Metairie estate planning attorney

How To Review Your Customized Estate Planning Program Prior to Making It Official

When you review your customized estate planning legal program documents, you likely will fall in a range of thought processes from, "I don't need to review anything...just show me where to sign," to "I need to know what every word of every document means, including the definition of 'Pact De Non Alienando'". 

It makes sense, for people who fall in the middle, to want to review the customized portions of their estate plan. Just like when you buy a house and get a mortgage, there is all kinds of legal mumbo jumbo that needs to be in the paperwork.

The following could be a few things that should be reviewed prior to making your estate planning documents official:

(1) Power of Attorney. Is it effective immediately or does it spring into effect upon your incapacity? Do you name one Agent or more than one? If you name more than one, must they act jointly or can they act separately? Did you name any backups?

(2) Living Will Declaration. What did you document regarding the removal of nutrition and hydration if you are in that profound vegetative state with no chance of recovery?

(3) Living Trust. Who did you names as your Successor Trustee or Co-Trustees. What is the distribution schedule after you die? Are beneficiaries to receive their distributions outright or does the trust continue for certain beneficiaries? And if it continues, under what terms? Don't get too caught up in the trustee powers and duties (unless you intentionally wanted to customize these powers and duties).

Once you have peace of mind that all of the substantive components are in order, then go ahead and make it official and have the security that comes with knowing that your legal affairs are in order.

Paul Rabalais
Louisiana Estate Planning Attorney
Phone: 866-491-3884

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How To Transfer Assets To A Trust

Was working with a gentleman from Metairie, Louisiana. He was getting to a point in his life when he wanted to get all of his estate legal affairs in order.

He was interested in arranging an estate legal program so that his home and investments would be protected from the nursing home spend-down, and he wanted to make things easy when he passed on by enabling his children and grandchildren to avoid probate.

One of the questions he asked was, "Mr. Rabalais, how do you transfer a home, an investment account, and life insurance policies to a trust?"

I said, "Well, each asset is different." I told him that we would prepare all of the necessary paperwork to transfer his piece of real estate to his trust, and that once he signed the paperwork, we would record the transfer in the real estate records of the parish.

I then told him that once his trust is signed, he can go to his brokerage firm and request that his account title be transferred from "Joe Smith," to "Joe Smith as Trustee of the Joe Smith Trust."
He said that seemed simple enough.

He also currently owns two life insurance policies that have cash value. He did not want to be required to surrender the life insurance policies when he enters a nursing home. He correctly heard that if he went into a nursing home, he would be forced to surrender his life insurance polices and spend that cash value, rendering his life insurance policies worthless and without a death benefit.

I told him that once his trust is signed, he can contact his agent and request that ownership of the policies be transferred from his name to his trust. Easy enough.

Different classes of assets get transferred to trusts in different ways. But it's easier than most people think!

Paul Rabalais

How To Leave Assets to a Minor

If you want to benefit a young person with your Estate Legal Program, don't ever allow them to inherit in their own name.

For example, let's say you have life insurance and a 401(k), and you live in Louisiana. On the beneficiary designation forms, you name your spouse as your primary beneficiary (if you are married), and you name your minor children as your contingent (or secondary) beneficiaries.

If an account owner dies and proceeds are to go a minor, then the financial institution will refuse to pay the minor. So, someone will have to petition the court to be appointed as the guardian (known in Louisiana as the "tutor") of the minor.

Then, once those court orders are issued, the financial institution will pay the funds to the tutor on behalf of the minor. The tutor must report to the court an accounting annually of how the tutor handled the minor's funds. If the tutor wants or needs to spend any of the minor's funds on behalf of the minor, the tutor must get a judge to approve the expenditure.

Then, on the minor's 18th birthday, the tutor must dump all of the funds into the lap of the 18 year old.

Folks who want to avoid all of this bureaucracy and preserve what they leave to young children or grandchildren will make sure they leave the assets in a trust for the young folks. You would name a trustee of the trust and you would dictate when and under what terms your child or grandchild may get or use the funds.

For example, divorced Dad names a trust for his minor children to receive his life insurance when he dies. Dad names his sister as the trustee. Dad says in his trust instrument that the trustee may use the trust assets for the health, education, maintenance, and support of the child, and Dad further provided that the child can get 1/3 of the trust assets when the child reaches the age of 25; one-half of what's left at 30; and the remainder at 35.

By setting all of this up correctly, Dad further ensures that any inheritance he leaves for his family will be used at the right times for the right reasons with the right people in charge.

Four Major Issues Facing LaPlace, Louisiana Family While Making Estate Planning Decisions

Been working with a couple from LaPlace, Louisiana on their estate legal program. They came into my office holding their Wills from 30 years ago. They knew they needed to start over with their estate planning and they asked for my help. Here are a few of the legal issues that we discussed:

  1. Grandchildren. The couple has 13 grandchildren and they wanted to recognize each of their grandchildren in the estate planning program. They are leaving $15,000 to each grandchild. If, when Grandma and Grandpa both pass, the grandchildren are not yet 27 years old, then the grandchild's parent will handle the money until the grandchild reaches 27 years old. The grandparents are pumped that they can acknowledge their grandchildren in this way.
  2. Charities. The couple has nine different charitable organizations they want to support with their Louisiana estate plan. They are leaving some charities more than others, and with certain charitable bequests, they are restricting the money for certain uses within the charity.
  3. Protecting Children's Inheritance From Divorce. We are arranging their estate planning legal program so that the five children will each inherit a trust making it more likely that the child will not lose his or her inheritance if the child subsequently gets divorced.
  4. Avoid Probate. The couple really liked the fact that their loved ones will avoid two probates - one which would have taken place after each of them dies. They are fired up that their will be an easy transition for their loved ones when they die - hopefully keeping all of the family relationships strong.

If you would like to have your grandchildren remember you for the final gift that you give them, or if you want to leave the world a better place by making charitable bequests, or if you want to make sure that your children and grandchildren can hold onto their inheritance, and you want to avoid government intrusion into your estate, then call us for help at 866-491-3884, and we'll simply start a chat about how to set up your Louisiana estate planning legal program the right way.

Paul Rabalais


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!


What is an Executor or Administrator of a Louisiana Succession: 7 Questions and Answers

What is an executor?

An executor is the person named in someone's Last Will and Testament whose job it is to work with the court system to have the assets of a deceased person transferred to their heirs.

Example. Pete wrote a Will leaving his entire estate to his three children. In Pete's Will, he named his oldest child, James, as the executor his Will. When Pete dies, it's James' job to hire an attorney and oversee the Succession or Probate court proceeding to make sure that Pete's estate gets managed correctly and that, ultimately, Pete's three children inherit Pete's estate at the conclusion of the Succession proceedings.

What is an administrator of an estate?

Sometimes people die without ever having written a Will, and a Succession is necessary to transfer the assets that are in their names, to their heirs. Often, the proper Louisiana court will appoint an Administrator to manage the assets of someone who died without a Will. The Administrator's job will also be to follow all of the court rules and see to it that the assets of the deceased ultimately get transferred to the heirs. When someone dies without a Will, state law dictate who inherits, so the Administrator must work with those people throughout the Succession court proceedings.

Example. Seymour died without a Will. Seymour had three children, but one of his children predeceased Seymour. Seymour's predeceased child had five children. After Seymour dies, one of the grandchildren quickly hires an attorney and petitions the court to appoint her as the Administrator of Seymour's Succession. The court appoints the 19 year old grandchild to be the Administrator of Seymour's Succession. The grandchild then will gain access to all of her grandfather's assets while she works with attorneys and the rest of the heirs to manage the estate and ultimately, have a judge order that assets be transferred to the heirs that state law provide that the estate must be transferred to.

What is the difference between an Executor and an Administrator?

Actually, the roles are similar. When someone dies with a Will, the person who wrote the Will named an executor, and the executor must work with heirs and attorneys to manage the estate as it goes through the court process. When someone dies without a Will, then obviously, an executor of a Will was not named, so the proper court must appoint an Administrator to manage the estate under similar rules that an executor would manage an estate.

What is an Independent Executor?

If the Will stated that the executor may act as an "independent executor," then the executor will be permitted to take certain actions that are involved in completing a Succession without having to get a judge's approval in advance.

Example. Jeff's Will stated, "I appoint my daughter, Margaret, as executor of my Will. My executor may act as an independent executor." If Margaret were simply an executor - and not an independent executor - she would need to formally petition a judge to get express written permission from a judge to sell Jeff's house, stock, car, or even his personal items, after Jeff died. This can be a real nuisance and a financial burden when Margaret tries to settle Jeff's estate. But since Margaret is an independent executor, a Succession is still required, but Margaret can take certain actions (like selling estate assets) without first having to petition the court to take that action.

Virtually every Will written in Louisiana these days should authorize the executor to act as an independent executor. If a Will written in Louisiana does not have these express provisions authorizing the executor to serve as an independent executor, then either:

  • the Will was written prior to 2001 when the "Independent Executor" position was created by state law; or
  • the attorney who prepared the Will is shamelessly ill-informed.

What if the Will does not authorize the executor to be independent?

There's hope. If the Louisiana Will does not authorize the executor to be an independent executor, then, generally speaking, all of the heirs can sign an Agreement authorizing the executor to serve as an independent executor. But it must be unanimous. A few other details exist that must be complied with but your Succession Attorney can help you verify whether the Succession you are working with can operate under the independent administration rules.

What is an independent administrator?

If the person who died had no Will, then the court will appoint an Administrator of the Succession. An Administrator must get every action approved by the judge. However, if all of the heirs sign an Agreement allowing the Administrator to be an Independent Administrator, then the administrator can act under the simpler "independent administrator" court proceedings. Every court-appointed Administrator should seek to be appointed as an Independent Administrator.

Does having an Independent Executor avoid probate?

No. Even if there is an independent executor or an independent administrator involved in a Succession, the Succession is still required. There must be court proceedings to get the independent executor or administrator appointed or confirmed. The assets, liabilities, and estate expenses must be documented and valued, the heirs must sign off on the plan for distribution, and accountings are necessary. Judges will still need to get involved to sign various court orders, and court orders will have to be distributed to various heirs, financial institutions and other third parties to "un-freeze" the estate assets to have them managed and ultimately distributed to the heirs.

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.