What does Avoid Probate mean?

What does avoid probate mean?

To understand what avoid probate means, you have to understand what probate is.

For prospective law firm clients who want to schedule a free 15 minute initial phone call with Paul Rabalais, go to: https://go.oncehub.com/Paul8

Some basics: Probate, in general, is the court-supervised process of transferring assets in the name of a deceased person to the heirs. In Louisiana, probate is referred to as "a Succession." But because there are different laws, rules, and regulations that apply to different types of assets you might own, I'd like to use an example.

Let's say that Alan and Alice Peterson own five assets:

(1) A bank account;

(2) An individual retirement account (IRA);

(3) A brokerage account;

(4) A vehicle; and

(5) A home.

One die, Alan dies. Alice goes to the bank where they tell her that she still has access to their bank joint bank account. Alan goes to their brokerage firm where she is told that as the designated beneficiary on Alan's IRA, she can produce a death certificate (when she gets it) and the financial institution will transfer Alan's IRA into an IRA in Alice's name. So far, Alice is on a roll.

But when Alice inquires about their joint brokerage account, the brokerage firm tells Alice that the account is frozen, and that Alice and her family must hire an attorney to get the appropriate court orders in order to gain access to the brokerage account funds.

Then Alice discovers from the Office of Motor Vehicles that she cannot sell or otherwise transact the car until she produces the appropriate court order ordering the Office of Motor Vehicles to take Alan's name off the vehicle title.

Then, when Alice starts to inquire about selling the home, she discovers that she can't sell the home until she "completes Alan's Succession," which will clear up the title to the home.

So, even if Alan had a last will and testament, it's the fact that he had assets titled in his name when he died that required his survivors to hire lawyers to complete this court-supervised procedure, even though Alan's IRA "avoided probate."

So Alice and the kids hire a lawyer, spend a few grand or more, take several months or more, to complete the court proceeding and all that goes along with settling Alan's estate.

Years later, Alice dies, also owning five assets. Even though Alice may have had a last will and testament naming an executor, and naming her children as her sole heirs. The kids must now "lawyer up" and go through the court proceeding in order to get Alice's bank funds and brokerage account, and to sell Alice's vehicle and home.

Some people want their survivors to "avoid probate," which means they want to arrange their affairs in a manner so that their survivors will have immediate access to assets, without their survivors having to have assets frozen while survivors hire lawyers and wait on the judicial system to oversee the settling of the estate.

So perhaps Alan and Alice would have, in order to avoid probate, established the "Alan and Alice Peterson Revocable Living Trust." They would have transferred their "probate assets" to their trust, such as their home and brokerage account, while they would have kept the IRA out of the trust since IRA law permits IRA owners to designate beneficiaries of their IRA accounts.

Then when Alan died, Alice, as the trustee of their trust, could sell the home and access the trust brokerage account, without having to go through probate. Things in a trust do not have to "go through probate" when you die. Only certain assets titled in your name require a probate (or in Louisiana, "a Succession") when you die.

After both Alan AND Alice die, then the Successor Trustee so designated by Alan and Alice in the trust instrument, would have immediate access to sell trust assets (like the home, if appropriate), and disburse trust assets to the principal beneficiaries of the trust, without having the traditional attorney and court involvement that is required when you die with assets in your name and a Succession is required.

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

Sometimes You Need a Customized Beneficiary Designation Form for Your IRA

Occasionally in estate planning, the need for a customized beneficiary designation form arises.

For prospective law firm clients who want to schedule a free 15 minute initial phone call with Paul Rabalais, go to: https://go.oncehub.com/Paul8

Most people are aware that their IRAs, life insurance, and certain other accounts they own are payable to their designated beneficiary or beneficiaries - the provisions in their will or living trust have nothing to do with where their IRA goes when they die.

And with many people having the majority of their financial wealth in their individual retirement account, the beneficiary designation language becomes just as important, if not more important, than the customized language of their last will and testament or their living trust.

For many, the traditional beneficiary designation form is sufficient. For example, in many traditional families, the IRA owner will name his or her spouse as the primary beneficiary, and will name the children as the contingent beneficiaries.

However, in some circumstances, it becomes necessary to name a trust as a beneficiary of an IRA. Having children who cannot handle a lump of money, or having a blended family situation, are common examples where creating and naming a trust as a beneficiary may be important. Note that Traditional IRA owners who name trusts as beneficiaries may be triggering adverse income tax consequences to the beneficiaries of the trust.

However, in some instances, neither naming individual beneficiaries, nor naming a trust as a beneficiary, accomplishes the estate planning objectives of the IRA owner. It becomes necessary that a custom beneficiary designation form is drafted and submitted to the financial institution where the IRA is held.

There are many instances where a custom beneficiary designation may be necessary. Let's say, for example, that Dad wants one of his three children to get a minimum of $500,000 from his IRA. At the time that Dad is completing his designated beneficiary form, his IRA value is $1,500,000. But Dad knows that the value of his IRA will change before he dies. Dad may need his estate attorney to draft a customized beneficiary designation form that provides that if, at the time Dad dies, Dad's IRA exceeds $1.5 million, then the three children will divide the IRA equally. However, the customized beneficiary designation will further provide that if the value of Dad's IRA is less than $1.5 million when Dad dies, then Child #1 will get the first $500,000, and the other two children will divide equally the remainder.

Since the IRA, life insurance policy, or annuity may be the largest financial asset an individual owns, it becomes critical that the proper attention be given to the beneficiary designation, particularly if the circumstances surrounding the estate are unique or complex.

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

We're a Blended Family. We Don't Want Each Other's Kids Breathing Down our Necks When One of Us Dies

Estate planning for blended families has become the norm. It is common, these days, for a husband and wife to each have children from prior marriages or relationships. But couples with blended families who fail to put the right estate legal program in order is a recipe for disaster.

For prospective law firm clients who want to schedule a free 15 minute initial phone call with Paul Rabalais, go to: https://go.oncehub.com/Paul8

The conversation to me goes something like this, "Mr. Rabalais, we each have our own children. Right now, everything is ok...everybody gets along well. But I wasn't born yesterday. I know that when one of us dies, if we don't have our estate legal matters buttoned up just right, the kids of the first spouse to die will pounce on the surviving spouse like white on rice in an attempt to preserve their inheritance."

Louisiana law that applies in these circumstances is cumbersome at best. When a spouse is a blended family dies without a legal plan in place, the children of the deceased spouse can force the surviving spouse to purchase and post a bond that will protect the children's inheritance. And that's just for starters.

There are several components of the "intestate usufruct" that couples don't like: (1) the surviving spouse can't sell real estate or stock without the "permission" of the children of the first spouse to die. (2) If the surviving spouse is forced to spend assets over which she has usufruct, she still owes a debt to children of the 1st spouse to die for the full value of the usufruct. And (3) if the surviving spouse is not the parent of the children of the 1st spouse to die, the children of the 1st spouse to die can force the surviving spouse to post a bond to protect the interests of the children of the 1st spouse to die. These issues often wreck what was a delicate relationship to begin with.

There are number of legal strategies you can take advantage of in order for couples who are in a "blended family situation" to protect each other, but also protect the interests of the children.

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

Why the Louisiana Succession Doesn't Ever Get Done...And How to Make Sure Yours Does Get Done

Two reasons estates don't get settled are (1) the survivors are unaware of the need to complete the probate (in Louisiana we call it a "Succession"); and (2) at least one of the participants is not cooperative.

For prospective law firm clients who want to schedule a free 15 minute initial phone call with Paul Rabalais, go to: https://go.oncehub.com/Paul8

It is not uncommon for someone to pass away leaving survivors, and those survivors are unaware of the need to complete the probate of the deceased family member. For example, let's day Dad dies. Dad and Mom had purchased a home 35 years earlier. After Dad dies, Mom decides to continue living in their home. Mom has access to all of the joint bank accounts, and Mom was the designated beneficiary of Dad's IRA. She doesn't even think about seeing a lawyer to complete a Succession. Years later, Mom wants and needs to move into an assisted living facility. She decides to sell the home to help cover the expenses of moving and living in the assisted living facility. She puts the house up for sale, finds a buyer, and signs a purchase agreement. The buyer's title attorney conducts a title examination and discovers the home is still in the names of both Dad and Mom. The buyer's title attorney says, "No sale will take place until Dad's probate is complete!" So the sale is suspended, or perhaps worse, the buyer backs out of the sale.

We often see surviving family members unaware of the need to complete a Succession after their loved one dies. Perhaps the deceased owned a rental property and the family merely continued to collect rent from a tenant but never went through the Louisiana Succession to get the title transferred. Perhaps the deceased had owned a one-third undivided interest in family property, with her two siblings, and no one bothered to include that as a Succession asset after she died. Perhaps the deceased owned real estate out of state, and the Louisiana Succession does not transfer any of the real estate owned in the name of the Louisiana resident.

So there are many circumstances where surviving family members are unaware of the need to complete a Louisiana Succession after the death of a loved one. And when they finally uncover that need years later, it is more complicated because there is urgency, or perhaps an heir of the deceased passed away in the interim, making more probates necessary.

A second, and perhaps more frustrating, reason estates don't get settled, is when one or more of the participants is uncooperative. Neither the executor acting alone, or a majority of the heirs, can complete a Louisiana Succession by themselves.

In order to transfer assets of the decease to the heirs, a judge must sign a court order ordering third parties to transfer assets out of the name of the deceased, and into the names of the heirs. A judge will not sign the necessary court order until ALL OF THE PARTIES sign off on the petition requesting the judge to sign the order (this order is referred to as a "Judgment of Possession").

Sometimes a participant will refuse to sign the necessary paperwork - sometimes for valid reasons and sometimes for petty reasons. Nonetheless, one participant refusing to fully cooperation will stop an estate settlement in its tracks.

So what's the Solution? Twofold:

(1) On the planning side, particularly if you anticipate relationship issues among your heirs, establish an estate legal program to eliminate or minimize the potential for problems. Avoid probate. Put the right people in charge with the authority to get things done. Communicate your reasons exactly why you are doing what you are doing.

(2) Once a family member dies, make sure you have very quick and very open communication with all of the parties involved. This early and open communication will build trust among the parties, often eliminating discourse.

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 Planning Trends

Over the last couple of decades, there has been a shift in the areas that consumers address when they engage an estate planning attorney to get and keep their estate legal program in order.

For prospective law firm clients who want to schedule a free 15 minute initial phone call with Paul Rabalais, go to: https://go.oncehub.com/Paul8

While these are just trends - they don't apply to every family and every set of circumstances. For example, many families don't have a federal estate tax concern, but they also don't ever want or intend to qualify for Long Term Care Medicaid. Some estate planning issues are evergreen, they will be addressed regardless of the political landscape: issues like providing for minor children, providing for disable children, and providing for adults who cannot handle a lump sum inheritance the right way.

But the following are general shifts we see:

(1) Estate tax planning vs. Medicaid Eligibility planning. Few families these days need to worry about the federal estate tax. The average middle class family these days does worry about losing their home and life savings if they get sick and need long term care.

(2) The ILIT vs. the IIOT. Gone are the days where parents created an irrevocable life insurance trust in an attempt to use life insurance proceeds to pay estate tax. Here are the days where people transfer assets to a particular type of trust that enables them to retain elements of control but not lose the assets if they get sick.

(3) The $15,000 gift tax annual exclusion. Used to be, everyone and their brother would make gifts annually of $15,000 in an attempt to reduce the assets ultimately subject to the federal estate tax. Now, those gifts are useless, particularly if they are being made with some future Medicaid eligibility goal in mind.

(4) Avoid Lumping Assets in Surviving Spouse's Estate vs. The Double Step Up. Now, we want the assets of the first spouse to die to be "lumped" into the suriviving spouse's estate, for estate tax purposes. Assets in the estate of the surviving spouse get a step-up in capital gains tax when the surviving spouse dies. This "lumping" used to be a "no-no" because it cause the surviving spouse's estate to exceed the $600,000 estate tax exemption (which is now $11.4 million).

(5) Providing for a Child Predeceasing vs. Providing for a Child Divorcing. Many people now express a very clear desire that they do not want their ex-daughter-in-law, or their ex-son-in-law, ever controlling a penny of their money.

(6) Old School Will vs. New School Trust. Lawyers were taught in law school that wills and probate are the way to go. Plus, guiding a family through the intricacies and obstacles of the court-supervised probate (we call it "Succession" in Louisiana) can be easy and highly profitable work. Now, with so much information on the internet, consumers have now wised up to the concept that an estate can be set up to eliminate the court and attorney involvement of probate.

(7) Old School Probate vs. New School Trust Administration. Old School - your assets are frozen when you die, and your survivors hire lawyers to sort through the legal maze. New School - name a trusted family member as the Successor Trustee (or Co-Trustees) of your funded trust, and keep 100% of your estate in the family.

(8) Custom Will or Trust Provisions vs. Custom Beneficiary Designations. Now, many people have the majority of their financial wealth in their Individual Retirement Account (IRA). Your will or trust has nothing to do with directing where your retirement assets go when you die. With unique family circumstances, many families overlook the need to have their estate lawyers customize not only their traditional wills and trusts, but also their beneficiary designations on retirement accounts, annuities, and life insurance.

(9) Traditional vs. Blended Family. With people living longer and getting married more, the blended family estate plan can get tricky. Protections need to be in place both for the surviving spouse AND the children or heirs of the first spouse to die.

BONUS: For estate planning professionals only: Old School - the QTIP election. New School - the Portability election. This has to do with proper estate tax reporting within nine months after the first spouse dies, EVEN IF the first spouse to die's estate does not exceed the applicable estate tax exemption amount.

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 Trust Income Taxed?

Do trusts pay income tax?

For prospective law firm clients who want to schedule a free 15 minute initial phone call with Paul Rabalais, go to: https://go.oncehub.com/Paul8

That's a great question. Like many aspects of estate planning, that question can initially seem daunting.

Some people who initially look into whether trusts pay income tax first stumble upon the federal trust income tax rates, which states that trusts (and estates) pay 37% on annual trust income that exceeds $12,750. Quite frankly, this scares people. Married couples don't pay 37% income tax unless their taxable income annually exceeds $612,350.

Here's the kicker: most trusts established these days are Grantor Trusts. When a trust is a grantor trust, the Settlor (person who set up the trust and transferred assets to his or her trust) is treated as the owner of the trust assets for income tax purposes.

When a trust qualifies as a grantor trust, the Settlor reports all trust taxable income on his or her personal return.

There are several different types of Grantor Trusts, but two common types of grantor trust include the revocable living trust (often established for probate avoidance purposes), and the irrevocable income-only trust (often established for Medicaid eligibility purposes, and in some instances, lawsuit protection purposes).

When having an initial conversation about establishing a trust, it may make some sense to say something like, "Hey, are we talking about a Grantor Trust here?"

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 is a Survivorship Clause in a Will?

What is a survivorship clause in a last will and testament?

For prospective law firm clients who want to schedule a free 15 minute initial phone call with Paul Rabalais, go to: https://go.oncehub.com/Paul8

Quite frankly, it's a clause that is often in wills that no one understands, and is rarely applicable. It's one of those provisions that gets consumers to say something like, "Well I guess this is just more of that legalese that lawyers put in legal documents."

Here's some background: You cannot make a bequest of full ownership of an asset and require that they preserve it for another person. That, under Louisiana law, is called a prohibited substitution.

However, you may make a bequest of an asset to someone, and impose as a condition on the bequest, that they survive you for a stipulated period, which period shall not exceed six months after your death.

Let's say you leave your home to Harold. But if Harold were to die right after you (let's say one month after you), you would not want your home to go to Harold's heirs - you would want your home, rather, to go to Sally. You could leave your home to Harold subject to the suspensive condition that Harold survive you for six months. Then, when Harold dies one month after you die, your home will go to Sally, instead of Harold's heirs.

Since "Joe Public" doesn't, at first glance, understand the terms "suspensive condition" or "survivorship clause", these provisions often cause confusion and rarely are applicable.

One other note worth mentioning: the existence of a six month survivorship clause can hold up the Louisiana Succession, or perhaps even the trust settlement, because the rights of Harold, in our example above, are "in suspense" until the six month survivorship time period expires.

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 are the Differences Between a Revocable and an Irrevocable Trust? And Why Would One Want to Use Either a Revocable vs Irrevocable Trust?

What is the difference between a revocable trust and an irrevocable trust?

That is one of the most asked questions that I get. It's both a simple question to answer, and a very complex question to answer.

The "duh" answer is that you can amend, revoke, and change a revocable trust. But you cannot change, within certain exceptions, an irrevocable trust.

So let's look at the practical answer and examine how and why they are used. Know that there are many, many different types and reasons to use trusts, and we are just scratching the surface here.

Most revocable trusts are set up for the primary purpose of avoiding probate. Probate is the government-supervised, or court-supervised, process of transferring assets that are in your name when you die to your heirs. Many people don't like probate because it can be difficult, time-consuming, and a financial drain on the estate and the heirs. So the idea is that assets in a trust don't have to go through that process. So people create a trust and transfer assets to their trust while they are alive so that when they die, those trust assets don't go through any government oversight. They set up a "revocable trust" because they want to retain every element of control over their trust after their assets are transferred to their revocable trust.

Note, however, that virtually all revocable trusts become irrevocable when the person who set up the trust dies. The person who sets up the revocable trust does not want anyone, after death, to be able to change how the trust assets are to be disbursed.

Irrevocable trusts can be more complex because irrevocable trusts typically place certain restrictions on the parties to the trust, in order to gain certain protections. Some of the protections people look for when they establish an irrevocable trust include protection from lawsuits, protections from federal estate tax, and protection from losing assets due to nursing home stays. But in order to get these protections, your trust must be worded correctly to comply with all of the rules and regulations that affect how protected you are from lawsuits, estate tax, or nursing home expenses.

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 Louisiana Resident's Plea to Create an Estate Planning Legal Program to Leave Her Children an Inheritance, and to Make the Estate Settlement Simple for Them.

While I've met with thousands of estate planning clients over the years as I've served as the Louisiana estate planning attorney for many Louisiana residents, I've heard many unique statements from my fantastic clients who took the time and effort to attempt to protect what they worked for and pass it along to their cherished loved ones.

But I heard a statement recently from a woman, and that statement stuck out in my mind. It wasn't a statement that was unique or unusual, but for some reason, every day I think of this woman and why she said what she said.

Her statement was, "I just want to leave my children an inheritance, and I want to make it easy for them." A very simple statement but also very profound.

When I heard her make this statement, I thought to myself, "Why did she just say that? And why did she choose those words?"

Upon further discussion, we realized that she, in the past, had family members who had entered a nursing home and were forced into the "spend-down game" prior to qualifying for long term care Medicaid. The woman had a "few hundred thousand dollars" of savings and she lived alone. She felt like her kids would care for her if necessary, but like she said, "you just never know what the future holds and I want my assets protected if I have to live in one of those god-awful nursing homes."

So, the thought process behind, "I just want to leave my kids an inheritance," could be translated to, "I don't want a long term illness, or taxes for that matter, to deplete my estate so that my kids would be left with nothing when I pass on."

But, as you may recall, she made another statement. She also stated, "I want to make it easy for them." You can break this statement, technically, down into two sub-statements. First, she could have said, "If, during some point during the rest of my lifetime, I get to a condition where I can't sign my name, make rational decisions, take myself to the doctor, understand my treatment decisions, or just can't care for myself, I don't want my kids to have to sue me in an interdiction proceeding in an attempt to have me declared incapacitated, and then have a judge appoint a legal guardian (curator) for my. I want to make it easy for my daughter to do everything for me."

And then the second sub-statement could be interpreted as, "When I leave this life, I don't want all of my assets frozen in a way that my kids can't access them, forcing them to hire lawyers to go through our judicial system just to gain access to what I leave behind."

Again, such a simple statement, "I want to leave them an inheritance and make it easy." But in today's world, you have to be pro-active and take the necessary initiative to give yourself and your children a fighting chance to protect and stay in control of everything you have worked for.

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 You Look at the Initial Legal Planning Expense AND the Estate Settlement Expense, Which Estate Planning Program is More Efficient: the Last Will Plan or the Revocable Living Trust Plan?

People often ask how much a will or a trust costs. In this post, we look at the overall financial involvement, from implementation until after death, of having a Last Will-based Legal Plan versus a Revocable Living Trust based Legal Program.

For most, there are two different ways you can leave your estate to your survivors - through your Last Will and Testament, or through your Revocable Living Trust.

It is generally less expensive to establish a Last Will based Estate Planning Program because with a Will Plan, you will leave all of your assets in your name. You won't need to re-title your home, your other property, your investments, or other assets into a trust's name. However, when you pass away, your assets will be frozen, and your executor and heirs must go through a court-supervised process to remove your name from your home, investments, and other "probate assets."

When you set up your revocable living trust, and re-title assets in your trust, you are arranging your affairs in such a way that your trust assets will not be frozen when you die. Your trustee, when you pass away, retains thet authority to access, manage, and transfer your trust assets to your trust beneficiaries in the manner you arranged in your trust instrument. In effect, your trust replaces your last will.

While there is generally more cash outlay up front for the legal services necessary to set up a trust versus a will, the overall cash outlay considering the two probates the family must go through when each spouse dies, typically far surpasses the outlay of setting up the living trust and avoiding the two probates.

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

If You Have an Undivided Interest in Family Property, Watch This Regarding Your Future Louisiana Long Term Care Medicaid Eligibility

Some people mistakenly believe that an applicant for Louisiana Long Term Care Medicaid does not own property that belonged to their parents when the parents' Successions have not been completed.

Here's an example: Grandparents owned a piece of real estate. Grandparents died many years ago leaving two children, a son and a daughter. Either the grandparents' Wills, or intestate law (you pick) leaves the property to the two children, equally. The grandparents' successions were never completed leaving title to the property in grandparents' names.

Grandparents' daughter is now requiring nursing home care and is applying for Louisiana Long Term Care Medicaid. As part of the application process, it is discovered that Grandparents' daughter is entitled to inherit one-half of the property. Medicaid rejects the daughter's Medicaid application based on the Medicaid Manual's Estate definition, which provides:

"Count the applicant/enrollee's share of an undivided estate as a resource the first day of the month following receipt. Receipt is deemed to be the day of death in the case of a direct descendant or when there is an uncontested will designating the individual as beneficiary."

Medicaid correctly assets that even though the Successions had not been started or completed, one-half of the property is a countable resource, pushing daughter's countable resources far in excess of the $2,000 statutory limit. The Medicaid application is denied. If the daughter is going to stay in the nursing home, somebody will need to pay the nursing home the applicable $6-7,000 monthly amount.

Because receipt of the property is deemed the date of death, it behooves families to, pro-actively and promptly complete the Successions of their ascendants, so that planning can be done in advance of a nursing home stay in order to protect family 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

Asset Protection: How To Protect Your Estate from Lawsuits - Frivolous or Otherwise

One of the questions we get from time to time is, "How do I protect my estate if I get sued?"

This is a slippery slope. The reality is that most consumers have liability insurance and they don't worry too much about getting sued and losing everything they own. But it seems that when "something happens" - like a car accident or some other event where one foresees personal liability exposure - panic sets in and the consumer immediately wants and needs to know what they can do to protect their assets.

For starters, the best time to protect your assets from lawsuits is NOT after an event happens that might trigger personal liability.

On another note, it is likely that you own some assets that are exempt from creditor claims, and you likely own some assets that are not exempt from creditor claims. Each state's exemption laws may be different so check with someone in your state who has a good understanding of your state's exemption laws.

Know that this can be a complicated topic, but when you do discuss asset protection with a professional, you'll likely discuss the exemption status of life insurance cash value, annuities, retirement accounts, limited liability company protection, and which types of trusts can provide you with creditor protection. If you discuss setting up trusts for asset protection, the discussion will likely move toward irrevocable spendthrift trusts in some form.

This is an area where it pays to get informed early - before something happens - and, if can't sleep at night because you are worried that a lawsuit, frivolous or otherwise, could wipe you out, then take whatever action you deem necessary to give you the peace of mind that your estate is protected.

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

Is Estate Planning Mainly For the Rich?

Is estate planning only for the rich? Do middle class folks really need to engage in estate protection or estate planning?

While there are dozens of reasons people engage in estate planning with estate planning lawyers, this post addresses who REALLY benefits the most from engaging the services of the right estate planning attorney. Let's look at three aspects of estate planning - taxes, probate, and long term care expenses - and see who gets whacked the most from failing to plan.

Let's say Rich and his wife have accumulated $8 million. They never engage in any estate planning because they are too busy sailing on their boat and travelling in the Caribbean. But as they age, they get sick and they spend a staggering $1 million on long term care expenses. Then, they die, and between all the probates in the various states (they own real estate in multiple states), their estate incur a total of $400,000 in probate cost. Still, their two children divide the remaining $6.6 million - each child walks away with $3.2 million - not too shabby.

Now, let's say Middle Class Max worked his tail off to pay off his $350,000 home and accumulated $700,000 in savings. They also neglect estate planning. Later in life, Max has a stroke, and Max's wife has dementia. They too spend $1,000,000 in long term care expenses. They spend their life savings of $700,000, and Medicaid pays the remaining $300,000. They are not forced to sell their home during their lifetime, but Medicaid pursues reimbursement of $300,000 from the estates through Medicaid's Estate Recovery Program. During the probates, the house is sold for $350,000, Medicaid is paid $300,000, and funeral and probate expenses wipe out the remaining $50,000. Middle Class Max's two children are left with zippo, $0, not a thing.

So you tell me, which family would have benefited more from engaging in estate planning the right way? Rich's family or Middle Class Max's family?

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

Warning: Medicaid Eligibility Planning Often Gets Overlooked When a Spouse Dies

In this post we address how important it is for families to deal not only with the Louisiana Succession when a married person dies, but also to deal with future Louisiana Long Term Care Medicaid Eligibility, and future Succession avoidance, all while dealing with the probate of the first spouse to die.

Often a married couple will experience something like this later in life: one spouse gets ill and is in and out of the hospital. Sometimes, the sick spouse must go to a nursing home or rehabilitation facility from the hospital. Medicare covers a limited number of days of rehabilitation services after staying in the hospital. But that Medicare coverage runs out quickly and then the patient must pay for their nursing home care out of their pocket, always at many thousands of dollars each month.

Then, after the sick spouse passes away, the surviving spouse often visits the law office to complete the Succession (other states besides Louisiana call it "probate").

Although this is a sensitive time, perhaps the conversation that may be just important is the conversation about how the surviving spouse can protect his or her home and savings in the event the surviving spouse needs nursing home care.

While both spouses were alive and well, the conversation about protecting assets often does not take place. The couple's plan is that when one spouse gets sick, the other spouse will hold down the household. But after one spouse dies, the surviving spouse realizes that they are alone with no one to take of them or their household if they get sick. So, Medicaid planning and protecting the assets can, and often does, take a top priority.

So, if you are a surviving spouse, and you don't think you can afford to spend $80,000 to $100,000 per year for your long term care, without it depleting your life savings, then make sure you have a conversation with an attorney who is well-versed in not only probate law, but property law, tax law, and Medicaid Eligibility regulations.

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 the Surviving Spouse's Usufruct Ends, Is There Anything Than Can Be Done to Prevent the Naked Owner from Abusing the Inheritance?

This post addresses whether a person who owns the usufruct of an asset can prevent the naked owner from blowing the asset when the usufruct terminates.

Here's the situation. Mom dies intestate (without a last will and testament) residing in Louisiana. Dad inherits the usufruct of Mom's share of the home and the money. Because Mom dies intestate, Dad's usufruct terminates when he remarries. A few years later, Dad gets engaged but one of Mom and Dad's children has a substance abuse problem, and Dad is worried that when his usufruct terminates and child gets the funds he inherited from his mother, that son will blow the funds. Can Dad do anything to prevent the child from being able to blow the inheritance once Dad's usufruct terminates?

The short answer is that there is nothing Dad can do to prevent Son from getting and blowing his inheritance once the usufruct terminates and Dad is required to turn over assets to the naked owners. But is there anything Dad can do to prevent the naked owner from abusing the inheritance?

Well, I suppose Dad could avoid getting married. Then, the usufruct would not terminate until Dad died and, hopefully, the naked owner would not abuse the inheritance at that time, which may be many years later.

Perhaps Dad could convince the naked owner to voluntarily allow the naked owner's inheritance to be place in a trust with someone other than the naked owner as the trustee. But the abusive naked owner is not likely to agree to that.

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