Whether at work or a social event, I am often asked many of the same legal questions. In this article, I am going to provide answers to these frequently asked questions.
Q: Does Wisconsin have common law marriage?
A: Common law marriage is when a man and a woman live together for at least seven years and act like husband and wife to the public. There are about a dozen states that recognize common law marriages, but Wisconsin is not one of them. However, people who cohabitate together long enough and then break up may have a legal claim that their property should still be divided in a similar manner to divorce.
Q: What is the length of the look-back period for the nursing home?
A: When you apply to have the state of Wisconsin pay for your nursing home stay, the state will look at the assets you owned over the look-back period. Since 2009, the look-back period has been five years (not seven years!), and before that, it was three years.
Q: How much can I gift to someone?
A: First, do not mix this rule with nursing home planning. They are entirely unrelated. For 2016, the IRS says a person can gift to another person $14,000 each year. No one owes any tax, and the gift does not have to be reported to the IRS. If your gift exceeds that much to one person in one year, there is probably no tax owed, but now you have to report that extra amount to the IRS, and that amount reduces the amount of assets you are allowed to own at death, dollar for dollar, to avoid the estate tax. The $14,000 amount (which is called the Annual Exclusion) increases by $1,000 every few years, as it is indexed for inflation.
Q: How do my kids protect the farm I am transferring to them in the event of a divorce?
A: The best way to protect assets in the event of a divorce is for your son or daughter to do a prenuptial agreement or a postnuptial agreement. When doing such agreements, each person should have his or her own attorney. Full and complete financial disclosure must be made, and the agreement must be fair. Having only one attorney write and review the agreement (or no attorney!) severely reduces the chances that the agreement will hold up. Likewise, using any other method is full of many more risks than doing a prenup or postnup in the manner I described.
Q: If I sue somebody and win, will the loser have to pay my attorney fees?
A: The “American Rule” says that each party is responsible for his or her own attorney fees unless there is a statute or contract that says the losing party pays for some or all of the winning party’s attorney fees. If you win your lawsuit, there is a statute that allows you to collect up to a few hundred dollars in attorney fees. Sometimes, the basis of a lawsuit is on a very specific statute, and that statute may allow for the winner to receive attorney fees. If the basis of a lawsuit is based on a contract, such as a bank foreclosure, the contract itself can provide that the loser will pay the winner’s attorney fees.
Q: If I die without a will, where do my assets go?
A: If you are single with no kids, then to your parents. If your parents are deceased, then to your siblings and to a sibling’s kid, if a sibling died before you. If your siblings are deceased leaving no kids, then to your grandparents. If they are deceased, to their kids and grandkids (i.e., your aunts and uncles and your cousins). If you have none of the foregoing who are living, then to the state of Wisconsin. If you are married and all of your kids are your spouse’s kids, too, then it all goes to your spouse, or if your spouse is deceased, then to your kids. If you have kids who are not your spouse’s kids and if your spouse and your children are alive when you die, then it gets complicated. At this point, you should definitely get a will or other estate planning documents.
Q: Can I form a limited liability company online myself?
A: The purpose of forming an LLC is to provide you with limited liability. In a sense, the law says you have to earn this limited liability. This means you have to do the correct paperwork; you have to properly capitalize your LLC; and you have to treat your LLC as its own separate legal entity. Yes, if you go to the right website, you can file an LLC online yourself, but it does not mean you will receive limited liability.
Halbach is a partner in the ag law firm of Twohig, Rietbrock, Schneider and Halbach S.C. Call Halbach at 920-849-4999.