Baton Rouge Estate Planning Attorney

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 Everyone Ought to Know About Valid Wills in Louisiana


We get questions everyday on whether a handwritten will is valid in Louisiana. Should I have a handwritten will? Should the will be typed? What if it's handwritten and it's notarized? We get all of those questions all of the time. Let me lay it out for you.

In Louisiana there's two kinds of valid wills. The one that we see most often by far is what's called the notarial will. It's the kind of wills that we prepare where it's all typed up and has all of the correct language in there that makes it a valid will. It has all of the proper bequests, executor designations, all the other legal stuff. There's a special clause at the end, it's signed on each page, it's notarized, it has to be witnessed by two people. So there's a lot of formality requirements that go into making a valid notarial will. Those are the the ones that are done most often. That's what we recommend.

In Louisiana, our state allows what's called olographic wills or hand-written wills. They scare me to death. Yes, it is a valid will if you do it in your own handwriting, do it on your own, you sign it, you date it. However, the question for me is not, "Is it a valid will?" The question is always, "Does it do what it needs to do?" If you write one word the wrong way it could cause havoc among your surviving family members. It's kind of like a doctor. Can you do your own surgery? Sure, but you may mess it up. Wills are the same way. Can you do your own will? Sure, but don't mess it up. You could be creating more problems than if you had no will at all. I also write a lot more about that in my book "Estate Planning in Louisiana." Feel free to check that out. But yes, handwritten wills, if they meet the necessary requirements, are valid. But they often do more harm than good because the person who wrote the will is not properly trained in how to write a will to cover all the things that need to be covered in it. So be aware of that.

Key Feature of a Louisiana Revocable Living Trust

In the past few months our firm has been preparing an abundance of Revocable Living Trusts for Louisiana residents seeking to avoid probate or succession, as it is called in Louisiana. One of the essential parts of a Louisiana Revocable Living trusts is what's known as a pour-over will. Often clients are confused by this term, because their thinking is; "If I have a revocable living trust I shouldn't need a will". Well I'm here to explain exactly what the pour-over will is used for.

When you have a revocable living trust, your Louisiana pour-over will is a essentially the back-up plan for property that is not a part of your trust when you die.  First, the pour-over will governs the distribution of your assets that will not need to pass through a Louisiana succession or probate procedure. These assets include your vehicles and personal effects. The pour-over will is in place to dictate what will happen to such assets.  The other assets that the pour-over will covers are assets which should have been placed in your living trust, but for some reason or another, have not made it into the trust. The pour over will is there just in case there are some assets that still need to go thorough probate. The pour-over will typically leaves these assets to your living trust to be distributed according to the terms of the trust. However, the hope, in setting up a Louisiana revocable living trust, is that your estate will never need to pass through a Louisiana Succession.

If you are interested in setting up a revocable living trust, give me a call and I will work with you to establish a plan to protect your assets and provide great peace of mind.

Wondering if Your Louisiana Estate Plan Should Include a Power of Attorney - Read This


Many of our clients come in to the office and want to get their affairs in order.  The thinking is that signing a last will and testament will do so, and often times it willl.  But what happens if you're incapacitated, either by sickness or another accident for an extended period of time?  In that case you may need a power of attorney.  Laws in Louisiana differ from the laws in other states for power of attorney. 

I would like to share a situation that we hear about all of the time.  Jerry has three kids, Harry, Larry, and Mary.  Jerry is getting older and his health is beginning to decline.  He takes no action, however, and suffers from a heart attack.  Luckily,he survives but for weeks he is in no condition to handle his own affairs. 

This is a terrible situation and since a power of attorney was not executed there will likely be a court-supervised interdiction proceeding.  Harry, Larry, and Mary will have to sue their dad and have him interdicted.  The family will be at the mercy of the court and after a great deal of time and cost the court will pick a curator whose job it will be to manage Jerry's affairs and report to the court for permission to act on Jerry's behalf.

Let's take the same example, but this time when Jerry notices his health is declining he decides he wants his son, Harry, to handle his financial affairs for him if he ever becomes so sick that he can't take care of his own affairs.  Jerry signs a power of attorney authorizing Harry to take care of all of his financial affairs. 

There are many benefits to signing a power of attorney in Louisiana including:

* Your family avoids the court supervised interdiction proceeding that may be required if you have not properly executed a power of attorney.

* YOU can designate the person who will handle your medical or financial affairs for you if you ever become incapacitate

* YOU can authorize your agent in your power of attorney to engage in tax planning and Medicaid planning techniques that he or she would have been able to perform in an interdiction proceeding.

At Rabalais Estate Planning almost any estate planning documents we draft will include this important document.  We want to make sure to cover all of your bases when protecting your estate.  If you want to know how to establish a power of attorney, then give me a call.  I will be happy to help you take all of the necessary steps to get a complete estate plan in place and move you closer to having the peace of mind you deserve. 

Secrets Every Louisiana Couple Should Know - Is It Best to Have One Living Trust or Two?

We work with many married couples throughout Louisiana. Every once in a while we work with a married couple and their goal is to avoid probate and sometimes they ask the question, "Should we have one trust or should we have two trusts?"

Quite frankly, the answer is that most married couples, particularly the traditional families (a married couple that have children together), typically have one trust. They have the same beneficiaries so after both spouses pass away typically their children are going to share in the trust assets.

However, there are many married couples that meet later in life, they already have children, and perhaps they even signed a marriage contract prior to their marriage.  They do this because they wanted to make sure that all of the assets remain separate and each spouse has different heirs. Perhaps they want to provide for their spouse but ultimately each spouse wants to provide for and leave their assets to their perspective child or children. Often times in those cases we'll do two trusts, one for each spouse. Each spouse will get their own portfolio with all of the trusts, and the wills, and powers of attorney, and all of the other supporting documents that are included, all of the instructions for the people who are going to be in charge when you pass away. All that information goes in one place.

So be aware, married couples, if your intent is to avoid probate with a trust, you have a decision to make, whether you want to have one trust or two. Typically it's one, but when things are kept separate, it's often two. Give me a call if you would like to gain peace of mind by taking the first step to get your estate plan in order.

What Does an Estate Plan for Louisiana Parents with Minor Children Look Like?

Twice in the past week I took care of friends of mine who wanted and needed to get their estate plan in order for the first time. Both friends have minor children and have never done any estate planning before.

Estate planning for parents with minor children usually looks something like this:

1. Lifetime Usufruct to Spouse. Parents with minor children in Louisiana usually leave their spouse the lifetime usufruct of their estate. In Louisiana, you really can't leave your estate in full ownership to your spouse because forced heirship laws require you to leave part of your estate to your kids 23 or younger. The usufruct satisfied these forced heirship rules because you are not leaving out your children - you are leaving them "naked ownership" which permits them to inherit from you after you AND YOUR SPOUSE die.

2. Children's Inheritance In Trust. If you and your spouse die, you don't want your minor/young child(ren) to inherit it all in a lump sum. So, we often create a "testamentary trust" in your will whereby you name a trustee for your kids to manage their inheritance until they are older, and you designate a term (age 25 perhaps) when your kids can have their inheritance.

3. Tutors. If you have minor children, you will name their guardian who will play the role of parents if you die before your children are 18.

4. Powers of Attorney. You will likely designate your spouse as your Agent on your Durable Property Power of Attoreny and your Health Care Power of Attorney. If your children are young, you will likely name a trusted relative or friend as the alternate agent, if your spouse is unable to act as your agent.

5. Living Will Declaration. You will likely document your wishes regarding life support machines.

These are typical items that parents with minor children address when they are setting up their estate planning legal documents. There are other issues that often come into play but these are the basics. If you live in Louisiana and want to protect your minor children (of course you do!), let us know.

Business Incorporation May Be An Integral Part of Your Estate Plan

In about 20% of all estate plans that I prepare, there is also some business planning that needs to take place. This business planning typically takes the form of Louisiana LLC formation. LLC’s, or limited liability companies, are most often formed by clients who hold investment properties or rentals as a way to protect their other assets.

The idea of the LLC is to shield yourself and your personal assets from any lawsuit arising from property owned by you. Lets say you own a rental house and your tenant slips and falls on the property and decides to sue you. Without a Louisiana LLC, the tenant will sue you individually and they can recover from all of your assets you’ve worked so hard to accumulate. When you have an LLC who’s only asset is the rental home, the tenant’s recovery will be limited to the value of the home, and any lawsuit will not threaten all of your other assets.

So as you can see, an LLC can be a very valuable tool when you own investment properties. LLCs allow you to protect assets and that is the primary goal of professional estate planning. If you would like to look into your needs when it comes to Louisiana Estate Planning and whether business planning may also be helpful to you; call me at 866-491-3884 for more information or to set up a no-cost consultation.

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.

Advice to Husbands Whose Wives Don't Handle the Money

One of the most important things you can do to enrich the lives and relationships of those you leave behind is to make sure all of your estate affairs are in order - and I'm not even talking about your estate legal documents. Sure, having all your estate legal documents in order is an important component to leaving a legacy (and not a headache) to your family, but here are five OTHER MATTERS that our best clients do for their loved ones to ensure a peaceful, stress-free, harmonious estate settlement:

1.    Funeral and Burial Instructions. If you've had your estate planning legal affairs documented by our law firm in the last 25 years, you received an Estate Planning Portfolio containing numerous sections. One of those sections includes your customized Burial and Funeral Instructions. Countless people have revealed their heart-felt wishes regarding their burials to me, but it really doesn't do much good to tell ME what you want, because I'm not likely to be the one handling your funeral arrangements. Document your detailed wishes in the appropriate section of your Estate Planning Portfolio. Your family will thank you for it and they'll brag about you to others.

2.    List Your Closest Family Members and Friends. There's a section in your Estate Planning Portfolio that we assemble for our clients where you can list the names, addresses, and telephone numbers of your closest family members and friends. Don't leave your family with the job of having to track down the contact information for those dozens of people who need notification. Do this work ahead of time and keep it up to date.

3.    Instructions to Your Executor / Successor Trustee. If you've worked with us and you have your Estate Planning Portfolio, there's a section in your Portfolio which has detailed instructions for the person that you designated to handle your legal, tax, and financial affairs when you are gone. You simply need to let that person know of the existence and location of your customized Estate Planning Portfolio, and they'll be able to flip through to the section that contains their instructions on what to do to get the job done.

4.    Organized Asset Information. You can have the most superior set of estate legal documents customized for your family, but if your surviving wife or other surviving family members do not have detailed records of what you own and what you owe, you will leave them with a frustrating, never-ending headache.  This will delay your estate settlement because no one will ever know if there is another account or asset that will be uncovered at a later date that will cause all of your heirs to drudge through more settlement paperwork. In a Rabalais Estate Planning Portfolio there is a section that includes the assets you own which will take the "guesswork" out of your estate settlement.

5.    Your Estate Planning Letter to Your Heirs. Included in a Rabalais Estate Planning Portfolio, you can communicate your wishes to your family regarding your desired distribution of personal effects, such as guns, jewelry, furniture, and other personal non-titled items. For some, making sure the personal effects wind up in the right hands is more important than the division of funds. Plus, it's easy to divide $1,000,000 among four children, but many families have been torn apart because of a fight over personal effects which had far less fair market value than other estate assets, but FAR MORE SENTIMENTAL VALUE than a bank account or investment portfolio. So take a few moments to describe your wishes and your feelings to your surviving wife, husband, children, or other loved ones. It will be your final message to them.

If you left your lawyer's office with your estate legal documents folded up in an envelope - without an organized set of supporting documents, you've missed the boat. Sure - having a superior, customized set of estate planning legal documents is critical to easing the process of settling your legal affairs, but having all of the above supporting letters, records, and instructions for those you leave behind can be the key to leaving a legacy.

Set Up Your Estate Planning Legal Documents To Make Car Title Transfers Simple at the Louisiana Office of Motor Vehicles After You Die

There's nothing worse than forcing your surviving family members to go through lawyers, courts, and judges just to be able to sell your vehicle or put your vehicles in their name. But there's a not too well known secret that you and your family can take advantage of to make it easy for your surviving family members to put your vehicles in their name.

According to the Louisiana Office of Motor Vehicles, you can transfer a vehicle of a deceased owner if you have a photocopy of the deceased's death certificate, and you also have a copy of the deceased's last will. The deceased's last will should have a particular bequest of any vehicles owned at the time of death.

Example. Dad died with a last will and testament which stated, "I leave any vehicles that I own at my death to my son, Peter." After Dad dies, Peter brings a copy of Dad's death certificate and a copy of Dad's last will to the Louisiana Office of Motor Vehicles. Peter will leave the Office of Motor Vehicles with new titles in Peter's name - no probate, no Succession, no lawyers, no courts, and no judges involved.

Make sure when you set up your estate legal program that you cover all of the details necessary to make things really simple for your family - including how your vehicles will be transferred after you pass away. Your family will thank you for it.

How To Keep A Child From Blowing A Large Inheritance

I was working with a Lafayette, Louisiana couple recently. They had one child - a daughter. The couple had worked hard to build a business together while they were working. They were successful - build an estate that consisted of millions of dollars of net worth.

They acknowledged to me that they had spoiled their daughter and enabled her to get used to a lifestyle that was "spend now - worry about paying for it later." They feared that if they had an estate planning program that dumped these millions into the daughter's lap, that it would all be gone six months later.

The couple has three grandchildren from this daughter and the couple is really worried about the future well-being of these grandchildren. They were looking for guidance from me on how they should leave their estate to their family. I knew I did not want to tell them what to do - I wanted to give them options and put them in a position where they could make the best informed decisions for their family.

We discussed all of their options. Here's what they came up with. After couple both pass away, they will leave half of their estate for the benefit of their daughter, and half of their estate for the benefit of their three grandchildren. And they were specific about how they were leaving their estate to their descendants.

  1. Amount for daughter. The daughter will not get her inheritance in a lump sum. She will get an annual distribution for each of the five years after the couple is gone. Then, she will receive the remainder of her share in five year intervals. This will prevent the daughter from blowing her inheritance all at once.
  2. Amount for grandchildren. After the couple dies, the amount for the grandchildren will be held in trust. A trusted professional will serve as the trustee, spending the money as needed for the education and well-being of the grandchildren. The grandchildren will get their inheritance in stages until the last distribution at age 50.
  3. Revocable Living Trust. The couple does not want their to be court proceedings when each of them dies, so we are setting up their estate in a revocable living trust so the typical delays and costs associated with probate are avoided when they die.

The decision of what to do with this couple's estate had been bothering them for quite some time. Now they know that their daughter will not be able to blow her inheritance, and they know that they have provided that their grandchildren's education will be paid for, and their grandchildren will be able to get a much-needed head start financially on their lives. They were also pleased to know that, indirectly, they were also providing for their future great-grandchildren that do not yet exist.


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

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.

Completing a Succession When a Child Is Already a Co-Owner of Property?

     Hey, I was working with a family recently, the parents had both recently passed away and the four children were getting together and they retained us to handle all the succession, or probate, matters. They had a question about a particular piece of property that their parents had owned.

     During the parent’s lifetime, the parents had donated a 10% share in that property to one of the children. Now that the parents have died, and all the parent’s assets are going to the children equally, the children were asking me who ends up with this piece of property? Well, as you might imagine, the child who owned the 10% will continue to own the 10% and then the parents 90% would wind up being transferred equally to the four children. If you do the math, the child with the 10% would continue with the 10% and each of four children would inherit 22.5%, which is one-fourth of the parents 90%. The child that already had 10% winds up with 32.5% of the property and the other three children each own 22.5%.

     You might figure how does that work because it is a house. How can you own a 22.5% interest in a house? Well, people can have an undivided interest, which means that each child, at least those three, own a 22.5% undivided interest in the whole house.  There is not particular tracks or rooms for each child. Each child has an undivided interest in the whole home. I

     If you have a situation like that and you want to get it all straight, feel free to reach out to us and we can have a conversation together.

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.

Double Step-Up in Basis Helps Louisiana Families Save Taxes at Death

The traditional married couple estate plan often was established in a way through their Last Wills or the Revocable Living Trust so that when the first spouse died, that spouse's share of the assets would go to an irrevocable trust, whereby the surviving spouse is often the trustee and income beneficiary of the irrevocable trust, and the deceased spouse's children are the principal beneficiaries of this irrevocable trust. The reason many estate plans were established this way was for estate tax avoidance - so that the assets of the deceased spouse (in the irrevocable trust after the first spouse dies) would not be included in the taxable estate (for federal estate tax purposes) of the surviving spouse.

But with the Estate Tax Exclusion Amount now $5.45 million - which is in theory $10.9 million for married couples. It is often irrelevant whether the assets of the first spouse to die get lumped into the surviving spouse's estate for federal estate tax purposes.

Example: Mom and Dad have a combined estate of $3 million - each owns half. Dad dies and structures his estate planning legal program in a way so that his entire $1.5 million estate gets lumped into Mom's estate, so that after Dad dies, Mom has the entire $3 million of assets in her taxable estate. But even if the $3 million in Mom's estate appreciates in value to $4 million prior to when Mom dies, there will be no estate tax when Mom dies because her estate was valued at less than $5.45 million.

The above example assumes that a portability election was not filed on Dad's estate tax return when he died. In fact there was no estate tax return filed after Dad died at all. Had they filed a Form 706 after Dad died and elected portability, Mom's estate would have been able to shield much more than $5.45 million from estate tax when she die.

So, since Mom and Dad don't have estate tax concerns, it would be great for the kids (and not so great for Uncle Sam and the IRS) if there is not only a step-up in basis of the estate when Dad dies, but also another step-up in basis of the entire estate when Mom dies - to eliminate there EVER being capital gains tax on any appreciation from when items were purchased to the date that Mom dies. If the executor, or the trustee, or the kids sell these appreciated assets shortly after Mom dies, they will get all of the proceeds of these sales completely tax-free thanks to the double step-up in basis that occurred at each parent's death.

Estate planning these days involves so much more than just writing a Will or trust or power of attorney. You can save your spouse, your kids, and your loved ones significant taxes - even if you don't have a "taxable estate."