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:

1. The marital property agreement offers little opportunity for transfer tax planning.
2. The marital property agreement may not be effective at transferring property located outside of Wisconsin.
3. 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.
4. The marital property agreement may be ill suited to dealing with unanticipated events (such as a predeceased child survived by minor children).
5. 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

Wisconsin Lawyer