Avoid Probate

As 2016 Comes To a Close . . . 6 Reasons Why Louisiana Families Should Get Their Estate Planning Legal Affairs in Order

Now that we are entering the final quarter of 2016, let's take a look at the most popular reasons Louisiana families, from Houma to Baton Rouge to Lake Charles to Shreveport, engage lawyers to arrange their estate legal affairs.

1. Simplify the Estate Settlement for Loved Ones. No one wants to leave their surviving spouse, children, or other loved ones a legal mess once they are gone. Arranging your estate's legal affairs in a way that makes it easier for those in charge when you pass can be a true gift to your survivors.

2. Designate the Appropriate People to Be in Charge. I worked with a couple recently who wanted to make sure their daughter handled their estate when they were gone. Just as important was to make sure that their son would not be the one to handle their estate. If you don't designate someone in your estate legadel documents to be in charge when you die or become incapable, a judge will select someone to manage your estate. No one knows better than you who should manage your estate when you die or if you become incapable.

3. Avoid Probate. Since it's simple to avoid, many families want to arrange their financial and legal affairs so that their surviving family members can avoid a court-supervised estate settlement. Those individuals who have been through a messy probate in the past are typically the first people in line at our door to set up their estate legal documents to avoid probate by typically, creating a revocable living trust to own their "probate assets," avoiding the freezing of accounts and real estate when they die, and appointing a family member/Successor Trustee to be in charge of distributing trust assets outside of the Louisiana Succession.

4. Specific Asset Distribution. I worked with a couple recently that wanted certain pieces of real estate to go to particular children. If you want to provide that certain assets be passed to along to certain heirs, you have to arrange your estate legal documents to do just that.

5. Avoid Nursing Home Poverty. It's a shame how many people wait to late to protect assets from nursing home expenses that can wipe you out. You MUST engage a qualified estate planning attorney at least five years before you or your loved one enters a nursing home. Otherwise, you may lose your life savings to the nursing home or to Medicaid. Don't dilly-dally around if avoiding nursing home poverty is a top priority.

6. Avoiding Taxes. It's smart to act NOW to arrange your estate legal affairs to avoid tax which can consume a large chunk of your estate when you die.

The bottom line is that everyone has different estate planning priorities but you all know that it's critical to have everything in order. Whether your primary issue involves avoiding probate, avoiding nursing home poverty, protecting minor or irresponsible children, avoiding taxes, putting the right family member in charge, or disinheriting a son-in-law, take action now to get all in order because you never know when your number might be called.

What Should Louisiana Residents Do With Their Series EE or Series I Savings Bonds When Planning Their Estate?

I was working with a couple yesterday in our Baton Rouge office. Their neighbor had used our services and were satisfied, so they wanted to get the same peace of mind knowing that all of their legal affairs were in order. They discussed with me what they owned: home, IRAs, bank accounts, vehicles...the usual stuff.

I asked them if they were worried about the prospect of losing everything if they had a nursing home situation. She shook her head up and down and stated that it was one of her biggest concerns. They had an estate the size of which they needed to protect because it was more than what they are allowed to have and qualify for Louisiana Long Term Care Medicaid, but it was not so much that if they spent just a few short years in a nursing home, it would all get eaten up by nursing home costs.

So we started a discussion about how simple it would be to protect the value of their home from Medicaid's Estate Recovery lien, which if the home was not protected, would allow Medicaid to force a sale of the home after they both died to reimburse Medicaid for what it had spent on their nursing home expenses. We also discussed how easy it would be to protect their bank savings, particularly because they were starting the planning process while they were still healthy.

The wife went on to tell me that she had purchased a long term care insurance policy years earlier, but the insurance company would not permit the husband to buy a policy because of some health concerns.

We kept talking about some of the issues involved in protecting their IRAs from nursing home expenses. We discussed the Community Spouse Resource Allowance which allows married couples to protect more than $100,000 of the IRA and other assets if only one spouse enters a nursing home while the other stays at home.

We all felt that we had come up with a good strategy to protect what they had worked for from nursing home expenses, and also from probate, and as I was summarizing all of the details of their program, she said, "Oh, I almost forgot...I have all of these Savings Bonds. What do I do with these?"

She pulled an envelope out from which came a two-inch thick stack of United States Savings Bonds. I shuffled through them and discovered that some were in the wife's name only, some were in the husband's name only. Some were titled, "Wife OR Husband." And some were titled, "Wife OR Child."

She said, "What can we do to protect these Savings Bonds?"

I told her, "It's simple." Once your trust is signed - next time you come back to the office - you will be able to re-title all of your Savings Bonds into your trust by going to a special website. Transferring your savings bonds to your trust will prevent you from being forced to sell them and spend them if you go into a nursing home, AND, your son that you designated to handle your family's affairs when you and your husband die (the son's title is called the "Successor Trustee") will not have to fight with lawyers and the court system to get those bonds sold or transferred to your children equally when you die.

We pointed out to her that she will need to complete a Request to Reissue United States Savings Bonds to a Personal Trust, and that form is available online at http://www.treasurydirect.gov/forms/sav1851.pdf.

We told her that any questions regarding proper completion of this form could be directed to the Treasury at 1-800-245-2804.

We discussed how when the government re-issues a Series EE or Series I savings bond, it no longer issues a paper bond, and that the reissued bond is in electronic form - this actually makes things simple - don't have to deal with all that paper anymore.

We discussed how since she was transferring the bonds to their "Grantor Trust," the tax on the deferred interest would not have to be paid. The interest from the bonds would continue to accumulate tax deferred until the bonds were disposed of or they finally matured.

While some Louisiana residents have complex assets that are difficult to deal with when it comes to probate, Medicaid, usufruct, donations, gifting, Successions, taxes,  or re-titling, the government has actually done a pretty good job making it easy to re-issue United States Savings Bonds to a trust, allowing your clients to avoid all of the itemization of the bonds when they go through probate, and, if desired, allowing your clients to avoid being forced to sell and consume bonds if there is a nursing home situation.

If you own United States savings bonds and you want to simplify what your family will have to go through one day to get those bonds and other estate assets settled, whether it's when you die, when you become incapable, or perhaps even when you enter a nursing home, then give us a call at Rabalais Estate Planning, LLC, and we'll discuss, perhaps, a program to simplify all of this and leave your family a legacy instead of a headache.