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Vol. 72, No. 4, April 1999 |
Letters
Using marital property agreements as primary estate planning
devices
I enjoyed the informative article, "Wisconsin:
An Estate Planning Paradise," by Andrew J. Willms and
Dean T. Stange in the February Wisconsin Lawyer. However,
I must disagree with the authors' assertion that "will
substitute provisions in a marital property agreement often are
not appropriate as the primary asset transfer document at death."
I am surprised that more Wisconsin lawyers are not using marital
property agreements with Washington Will provisions as the primary
asset transfer document in certain cases. We have a unique marital
property law in Wisconsin that permits nonprobate transfer at
the time each spouse dies. There are unlimited planning possibilities
with these agreements. I believe that part of the reason these
documents are not used as primary estate planning documents in
Wisconsin is that Wisconsin lawyers are reluctant to do something
not being done in other states.
I agree that marital property agreements as primary estate
planning devices are not for everyone. However, I have done dozens
of such estate plans for standard "husband and wife with
children" situations involving smaller estates. They have
proved easy to use and have been well received by my clients.
These agreements have many advantages over traditional trusts.
No trust funding is necessary. You never have to worry about
probating an asset that was not put into the trust. With proper
language, flexibility is maintained for the surviving spouse.
The documents are easy for the clients to understand. They fulfill
the two most often stated requests made by my clients: "We
want something simple" and, "We are not interested
in a trust."
The authors stated two reasons for their position. The inability
to do postmortem tax planning is not an issue if use of Washington
Will provisions is restricted to estates with no death tax exposure.
The average estate that I handle does not have federal death
tax concerns. As to the need for mutual consent by spouses to
revoke such agreements, the authors acknowledge that proper language
will permit unilateral revocation before death of the first spouse
and unilateral amendment or revocation by the surviving spouse.
The ability to amend these agreements after the death of the
first spouse, while still maintaining the nonprobate features
of the law, actually affords great planning opportunities and
provides the flexibility estate planners often seek.
James J. Winiarski
Milwaukee
In appropriate circumstances, a marital property agreement
can be an attractive alternative to a will or trust for the disposition
of assets after death. However, I believe in most circumstances
a marital property agreement should augment, rather than replace,
a revocable living trust. Potential drawbacks to using a marital
property agreement as the primary asset transfer document at
death include:
- The marital property agreement offers little opportunity
for transfer tax planning.
- The marital property agreement may not be effective at
transferring property located outside of Wisconsin.
- The marital property agreement cannot designate someone
to oversee the division, distribution, and management of assets
after the spouse's death. This can be a particularly important
issue upon the death of the surviving spouse when there is more
than one beneficiary.
- The marital property agreement may be ill suited to dealing
with unanticipated events (such as a predeceased child survived
by minor children).
- A marital property agreement cannot protect the beneficiary's
inheritance from his or her own mismanagement, creditor claims,
divorce, and so on.
Notwithstanding the foregoing, I do agree with Mr. Winiarski's
suggestion that marital property agreements should be used more
often as a way to accomplish nonprobate transfers. However, I
personally believe in most instances the transfer should be to
a trustee of a carefully drafted revocable living trust, rather
than directly to the intended beneficiaries.
Andrew J. Willms
Thiensville
An expression of gratitude
I want to thank all of my friends and supporters for their
encouragement and help during our recent State Bar elections.
I am very grateful to all who appeared on my behalf or conveyed
my regrets to those groups that had asked me to speak to them
when I was not able to. On behalf of my family and myself, I
also want to express our gratitude for all of the messages of
sympathy and support we received following the illness and death
of my mother in January. Finally, I congratulate Gary Bakke on
his election as president-elect and wish him all success.
Kathleen Grant
Wausua
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