Lake Charles 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.

Interesting Louisiana Estate Planning Factoid About Leaving an IRA to Grandchildren

I met with a very nice couple last week that wanted to leave their investments to a trust for their grandchildren. One of the issues that we had to deal with was that the bulk of their investments were held in their IRA account.

I spent some time educating them about what their grandchildren would be facing from an income tax standpoint. The couple expressed that they did not want the grandchildren to get any of it until they were well into their adulthood.

I explained that since they were leaving an IRA to their grandchildren - even though it is going to a trust for the grandchildren, the grandchildren will be required to take distributions starting the year after the surviving spouse dies. I explained that the best we could do would be to set things up so that after the couple died, the grandchildren would be forced to follow the rules of an "Inherited IRA" and they would be required to take immediate distributions based on their life expectancy.

Nonetheless, we are still able to accomplish their objectives of providing an income to their grandchildren for many years, and then have the remainder turned over to the grandchildren when the grandchildren are nearing retirement age.

Anytime you name someone other than your spouse as the beneficiary of your IRA, be aware of the Inherited IRA rules that they will have to follow regarding their schedule for required minimum distributions. Their schedule will likely be very different than your schedule or your spouse's required minimum distribution schedule.

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

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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.

The Two Secrets to Bill Gates Completely Avoiding Estate Tax

It's no secret that Bill Gates is one of the wealthiest people on the planet. You would think that the IRS will mop up when he dies, collecting billions in estate tax to be redistributed in whatever way our government distributes it - that's another story.

While Mr. Gates has not yet contacted me to customize his estate legal documents, there is little doubt that he will take advantage of two "often little known" tax rules to minimize or completely avoid federal estate tax. While I'm sure Bill has several trusts to avoid probate and make things simple, here are the two tax rules that Bill will take advantage of:

1.    The Unlimited Marital Deduction. If Bill dies before his wife, Melinda, he will leave his estate in a way so that $0 estate tax will be paid when Bill dies. You can leave an unlimited amount of assets to your surviving spouse when you die, and no estate tax will be due (the idea is that the tax is due after the surviving spouse dies);

2.    The Estate Tax Charitable Deduction. After both Bill and Melinda die, they will leave the bulk of their estate to the Bill & Melinda Gates Foundation. Anything you leave at your death to a charity escapes the federal estate tax.

Voila! No estate tax. The richest man in the world will take advantage of two often misunderstood tax principles to avoid a tax that is specifically designed to tax the rich.

When Bill calls, I'm sure we'll have a discussion about this. Moral of this story? Make sure you take the necessary actions to protect your estate from the government. Be like Bill!

 

How to Take Your Unique Family Circumstance and Develop a Powerful Estate Plan

     I just finished up a seminar at Pujo’s Street Cafe in Lake Charles.  I gave a great talk and met a lot of nice people that I look forward to working with.  There were a couple of family situations that I thought would be worth mentioning.  I met a really nice couple, he had two children and she had one child.  They were very concerned that if the husband died first, they didn’t want his children to give their step-mother (his wife) grief for selling the home and giving them the inheritance.  Now they are all excited because they can set things up so that when one spouse dies, the surviving spouse is protected and also there will be a proper disposition when both spouses die.  They are very excited about coming into the office to discuss things further.

     I met another couple that didn’t have any children and they were not in total agreement on where they wanted things to go.  They would like to do some charitable things for the city and also leave things for some nieces and nephews. So, we will be talking to them and working through things on how they will leave their assets the way they want.  Give me a call if you want to discuss your situation with me.  Leave a legacy!

 

Life-Saving Tips About Estate Planning for Blended Families

     I want to tell you about a family from Lake Charles that I was working with.  The husband and wife have been married for a number of years, she had two children, he had one child, and his child had two children.  They were real specific about how they wanted things to go after both the husband and wife passed away. They have some property that they wanted to go to one of the husband’s grandchildren.  They also had funds that they wanted to have divided up 5 ways with one part for each of her two children, one part for his child and one part for each of his two grandchildren.  Of course, they wanted things to be protected after one of them died, so that there would be assurance that all those people would get the right things at the right time after the surviving spouse died.

     We got all of that set up and they are tickled to death that the property is going the right way, the money is going to be shared, and all of the probates will be avoided. You know, when married couples have things in their name, there is a probate or a succession when they pass away (some people call it probate and some people call it succession).  It’s that court procedure that the family goes through when the first spouse dies and then the family does it all over again when the surviving spouse dies.  If things are structured and titled often times in a revocable living trust than those probates are avoided and it makes it simpler and quicker for the family to inherit 100% of what the parents own.

     So, if you have a blended family situation like that and you want to make sure that the spouses protect themselves, they protect each other, but also protect the respective children of the different marriages, that's a really important issue to address. I see a lot of mistakes made and you want to make sure that you work with the right people and get it done right the first time.  You need to avoid lots of those family disasters.  If you would like to have a talk about it, give me a call.

 

Are You Sick and Tired of Worrying That You Will Lose Everything Because of a Nursing Home Stay?

     I want to tell you about a great family I was working with that lives close to our Lake Charles office.  The mom had come to two of my presentations.  She came to one with her friend and then after that, she told her children, “You need to come with me and hear what this guy has to say because I think I need to do something.”  So she came to a second presentation that I gave and she brought two of her children with her.  It was kind of funny because the children said, “She is never going to do anything.  She's going to procrastinate and put everything off to the last minute.”  Nonetheless, Mom took some initiative and said, “I have to do something.”

     So, Mom and one of her children came into the office and we started talking. Mom was really worried about the potential for losing everything to a nursing home and she did not like the idea of losing control.  She did like the idea of leaving a fairly significant amount of money in her name, perhaps her IRA and some of her savings accounts, so she could have a couple $100,000 to do whatever she wanted to with.  She wanted to move some of her assets that she really never planned to spend into a trust where she could control it and the kids wouldn't get it until she died.  It would be structured in a way that those trust assets could not be lost if Mom experienced a long-term care nursing home situation. Mom felt really good about it, she was ready to go, and the children felt good about it also.  They just wanted what was best for Mom.  Mom wanted to make sure that the children would be taken care of when she passed away and Mom didn’t want to put herself in a situation where she would lose it all.

     Many people structure things in a way so that they keep certain assets in their name and they protect other assets that they want to protect and pass along to their children.  So, no matter what happens, the person retains control over funds and funds are protected from a potential nursing home situation.  If that's a concern of yours, give us a call and we can have a talk.

 

Give Me 10 Minutes, I'll Give You an Estate Planning Tip About How to Avoid Nursing Home Poverty

     I was meeting with a family recently, the mom and her daughter came into the office. The family’s number one concern was making sure that mom didn't lose everything that she had saved if she had to go into a nursing home in the future. Mom's plan was to stay out of a nursing home and the children's plan was to keep her out of the nursing home.

But, you never know, and you have to prepare for the worst. So, we talked about all of the things that Mom owned and all of the things that she would lose if there was a nursing home situation. She had three different investment accounts, one was an IRA.  She had a couple of different pieces of property and because she was in her seventies, she was starting to transition control of the assets to one of her children. So, she and her child came in and the end result was that we set up an arrangement or a very particular type of trust, where that family out of Baton Rouge, is going to be able to protect everything they have. They were fortunate because they felt like they were doing it in a timely manner because they knew of the importance of taking this kind of legal action at least 5 years before entering a nursing home. So, things are being transitioned from everything being owned by Mom to everything in an arrangement that Mom and her child can oversee and it will be structured in a way that it’s protected, just in case mom goes into a nursing home in the future. Also, they like the secondary benefit which is when Mom passes away everything will just transition immediately to the three children equally, outside of any probate or court proceedings.  So, if you have a situation like this and you would like to talk to us about it, feel free to give us a call.   I'll be happy to chat with you about it.