Estate Planning with Paul Rabalais: Recent Episodes
Paul A. Rabalais
Rabalais Estate Planning, LLC, is a Louisiana estate planning and administration law firm. Since 1991, Paul Rabalais has been helping Louisiana individuals, couples and families arrange legal affairs to protect what they have. Mr. Rabalais earned his B.S. in Finance from Louisiana State University, his law degree from the LSU Law Center, and his Masters in Tax Law from the Boston University School of Law. Mr. Rabalais is the author of the book, "Estate Planning in Louisiana, A Layman's Guide." He has spoken to hundreds of consumer groups about estate planning. He has taught continuing education to Louisiana attorneys regarding a variety of estate planning related matters. This channel is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Any way you look at it, long term care services are expensive. And when you have a married couple with one spouse residing in the nursing home while the other spouse is healthy enough to reside in their residence, it gets tough because on top of the several thousand dollar nursing home bill, the couple is also spending thousands monthly to maintain the residence. In these circumstances, couples spend hundreds of thousands of dollars over several years.
Many couples, particularly those who do not plan ahead, are forced to consume their assets (also called "Countable Resources"). This post is not about spending or protecting the assets, but this post is about how the monthly income of the couple gets handled.
Here's an example. Let's say that each spouse is receiving $2,000 of monthly income (social security and pensions are common forms of monthly income, but there are others).
Louisiana Long Term Care Medicaid rules provide that ownership of income is determined without regard to community property laws. For Medicaid purposes, a spouse has full ownership of income paid in his name.
In determining how much of the income the couple can keep. Medicaid rules provide that the income of the community spouse is never to be considered in determining eligibility for an institutionalized spouse. Keep in mind that the spouse residing in the nursing home institution is called the "institutionalized spouse," while the spouse still living in the community is called the "community spouse." The community spouse always gets to keep all of the community spouse's income.
In order to determine the institutionalized spouse's patient liability, we must start with that spouse's gross monthly income ($2,000 in our example) and subtract their personal needs allowance ($38). Then, we subtract the Community Spouse's Maintenance Needs Allowance.
The Community Spouse's Maintenance Needs Allowance is calculated by subtracting the community spouse's income ($2,000) from the Community Spouse's Maintenance Needs Standard ($3,160.50 for the first half of 2019 - it gets adjusted twice each year). Thus the Community Spouse's Maintenance Needs Allowance totals $1,160.50.
So, $2,000 minus $38 minus $1,160.50 equals $801.50. This is the institutionalized spouse's patient liability. The concept here is that the community spouse always gets to keep all of the community spouse's income. But if the community spouse's income is less than the applicable Maintenance Needs Standard, then the community spouse gets to keep enough of the institutionalized spouse's income to get the community spouse up to a total of monthly income that equals the Maintenance Needs Standard.
Keep in mind here that these are Louisiana rules and your state's rules may differ. Also note that this calculation is not made, nor is it relevant, if the patient is denied Medicaid due to too many countable resources or for some other disqualifying reason.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais
Louisiana Estate Planning Attorney
www.RabalaisEstatePlanning.com
Phone: (225) 329-2450
Every year the State of Louisiana's Department of Health adjusts certain Louisiana Long Term Care Medicaid asset and income limitations for Long Term Care applicants and recipients. The following is a summary of the changes made for 2019.
The Long Term Care Resource Limit for Single Individuals ($2,000) and Married Couples ($3,000) has not changed.
The Spousal Resource Standard has increased from the 2018 amount of $123,600, to the 2019 new limit of $126,420. What this means is that if one spouse is in a nursing home (the "institutionalized spouse") and one spouse still lives in the community (the "community spouse"), the the community spouse can retain up to $126,420 of Countable Resources. The rationale is that the spouse who is not in the nursing home needs assets to live off of.
Note that the Louisiana Home Equity Limit has increased from $572,000 in 2017, to $585,000 for 2019. Most people realize that the home is not a countable resource - it is an exempt asset. But what some don't realize is that when a Medicaid recipient dies, the State of Louisiana has Estate Recovery Rights which allows the State of Louisiana to force the sale of the home to reimburse Medicaid for what Medicaid spent on the deceased Medicaid recipient's care.
However, if the home, at the time of Medicaid application, is worth more than $585,000, then the applicant will not qualify for Medicaid due to Louisiana's Home Equity Limit of $585,000.
Regarding monthly income, the new Spouse's Maintenance Needs is $3,160.50 of monthly income. Generally, the Community Spouse will be permitted to keep the first $3,160.50 of the couple's monthly income. Exceptions to this rule apply, however, so work with the right estate planning attorney to protect as much of your assets and income as possible.
Finally, the Average Monthly Cost for Private Patients of Nursing Facility Services increased on March 1, 2018 from $4,000 to $5,000. This means that if you make an uncompensated transfer within five years prior to applying for Medicaid, you will be assessed a penalty period of the value of the transfer divided by $5,000.
Note that this post does not address any of the planning strategies that are available to help people protect what they own, nor is it an in depth discussion of the Medicaid definitions, such as countable resource or exempt asset, nor do these figures apply to all 50 states - each state is different so if you live outside of Louisiana, make sure you are working with the correct figures.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais
Louisiana Estate Planning Attorney
www.RabalaisEstatePlanning.com
Phone: (225) 329-2450
This post will help people who have a family member or loved one in a nursing home (or their loved one is about to enter a nursing home) and the family member or loved one has more than $70,000 of countable resources.
Most people think that if you enter a nursing home owning more than $2,000 of assets (other than your home and car), then you will be forced to spend all of those assets on your care until you deplete them down to less than $2,000. Nursing homes are expensive so the money gets depleted rapidly, preventing seniors from being able to leave an inheritance to their children or other loved ones.
But there is a particular legal strategy that can enable you to protect at least half of your countable resources, even if you don't take advantage of the strategy until you (or your loved one) are already in the nursing home as a private pay patient.
Let's use an example to describe how the Return of Transferred Resources provisions of the Louisiana Medicaid Eligibility Manual ("Medicaid Manual") can help one family save $100,000. Let's say Mom (who is not married) is entering the nursing home with a bank account balance of $200,000.
Now we must look at a couple of provisions of the Medicaid Manual. The first provision says, "Do not continue to count the uncompensated value of a transferred resource if the original resource is returned."
Another important provision states, "If only a part of the asset or its equivalent is returned, the penalty period is modified, but not eliminated."
In our example, let's say Mom donated $200,000 to Daughter just prior to Mom entering the nursing home. Mom then applies for Medicaid and gets denied due to the transfer of countable resources. Medicaid will assess a penalty period equal to 40 months ($200,000 transferred divided by $5,000 LA monthly private pay rate). The penalty period begins the month Mom is determined eligible for Medicaid except for the transfer of resources.
Next, Daughter returns to Mom $100,000 of the original $200,000 transferred. As a result, Medicaid will modify the penalty period from 40 months to 20 months. Now, Mom has $100,000 in Mom's account. Daughter has $100,000 in Daughter's account. And Mom's modified 20 month penalty period is underway. Mom uses the $100,000 in Mom's account to pay for her care during the 20 month penalty period.
At the end of the 20 month penalty period, Mom has less than $2,000 of countable resources, the penalty period expires, Medicaid starts covering Mom's nursing home expenses, and Daughter still has $100,000 in Daughter's account.
A few things to keep in mind. We are basing this on the Louisiana Medicaid Eligibility rules. If you live in another state, find out what your state's rules are on the return of transferred resources. Second, DON'T TRY THIS AT HOME. Complications result through the Medicaid Application process, the many transactions that take place, and the providing of appropriate financial institution documentation to Medicaid and other third parties. Get good help. One false move and you could do more harm than good.
Also, the family members that play a role in this must be 100% cooperative and supportive. It does not good if they turn around and spend all of the money on themselves.
So, what should you do? Call our office and say you'd like to find out of t he "Transfer and Return" strategy can help your family protect assets. We'll look at your situation and determine whether this would be worthwhile to take advantage of.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais
Louisiana Estate Planning Attorney
www.RabalaisEstatePlanning.com
Phone: (225) 329-2450
Let’s look at and analyze the 2019 gift and estate tax rules. First, the basics: the gifting annual exclusion amount remained at $15,000 for 2019, and the gift and estate tax exclusion amount increased from $11.18 million in 2018 to $11.4 million in 2019.
Now let’s take a closer look at these. Regarding the $15,000 annual exclusion amount, it’s worth noting in any discussion regarding gifting, that if a person (donor) makes a gift in excess of $15,000 in a calendar year, the tax consequence is that the donor must file a gift tax return (IRS Form 709) showing that part of the gift and estate tax exclusion amount was used. In almost every “taxable gift,” no tax is due. The gift merely needs to be reported. And it’s worth noting that married couples can each give $15,000 without any gift tax reporting requirement, which further means that married couples can donate $30,000 to as many individuals as they want, each year, without being required to report the gift on a gift tax return.
Regarding the gift and estate tax exclusion amount, note similarly that each spouse has an exclusion amount of $11.4 million for 2019. In theory, the married couple can exclude assets valued at $22.8 million from the 40% estate tax.
It’s worth noting that the estate tax law, in its current form, is scheduled to “sunset” after 2025. Absent Congressional action, the exclusion amount reverts back to $5 million, adjusted for inflation, in 2026.
There is concern from some about the potential for clawback of lifetime gifts. Specifically, the sunset of the higher exclusion amount could deny estates of individuals who die after 2025 the full benefit of the higher exclusion amount applied to previous large gifts.
Recently, the IRS proposed regulations to resolve this issue. The example they gave was of a taxpayer who made gifts taxable gifts of $9 million prior to 2026, and then died during or after 2026, when the gift and estate tax exclusion amount was less than $9 million. The proposed regulations of the IRS state that the credit amount against estate tax will be based on the higher $9 million amount rather than the lesser amount that may be in effect after 2025.
Note that we still have portability (which makes it easier for married couples to get the full utilization of two estate tax exemptions), step-up in basis for capital gains tax purposes, and gifts in excess of $15,000 still must be reported even though typically no gift tax is due.
Happy New Year!
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais
Louisiana Estate Planning Attorney
www.RabalaisEstatePlanning.com
Phone: (225) 329-2450
A common estate planning principle communicated by spouses who have children from prior marriages and relationships is, “If I predecease my spouse, I want my assets to be available for my surviving spouse’s needs, but when my surviving spouse dies, I want my assets to revert back to MY children.”
This can get complicated when the estate consists of Traditional IRAs, as many estates do. Let’s take the example of a Husband and Wife who each have two children. When H dies, his IRA is worth $1,000,000. In the year after Husband dies, Wife is 80 years old.
When it comes to income tax planning and IRAs, most recommend to keep the IRA balance as large as possible, allowing an IRA owner to earn investment income on deferred income taxes.
In this post we will discuss two strategies: (1) Naming the surviving spouse as the designated beneficiary of Husband’s IRA; and (2) Naming a trust (for the benefit of the spouse) as the beneficiary of Husband’s IRA.
When a surviving spouse is the designated beneficiary of an IRA, the surviving spouse’s ability to roll over inherited benefits to her own IRA gives her a powerful tax-deferring option, not available to any other IRA beneficiaries. If the surviving spouse holds the IRA as an owner, her Required Minimum Distributions (RMDs) are determined using the Uniform Lifetime Table under which her Applicable Distribution Period (ADP) is the joint life expectancy of the surviving spouse and a hypothetical 10-years-younger beneficiary. If she withdraws only the RMDs under the Uniform Lifetime Table, the IRA is guaranteed to outlive the surviving spouse. And it’s likely that the IRA will be worth more in the surviving spouse’s late 80’s than it was when she inherited it at age 80.
Let’s look at some numbers. Since Wife can use the Uniform Lifetime Table, her first required distribution the year after Husband dies (assuming a $1,000,000 IRA value) is $53,500 (5.35% of the IRA value). The next year her RMD is 5.59%. And the next year, 5.85%. If the investment performance of the IRA exceeds these distribution percentages, and she only takes the RMDs, the IRA will grow.
The downside, however, is that since Wife is treated as the owner of the IRA, Wife can name whoever she wants as the beneficiary of beneficiaries of her IRA. She could exclude Husband’s children by naming Wife’s children, or perhaps even Wife’s new spouse that she married after Husband died!
So instead of naming Wife as the designated beneficiary of Husband’s IRA, Husband considers naming a trust for Wife as beneficiary. The trust instrument might provide that RMDs go to Wife for her lifetime, but when Wife subsequently dies, trust assets revert back to Husband’s children. But since a trust was named as the beneficiary of Husband’s IRA, even if the trust qualifies as a “see-through” trust, RMDs after Husband dies will be based on the single life expectancy of the surviving spouse (Wife) which results in substantially less income tax deferral than would be available if the surviving spouse were named as the outright beneficiary and rolled over the benefits into her own IRA.
Let’s look back at the numbers. If a trust for Wife is named as beneficiary of Husband’s IRA, the first RMD when Wife is 80 (based on the same $1,000,000 IRA) will be $98,000 (9.8% of the IRA value). At age 81, the RMD will exceed 10% of the account value. And each year, the percentage will increase. If Wife lives long enough after Husband dies, the RMDs based on the required single life expectancy table will cause most of the benefits to be distributed to Wife outright which will defeat the purpose of trying to protect those IRA assets for Husband’s children.
So keep in mind that there are tradeoffs when it comes to naming beneficiaries of IRAs.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais
Louisiana Estate Planning Attorney
www.RabalaisEstatePlanning.com
Phone: (225) 329-2450
Some people own real estate in their own state, and they also own real estate in another state. There is often a right way and a wrong way to structure ownership of these properties.
The following are two reasons people transfer their out-of-state real estate to a limited liability company (LLC).
The most often cited reason to transfer real estate to an LLC is to protect yourself from potential lawsuits or other liabilities. Here's the deal: if you own real estate in your name in another state, and someone gets injured on the property, the injured party will sue the owner of the property (you). And if they are successful in their lawsuit against you, you will have to satisfy a judgment from your personal assets. So, your personal assets are at risk if you own real estate in your name.
However, if you transfer your property to your LLC, and someone gets injured, that injured party will sue the owner of the property (the LLC), and your personal assets are protected.
A second reason people transfer their out of state property to an LLC is to avoid the ancillary probate. When you die with assets in your name, your survivors will be required to go through a court proceeding ("Probate" or "Succession" - same thing really) and have the government's court system oversee the administration and disbursement of your things - some people consider this to be tedious, time-consuming, and expensive. And if you own real estate in your name in another state (outside of your home state), your survivors must hire a law firm in that other state to transfer your out of state property to your heirs. The "home-state" probate does not transfer out of state real estate that is titled in your name when you die. So, some people transfer their out of state real estate to an LLC to (1) gain limited liability; and (2) avoid the ancillary probate. The ownership of your LLC that owns out-of-state real estate can be transferred through your home-state probate.
Another alternate is to transfer your out-of-state real estate to an LLC (get limited liability and avoid ancillary probate), and then transfer your LLC to a revocable living trust so that an in-state probate is not even necessary to transfer your ownership interest in the LLC when you pass away. Don't try this at home! This is not a do-it-yourself task. If you live in Louisiana and want to get these benefits, contact my office.
There are many things to consider when taking these actions. Prior to transferring your property to an LLC, check with your lender (if you have a mortgage on the property), and check with your liability insurer (to make sure your insurance won't have to shift to a commercial policy). Make sure you get good legal help to cover all your bases and get the peace of mind you deserve.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais
Louisiana Estate Planning Attorney
www.RabalaisEstatePlanning.com
Phone: (225) 329-2450
After a Louisiana resident passes away, a surviving loved one often goes to the deceased's bank, credit union, or brokerage firm, in an effort to settle the estate of their loved one. The financial institution promptly responds by saying something like, "Your loved one's accounts at this financial institution are all frozen. You must bring back "Letters Testamentary" or "Letters of Administration" in order to gain access to funds.
These days, the financial institutions are asking for the wrong things. They should be requesting "Letters of Independent Executorship" or "Letters of Independent Administration."
Since 2001, Louisiana has authorized the independent administration of estates - less court supervision. Virtually all Wills written since 2001 authorize this procedure. And if a Will does not authorize it, then the heirs can agree to operate under this independent administration procedure.
After a death, when the family gets the executor confirmed, and if the executor is acting as an independent executor (which is the case in an overwhelming majority of Successions), the court does not issue "Letters Testamentary." The court issues "Letters of Independent Executorship."
So the bank requests Letters Testamentary, and then we have to tell them that we will not give them what the bank is requesting. We will give them Letters of Independent Executorship.
It would be easier on everyone if the financial institution tells the survivors of its clients and customers that they can bring in the Letters of Independent Executorship to gain access to the funds of the deceased.
To some, this may seem to be a trivial matter. But when we deal with so many confused survivors, anything the legal and financial industries can do to help those in need at a difficult time would make everyone's job easier. Just my two cents.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais
Louisiana Estate Planning Attorney
www.RabalaisEstatePlanning.com
Phone: (225) 329-2450
I'm often asked, "Where should we keep our last will and testament?"
This is an important issue because, after you pass away, your original last will needs to be filed at the courthouse to start the court-supervised probate process (often called "Succession" in Louisiana). You have several options when it comes to where you should store your last will.
Some people mistakenly believe that all Wills are stored at the courthouse. Your Will does not get filed at the courthouse until after you pass away and the Succession is underway. A probate/Succession cannot get started until after someone dies.
Some choose to keep their original last will at their residence. This keeps the will easily accessible, but many Louisianians lost all of their important legal documents in recent hurricanes and floods around south Louisiana. If you do keep your last will and testament in your home, perhaps you should keep it in a waterproof and fireproof safe, preferably one large enough or built into the structure to prevent theft.
Others decide to keep their will in their bank safe deposit box. If you do this, you must make a decision regarding whether you want to grant someone else the authority to access your box. If no one else is "on" your safe deposit box, then a court order will be necessary after you pass away to open your box and access the contents of your safe deposit box.
Some people, at their attorney's suggestion, allow their attorney to keep their last will and testament. I've never been a big fan of the attorney keeping the originals of all of the Wills that he or she prepared. Attorneys can move around often. In addition, an awkward situation arises when the survivors may not want to use the legal services of that particular attorney or law firm after the death of a loved one. Many attorneys keep the original wills of their clients because it gives them a competitive advantage when it comes to the lucrative probate work that is necessary of the death of the will-maker.
The Louisiana Legislature has authorized the Secretary of State to maintain a Will Registration Form. While you cannot enclose a copy or the actual will, you can document the intended place of our will or the name and address of someone who has information regarding where your will is located. We don't see this Louisiana Secretary of State Will Registration Form used very often.
While there may be no "perfect place" to keep your last will and testament, you should, at least, let your trusted love ones know of the existence and location of your last will and testament.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais
Louisiana Estate Planning Attorney
www.RabalaisEstatePlanning.com
Phone: (225) 329-2450
It is common for people, as part of the estate planning process, to establish a revocable living trust to provide for the disposition of trust assets outside of probate. Occasionally, people who previously established a revocable living trust want to amend or modify or revoke their trust.
Reasons why people would amend their revocable living trust include someone wanting to change the beneficiaries of their trust; someone wanting to amend how a beneficiary receives his or her portion or share; or perhaps changing the name of the Successor Trustee who is in charge of administering the trust after the death of the Settlor (the person who established the trust).
So, how do you amend or revoke your trust? Well, you must first look to the state law of the state that governs the trust instrument. The following is an overview of the Louisiana law applicable to modifying or revoking a trust.
What you should never do is pull out a pen and pencil and start marking on your trust. None of this will be valid. Most trust amendments or revocations in Louisiana are done by authentic act. An authentic act, generally, is a writing executed before a notary public and two witnesses, and signed by the person amending their trust, the witnesses, and the notary. Most trust amendments are done this way.
The Louisiana Trust Code also provides for modifying a trust by act under private signature, and also by testament. Even though Louisiana law provides for three different ways to modify a trust, most amendments are done through an authentic act.
Bottom line - don't try to amend or revoke a will or trust without getting some legal help from an estate attorney. Different rules apply to wills and trusts, and you must work with an attorney who understands all of this and helps you get it right the first time - there is too much at stake.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais
Louisiana Estate Planning Attorney
www.RabalaisEstatePlanning.com
Phone: (225) 329-2450
I've seen many people over the years want to make changes to their existing last will and testament. Without knowing any better, they pull out their existing will, grab pen or pencil, and cross through the things they want to change while writing in replacement provisions.
For example, someone may want to change their executor. They feel that the previous executor they named (let's call him "Joe") is now a bum, and they want to replace Joe with Fred.
Or, let's say a Will provides a specific bequest either to an individual or charity of $100,000. But the testator now wants to change that bequest to $5,000.
There are a couple of Louisiana laws that are in play here. First, Louisiana law provides, in pertinent part, that a revocation of a testamentary provision occurs when the testator clearly revokes the provision or legacy by a signed writing on the testament itself.
So, the Louisiana rules are somewhat relaxed to permit the revocation of a provision in a last will by a signed writing that is not dated but which clearly revokes the provision.
However, regarding a replacement provision, the formalities are more stringent. Louisiana law provides that, "Any other modification of a testament must be in one of the forms prescribed for testaments.
Example: A woman pulls out her old will naming Joe as the executor. She scratches through Joe's name, writes in Fred's name, and signs the change. The result would be that Joe is no longer the executor because she revoked the provision by a signed writing, but Fred will not be the executor, because this modification is not in one of the forms prescribed for testaments - it does not meet the formality requirements of an olographic testament because it is not dated.
Be very careful when you attempt to change your Will. Your safest bet is to work with an attorney who understands the rules as they relate to revocations and modifications of testaments.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais
Louisiana Estate Planning Attorney
www.RabalaisEstatePlanning.com
Phone: (225) 329-2450
Occasionally, for unfortunate emotional or relationship issues, there is an heir of an estate who refuses to accept either the inheritance of money or the inheritance of a specific item. This can cause the probate or Succession to come to a screaching halt, causing delays and expense for everyone involved.
While it is not uncommon for an heir to formally "disclaim" an inheritance for a variety of reasons, such as income, gift, or estate tax reasons, it is uncommon for someone to fail to communicate even though a small amount of communication could result in a financial windfall for the individual.
Louisiana Succession law has a procedure to address this. If an heir refuses to accept and sign a receipt for an inheritance of funds, then, after a hearing, the court may order an executor to deposit the funds in either a state or national bank, or in the registry of the court to the credit of the person entitled to the funds. A receipt showing the court that the deposit was made is sufficient to allow the executor to be discharged.
If an heir refuses to receive an item (called in Louisiana, a "corporeal movable"), then the court may direct the executor to make some other disposition of the item.
It is worth noting that this same thing can happen when a trust beneficiary refuses to accept a distribution of trust principal. While our trust code does not specifically address this issue, it would make sense that these funds sit in a trust account for the benefit of the refusing beneficiary, or perhaps the trustee could petition the proper court for some direction.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
Across America, people typically leave their estates to their survivors through a living trust (with the goal to avoid probate) or a last will and testament.
When a married person leaves their estate through their last will and testament, they often either leave their surviving spouse the ownership of their estate or they leave their spouse the usufruct of their estate. One of the concerns about leaving ownership of their estate to their spouse is that, potentially, the surviving spouse could ultimately leave the entire marital estate to someone other than the children (such as, a 2nd spouse).
In Louisiana, some married people write a will and leave the usufruct of their estate to their spouse, in order to protect the children's future inheritance. They leave their spouse the usufruct (often for the lifetime of the surviving spouse), and they name their children as the naked owners. However, this can cause complications under a couple of different scenarios.
When a married person dies after having written a will leaving his spouse usufruct and naming others as naked owners, then a Succession will be necessary after the first spouse dies. All of the naked owners, along with the surviving spouse, are participants (also known as "Petitioners") in the Succession, and all must agree on how Succession matters are being handled and accounted for. Successions can be complicated and, typically, the more participants involved, the more misunderstanding that occurs. In addition, with multiple parties to a Succession, especially a number of naked owners who are concerned about protecting their future inheritance, things can get tense. Sometimes relationships among siblings and their spouses can be imperfect so when they all must participate and agree on all matters related to the Succession, it can get tricky.
So let's say go ahead and assume that the Succession gets completed and, subsequently, the surviving wife wants to sell the home. Because there are naked owners, they all must participate in the listing and selling of the home. The naked owners, in addition to the surviving spouse, must sign all of the real estate closing paperwork, often even if the first spouse to die granted his wife, as usufructuary, the authority to dispose of nonconsumable things. When a surviving spouse sells the home or other property over which there are naked owners, those naked owners often have a false expectation that they are to receive some of the proceeds of the sale of the home or other property. And sibling relationships can make it difficult for everyone to agree on all aspect of the sale of property subject to usufruct.
So when a married person writes a will and leaves their spouse usufruct of their estate, they should consider leaving the naked ownership in a testamentary trust for the benefit of the naked owners, with the surviving spouse as the trustee of that testamentary trust.
It will be easier to complete the Succession after that married person dies because the surviving spouse will be the only participant in the Succession. The surviving spouse will be the only participant because she will continue to own her half of the community property, she will inherit the usufruct of the deceased spouse's half of the community property, and she will be the trustee of a trust which holds the children's naked ownership interest. Now you won't have so many personalities involved trying to settle the estate or Succession.
In addition, under this "naked ownership in trust" bequest, the surviving spouse can sell the house or other property subject to usufruct, without having to get the agreement and signatures of all of the naked owners. In essence, the surviving spouse can sign for the naked owners on the sale paperwork because she is the trustee of a trust which owns the children's naked ownership interests.
While, on its face, the Will may initially appear more confusing when you leave the naked ownership in trust with your spouse as trustee of this testamentary trust, you'll likely be doing your spouse a big favor while also protecting the interests of your children or other naked owners.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
This post should help you understand the difference between a testamentary trust and an inter vivos trust.
All trusts are either testamentary or inter vivos. Inter vivos trusts are also called "Living Trusts."
The best way to describe the difference is to put them in context of a real-life situation.
Let's say Jack is engaged in his estate planning. He is married to Jill and he has two children. He wants to leave his estate in a way so that Jill is taken care of, but after Jill dies, he wants his estate to go to his two children.
Jack goes to an attorney and the attorney prepares a Will with Testamentary Trust. The terms of the trust are a part of Jack's last will and testament. Jack's will says that when Jack dies, Jack's estate will go to the "Jack Testamentary Trust."
After Jack dies, Jill and Jack's kids assume that no probate is necessary because "Jack had a trust." However, their assumption is incorrect. There will always be a probate (or in Louisiana called a "Succession") when someone leaves their assets or estate to a testamentary trust. When Jack dies with a testamentary trust, his assets that are in his name when he dies will be frozen, and the courts must oversee the management and ultimate transfer of the assets to the trust.
Now, instead, let's say that, instead of Jack creating a testamentary trust, he creates the stand-alone "Jack Inter Vivos Trust" or the "Jack Living Trust," If Jack transfers his asset to the Jack Living Trust during his lifetime, no Succession or Probate will be necessary when Jack dies because the assets will already be in the trust and there will be no assets in Jack's name that would be frozen and subject to the court-supervised transfer process.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
Many indviduals, couples, and families are concerned that a nursing home stay will cause them to deplete their life savnigs, and force them to lose their home to the State of Louisiana when they die due to the State's Estate Recovery Rights.
While it is important to take advantage of legal strategies to protect your estate from nursing home poverty at least five years before you wind up in a nursing home, it's also important to understand what you can and cannot own at the time one goes into a nursing home and applies for Louisiana Long Term Care Medicaid.
A single person can have no more than $2,000 of Countable Resources when they apply for Louisiana Long Term Care Medicaid. Bank accounts are a Countable Resource. This post takes a closer look at four key Medicaid rules regarding bank accounts as a Countable Resource for purposes of Louisiana Long Term Care Medicaid.
(1) 1st Day of Month. Medicaid counts the balance shown by your bank for the first moment of the first day of the month. Be prepared to furnish banking records.
(2) Encumbrances Deducted From Bank Balance. If you have written a check for a legal obligation, and that check has not cleared by the first moment of the first day of the month, the encumbrance may be deducted from the actual bank balance.
(3) Unrestricted Access ("or") Accounts. The Medicaid applicant is presumed to be the owner of all funds held in an "or" account.
(4) Rebutting the Presumption for an "or" Account. If the Medicaid applicant is not the owner of funds in an "or" account, the applicant can rebut the presumption of ownership by providing written and corroborating statements regarding ownership, withdrawals, and deposits, along with a change in account title or the establishment of a new account with only the Medicaid applicant's funds.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
Amazon.com link for new 4th Edition: http://a.co/2pbRjwB
Very excited to announce my new, 4th Edition of my book, "Estate Planning in Louisiana, A Layman's Guide to Understanding Wills, Trusts, Probate, Power of Attorney, Medicaid, Living Wills & Taxes," published in 2018.
I wrote my book's first edition back in 2011. Every few years both Congress and the State of Louisiana change enough laws that require me to update my book. But there had not been an update in the last four years.
This edition is the best one yet. Topics covered include President Trump's new estate tax laws, the "unique to Louisiana" forced heirship and usufruct laws. More emphasis on popular topics of avoiding probate and protecting assets from nursing home expenses. There's new information on completing the Louisiana Succession, including new laws on sealing Succession records and the new Small Succession Affidavit procedure.
You can purchase it for yourself or as a birthday, Father's Day, or Christmas gift for another - especially if they are a senior citizen.
http://a.co/2pbRjwB
It would mean a lot to me if you would read a copy and write an Amazon.com review. You can order the book through Amazon at the following link: http://a.co/fFcJWVg
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
I've been asked questions recently about how Tom Benson's passing will affect ownership of the New Orleans Saints. Here's what I know:
When someone dies in 2018, the first $11.2 million of assets is exempt from federal estate tax. The rest is taxed at 40%. The federal estate tax is a serious problem for NFL franchise owners due to the enormous value of their teams.
Joe Robbie's estate sold the Dolphins to pay estate tax. Lamar Hunt planned ahead by donating 80% of the Chiefs to his daughter and three sons prior to huge appreciation of the Chiefs franchise. The donation likely cost Mr. Hunt $100 million, but that was a pittance compared to the potential estate tax had he kept the NFL franchise in his estate until his death.
Mr. Benson's estate likely took advantage of the federal estate tax marital deduction, which allows a married person to leave their estate to or for their surviving spouse in order to avoid or defer taxes at the first death. However, these assets are typically subject to the estate tax when the surviving spouse dies.
In order to qualify for the marital deduction treatment, Mr. Benson likely left his estate to a trust, and provided that his suriviving wife would receive the income from that trust for the rest of her life.
Even though Mr. Benson named two co-trustees of that trust, he stated that Gayle would have the sole right to exercise all voting power over Benson Football, LLC. Giving Gayle this power may have been necessary due to the National Football League Constitution and Bylaws which allows owners to transfer their membership to a member of the immediate family of the deceased without requiring the consent or approval of the members of the League or the Commissioner.
Now, it perhaps gets tricky when Gayle dies. It appears that Mr. Benson was attempting to take advantage of the federal estate tax charitable deduction which allows people to leave their estate to charity in order to avoid estate tax. It appears he left assets to a trust that provides that at Gayle's death, 50% of the assets will be in Gayle's estate, and 50% will go to the Gayle and Tom Benson Charitable Foundation. So it appears he was attempting to take advantage of the estate tax charitable deduction by naming his charity as the principal beneficiary of his trust.
However, the National Football League Constitution and Bylaws provides that no nonprofit organization nor any charitable organization shall be eligible for Membership in the National Football League.
So it appears that, while Mr. Benson left a significant part of his teams and his estate to charity after he and Gayle pass, the NFL rules prohibiting a charitable organization from being an owner will require that the Saints be sold after Gayle passes away.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
As a Louisiana estate planning attorney, I'm asked often by Saints fans what's going on with the Estate or Succession of Tom Benson. Quite a bit has been written and reported on his estate, so I thought I'd share a few of my own observations about what has happened thus far.
The Will. Mr. Benson's last will and testament leaves his estate to a Revocable Trust. The terms of this trust are not public record. However, in his will, he stated that if his revocable trust does not exist when he dies, he leaves his estate to another trust, the terms of which are in his will. I imagine that the terms of the trust in his will are similar to the terms of his revocable trust.
The trust in his will provides that his wife will receive the income from the trust for the rest of her life, and upon her death, the trust principal will go half to his wife's estate, and half to his charitable foundation.
There is a 2017 codicil to the will which ensures that the bequest to his revocable trust includes his trust plus subsequent amendments he may make to his trust.
Executor. Normally, an executor is entitled to executor compensation of 2.5% of the assets. If Mr. Benson has a $3 billion estate, then under the default rules, the executor would be entitled to, presumably, a $75 million fee. However, Mr. Benson stated that his revocable trust would dictate executor compensation.
Forced Heirs. Mr. Benson specifically attempted to exclude his descendants. No discussion in Louisiana regarding the exclusion of descendants can take place without mentioning forced heirship. If it is determined that he has a forced heir, the forced heir would be entitled to 1/4 of his estate. We'll see if his suriviving child attempts to assert forced heirship rights. There's a lot at stake.
Witness. It is worth noting that the Archbishop is a witness to Mr. Benson's last will. When a will is challenged, the testimony of the notary and the witnesses often plays a key role in the determination of capacity.
Estate Tax. By leaving his estate to a trust that provides income to his wife for her lifetime, there is likely to be little or no federal estate tax due at this time. His estate will pass pursuant to the federal estate tax marital deduction into his wife's estate. Potentially, there would be a 40% estate tax due on the value of the assets when Gayle dies. However, if assets are left to charity, estate tax is avoided.
I admire the business acumen and charitable work that Mr. Benson accomplished during his lifetime. We'll see how his estate plays out in the coming months and years ahead. It is likely to be a public proceeding played out in the Orleans Parish courts.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
Many people prepare for the inevitability of their death by creating trusts to ease the transfer of, among other assets, the non-retirement brokerage account. Brokerage accounts titled in the name of your revocable living trust at your death escape having to go through the court-supervised Succession or Probate procedure, which many find unnecessarily time-consuming, expensive, and stressful.
Many people, as they age, have multiple accounts at a brokerage firm. Many have traditional IRAs, Roth IRAs, and non-retirement brokerage accounts. It's these non-retirement accounts that, when an individual's name at their death, get frozen and must go through probate.
In order to have your brokerage accounts titled in the name of your revocable living trust at your death, you must establish your trust and open a trust account at the financial institution.
I took a look at the requirements that three different financial institutions have regarding establishing an account in the name of a revocable living trust. Here are my findings:
(1) Charles Schwab. For a revocable trust, you must a copy of the trust title page of first page and all signature pages with the account application. You could supply an Extract of Trust instead with the application.
(2) Vanguard. You must attach with the Application for Trusts, copies of pages of the trust that contain the name and date of the trust, the trustees' names, and the signature pages.
(3) Ally Bank. To set up an trust account at Ally Bank, you must upload the pages describing the Trust, including the formal name of the Trust, Grantors and Trustees; the notarized signature page with Grantor and Trustee signatures – in some states, there may be a separate page completed by the notary; any amendments to the original Trust; pages with Trustee powers and provisions related to incapacity or death of a Trustee; and the page listing the beneficiaries who will receive the funds if the Grantor of the Trust passes away.
The key here to keeping the setup process simple is to give the financial institution what they are asking for. And before you know it, your legal affairs and your assets will be set up in a way so that your survivors will be thanking you one day for what you did to make it easy for them.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
This video describes the basic rules regarding the enforcement of claims against Successions. It's important that you seek attorney help if you are involved in a Succession that has claims made against it, whether you are the loved one of a decedent who is attempting to settle the estate, or the creditor of an estate that owes you.
It often starts when a creditor submits a written claim to the Succession Representative (Administrator or Executor). The Succession Representative will, within 30 days, either acknowledge or reject the claim. A failure to do so results in a rejection.
If the claim is acknowledged, it is presumed valid, included in the Succession paperwork, and the running of prescription against the claim is suspended.
If not acknowledged, a creditor may suspend the running of prescription by delivering a formal written proof of claim to the Succession Representative, or filing a formal written proof of claim in the succession record if no Succession Representative has been appointed and no Judgment of Possession has been signed, or if no succession proceeding open, a creditor can file a formal written proof of claim in the mortgage records of the parish where the deceased was domiciled.
A formal written proof of claim is sworn to and sets forth the name and address of the creditor, the amount of the claim and a short statement of facts, and, if the claim is secured, a description of the security. Relevant written instruments with endorsements must be attached to the proof of claim.
So if you are involved either as a creditor or as a Succession Representative, in a succession where claims are attempting to be enforced, it would make sense to work with an attorney who understands these rules regarding claims enforcement, and can guide you through the process.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
An elderly gentleman comes into my estate planning law firm office and says, "Paul, I've bee fortunate accumulating an estate. My kids are well off and my ten grandchildren are all doing great financially. I'd like to leave $1 million for my great grandchildren, but the problem is I only have one great grandchild right now, but I know I will have many more because I have 10 grandchildren. Can I do this?"
Normally you cannot leave assets to a trust for the benefit of people who are not born at the time of the creation of the trust. But there is an exception for Class Trusts.
A person may create a trust in favor of a class consisting of some or all of the children, grandchildren, great grandchildren, nieces, nephews, grandnieces, grandnephews, and great grandnieces and great grandnephews of the settlor or the settlor's current, former, or predeceased spouse, or any combination thereof, although some members of the class are not yet in being at the time of the creation of the trust, provided that at least one member of the class is then in being.
Since Great Grandpa wants to leave $1 million for the benefit of all of his great grandchildren, even though many are not born when the trust is created, this is permissible since great grandchildren are one of the permitted classes under the class trust provisions.
Since this trust may last for many decades, and since it is irrevocable after Great Grandpa dies, the trust must be carefully prepared. Provisions regarding how income and principal can be used become important. When the class closes, and when the trust ends are important items to address when creating a Louisiana class trust.
In addition, our Louisiana Trust Code provides what happens to a class member's interest if he or she dies prior to the creation of the trust, or after the trust is created.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
This video explains what a Louisiana interdiction is and when an interdiction is necessary, along with an introduction to the interdiction procedure.
I've been involved in a number of interdictions over the years. They are never fun. They are always expensive to families, and time-consuming. The bad interdictions, in my opinion, tear families apart.
Examples of when an interdiction may be necessary include when someone is not capable of handling their own affairs. Perhaps a piece of real estate needs to be sold and the person does not have the capacity to understand what they are doing. Perhaps they cannot transact their investment or financial accounts. Perhaps they cannot request medical records. Perhaps they are in danger of harming themselves, either physically or financially, and someone needs to intervene on their behalf.
Maybe the person in the past had signed a power of attorney, but third parties are refusing to honor the power of attorney.
Here are the standard procedures that must be followed when filing a petition to interdict someone in Louisiana:
Petition. A petition for interdiction is filed at the proper courthouse. The petition must include information such as the names and addresses of the spouse and all of the adult children.
Service. The sheriff's office must serve the petition on the defendant. At about this time, the petitioner is mailing a copy of the petition, registered mail, return receipt requested, to all of the people listed in the petition.
Attorney Appointment. If the defendant makes no timely appearance through an attorney, the petitioner shall ask that the court appoint a court-appointed attorney to represent the defendant. The court-appointed attorney must visit the defendant.
Fixing Hearings or Trial. A hearing or trial is fixed. The petitioner must mail a copy of the order fixing a hearing or trial to everyone named in the petition at least 10 days prior to the hearing.
Hearing. The interdiction proceeding shall be heard.
Judgment. If the judge interdicts the defendant, the judge will sign a judgment appointing a curator and undercurator.
As you can see, there are a number of procedural steps that must be followed to successfully complete an interdiction. Removing someone's capacity to transact for themselves is a serious matter.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
This post describes who is liable for repairs when someone owns the usufruct of property, while others are naked owners.
It's common in Louisiana for a spouse to leave their surviving spouse the usufruct of property. Here's an example: Wife and Husband marry, each for the second time. They each have children from their prior marriages. Wife owns the home they live in. Wife doesn't want Husband to be homeless if she predeceases him, so she writes a will and leaves Husband the lifetime usufruct of her home, and she names her children (Husband's step-children) as the naked owners of her home.
Wife dies. Husband and Wife's children somehow cooperate enough to complete the Succession. Husband is now living in the home. And let's say the home is 40 years old and in need of constant repair. Who is responsible for these repairs. The usufructuary? The naked owners?
There are several Louisiana laws that address liability for repairs in these circumstances. The general rule is that the usufructuary is responsible for ordinary maintenance and repairs, while the naked owner is responsible for extraordinary repairs, unless the usufructuary's fault or neglect cause the extraordinary repairs to become necessary.
Extraordinary repairs are those for the reconstruction of the whole or a substantial part of the property subject to usufruct. All others are ordinary repairs. As you might imagine, usufructaries will argue that all repairs are extraordinary. Naked owners will argue that all repairs are ordinary.
During the existence of the usufruct, a naked owner can compel the usufuctuary to make the repairs for which the usufructuary is responsible.
But the usufructuary may not compel the naked owner to make the extraordinary repairs for which the naked owner is responsible. And if the naked owner refuses to make these extraordinary repairs, the usufructuary may do so, and the usufructuary shall be reimbursed without interest by the naked owner at the end of the usufruct.
If, in the above example, the usufruct does not end until the death of the usufructuary, then the usufructuary's estate will likely seek this reimbursement from the naked owners after the usufructuary dies.
In addition, there are even more rules that address when, for example, a usufructuary abandons his usufruct, or when property has been totally destroyed through accident, but this post should give the basic information you may be looking for regarding the liability for repairs.
Make sure you address these things the right way on the front end so they don't became a disaster on the back end. Work with the right estate planning attorney who will listen to your objectives and suggest the best ways for you to leave a legacy behind - instead of a mess that winds up in court.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
Often, people see language in a trust referencing that the trust is a "spendthrift trust," and they ask us the meaning of a spendthrift trust.
Most trusts are spendthrift trust. When a trust is classified as a spendthrift trust, it often means, in layman's terms, that a beneficiary may not sell their interest in the trust or use it as collateral for a loan, and that a creditor cannot seize a beneficiary's interest in a trust.
Note that if spendthift language is not included in a trust instrument, then a beneficiary may transfer or encumber their interest in the trust.
Let's take a look at an example. Grandpa dies and leaves $100,000 to Grandson in trust, and Grandpa provides that trust assets may be used for Grandson's education, and when Grandson reaches the age of 35, remaining trust assets may be disbursed to Grandson.
If Grandson was permitted to voluntarily alienate his interest in the trust, then Grandson could sell his interest in the trust or use it as collateral for a loan. And if the trust were not a spendthrift trust, then a creditor of Grandson could seize Grandson's interest in the trust.
Nonetheless, there are two circumstances where a creditor of a beneficiary may seize an interest in trust. First, if the beneficiary can voluntarily alienate his interest in the trust, then a creditor of the beneficiary can seize that beneficiary's interest in income or principal that could be voluntarily alienated. Second, a beneficiary's interest in income or principal can be seized to the extent that the beneficiary donated property to the trust, either directly or indirectly.
The key to restraining alienation by a beneficiary to the maximum extent permitted by the Louisiana Trust Code is to declare in the trust instrument that the interest of a beneficiary shall be held subject to a "spendthrift trust."
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
I was asked a question recently by a husband whose wife had recently passed away. She left her husband the usufruct of a significant investment portfolio of stocks, bonds, and mutual funds. The wife named her children as the naked owners of her estate.
He asked me, "Paul, what standard am I going to be held accountable to now that I have the usufruct of an investment portfolio? I don't want the naked owners coming after me alleging that I managed the assets the wrong way?"
I told him that, in regards to a usufructuary's standard of care, the usufructuary is answerable for losses resulting from his fraud, default, or neglect.
I told him that he should be fine so long as he makes decisions that a prudent owner or a prudent administrator would make. I told him there was some Louisiana case law that stated that a usufructuary is bound to take the same care of the property as if it were his own. And I told him, that if the investments were sound, and there was a general downturn in the markets, that he may be ok due to the fact that Louisiana courts have stated that a prudent administrator is not responsible for the decline of rental income attributed to the general decline of the economy.
We also discussed the fact that he was inheriting the usufruct of nonconsumables. And upon their sale, we discussed the consequences to him and his estate when nonconsumables (such as stocks and bonds) are converted to a consumable (cash).
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
The Prohibited Substitution estate planning rules in Louisiana are a trap for the unwary. When someone writes a Louisiana last will and testament, or a trust, in a way that it contains a prohibited substitution, then the bequest is null.
So, what is a prohibited substitution? Well, here's an example of a provision in a Will that would be interpreted as a prohibited substitution, "I leave ownership of X to Person 1. I require that Person 1 preserve X and, when Person 1 dies, I require that Person 1 leave ownership of X to Person 2."
You cannot donate or leave something in full ownership to one person with a charge to preserve it and deliver it to a second person at the death of the first person. You would be depriving the first person from the power of testation.
A prohibited substitution might be something that I'd see in an olographic testament. Some people attempt to write their own wills in their own handwriting, but they mess up the provisions of the Will. People in Louisiana sometimes argue that they can write their own valid will, but they often fail to realize that the wording that they put in their will can make their loved one's lives miserable.
A prohibited substitution is null - it's as if it was never written. The bequest to the first person is not even valid.
There are a couple of alternative you can use if you want to leave an asset for the benefit of someone, and then when that someone dies, have the asset pass along to another someone. One way to do this is to use a trust - check with your estate planning attorney to help you do this the right way. Another option that might be feasible is to leave usufruct of an asset to someone, and name the naked owner to receive the asset at the termination of the usufruct. Again, check with your estate planning attorney to make sure that you understand the pros and cons of leaving things in trust or in usufruct.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
This post describes how the real estate of a deceased person, who owned property in multiple Louisiana parishes, gets transferred the right way to the heirs.
We recently started working on a Succession. The deceased lived in Jefferson parish but owned property in several different parishes. He didn't own property in Jefferson Parish, but he owned property in St. Tammany, Tangipahoa, Plaquemines, and St. Landry Parishes. The daughter, who was named the executor of her father's Will, thought she was going to have to travel all around the state to register the children as the new owner of all of their father's property.
I explained the procedure for getting the property transferred as follows:
(1) Succession Opened. The proceeding to open a Succession after someone dies must be brought in the district court of the parish where the deceased was domiciled at the time of his death. In this matter, the deceased was domiciled in Jefferson Parish, even though he did not own a home or other real estate in Jefferson Parish. All court pleadings, petitions, Lists of Assets and Debts, court orders, and all other court documents of the Succession will be filed in the Jefferson Parish Succession Suit record.
(2) Judgment of Possession. At the conclusion of the Succession, the district court judge in Jefferson Parish will sign a court order that we prepare called a Judgment of Possession. We will ensure that all of the various legal descriptions of all of the deceased's different properties around the state are listed on this Judgment of Possession.
(2) Certified Copies of JOP. Once signed, we will request that the clerk of court of Jefferson Parish issue multiple certified copies of this Judgment of Possession (JOP).
(3) Record JOP in Parishes. We will record a certified copy of the JOP in the conveyance records in each parish where the deceased owned real estate. This will show all third parties and title examiners that ownership has been transferred from the deceased to the heirs (or, since there was a Last Will, to the legatees (children)).
In this matter, the deceased also owned real estate in Mississippi. I told the family that the Louisiana Succession would not transfer the Mississippi property. The family must hire another law firm in Mississippi to go through the ancillary probate in Mississippi to transfer the Mississippi property from the deceased to the heirs.
Many people who have property in multiple states transfer those multiple properties to one Living Trust so that no probate proceedings are necessary after the death of the Trust Maker.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
When someone asks me what "Collation" means, it's typically because they've seen the word referenced in a last will and testament, and they don't know what it means.
This post describes a little history and current application of Louisiana collation law.
Back in the pre-1990's, there was a presumption in Louisiana estate law that parents were supposed to, from an inheritance standpoint, treat their children equally. If a parent made a gift to one child during the parent's lifetime, collation laws required that gift to be considered as an advance on that child's inheritance.
So, back in the pre-1990's, parents were permitted, in their last will and testament, to dispense their lifetime gifts from collation so that lifetime gifts would not be considered an advance on a child's inheritance.
Then, in the 1990's the Louisiana Collation law changed significantly in a way that reduces the scope and application of collation by limiting the right to demand collation to children who qualify as forced heirs, and collation only applies with respect to gifts made within three years prior to the parent's death.
Now, under collation law, if a child is 24 and not otherwise disabled, he or she is not permitted to demand collation. And a grandchild is not permitted to demand collation, even if he or she qualifies as a forced heir.
Nonetheless, many attorneys still include a provision in their client's wills stating, in effect, that the client's lifetime gifts are exempt from collation.
I haven't seen or heard anyone around our office discuss a potential collation claim in decades. Collation claims just don't come up much any more due to its limited scope. I suppose, however, it does not hurt to keep the "dispense from collation" provision in Louisiana last wills, even though it causes some confusion because clients have no idea what it means.
However, now with this post, you know!
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
People often come into our estate planning law firm with stacks of United States Savings Bonds, and they don't know how to handle them for estate planning or estate administration purposes. U.S. Savings Bonds make their way into our office under two typical scenarios:
(1) An individual or couple is getting legal affairs in order and they don't know what to do with their stack of savings bonds; or
(2) A loved one has died and the loved one owned a stack of U.S. Savings Bonds, and the survivors don't know what to do with the bonds.
Estate planning in Louisiana can be more complicated that estate planning for residents of other states. We have community property, forced heirship, the Napoleonic Code, and we don't recognize certain forms of ownership (like Joint Tenants with Rights of Survivorship).
But as far as U.S. Savings Bonds go, Louisiana is similar to all of the other states. Here's a rundown of rules that apply to adult owners of United States Savings Bonds:
(1) One owner. When the one owner dies, the bond is part of the owner's estate. Probate (or "Succession") will be necessary to redeem the bond.
(2) Two people named on the bond and one has died. The surviving person is considered the owner.
(3) Two people are named on the bond and both have died. The bond is part of the estate of the person who died last.
Some people, for probate avoidance or asset protection purposes, wish to transfer their bonds to a trust during their lifetime. FS Form 1851 (revised in January 2018) permits individuals to have their bonds reissued in the name of a trust. When the government reissues a Series EE or Series I savings bond, it no longer provides a paper bond. The reissued bond is in electronic form in the governments online system called TreasuryDirect.
Talk to your estate planning attorney to determine the best way to handle U.S. Savings Bonds as they related to Louisiana Estate Planning and Succession law. For more information, you can look online at www.TreasuryDirect.gov
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
When people establish wills or trusts, they often want to designate more than one executor or more than one trustee. This video describes what it takes to exercise powers when multiple executors or trustees are named in Louisiana. Note that each state can be different so check with an attorney in your state to guide you through these matters.
Most people are not aware that the Louisiana Succession procedure (regarding executors) and the Louisiana Trust Code (regarding trustees) have different provisions and different applications.
Here are three rules you should be aware of when considering naming more than one executor or co-trustee:
(1) Executors. Louisiana Succession law provides that when there are several executors named, all action by them shall be taken jointly. Provisions in the will can alter this rule.
(2) Two trustees named. If there are two trustees of a trust named, the powers conferred upon them shall be exercised only by both of them. The trust instrument or a court could alter these default provisions.
(3) Three+ Trustees. A power conferred in three or more trustees may be exercised by a majority of the trustees, unless the trust instrument provides otherwise.
So, when three executors are named in a will, action by them shall be taken jointly. But if three trustees are named in a trust, actions by them may be taken by a majority.
I do not know why there is this distinction and difference between our Louisiana Succession law and our Louisiana Trust Code, but you should fully understand these differences when you are working with an attorney to prepare your will or trust, and you are naming more than one person to be in charge when you die. Many parents do not want to show favoritism toward just one child, so they designate all of their children to fill these roles.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
Congratulations. You took some major steps toward making settling your estate easier. The Probate can be difficult, it takes longer than people want. It's expensive, a hassle, it's a court proceeding.
There's a big estate planning problem out there. The titling process is getting neglected causing families to go through probate.
However, when the revocable living trust is fully funded, the estate settlement is a beautiful thing. But your living trust is only as effective as the assets that you title into it.
Many fully funded trusts are settled without attorney involvement. The surviving spouse maintains access to assets. The surviving spouse can sell the home and buy another, and can access all financial accounts.
Even when probate is avoided, survivors are having to deal with funeral homes, death certificates, the Social Security office, the VA, financial institutions that hold IRAs, bills that keep coming in, and insurance companies if the deceased had life insurance or annuities. Then, when you add on top of that the requirement of a probate when it was unexpected, then that sometimes is that straw that broke the camel’s back – survivor’s are fragile – going through grief and stress of the loss of a loved one.
There are a few reasons that trusts don’t get funded. People forget they owned that piece of property. People thought they had beneficiaries on all accounts. People didn’t think about buying the new property in the name of their trust. People didn’t think about opening that new account in the name of their trust. People may not have known that they needed to transfer their LLC to their trust. They kept a minimal amount of shares out of the trust. They thought their attorney was going to handle getting everything in the trust, but an attorney can only transfer certain assets into your trust.
Do these three things:
(1) Share this information. Surely you know other friends and colleagues that can benefit from this information. If you are an estate planning attorney, share with your clients along with a note to contact you if they need legal help. If you are a financial advisor, share with your clients and prospective clients along with a note to contact you if they need help titling and beneficiary designations.
(2) Fund your trust. While the process isn’t difficult, it’s easy to get sidetracked or procrastinate. Just make funding your trust a priority and keep going until you’re finished. Take a look at everything you have this is titled. Determine whether assets are probate or nonprobate. Probate assets, in general, go in your trust. There are many excellent attorneys around the country willing to help. If you need a lawyer’s help, get it. While you are at it, update your beneficiary designations.
(3) Write a Comment. if this video can help one person avoid probate and make things easier for their survivors, it’s worth it. Comment with your positive comments and experiences on youtube or linkedin or wherever else you might see or hear this, so that others can and will benefit from your experience.
Now go leave a legacy! Your family will thank you for it.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
What happens to your Will or estate plan if your estate planning attorney dies, retires, quits practicing, or is otherwise not available when you or your family need estate legal services in the future?
I get this question often. Clients mistakenly believe that their estate legal program will fall apart if the attorney who prepared and implemented the plan is not around at a later date.
People who put an estate legal program in place typically have either a Will-based plan or a Living Trust-based plan.
Over the years, many people have gone to "other" attorneys or firms to get their Will done. Later, when they need to change their Will (perhaps change the heirs; or change the executor) they come to me to either make the changes, or, when someone dies, to handle the probate (also known in Louisiana as "Succession"). When we provide those subsequent legal services, the previous attorney or firm does not have to be located or communicated with. Easy to make the transition.
When someone creates a Living Trust-based estate planning program, they often mistakenly believe that legal documents must be updated every time they buy or sell property, or even open an investment account. That assumption is incorrect. The key is, simply, to buy the new property, or open the investment account, in the name of the trust. And when the Settlor of a trust dies, note that many Living Trusts are settled with no attorney involvement whatsoever. So if the attorney who helped you implement your Trust-based plan is not around when you need to name new beneficiaries, or settle the trust when you die, it's OK.
It is not unlike when you lose the services of your doctor, your CPA, or your financial advisor. You simply find someone else that you know, like, and trust to pick up where you left off with the other professional service provider.
But note that on a personal note, it looks like my three oldest children will be lawyers. My oldest passed the Bar Exam and became a lawyer four months ago. My second son is in his second year at LSU Law School - his plans have always been to come work with his old man. My third son graduated in Finance a semester early and has been admitted to both LSU and Tulane law schools. So, it's likely that my firm will be around for, let's say, at least another 50 years or so - but who can predict the future?
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
This post describes the regulations that exist regarding when assets in a trust are considered resources of someone who is applying for Long Term Care Medicaid.
Many Seniors are concerned about the cost of long term care, especially if it is necessary that they spend months or years in a skilled nursing facility.
Some Seniors explore getting assets out of their name timely to make themselves eligible for Medicaid. These same Seniors, however, are uncomfortable putting assets in their children's names for fear of losing control of the assets, and for fear of giving their children unwanted tax consequences.
Some people explore putting assets in trust for purposes of gaining future Long Term Care Medicaid eligibility. The Louisiana Long Term Care Medicaid Eligibility Manual (the "Manual") has specific rules regarding whether trust assets are considered a resource of the Medicaid applicant, rendering them ineligible for Medicaid benefits.
Regarding when the Medicaid applicant is a trustee of a trust, the Manual provides:
"Count the trust as a resource, regardless of whose funds were originally deposited into the trust, if the applicant/enrollee: is the trustee, and has the legal right to: - revoke the trust, and - use the money for his own benefit."
Regarding when the Medicaid applicant is a Settlor of a trust, the Manual provides:
"Count the trust as a resource if the applicant/enrollee is the settlor (created the trust) and: has the right to revoke it, and can use the funds for his own benefit"
Regarding when assets are not considered a resource and penalty periods apply to the transfer of the assets to a trust, the Manual provides:
Consider penalties under the transfer of resource policy (refer to I-1670 Transfer of Resources For Less Than Fair Market Value) if the applicant/enrollee: created the trust, does not have the right to revoke it, and cannot use the principal for his own benefit.
The traditional "avoid probate" revocable living trust clearly is a resource for a Medicaid applicant. Many people, however, create other trusts, and transfer assets to those trusts, which can enable a Senior to avoid the risks inherent in transferring assets during into children's names, while starting the five year penalty period and protecting assets from the nursing home spend down.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
Generally, people who establish an estate planning legal program either establish a Will-based estate plan or a Trust-based estate plan. When someone establishes a Trust-based plan, often one of the goals is to have assets titled in the name of the trust at death so that those assets can be distributed immediately to the trust beneficiaries without going through the Louisiana Succession, and its inherent delays, expenses, and aggravations.
People often ask, "If I have a trust, do I need a Will." Well, a pour over will is used in conjunction with a trust based plan. The purpose of the pour over will is to serve as a safety net. If, either intentionally or unintentionally, assets at death are titled in the name of the person who established the trust, then the probate proceeding will be necessary to pour-over those individually owned assets into the trust.
Often, the ideal scenario is to have all assets titled correctly so that, at death, there are no "probate assets" in the individual's name, and the pour-over Will does not even need to be used. But the pour-over will is prepared and signed in virtually every instance where there is a trust-based plan.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
The Louisiana Medicaid Eligibility Manual allows certain family members to enter into a written Personal Care Agreement which, essentially, allows money to be shifted to children/caregivers without the parent triggering a five year ineligibility period for Louisiana Long Term Care Medicaid.
When a parent has funds in their name and they transfer those funds to their children, it will typically trigger a five year ineligibility period for Louisiana Long Term Care Medicaid in the event the parent needs care in a nursing home.
However, in the right circumstances, if a child is actually providing care and assistance services to the parent, the parent can compensate the child without triggering the time-penalty Medicaid penalties, SO LONG AS ALL OF THE CORRECT DOCUMENTATION IS IN PLACE PRIOR THE SERVICES BEING PROVIDED.
There are at least seven mandatory conditions that must be met, but the one that families sometimes struggle with is that, "The agreement must be in writing, and properly executed prior to the service or assistance being provided. The agreement cannot be applied retroactively to pay for services or assistance that was provided prior to the agreement."
The concept is, if there is the right written contract in place, an individual (a parent, for example) can pay another person (a child, for example) to provide personal care services.
Note that one of many important provisions of the Louisiana Medicaid Eligibility Manual regarding these Personal Care Agreements provides that, "A Personal Care Agreement that fails to contain any of the mandatory provisions is considered to be invalid. Payments that are not considered to be compensation in accordance with a valid written agreement are transfers without compensation."
Bottom line - this can help certain families protect assets while keeping a parent or grandparent out of the nursing home.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
There's lots of confusion out there in the great state of Louisiana about there about the rights and obligations of someone who owns the usufruct. This should start to clear things up.
It is common, when a married person dies, whether they had a last will and testament or not, for their surviving spouse to inherit the usufruct. People try to guess what everyone's rights are without realizing there is specific Louisiana law which dictates the rights and obligations of the usufructuary.
First, we must determine whether an asset is a consumable thing or a nonconsumable thing. Then we can determine the usufructuary's rights.
Let's say, for example, that Husband died without a last will and testament. On the date that Husband died, Husband and Wife owned community property. They owned $400,000 in their bank accounts, and they owned 1,000 shares of stock in ABC Corporation.
Money is a consumable thing because it cannot be used without being expended or consumed. The share of stock are a nonconsumable thing because they may be enjoyed without alteration of their substance.
When Wife inherited the usufruct of $200,000 of money (a consumable thing), Wife became the owner of it and could consume it as she sees fit. But when she dies or remarries, she owes the naked owners $200,000, regardless of what happened to the money after she received it.
When Wife inherited the usufruct of 500 shares of stock of ABC Corporation (a nonconsumable thing), she gets to keep the dividends that the shares produce, but when she dies or remarries, whichever occurs first (the termination of Wife's usufruct), she must deliver the 500 shares to the naked owners, regardless of their appreciation or depreciation.
And when a nonconsumable is sold, the usufruct attaches to the money that is the proceeds of the sale, and usufruct becomes a usufruct of a consumable.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
The following is an overview of what will happen when Louisiana parents of minor children pass away, and what they can do to protect themselves, their children, and their assets.
It is not often when parents with minor children pass away, but when it does, it can be a legal nightmare. If the parents have no legal program in place, then typically other family members must scramble to hire lawyers, petition courts to appoint guardians (known in Louisiana as "tutors") for the minor children, and deal with frozen accounts and other frozen assets. If multiple people want to raise kids, then there will likely be a multi-year court battle where it will ultimately be up to a judge to determine who has the parental rights over your kids.
And then, if the parents with minor children had no legal program in place, a judge must oversee and approve every expenditure of your estate for your kids until they are 18 (the age of majority in Louisiana), and then, on your child's 18th birthday, a pile of money will be dumped in their lap with no supervision.
Parents with minor children can avoid these concerns by putting the right legal programs in place. Parents can designate who will raise their children, handle the children's inheritance, and the parents can prolong when the children can get their hands on the inheritance. Parents can even arrange their legal affairs to keep everything out of the courts and give the right people immediate access after death to accounts so there is little disruption to children's financial needs.
All parents with minor kids need to have all of the "incapacity legal plans" in place, so that if the parents become incapacitated (due to illness, injury, or otherwise), other trusted family or friends can immediately step in to make important financial or medicaid decisions for you.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
Every year the State of Louisiana's Department of Health adjusts certain Louisiana Long Term Care Medicaid asset and income limitations for Long Term Care applicants and recipients. The following is a summary of the changes made for 2018.
The Long Term Care Resource Limit for Single Individuals ($2,000) and Married Couples ($3,000) has not changed.
The Spousal Resource Standard has increased from the 2017 amount of $120,900, to the 2018 new limit of $123,600. What this means is that if one spouse is in a nursing home (the "institutionalized spouse") and one spouse still lives in the community (the "community spouse"), the the community spouse can retain up to $123,600 of Countable Resources. The rationale is that the spouse who is not in the nursing home needs assets to live off of.
Note that the Louisiana Home Equity Limit has increased from $560,000 in 2017, to $572,000 for 2018. Most people realize that the home is not a countable resource - it is an exempt asset. But what some don't realize is that when a Medicaid recipient dies, the State of Louisiana has Estate Recovery Rights which allows the State of Louisiana to force the sale of the home to reimburse Medicaid for what Medicaid spent on the deceased Medicaid recipient's care.
However, if the home, at the time of Medicaid application, is worth more than $572,000, then the applicant will not qualify for Medicaid due to Louisiana's Home Equity Limit of $572,000.
Regarding monthly income, the new Spouse's Maintenance Needs is $3,090 of monthly income. Generally, the Community Spouse will be permitted to keep the first $3,090 of the couple's monthly income. Exceptions to this rule apply, however, so work with the right estate planning attorney to protect as much of your assets and income as possible.
Finally, the Average Monthly Cost for Private Patients of Nursing Facility Services remains at $4,000, as it has since November 1, 2007. This means that if you make an uncompensated transfer within five years prior to applying for Medicaid, you will be assessed a penalty period of the value of the transfer divided by $4,000. The fact that the actual cost of nursing home care increases each year makes it very difficult to transfer assets prior to a nursing home stay to protect assets. This $4,000 number really should be increased since the lower the number - the longer the penalty period.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
In every Succession in Louisiana when someone dies with assets in their name, the lawyers must prepare a number of court pleadings. One of the documents is commonly referred to as the "Detailed Descriptive List" or the "Sworn Descriptive List of Assets and Liabilities." I'll refer to it as the DDL.
The DDL is a snapshot of all of the assets and debts that a person owned when he or she died. If the deceased owned separate property, those separate assets would be listed. If they owned community property, then all of the community assets would be listed on the DDL. You would see the deceased's one-half value of the community property listed.
So, what assets get listed in the DDL? Well, it's all of the Louisiana real estate, the bank accounts, the investments, the business interests, and the boats, trailers and vehicles. No formal appraisal of real estate is required but a value must be placed on each asset listed on the Detailed Descriptive List. Note that if the estate is larger than $11.2 million, and a federal estate tax return is required, then the real estate will need to be appraised for purposes of federal estate tax return reporting.
It's also important to note here that the capital gains tax basis of any appreciated assets gets stepped up to the fair market value on the date of death. Some people, years after the death of a loved one, go back and refer to the values listed on the detailed descriptive list to determine the basis of assets.
In addition, all of the debts of the deceased, and administrative expenses, get itemized on the DDL.
It's important to get the DDL right because all of the data from the DDL get transferred to the Judgment of Possession, which is the important court order that a judge signs ordering the transfer of assets to the heirs. One difference between the DDL and the JOP is that the JOP does not typically list the values of the assets to be transferred - it just lists the assets.
In 2017, the Louisiana Legislature provided that the Detailed Descriptive List, which in the past was public record, can now be sealed in the Succession record. This sealing of the DDL may prevent predators from searching probate records and preying on surviving spouses who have some wealth.
To get more information about completing a Succession in Louisiana, you can subscribe to our youtube channel, or view our website at www.RabalaisEstatePlanning.com.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
Occasionally, after someone dies, the family starts to question what their deceased relative really owned. Sometimes we hear statements from children or other relatives like:
"I thought Dad had more CDs at the bank."
"I thought Dad had another savings account."
"I thought Dad owned stock in some other companies."
"I thought Dad had an annuity and a life insurance policy."
Well, there is no central registry that you can go to and determine everything that someone owned when they died. But there are both informal and formal ways that you can dig and determine what someone owned on the date of their death.
There are a couple of obvious formal ways that you can try and discover additional assets. First, go back and look at the last few years of their tax returns. They would likely have received tax reporting statements from financial institutions that show that accounts were owned. Second, check their mail. If they owned financial accounts, it's likely they may received account statements in the mail.
And then there is the formal way to discover someone's assets after they died. Let's use an example of Dad, who died with a last will and testament. Dad names Son as executor. People are questioning the fact that Dad owned additional accounts. Once Son works with the lawyers and the court system to get confirmed as the executor, the courthouse will issue certified copies of Letters of Independent Executorship. Son can then go to every financial institution where he thinks Dad may have had an account, and the "Letters of Independent Executorship" require the third parties to disclose Dad's account information to Son, who is the independent executor.
So, there is no central registry one can go to and figure out what someone owned when they died, but there are both informal and formal ways to locate whether a deceased person owned additional accounts or other assets. Your estate planning and estate settlement attorney can help you get the proper court authority and make the right kinds of inquiries to expedite this process. And ideally, none of this is necessary if the deceased person would have, during his or her lifetime, maintained a current inventory of assets and communicated that inventory to the appropriate family members or other loved ones.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
People create trusts for lots of different reasons. A few reasons include putting assets in a living trust to avoid probate, providing that assets after death remain in trust to be doled out to children or grandchildren over time as opposed to in a lump sum, or leaving assets to a trust for a 2nd spouse and having those assets revert back to your children after the death of your surviving 2nd spouse.
Often, people who create trusts designate an individual to be the trustee, Successor trustee, or co-trustee. These individuals are often family members. But sometimes, people who set up trusts are more comfortable naming a corporate trustee because naming an individual or family member as trustee is simply not appropriate.
Perhaps you do not want to show bias toward one of your children by naming them as a trustee. Or perhaps because of the potential conflict between children and a 2nd spouse, you don't want to name one of them as a trustee.
Some of the reasons that people have designated a corporate trustee are as follows:
(1) Experience. Corporate trustees often better understand trust provisions and trust law - more so than an individual that has never served as a trustee.
(2) Unbiased. An individual who is also a beneficiary of a trust may find it difficult to be biased in the administration of their duties as trustee. Corporate trustees can act with more bias.
(3) Accounting. Corporate trustees are capable of preparing and providing the necessary trust accounting, and, if necessary, the trust tax return preparation.
Note that corporate trustees typically require that the trust assets must meet or exceed certain values. If the trust assets are minimal, then an individual trustee who is willing to serve with little or no compensation may be your best or only option.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais Louisiana Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450
Paul discusses four common types of estate legal programs that help protect your family from government interference and other issues that go along with settling your estate.