Avoid Probate Louisiana

Husband Wants Simple Estate Settlement For Wife and Kids

Was working with a couple recently who lived in Metairie and they wanted an estate legal program that would make things easy and efficient for their family. Specifically, the husband, who handled all of the finances and the investments, wanted to make it as easy as possible for his surviving wife should he die first. They also wanted to make it easy for their daughter, who lives out of state, to be able to access and distribute the investments to their surviving family members in the proper proportions.

After we finished discussing the particulars of their estate legal program, the husband asked if we could talk through each of their assets so that he and his wife would know what would have to take place after he passed away.

First, we discussed their home. I explained that since their home was in their revocable living trust, his wife would not have to lift a finger after he passed away. The wife will be the sole trustee and instantly have the authorization to sell the home if she wishes without having to go through lawyers and court proceedings.

Then he asked about what his wife would have to do to access his varied investment holdings. Again, I said, "Your wife will continue to have access to all of your investments that are titled in the name of your trust - so no problems there."

Then he asked about what would happen to his vehicles. I told him that his wife, after he dies, will be able to take a copy of our paperwork and his death certificate to the Office of Motor Vehicles after he dies and the vehicles he owns will all be put into her name - no judges or court proceedings necessary.

Her point was, "This sounds really easy." They had comfort knowing they were arranging their legal affairs so that the surviving spouse would have complete and continued access after one spouse dies, and that their daughter will also have immediate access to make distribution to the daughter and other trust beneficiaries after both the husband and wife pass away.

Couple From Alexandria, Louisiana Has Estate Plan To Protect Youngest Child

I've been working on an estate legal program for a couple from central Louisiana. It's a "his, hers, and ours" scenario. The wife has several children from prior marriages. The husband has one child of his own. After they married, they had another child.  They mentioned several times that they were not very close with the older children, and that many of the older children had a larger estate than this couple had.

Their main concern was for their youngest child - that they had together. The wife was concerned that they may be forced to leave an inheritance to the older children due to Louisiana's forced heirship laws, but we discussed that since the older children were older than 23 years of age, she was not forced to leave the older children an inheritance. They realized that the youngest child was a forced heir, but the fact that the youngest child was a forced heir was not an issue because they would leave the bulk of their estate for the benefit of this youngest child.

They wanted an arrangement where the surviving spouse would completely control everything. But after both the husband and the wife pass away, they want their estate to be for the benefit of their youngest child. This child, a daughter, while responsible, would not be prepared to inherit an estate in a lump sum. But the couple had no family member or no one else that they could "trust" enough to be the Trustee of their daughter's trust after the couple passes.

After discussing the pros and cons of naming a corporate trustee to handle things for the young child (if the child happens to still be young when the couple dies). They selected the trust department of one of the national banks that they use to be the trustee.

Now the couple knows that if they pass away before their child completes all of her graduate and post-graduate education, then their estate will be managed by professionals and used for the right reasons until the child is an adult and has the maturity to handle the inheritance prudently.

The couple now knows that they have taken the necessary legal action to set up an estate legal program to protect the surviving of them from children or other who may want to cause a fuss, and they've provided for the financial well-being of their child who will need a head start on life if her elderly parents pass away unexpectedly in the next several years.

Assets Louisiana Residents Do Not Neet to Transfer to a Revocable Living Trust

A lot of couples that come into my office want to avoid a Louisiana Succession by creating and maintaining a Revocable Living Trust.  But what many people don't realize is that some of their assets, such as IRA's and life insurance policies, do not go into a trust if the ultimate goal is to avoid probate.   These types of assets are payable to determined beneficiaries, and as long as the beneficiaries are properly designated, a trust does not have to be involved.

There are other types of assets that do not have to be transferred to a Revocable Living Trust and probate can be avoided.

1. Checking and Savings Accounts.  If you simply add an adult child to your bank account as having signature authority, then after you die, that child can have immediate access to the account, close the account, and divide the funds between your heirs.  All of this can be done without the involvement of the court.

2. Vehicles.  If the person you want to ultimately receive ownership of your car provides the Will or a photocopy of the Will to the Louisiana Office of Motor Vehicles, they will transfer the title after death without court intervention.

3. Personal Effects.  Because your personal belongings are not titled, family members usually divide personal effects after the death of a loved one without the involvement of the court.

If your ultimate goal is to set things up so your family doesn't have to participate in the lengthy and costly court probate process, then assets would typically require court involvement must be in a trust.  These types of assets include real estate, mineral interests, stock, Certificates of Deposit, interests in limited liability companies, other business interests, and non-IRA investments. 

Since many people have a large portion of their estate in retirement accounts, it's fairly easy to avoid probate by retitling the home and other probate assets to your trust.

Should Louisiana Real Estate Be Put In Trust If It's About To Be Sold

I met with a couple today that was about to retire. They had about four different pieces of real estate. They owned property in Baton Rouge, Metairie, New Roads, and Shreveport.  Real nice couple - two kids and four grandkids. Seemed to be a pretty normal family - and we don't see many "normal" families anymore.

They had two main concerns. First, they said they wanted to avoid probate. Second, they said they wanted to avoid losing everything they had if one or both of them had to go into a nursing home in the future.

We decided to postpone any Medicaid Planning. They were relatively young, but the big issue is that they had a significant sum in their 401(k) and IRAs. It's harder to protect IRA and 401(k) assets from nursing home expenses in Louisiana, because these assets are countable resources. To get a 401(k) account or IRA out of your name, you have to take the money out of the account and pay all of the income tax - this strategy did not make sense to any of us. In addition, the husband already owned a long term care insurance policy so they had "some" protection in place from long term care expenses.

Regarding their desire to avoid probate, we discussed setting up their revocable living trust so that the following would happen:

  1. The couple would stay in control of everything while they were alive and able;
  2. The surviving spouse would stay in control after one spouse died, with no Succession or probate court proceedings necessary after one spouse dies;
  3. The two children would be the co-trustees of the trust after both parents die, with the immediate authority to sell the trust property and divide remaining assets between the two of them - all without the necessity of a probate or Succession proceeding.

Another issue that came up was whether they would put their Metairie property in their trust now. He mentioned they would sell this property in the next few months. They ultimately decided to keep their Metairie property in their name and they will expedite the sale of the property. Just to be safe though, we could have transferred their Metairie property to their trust (just in case they pass away before the property is sold). and then it would be easy for them to sell their property as trustees of their trust.

Finally, we talked about how easy it would be to sell their home (that will be in their trust) if they decide later in life that they want to sell their home and move to another location. We discussed how they could sell their existing home, and then acquire a new home in the name of the trust - all easy to do.

Their decision to keep their property out of their revocable living trust may have been different if they were trying to protect the property form nursing home expenses. If we were setting up the kind of trust that would protect their assets from future nursing home expenses, then it would be important to transfer all of the property now - to start the five year look-back period. Then, if they sell the property in trust in a few months, the sale proceeds would be deposited in a trust account, but the 5 year penalty period would have started when they initially transferred the property to the trust, not later when the property is sold.

Whether To Leave Percentages or Specific Amounts To Your Heirs or Beneficiaries

Was working with a family today from Metairie who wanted to leave a bequest to many difference grandchildren, great-grandchildren, and even certain step=grandchildren. They also wanted to leave the bulk of what they had to their five children when they died.

They asked me whether they should leave a specific amount to these descendants who were at least two generations below them (say, for example, $25,000 to each one), and leave the rest of their estate to be divided equally among their five children. We discussed, however, the alternative of leaving a large portion (say, for example, 75% to be divided equally among their five children, and leaving the remaining 25% to be divided equally among the specific grandchildren and great-grandchildren that they wanted to benefit.

These kinds of estate planning decisions can be tricky. Generally, if someone wants to leave others a small amount, designed primarily to acknowledge the recipient, we usually see them leave a specific dollar amount to those beneficiaries or heirs. This is, perhaps, a simpler way to acknowledge a recipient. It gets more complicated when you leave each of several people 1% or 2% of your estate - the recipient might want to review accountings to make sure they are getting the correct amount. But if you leave someone a fixed amount like $10,000, it does not matter how large the overall estate is, the recipient will get his $10,000, whether the overall estate totals $300,000 or $3,000,000.

If you are wanting to leave each of several people a significant amount of your estate, then perhaps it's easier to leave each of them a percentage of the overall estate. For example, if you want to leave a substantial bequest to your two children and your three grandchildren, then perhaps you would leave 20% of your estate to each of the five. If, for example, you leave $200,000 to each of your three grandchildren, and leave the balance to be split among your two children, and if your estate does not exceed $600,000 when you die, then your children will get nothing because the specific bequests ate up the entire estate.

Your decision to leave specific dollar bequests versus a percentage of the estate is both important and tricky. Your estate will likely fluctuate in value from the time you put your estate planning legal program in place, until the time you pass away and your program plays out. This is a good reason to review your estate planning program every few years and, if necessary, work with your estate planning attorney to keep it current.