much guesswork about assets the decedent owns and any outstanding debts. You will need to take inventory of both.
  1. Decide when, and to what extent, you will consult an attorney. The fee may be well worth it if it saves you time or spares you from making costly mistakes.
  1. Communicate effectively with beneficiaries, trustees, attorneys, accountants, or other professionals and keep records of correspondence with them.
  1. Stay organized since settling an estae requires you to manage a large volume of details.
  1. Distribute property only after you have paid required expenses and taxes on the estate’s behalf. Beneficiaries should undertand it is a lengthy process, you are doing your best, and you are protecting their interest in the estate.
Why and how to organize your financial and legal affairs
Article Name
Why and how to organize your financial and legal affairs
It’s not easy to think about what might happen if you become unable to handle your own affairs.
Publisher Name
Elder Law Center of Wisconsin
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