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There are many ways to protect yourself and property, both before and after death with estate planning. Some common tools used in estate planning include; Wills, Trusts, Durable Power of Attorney, Power of Attorney for Health Care, Living Wills, and Gifts (Estates of Substantial Value).
Wills are documents that provide for a particular disposition of property upon that person’s death. Wills also perform other functions. For parents of young children, a will should include language appointing a guardian. Maybe you have a friend who you trust and consider a “god father” or “god mother” to your children. Without a formal declaration in a Will, appointing that person as the guardian, your friend may not be the person a Court chooses to look after you children. This is a decision a parent should contr
The essential feature of a trust is that property is held by an individual or a corporate entity (the trustee) for the benefit of another person or persons. The trustee has a legal obligation to hold and manage the property for the beneficiaries, and the beneficiaries have enforceable legal rights against the trustee.
Trusts may be tailored to achieve a variety of objectives. They can provide property management for minors, the elderly, or other potential property recipients for whom outright property ownership is inappropriate, burdensome, or impossible. There a many different types of trusts to choose from. The factors involved in choosing the right trust almost inevitably combine tax consequences, level of control while still alive, level of control after death, and complexity or simplicity of administering the trust, to name a few.
The Tax Cuts and Jobs Act was signed into law in December 2017 and has greatly increased estate, gift, and generation-skipping exemptions for 2018 through 2025. The basic exclusion amount is $11.4 million in 2019. If the exemption amount is not used by a deceased spouse, it may be used by the surviving spouse, subject to some timing and filing requirements. In addition, individuals may make annual gifts, which do not count toward the lifetime exemption. The annual gift tax exclusion is $15,000 in 2019. .
A power of attorney is an instrument whereby one person, the principal, delegates property management powers or certain health-care decisions to another person to act as the principal’s agent or attorney-in-fact. Powers of attorney may be limited to the competency of the principal, or it may be durable, e.g., will survive the principal’s incompetency. A durable power of attorney may be used in place of or in addition to a trust to ensure that a property owner retains maximum property control as long as he or she so desires, without a need for the appointment of a guardian when management by the owner is no longer possible.
A living will is a document in which a person sets out his or her health-care preferences.
With a power of attorney for health care, a principal may delegate to an agent the power to make health-care decisions if the principal becomes incapacitated. Unlike a living will, which leaves directions to health-care providers, the power of attorney for health care appoints an agent to stand in the principal’s place.
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