Protect IRA From Nursing Home: Medicaid Planning

Often, when an individual enters a nursing home, a determination is made regarding whether they will be a private pay patient or a Medicaid recipient while in the nursing home. One part of the Medicaid application process revolves around the Medicaid applicants assets.

An individual often owns exempt assets and countable resources. Common exempt assets include a home and one vehicle. Countable resources include most other assets, including bank accounts, stocks and bonds, non-home real estate, and LLC interests.

The question often comes up as to whether an Individual Retirement Account (IRA) is a countable resource.

The Louisiana Medicaid Eligibility Manual provides, in pertinent part, "Count funds in an IRA as a countable resource."

When people pre-plan for a future Long Term Care Medicaid eligibility, they often transfer title to their assets to either other individuals or to certain types of trusts. While it is fairly simple to transfer title of real estate, investment accounts, and most other assets, it is not possible to transfer ownership of an IRA to others or to a trust.

Some people consider taking a large distribution from their IRA, paying the taxes, and then protecting the after tax proceeds, but this often requires the IRA owner to pay a huge income tax bill and most people don't want to do that  - I don't blame them.

We often tell people that while you are fortunate to have an IRA, you are kind of "stuck" with it for nursing home purposes.

But know that strategies exist to protect the funds in your traditional or Roth IRA, but most of those strategies require that you plan years in advance of entering a nursing home - so it's critical that you get armed with the possibilities and take sufficient action to protect those 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

How is Louisiana Estate Planning Law Different From Other States? How Does the Napoleonic Code Affect Louisiana Law?

Most "outside of Louisiana" estate planning attorneys know enough to know that estate planning law in Louisiana is "different," but they don't really know how. Attorneys that are outside of Louisiana typically tell their clients that Louisiana follows the Napoleonic Code, and that they must seek out at attorney in Louisiana to guide them through their estate planning issues.

The purpose of this post is to dig a little describe and describe a few of the specific differences between Louisiana estate planning law and the estate planning law of the other 49 states. What follows is a description of three differences of Louisiana estate planning law:

(1) Usufruct. Louisiana is the only state that recognizes a form of ownership called usufruct. Usufruct is super common in Louisiana because when a Louisiana married person (with children) dies without a last will and testament, their surviving spouse inherits the usufruct of their one-half of the community property. In addition, some people, in their last will and testament, specifically bequeath the usufruct of their estate (or some portion of it) to their surviving spouse. 

(2) Forced Heirship. Louisiana forced heirship law is unique. While the forced heirship law has been watered down over the last 2-3 decades, it generally means that certain children must inherit from you - you cannot disinherit them.

(3) No TOD or JTWROS. In other states, many people titled their accounts or their real estate in a way so that ownership is transferrred to others at their death outside of the court-supervised probate proceeding. But Louisiana does not recognize these titles, forms of ownership, or designations. When someone, in Louisiana, happens to title an investment account JTWROS (Joint Tenants with Rights of Survivorship), the account (or at a minimum, their portion of the account), will be frozen when they die and court orders must be obtained in a probate proceeding before ownership can be transferred to the appropriate heir (which may or may not be the person listed on the account as the "Joint Tenant."

If there is any state in our United States where you must have an attorney well-versed in state-specific law, it is Louisiana. Many other state law differences exist, but this post should start to give you an idea of a few estate planning issues that can confuse people as they start the process of putting their customized and thorough estate planning program in order.

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

Value Estate Assets High or Low After Death?

When working with surviving family members after the death of a loved one, the survivors often want my help to help them deploy a strategy to value the assets of the deceased. The survivors often want to know whether estate assets should be valued high or low. I typically tell them that this is not a "game" that they can play, they are bound to have assets valued at "fair market value." Nonetheless, some people feel they can wiggle the values if it benefits them.

Very few estate are subject to the 40% federal estate tax. However, those survivors who face an estate tax typically want to see assets valued as low as reasonable in order to avoid as much of the 40% estate tax as possible.

Survivors of estates that do not have to face the federal estate tax, however, may have the opposite strategy. Since estate assets benefit from the step up in basis, survivors often want estate assets valued as high as reasonably possible in order to get the maximum step-up in basis. 

Certain assets owned by a deceased are not subject to varying fair market values. Cash, bank accounts, and publicly traded securities are easily valued as of the date of death - merely determine the account balances.

Other assets, however, are subject to subjective determinations of fair market value. Land, rental property, other real estate, and ownership interests in a business, are often difficult to value as of the date of death of the owner.

The IRS has a definition of fair market value. The IRS defines fair market value as the amount that which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell, with both parties having reasonable knowledge of relevant facts.

Our system is not necessarily set up as a "game" that survivors can play and arbitrarily determine fair market value after their family members die. Nonetheless, when estate tax is an issue, heirs often attempt to encourage appraisers to appraise assets "low." While when estate tax is not an issue, survivors want to see assets assets valued "high" to take maximum advantage of the step-up in basis. And since so few estates are subject to estate tax these days, most estates benefit from the "higher" valuations.

Note that these rules do not apply to IRAs. There is no step up in basis of investments inside an IRA. Any distributions from a traditional IRA are subject to income tax.

Also, some Louisiana residents mistakenly believe that the asset value listed in the Sworn Detailed List of Assets and Liabilities filed in the deceased's Succession proceeding is the end-all, say-all when it comes to estate valuation. But of course the IRS can always question any valuation the family puts on the Sworn Descriptive List.

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

How To Keep Your Sons-In-Law and Daughters-In-Law Out of Your Estate

It's common for parents to want to keep their sons-in-law and daughters-in law out of their estate, for a variety of reasons. Common reasons include the fact that the in-law spends too much money; the in-law has their own kids; the in-law will inherit from their own parents and grandparents; some parents want to keep everything in the "bloodlines" because they inherited from parents and grandparents; others just don't like their in-laws; and others fear that their children will get divorced in the future and lose their inheritance.

Parents have several options when establishing an estate legal program. One option is simply leave the inheritance to the child - outright. Some parents reason that an inheritance is the separate property of the child so that should take care of it. However, inheritances that children receive are often, either intentionally or unintentionally, commingled with community property causing the inheritance to lose its separate property status.

A second option parents have is to leave their child's inheritance to a trust for the benefit of the child. If the parents name the child as the trustee, the child's spouse could exert influence over the child and force the child to take excessive distributions from the trust. But some parents tell me, "Let's leave it to a trust for our child and name our child as the trustee. If our child screws it up, so be it. We did what we could do to try to protect him without taking away his access to his inheritance."

A third option is to leave your child's inheritance to a trust, but name a 3rd party as the trustee of the trust - in essence restricting your child's access to his or her inheritance. By restricting your child's access to the trust, your are restricting your child's spouse from influencing your child to access the trust. You may even wish to name your child's children as the principal beneficiaries of the trust so that when your child later passes away, remaining trust assets would stay in the bloodlines benefiting your grandchildren. Your child's withdrawal or distribution rights become key components to this program.

There are many factors that play into how you leave an inheritance to your children. You must factor in the Louisiana community property law, the Louisiana Trust Code, laws which state that fruits of separate property are community property, family law, marriage contract law, and laws allowing spouses to sign a Declaration reserving the fruits of separate property as separate property.

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 No Place For Rude or Abusive Clients and Customers. Your Comments?

One thing that any estate planning attorney enjoys (or any business owner for that matter) is the satisfaction that comes from helping other people.

In our business (and I'd say for just about any business), about 98% of the clients or customers are fantastic to work with - they are kind, patient, understanding, positive, complimentary, and a joy to work for. However, the other 2% tend to steal time and attention away from the fantastic 98%.

This 2% tend to be rude and abusive to staff, they make unreasonable demands, and they are quick to threaten to complain to a third party.

I suppose these 2% feel  the need to act this way because they think that they must be difficult in order to "get what they want." However, the 2% don't realize that they are losing long term. 

Yes, in the micro short term, the 2% might "win" because the staff will give them what they want to get the 2% of the staff's back. But the 2% will most certainly lose long term because people and businesses will refuse to do business with them...who wants to do business with a jerk?

I'm hoping that this topic addressed this way will help people and their communities realize that it's ok to be nice in business...that's the way to get what you want long term.

Would love to read your comments on this subject, and would hope that this post can have some impact by you sharing it with your social network through Linkedin, youtube, facebook, email, or other social media app.

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

Disclaimer or Renunciation an Effective Post-Death Estate Planning Tool

Sometimes, believe it or not, it makes good tax or legal sense to formally refuse (also known as "disclaim" or "renounce") an inheritance.

Example: Dad dies and leaves assets to Mom. Mom doesn't need the assets and she wants to see the children enjoy their inheritance from their father. Mom might disclaim the inheritance.

Example: Mom dies leaving her estate to her two children. One child decides that he does not need the inheritance and decides to renounce and allow (due to Mom's governing documents) child's children to receive the inheritance. Disclaiming prevents the child from having to accept the inheritance and then give it away pursuant to federal gift tax annual exclusion limits.

Example: A Traditional IRA owner dies. The primary beneficiary decides that it makes more tax sense to disclaim her portion of the IRA and allow the IRA to pass along to the contingent beneficiaries because the taxable required distributions will be smaller to the contingent beneficiaries.

A "Disclaimer" is generally a federal tax term which allows people to formally refuse an inheritance. It prevents someone from having to accept an inheritance, and then donate it away. Particular disclaimer tax rules must be followed, including the requirement that the disclaimer be in writing, within nine months of death, and the disclaimant cannot accept any of the benefits of the disclaimed assets.

Renunciation is the Louisiana term for this. If a renunciation is to take place, it must do so in that window of opportunity after the date of death but before the disclaimant receives any assets or other benefit from an inheritance.

Disclaimer/Renunciation planning should be considered in many estate planning programs, both the post-death opportunities should be explored, and the incorporation of written disclaimer provisions in your governing will or trust legal documents as you put your estate planning legal program into effect.

One area where some get confused is that you cannot renounce an inheritance to get out of paying your debts or to get out of paying for the nursing home. Your creditor may accept your succession rights if you renounce them to the prejudice of your creditor's rights. And the Louisiana Long Term Care Medicaid Manual treats a renunciation as if you accepted the inheritance and then gave it away - triggering penalties for uncompensated transfers of resources.

Again, really important that you work with the right people to set things up the right way, the first time.

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 If Heir Refuses To Accept Inheritance Of Money or Item?

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

Do Mom’s Heirs Get Money When Dad (With Lifetime Usufruct) Sells Home?

We get this question often. Here's the situation. Mom dies with a last will and testament leaving Dad the lifetime usufruct of her estate, and naming her children as the naked owners. Dad then decides to sell the family home. Do Mom's kids get any of the money from the sale? 

No. They don't. Dad's usufruct will continue over the proceeds of the sale. Mom's kids may have to sign to allow the sale to take place, but they are not entitled to any sale proceeds.

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 Bequeathing Usufruct, Consider Leaving Naked Ownership in Trust

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

Four Key Medicaid Rules Regarding Bank Accounts as Countable Resources

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

Difference Between Testamentary Trusts and Inter Vivos (Living) Trusts

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

New 4th Edition of “Estate Planning in Louisiana” for 2018

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

Estate Law and NFL Bylaws May Ultimately Require Tom Benson Trust to Sell the New Orleans Saints

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

Issues Affecting Tom Benson Estate

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