avoid Succession in Louisiana

Louisiana Family Establishes Estate Legal Program for Two Children and Grandchildren

I was working with a Baton Rouge family recently who wanted to set up an estate legal program the right way for their family. Their goals were to make things simple for the surviving spouse; designate both of their children to work together, while staying out of the Louisiana probate, after both spouses died; and making sure that the money they left their grandchildren would be used for the right reasons.

So, we are establishing their revocable living trust so that the surviving spouse is the sole trustee after one spouse dies and is in complete control of everything (no Louisiana Succession or Probate); their two children will be the Successor Co-Trustees after both parents die, and since there will be no probate, the children could sell the home immediately after the parents pass; and third, instead of dumping $100,000 or so into each grandchild's lap when the grandparents die (encouraging even more bad habits from the grandchildren), the grandchildren's parents (who are very responsible) will serve as the trustee of the trust for the grandchildren. The parents will have total discretion regarding what the funds are used for, and the grandchildren's parents will transfer the inherited funds to the grandchildren when the grandchildren show the maturity and financial responsibility to be able to handle this kind of money the right way.

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.

Baton Rouge Couple Wants To Keep All Estate Affairs Private

I was working with a couple today. They own quite a bit of real estate. They own property in Baton Rouge, Zachary, St. Francisville, New Roads, Prairieville, and St. Amant. One of the most important things they want to accomplish is to provide for an ultimate distribution of their property to certain family members, without the other family members having any knowledge of it.

They ruled out making all of these bequests in their Wills, because they know that when they die, it is required that their Wills be filed into the public record for all to see.

They were also concerned about putting their Louisiana real estate in their revocable living trust, because when real estate is in a trust, a summary extract must be recorded in the parish. This extract must show who the parties in the trust are.

But we worked out a solution where he could keep all of his estate planning legal affairs private. He put his different pieces of property in LLCs, and he provided for the distribution of the LLCs in his revocable living trust. Therefore, nothing needs to be filed in the public records since the trust owns no property. The trust owns membership interests in LLCs. So, the people who they intentionally left out of the trust will not be able to determine who the properties or LLCs were left to.

If you live in Louisiana and you want to engage an estate planning attorney to keep all of your estate legal affairs private, out of the public court system, and out of the court-supervised probate proceedings, then perhaps you should email me at paul@rabalaisestateplanning.com to determine whether we should talk about how to get it right.

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.