The Wealth & Wisdom Blog

Minnesota Vikings fans know that no lead against the Green Bay Packers is safe. The Vikings nearly blew their 28-0 lead this past weekend, prevailing by a score of 31-29.  Bragging rights over the rival Packers will certainly be short-lived, as the Vikings and Packers will play again on December 29^th.  As the holder of a Wisconsin law license, I have been honored to work with many Wisconsin residents, who agree to work with me even after my disclosure of my Vikings loyalties.

In honor of the Vikings-Packers rivalry, in this month’s update I share three unique elements of Wisconsin estate planning:

• Marital Property Characterization.  First, Wisconsin law considers most assets owned by a married couple as marital property. Marital property is deemed to be owned equally between a husband and wife.  This property characterization allows for a married couple to jointly create a revocable trust to achieve their shared estate planning objectives.¹ In certain circumstances, it may be wise for a married couple to agree to a separate/individual property characterization, rather than marital property characterization.  This characterization can be achieved through a marital property agreement.  Such an agreement would be relevant when (i) the couple has a blended family, (ii) one marital partner inherited property, or (iii) one spouse should be shielded from the business or professional risks of the other spouse.
• Double Cost Basis Step-Up. Second, marital property receives a full step-up in cost basis at the first death between a husband and wife. This step-up in basis allows for a surviving spouse to avoid capital gains taxes on any appreciated assets. At the surviving spouse’s subsequent death, all remaining assets owned by the surviving spouse receive a second full step–up in cost basis.
• No State Estate Tax. Third, Wisconsin imposes no state-level estate tax.  Our wealthier Wisconsin clients may face federal estate tax exposure, but there are no state inheritance or estate tax considerations.²

While I don’t anticipate cheering for the Packers anytime soon, I plan on continuing to represent many Packer fans, many of whom are Wisconsin residents.

¹ Minnesota residents should have separate revocable trusts not only because of the “separate” nature of asset ownership, but also to fully utilize Minnesota estate tax exemption amounts.

² On balance, in comparison to Minnesota residents, we are less likely to recommend that Wisconsin residents make substantial lifetime gifts, not only because there is no Wisconsin state estate tax, but also because lifetime gifts would result in the loss of the “double” step-up in cost basis at death.