Wisconsin Estate Planning: Top 10 Mistakes People Make in Estate Planning

12 Mar

Wisconsin Estate Planning: Top 10 Mistakes People Make in Estate Planning

As a Wisconsin estate planning law firm, we’ve seen our share of the good, the bad and the ugly when it comes to probate and trust administration. Our probate and trust attorneys located in West Bend, Wisconsin, have put together this ‘Top 10’ list to help your family avoid a Wisconsin probate and estate litigation.

It’s one thing to make a plan for how your estate will be administered, but it’s another thing entirely to make sure that your wishes are truly honored after you pass. Many times there are factors outside of your control such as bickering between beneficiaries, issues with complex assets, or tax issues that will prolong the administration of your estate. However, there are some issues that could be avoided with some intentional planning.

Here are the top 10 issues that I run into most frequently after a person has passed away that lead to the most difficulties in administering an Estate effectively and efficiently:

No preplanning or prepayment for funeral plans. The first question I typically receive when family members are in my office for the initial consultation after the death of a family member is, “how do we pay for the funeral?”. There is typically a period of time between when you pass and when funds are available from your Estate. This can range anywhere from two weeks to several months based on the type of planning you have. Even in a best-case scenario, your beneficiaries will typically need your Death Certificate before they can access any of your accounts. With that being the case, I commonly am asked, “who has to pay for the funeral, will they be reimbursed”. Even though funeral costs and final expenses are considered a priority claim of the Estate and would therefore be reimbursed 99% of the time, it is a large expense to ask your family to pay out of pocket. The other issue is planning the service itself, which can become very emotional and burdensome if you have no planning in place. Many funeral homes offer free planning, even if you do not prepay for the funeral itself. This will take the emotional toll off of your beneficiaries and may also prevent fighting or arguing about what type of service to have.
Too many Agents or too many ‘cooks in the kitchen’. One mistake I frequently see is clients who want to name multiple Agents to administer their Estate. In theory, this sounds good because no one feels left out. However, it can also lead to issues where there are disagreements between the Agents as to how to administer the Estate or confusion about who is supposed to be acting. For example, if you have three or four Agents, one of them may wish to sell the house right away, one may wish to perform work on the house, and one may want to wait until spring when the buying season picks up. There are some cases in which multiple Agents are beneficial. For example, blended families. By having one Agent from each side of the family, you can ensure the fair distribution of assets. However, it is my clear preference for people to appoint one Agent at a time, unless there is a compelling reason to do otherwise.
Failing to follow through on your Attorney’s advice. Another issue that comes up often is that after meeting with an attorney and doing their planning, some people will forget to carry out the directions of the attorney, such as naming beneficiaries on some accounts. Some people will tinker with their planning without informing the attorney who prepared the documents and confirming whether it aligns with their overall goals. One example of this would be if the client has a Trust based plan and is directed to title all assets in the name of the Trust or name the Trust as a beneficiary, but then at a later date in time, they go to the bank with one of their children and add the child as a joint owner on the account, or name beneficiaries on the account. By doing this, the Trust may own the house but have no cash for upkeep. This can make the administration of the Trust very difficult, which is why uniformity is important when determining what planning you should use.
Naming too many beneficiaries. Sometimes it can be hard to choose where your assets should go, particularly when there are no direct heirs of your Estate. Other times, it may seem like a good idea to name not just children, but also grandchildren, as part of your Estate. However, this becomes quite burdensome and difficult to administer due to the notice and accounting requirements and the drastically increasing chance that someone may contest or complain about the administration leading to thousands of dollars of court fees. One example that I see quite often is when someone leaves all of their assets to “all of my nieces and nephews”. Many times those nieces and nephews live all over the country, some may have passed away with or without children, or there may be distant relatives who are unknown to you or your Personal Representative. This would lead to a prolonged administration.

Good alternatives to this would include choosing several people instead of many, or distributing your Estate to nonprofit organizations.

Naming charities as beneficiaries. It seems counterintuitive to say that some people should leave their Estate to charity, but that too can become an issue. This typically has to do with who is administering the Estate, whether there is some family or friend involved versus only a beneficiary, and how many and what type of charities you are working with. Keep in mind that if you are naming an organization as a beneficiary of an Estate, there will be a requirement for a full and complete accounting by your agent. With charitable organizations, there is no personal connection, and you may run the risk that they will dispute that your agent acted appropriately leading to contention and expenses to the Estate. One way to avoid this issue, if you still have charitable intent, is to either name the charity as a beneficiary of your retirement account, which then passes tax savings on, or by giving them only a set dollar amount in your planning which does not depend on the final accounting or inventory of the Estate.
Too much personal property with not enough direction. Many of our estate plans include directions to your agent on how to dispose of personal property in a reasonable manner. However, I frequently see beneficiaries arguing how personal property should have been sold or distributed in an alternative manner. The practical matter is that most of the time, if there is an estate sale, the net benefit is quite low as opposed to giving your Agent the ability and direction to dispose of or donate any personal property. If you truly want to make sure someone gets an item of personal property, the best direction is to gift that item to the individual while you are still living or make very specific lists with your planning and then give your agent broad discretion in how to dispose of the rest.
Failing to update your estate planning. Many times when a client comes in for estate planning, it will be years and years before we see them again. It is important to update your documents, or at least have them reviewed, every several years or in case of a life event. A life event could include a divorce, death of a beneficiary, death of an Agent, or even a falling out between friends. I have had cases where an individual failed to update beneficiary designations after a divorce. This led to thousands of dollars in litigation to determine the owner of the account. I have also seen cases in which planning was not properly updated after a beneficiary passed away. This led to an inheritance by minor children which was not accurately protected.
Too many changes and too much disclosure. On the flip side of not updating your plan often enough, some people update their plan too often. Whether it is an argument with a friend, a sibling, or even a child, or simply trying to get it “just right”, some plans change far too often leading to confusion when original documents can’t be located and particularly in cases where the client told one or more individuals of their intentions prior to changing them at a later date. This leads to disputes with beneficiaries claiming that they were told they would receive one thing when in fact they are not receiving what they thought they were told. I have had cases where beneficiaries dispute Wills or accounting based on what a parent may have told them 10 to 15 years ago. This is why keeping your planning confidential until a later date is helpful. This is also why we discourage people from giving out copies of their planning documents.
Taking care of estate planning after the death of first spouse. We often see in the cases of married couples where the surviving spouse does not take the necessary steps to remove the deceased spouse’s name from various accounts. Particularly in the case or event where the deceased spouse was the only name on an account or an asset. This creates several additional steps at the time of the death of the second spouse because now there may need to be two probates or complications in dealing with companies where the surviving spouse was named as a beneficiary but then passed away without changing those designations or rolling over certain accounts. It is important to take the necessary steps to ensure that your planning is up to date after the first spouse passes.
Bad recordkeeping. Unfortunately, there is no central database where an attorney can look up the assets of a decedent. Accounts may include bank accounts, life insurance policies, investment accounts, etc. There have been times when an agent has not found out about a life insurance policy until well after the passing and that it was only found out through State Unclaimed Property notices. It is important to gather all of your financial information into one central area to at least give your agent a good place to start when administering your Estate. This is particularly important if you utilize online banking and email notices, because your heirs or beneficiaries may not think of checking for insurance statements, monthly bank statements, etc., and they may overlook those accounts or assets. Having a financial advisor can help you keep everything in one place and make things easier on your children or Agents when you pass.

BONUS. Naming an Agent who is not also a beneficiary of your Estate. From time to time, we have clients who would like to name a friend or neighbor or perhaps family member as the Agent of their Estate when that individual is not going to receive a substantial sum from the Estate.

Although the Personal Representative is entitled by Statute to 2% of a probate Estate, in the case that your Estate may be smaller, this does not compensate that individual for the time and effort that they put into administering your Estate. If you are not comfortable with your beneficiaries being the Agents of your Estate, whether because of their age or because of some other factor, we strongly recommend using either a corporate fiduciary to administer your Estate, in which case they will be paid a market value for their services, or you leave a higher dollar amount or authorize higher fees for the individual that you do name. While many people are willing to serve out of the goodness of their heart, it does take a toll and the chances of them putting their full time and effort into the proper administration of your Estate diminishes greatly if they are not also a beneficiary in some way.

If you have questions regarding estate planning in Wisconsin, or if you would like assistance in administering an estate in West Bend, Slinger, Germantown, Kewaskum, Port Washington, Menomonee Falls, Milwaukee, Washington County, Sheboygan County, Dodge County, Ozaukee County, Waukesha County, or Milwaukee County, Wisconsin, please contact the author of this article, Attorney Isaiah M. Richie, at [email protected] or you can contact Schloemer Law Firm, S.C. at 262-334-3471 or by email at [email protected], and we will connect you with one of our probate attorneys or trust attorneys.

Originally published: March 12, 2025.