Wisconsin Law on Non-Probate Estate Planning
Having assisted clients for over 50 years in Wisconsin estate planning, I suspect that I am biased to certain estate planning methods and advice. But since they call it ‘practicing law’, hopefully I’m nimble enough to always improve how best to serve clients.
So it is with ‘non-probate’ estate planning. Though utilizing a funded Living Revocable Trust has historically been the planning document of choice in the past to avoid probate, there always were alternative techniques. These alternative techniques customarily included beneficiary designations on retirement plans and life insurance. In addition, payable on death (‘POD’) designations on financial accounts and transfer on death (‘TOD’) designations on Wisconsin real estate will allow for probate avoidance.
What approach best serves a client (Living Trust or Beneficiary Designations) is a function of melding client distribution objectives, assets, tolerance for planning and cost.
In addition, a significant planning objective that should, but often is not a priority: How will my plan make it easier for my spouse or my children to administer the estate?
Why should I avoid probate?
Probate is court supervision of the decedent’s assets owned individually at death. Probate administration incurs a probate filing fee of 0.2% along with attendant Personal Representative Fees, Attorney Fees, and fees incurred in transferring assets to beneficiaries. In addition, this information is ‘public’, so your distribution scheme and assets are public.
Non-Probate Planning is:
1. private (not subject to public disclosure or scrutiny)
2. more efficient
3. less intrusive during a time of grief
4. less costly
What is a living trust or a revocable trust?
You could view your Living Trust as a ‘Will on steroids’. It recites the type of provisions you would expect:
· Distribution of assets upon death
· Designation of Trustee who will ‘settle the estate’: pay the bills, distribute the estate to beneficiaries, file final income tax return.
With nothing more, the Living Trust is no more advantageous than a Will since all assets are owned individually. A ‘funded Living Trust’ has all of the client’s assets either titled in the Trust or directed to be paid to the Trust at death. This ‘funded’ Living Trust avoids probate administration.
Summary: A properly funded Living Trust eliminates probate administration.
Beneficiary Designations/POD/TOD
As stated above, probate administration is court supervision of assets owned individually by a decedent at death and which will be distributed to heirs based on the Will, or if no Will, in accordance with the Wisconsin Statute which designates who receives the assets if there is no Will.
But assets with Beneficiary Designations/POD/TOD are more than assets owned ‘individually’ by the decedent. They are assets which the decedent has designated who is to receive the asset at death.
Beneficiary Designations: By naming individual(s) as beneficiaries on insurance policies, at death, the death benefit will be delivered to the designated beneficiaries. This also applies to retirement plans such as401(k) and IRAs.
POD accounts: At death, the bank account, investment account, etc. will be transferred to the individual(s) listed on the POD beneficiary designation form.
TOD assets: Typically, this is a real estate parcel. Wisconsin law allows for the designation of a ‘Transfer on Death’ beneficiary on Wisconsin real estate for probate avoidance. The TOD document is recorded with the register of deeds, and upon death, the real estate parcel is transferred to the beneficiary designated on the TOD deed.
Yes, in administering these beneficiary designated assets, you may need to provide a death certificate and other information that may be requested, but this is all accomplished in private with no court supervision.
Summary: Beneficiary Designation/POD/TOD eliminate probate administration.
Note: It is common for a funded Living Trust plan to utilize one or more beneficiary designation techniques, particularly life insurance and 401(k), and IRA assets.
More on Non-Probate Planning in Wisconsin
Now that we understand that probate can be avoided with either method, the next question is ‘Should I use a ‘funded’ Living Trust or utilize Beneficiary Designations/PODs/TODs to address non-probate planning objective? ‘
No two client/couple balance sheets, families, or planning objectives are the same. The answer depends on a variety of factors.
When would you use Beneficiary Designations/POD/TODs?
1. Avoids probate and transfers property to desired designated individual consistent with overall distribution scheme.
2. Generally, easy to create utilizing forms provided by financial institutions, life insurance companies, and retirement plan administrators.
3. Less expensive than implementing a fully funded Living Trust.
4. Easier to understand than a Living Trust.
5. You can change your mind and revise the designation form as to who is the designated beneficiary.
6. Generally, best for smaller and simpler estates when the beneficiary designation is consistent with overall distribution scheme, i.e. spouse, and if not spouse equally to children.
When would you utilize a Funded Living Trust?
1. Except perhaps for some limited beneficiary designated assets, i.e. life insurance and retirement plans, all assets, their administration and distribution are contained in one document.
2. When clients change their distribution scheme, they many times do not also review and change as appropriate designated beneficiary documents.
3. Complex distribution schemes are better achieved through a funded Living Trust i.e.” Do you have unequal distributions to children? Are you setting up trust for a beneficiary such as a grandchild, spendthrift children? Beneficiary designation forms do not lend themselves to complex wording.
4. For larger estates, a Living Trust can better achieve planning objectives, i.e. a marital trust for surviving spouse, trust for estate tax planning, trusts for grandchildren, trust for an adult child, trust for a special needs child.
5. If you become incapacitated, your agent under your Durable Power of Attorney must allow the agent to change your beneficiary designations.
Questions to Ask if Probate Avoidance Is an Objective
1. Do you have a modest estate comprised of your home, checking/savings accounts, life insurance and retirement plan?
Beneficiary approach may be your preferred planning environment.
2. Do you want to have an estate plan in place at the most economic cost?
Beneficiary approach may be your preferred planning environment.
3. Do your beneficiaries and/or individuals who will administer your estate reside out of state?
Either Beneficiary approach or Trust approach may be the preferred planning environment.
4. Do you have a distribution scheme which provides unequal distributions to your heirs?
Trust approach may be your preferred planning environment.
5. Do any of your children or their spouses not get along with each other? Do you anticipate any disputes in the administration of your estate?
Trust approach may be your preferred planning environment.
6. Do you desire a trust established for children and/or grandchildren until these heirs have attained an age of maturity?
Trust approach may be your preferred planning environment.
7. Are you divorced or your first spouse has died, and you desire to provide for your second spouse but ultimately provide for your children?
Trust approach may be your preferred planning environment.
8. Do you have a special needs child?
Trust approach may be your preferred planning environment.
9. Do you have a special asset, i.e. Lake Cottage, that you would like one or more heirs to purchase, or receive as part of their inheritance?
Trust approach may be your preferred planning environment.
10. Do you want to provide for your spouse, but are concerned that he/she may remarry and the second spouse, and not your children, will receive their full inheritance?
Trust approach may be your preferred planning environment.
11. Do you have significant qualified assets (401k and IRAs) and adult beneficiaries which you want to maximize the deferral of income recognition?
Beneficiary approach may be your preferred planning environment for these assets.
12. Do you, or do you and your spouse have potential taxable estate?
Trust approach may be your preferred planning environment.
13. Do you own out of state real estate?
Trust approach may be your preferred planning environment.
14. Do you want to provide for a distribution to adult children which allows them to ‘isolate’ inheritance from marital assets if the child’s marriage is terminated.
Trust approach may be your preferred planning environment.
Note: Even when the Trust approach should be your preferred planning environment, your objectives can still be attained utilizing a limited Beneficiary planning environment and a Will, but then there will be probate administration for the estate and ongoing probate administration for any post death trusts established for beneficiaries.
Additional Comments
1. With either planning environment, clients should have a Durable Power of Attorney which grants the Agent the power to amend beneficiary designations and provide gifting authority.
2. With either plan, the married couple client should have a Marital Property Agreement classifying all property (except life insurance and qualified plans) as ‘marital property’ for larger estates, or ‘survivorship marital property’ for smaller estates, with a provision that any asset owned individually at death without a beneficiary designation is to be transferred pursuant to that provision.
3. Even with Beneficiary designation planning environment, a Will should be put in place.
4. It is our experience that whether a Trust or Beneficiary approach is used, clients fail to follow through on funding the trust as to the former or completing designation forms as to the latter. “If you build a garage, park the car”. In addition, it is our experience in either approach that clients do not amend prior designations when distribution objectives are revised.
Mistakes Made When Utilizing Beneficiary Designations
Common mistakes we have seen in a beneficiary approach include the following:
· Not naming a beneficiary – this will create a probate asset.
· Not designating a contingent beneficiary – this will create a probate asset.
· Not keep beneficiary designation form up to date– this will cause a distribution not in line with current distribution objectives.
· Naming a minor as a direct beneficiary – minor will need guardian to become involved.
· Naming a special needs person as a direct beneficiary – may unintentionally cause ineligibility.
· Naming multiple beneficiaries on a TOD – may create unmanageable real estate ownership.
· Naming an individual as co-owner of an investment account/bank account - this is not a distribution, better handled with a durable power of attorney. Also, co-owners creditors can make claims against the account.
· Naming one individual as beneficiary believing that individual will share the asset with other family members – beneficiary is not obliged to do so.
Questions?
If you have questions about this article or need assistance, please contact Schloemer Law Firm, S.C. at 262-334-3471 or info@schloemerlaw.com.
We frequently represent individuals and landowners in their estate planning, probate, and trust administrations, focusing primarily on providing legal services in Washington, Ozaukee, Dodge, and Fond du Lac County and the communities of West Bend, Jackson, Slinger, Hartford, Kewaskum and other surrounding communities.
Originally published: January 5, 2026
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Disclaimer: The information contained in this post is for general informational purposes only and is not legal advice. -Due to the rapidly changing nature of law, Schloemer Law Firm makes no warranty or guarantee concerning the accuracy or completeness of this content. You should consult with an attorney to review the current status of the law and how it applies to your unique circumstances before deciding to take—or refrain from taking—any action. If you need legal guidance, please contact us at 262-334-3471 or info@schloemerlaw.com.