estate planning lawyer Louisiana

Shreveport Gentleman Asks Great Question About Leaving Home For Wife

I was working with a Shreveport couple recently helping them set up their estate legal program. One of their three children lived in Shreveport. Another lived in Monroe. The youngest lived in Alexandria, Louisiana. All three of their children were married and some of those spouse exercised a lot of influence over their spouse.

The husband asked a question that we get quite often. It goes something like this, "How can I make sure that when I die, if my wife wants to sell our home, that she does not have to get the permission of our children to sell the home?

Well, the most popular ways to do this are as follows:

  1. Will Home Outright to Wife. The husband can have a Last Will and Testament and bequeath the Shreveport home outright to his wife. After he dies, the wife will have to complete the husband's Succession/Probate with any of the other heirs before she would be permitted to sell the home.
  2. Will Usufruct of Home With Authority To Dispose. This one can be tricky. The husband can write a Last Will leaving the usufruct of the Shreveport home to his wife. But that is not enough for her to freely be able to sell it after he dies. In the husband's Last Will, he will name the naked owners of the home, but he must provide (this is where it gets a little complicated) that the naked ownership interests are held in trust with the surviving wife as the trustee. It also helps if in his bequest of usufruct, he also grants her the "authority to dispose of nonconsumables." A Louisiana Succession will still be necessary after he dies to remove the property from the Husband's name.
  3. Put Home In Trust. He can put his home in a trust and designate that his surviving wife is the trustee of the trust after he dies. This may be the simplest way accomplish the husband's wishes. After the husband dies, a Louisiana Succession is not necessary to re-title property in trust. The home will simply remain in the trust after the husband dies, and the wife will immediately be able to sell the home without having to seek the permission of any of the children.

Whether you live in Shreveport, Monroe, Alexandria, Lake Charles, Lafayette, or any other Louisiana town or city. you can arrange your estate legal program so that your spouse will not have difficulty after you die if your surviving spouse wants to sell the home or other property. When a surviving spouse is forced to get the permission of all of the children (and indirectly that often means the spouses of the children chime in) it can often create irreparable family conflict which never improves.

Give our Louisiana statewide telephone number (866-491-3884) a call if this makes sense to you and you'd like your estate to be handled the easy and right way when you die. I look forward to the opportunity to have a conversation with you about your estate planning goals and how we might be able to help you accomplish them.

Paul Rabalais

 

 

When an Estate Should Give Information to the IRS - Even When You Don't Have To

I've been working with a Baton Rouge family that had an estate plan set up. The wife died. Her separate property and her one-half of the community property totaled about $2 million. She owned property in Baton Rouge, Lafayette, and Gonzales.

After the wife died, I was working with the surviving husband and the children. They assumed, rightly so, that the wife's estate was not required to file a federal estate tax return because the gross value of her estate was less than $5.45 million.

While they were technically correct, they did not realize that the failure to file a federal estate tax return on behalf of the wife's estate could cost them millions in the long run. You see, the husband had a large estate of his own. He owned property in New Orleans, Shreveport, Alexandria, and near Monroe. He also owned a significant IRA. His total estate was about $7 million and likely to grow.

I explained to the family that while the wife's estate was not required to file a federal estate tax return with the IRS, they should do so and make the "portability election." Filing a U.S. Form 706 on behalf of the wife's estate, and making the appropriate portability election would allow the surviving husband's estate to use $3 million unused estate tax exemption that they wife's estate failed to use.

Had the wife's estate not filed an estate tax return, then the husband's estate would only be able to shield $5.45 million from the 40% estate tax. But since we are filing the return and electing portability (even though it is not required to file a return since her estate was less than the $5.45 million exemption), the husband will be able to shield at least $8.45 million from estate tax when he dies. The portability election allows his estate to use his full exemption plus use the amount of her exemption that her estate did not use.

Future appreciation of an estate after the first spouse dies, or a future change in the law which reduces the estate tax exemption, could cause families to incur estate tax when they did not think they would. Careful consideration should go into whether an estate tax return should be filed with the IRS after the first spouse dies, even if it is not required.

If you are concerned about the possibility of your survivors incurring a 40% federal estate tax when you pass, shoot me an email at paul@rabalaisestateplanning.com, and perhaps we can discuss the simplest ways to preserve your estate from the government and for your family.