When you are questioned about it at a party, be calm and just say "lives in being plus 21 years" in the most serene manner possible, and tell people they need to go to law school in order to understand.
Basically this is just a rule against tying property up forever. This is generally recognized as a sort of bad idea.
The only thing that makes this so hard is that instead of just a number (e.g., 100 years), it's a story: lives in being plus 21 years.
We need to find someone (who can be described) who is alive at the time the interest becomes irrevocable. At least one of those people. We don't have to know exactly who it is, but it needs to be a specific knowable person (i.e., my last living child). And this needs to be figured out at the time the interest is created: you need to figure out this up front.
Three famous conundra:
And anyway, even though WI doesn't have the rule, there's always the chance your documents will migrate to another state. The way you cover yourself is not by knowing the rule super-well.
You use a savings clause: it's basically a back-up plan. A clause that says, essentially, "if it should turn out that this trust violates the rule against perpetuities, then it will terminate the day before the perpetuities limit." And that way you can control the termination process. 99.99% of the time this won't be invoked, but if somebody raises a fuss, the trust can still control its own shutdown.
Phew! It's just not that hard to dodge the scary rule. So only people who really want to immerse themselves in it will have to stress out about the rule.
The Rule Against Perpetuities is about distribution (not management/administration). It says that at some point you have to distribute property outright, in fee simple.
The WI rule is the Rule Against Suspension of Alienation: that's an administration/management rule. You can put property in trust forever. But you can't say "this property can never be sold:" you can't wipe out the power of the trustee to sell the property. You can put some restraints, but you can't declare outright that property can't move to its highest and best use.
This is a major source of misunderstanding: lots of people are custodians of these accounts, and believe they know the rules, but generally that's just what's in their head (of course if nobody else questions it, then it kind of is the law).
Structurally, these are kind of like a trust, but legally the rules are much more relaxed.
They're very easy to open: just check a different box on the account-opening form.
Trivia: how do we know that Hillowitz's probate estate is not going to his wife? Because there wouldn't be any dispute: she's the one asking for it to be deemed a non-probate transfer.
So anyway, Mr. Hillowitz is part of an investment club. And in a decision reminiscent of Farkas, the court says his agreement to dispose of the funds on his death is OK (i.e., it's not a will, therefore it's non-testamentary, and therefore it doesn't fail).
The language of the statute includes "instrument of a similar nature," but doesn't tell you how to decide what is similar. You can't assure someone what the outcome of a novel kind of non-probate transfer document will be. You shouldn't rely on this: if you think anyone might want to contest a thing, set up something you know will work. Or have a backup plan: a probate failsafe.
There's no automatic right to pass property non-probate. There has to be specific authority for it.
Remember about incorporation, also. Can a will say "I leave my investment in the partnership to whomever I name in the partnership agreement?" That's technically incorporating a document outside the will. Not all states are cool with this, but even where it does work, you can only incorporate pre-existing documents. So you might just as well name the person, because if you change the document you're going to have to change the will anyway.
But again, most people would never think to challenge this.
Still, the answer to this question is: maybe. If you think Hillowitz would work, then yes, but you're not guaranteed that those facts would come out the same here.
So would this work under WI law? Possibly, but this is really pushing the limit. Plus, this looks like a will (not like a partnership agreement, as in Hillowitz). You could argue that it's a "conveyance" as named in the statute, but there's no description (required in real estate). This is pretty out there.
Basically, you're investing the money that you would have paid to the government in tax, and you get the benefit of that growth.
So there really are two systems: probate and non-probate. And § 853.17(1) makes it look like in Part A it goes to the sister, because no life insurance comoany would really agree to this: they want simplicity.
But what about Part B? Here, the sister receives something under the will: some bunch of stock. On one level, that shouldn't make any difference. Now there's some kind of equitable election issue, and we go to § 853.15. The sister can either validate the will (take what comes to her there, and forego the rest) or not (take nothing under the will but get the other stuff). So now the probate court has jurisdiction over the sister.
Basically, the court has some leverage: they know that the testator didn't want the sister to get the life insurance, but they can say that they'll read the will as a whole, and she has to decide which way she wants it: follow the will, or follow the non-probate transder. They can't force her not to accept the life insurance, but they can try to implement the decedent's intent by forcing her to select whether the will is valid or not.
Now: does it matter whether the life insurance beneficiary was named before the will or after? Under § 854.17(c), we follow the last word, basically: that's an attempt to stick with the testator's wishes. So there'd be no problem if the life insurance designation was made after the will.
Returning to Part A, the correct answer is that it goes to the sister. That's the legal answer. But the law-in-action game suggests perhaps otherwise. So in real life, the question isn't "who gets it under § 854.17," but "who gets it?" To figure out who is going to get the property, we have to figure out how the sister feels about this.
How to get it to the kids? She might be able to disclaim it (and then if the kids are the second beneficiary, or the probate estate), and then it goes there. Or she can pay it out in increments over a few years to avoid the gift tax.