Avoid Probate

The Amendable But Irrevocable Trust

Is it possible to amend, modify, or change the provisions of an irrevocable trust?

All trusts can be classified as either revocable or irrevocable. The #1 reason people create revocable trusts is to hold title to assets in a way that you keep total control but eliminate the attorney and court-involved probate process when you pass away. Quite a bit is written about using revocable living trusts to avoid probate, so that is not the topic of this post.

Irrevocable trusts, however, are created for many different reasons: avoid taxes, lawsuit protection, and nursing home protection, just to name a few.

The word "irrevocable" scares many consumers, but it may not need to. Someone can establish an "irrevocable" trust, yet reserve the right to modify certain terms of the trust after the trust is created.

Here's an example: Parent sets up a trust. Parent is referred to as the "Settlor." In the trust instrument, it states that "X" is the trustee of the trust. It further states that "Y" and "Z" are the principal beneficiaries of the trust. The trust states that the trustee may distribute principal to the principal beneficiaries during the lifetime of the Settlor. The trust instrument further provides that when the Settlor dies, the trustee shall terminate the trust and distribute the principal to the principal beneficiaries.

Then, the trust instrument further provides that the Settlor can replace the trustee, and the trust instrument also provides that the trustee can replace the principal beneficiaries. Now you have an irrevocable trust where the Settlor has expressly reserved the right to modify certain provisions of the trust, yet there are some provisions of the trust that the Settlor cannot, under any circumstances, modify.

Fueling this concern over the inflexibility of irrevocable trusts is the fact that back in the 1990's, most irrevocable trusts were set up to avoid the 55% estate tax on assets that exceeded $600,000 in value at death. Settlors of those irrevocable trusts almost never reserved the right to modify those trust provisions for fear that the "right to modify" would cause the trust assets to revert back to the estate of the Settlor.

But since we now have an $11.4 million estate tax exemption, and portability between spouses, married couples can exempt $22.8 million in assets from the estate tax. Moving assets out of the estate to avoid estate tax just isn't a concern any more.

Now, irrevocable trusts are established for a variety of reasons: yes, tax avoidance is one. But so is lawsuit protection, nursing home protection, and many other reasons. But you need to be very careful when you are attempting to take advantage of trusts and other legal strategies to gain these protections because the slightest alterations of wording can have adverse tax, creditor protection, and Medicaid eligibility consequences.

So, in summary, an irrevocable trust does not need to be as scary as it first sounds, due to the fact that you can reserve the right to modify certain provisions, but you will want to tread carefully.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais

Louisiana Estate Planning Attorney

www.RabalaisEstatePlanning.com

Phone: (225) 329-2450

If You Have a Revocable Living Trust, Then Why Do You Need a Last Will and Testament?

If you have a Revocable Living Trust, do you need a Last Will and Testament?

When someone dies with assets in their name, like real estate, or interests in a business, or investments, those assets will be frozen when they die, even if they have a Will disposing of them, and their survivors are stuck hiring lawyers and all will go through a court process commonly referred to as probate, or in Louisiana, a Succession.

Many people, in an effort to simplify their estate settlement and avoid the court process, often create a revocable living trust, and they transfer title of their assets to their trust while they are alive, so that when they pass away, the court process is avoided because assets in a trust bypass the whole “settle your estate through the court system” process. You simply designate a Successor Trustee of your trust who can immediately sell or disburse assets from your trust to your trust beneficiaries, all outside of government supervision.

Your trust replaces the Will because the trust instrument governs who gets what as it relates to trust assets.

But even if you establish your revocable living trust, you still need to have a Will just in case assets are in your name when you die. Maybe you left something out of trust. Perhaps you acquired an asset or account in your name after you established your trust, and you forgot to title it in the name of your trust.

Someone who utilizes a revocable living trust often has a last will that is often referred to as their “pour-over” Will because it pours over the assets in your name at your death to your trust. It is there only as a "catch-all" to cover assets that should have been, but were not for some reason, put in your trust before you died.

Now, your pour-over Will may never be used because everything you have either has a beneficiary designation, is titled in the name of your trust when you die, or survivors will somehow have access to the asset upon your death.

So, in summary, if you have a revocable living trust that is designed to avoid probate and provide for the distribution of your estate when you die, you’ll also have a Will, but your Will may never need to be used because the Will is there as a "catch-all" to allow for the transfer of assets that are in your name when you die and require a probate to access.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais

Louisiana Estate Planning Attorney

www.RabalaisEstatePlanning.com

Phone: (225) 329-2450

Five Reasons Louisiana Residents Take Advantage of the Legal Services of an Estate Planning Attorney

The following are five reasons that Louisiana residents (and anyone for that matter) take advantage of the services of an estate planning lawyer:

1. Protect your Children's Inheritance from Their Divorces. Yes, the moment your children inherit from you, the inheritance is separate property. But if they commingle the inheritance (accidentally or intentionally), the inheritance becomes community property. Then, when your child later divorces, your child loses half the inheritance. You can proactively take legal steps to ensure that your child's inheritance will always be your child's inheritance.

2. Avoid Probate. When you leave assets to your survivors through your Last Will and Testament, your survivors will be required to hire attorneys and go through what many perceive to be an expensive, time-consuming, and inefficient court-supervised probate/Succession procedure to gain access to your estate assets. You can proactively arrange an estate legal program to enable your loved ones to receive your estate without having to be burdened by these court procedures.

3. Protect Assets from Long Term Care Costs. If you must enter a nursing home with assets in your name, you will be forced to deplete those assets on your long term care expenses until you are left with less than $2,000 in your name. You can take actions ahead of time to protect them but stay in control of them. This is a huge problem for the middle class that most don't address until it's too late.

4. Put the Right People in Charge. Absent your direction, a judge will select someone to handle your finances, make your medical decisions, and oversee the distribution of your estate. You will want to control who makes the decisions when you are no longer able to make them for yourself.

5. Avoid Taxes. Most estates avoid the 40% estate tax, but virtually every family faces income and capital gains tax consequences when family assets are transitioned from one generation to the next. You can be proactive and minimize these tax burdens for your family.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais

Louisiana Estate Planning Attorney

www.RabalaisEstatePlanning.com

Phone: (225) 329-2450

How to Keep Your Farm or "Family Property" in the Family for Future Generations

Many parents who have both children and grandchildren want to keep some of the property that they own so that their kids and grandkids can enjoy the property for many years to come. Perhaps the parents have seen how much their kids and grandkids enjoy the property.

However, when parents pass away and their property is left to children, property rules apply that may conflict with what the parents are trying to accomplish. Customizing the right legal program can ensure that one rogue descendant, or perhaps even the spouse of one child or grandchild, will not be able to mess up or destroy the family property that you'd want them all to enjoy.

First, let's look at some of the Louisiana laws that apply when multiple owners own real estate in Louisiana. Louisiana has a rule that states that no owner can be compelled to own property with another. When children inherit their parents' land, the children are considered "owners in indivision."

Anyone who owns an undivided interest in real estate in Louisiana, regardless of how big or small their ownership interest, can sell their ownership interest, or can force a "partition" of the property. The two kinds of partition are "partition in kind" and "partition by licitation."

When a piece of property is susceptible to being divided into lots, an owner can force a partition in kind whereby each owner would wind up with their own tract. Or, particularly if property is not susceptible to division into lots, an owner in indivision can force a sale of the property and the proceeds would be distributed to the co-owners in proportion to their ownership interest in the property.

Due to these rights that co-owners have, family property often gets sold eliminating future descedants from being able to enjoy the property.

Some owners of property think that by forming a limited liability company (LLC), the owners can keep the property in the family for generations. While owners of property should consider forming an LLC, and transferring their property to it, this is more of a "protection from lawsuits" vehicle than a "keep it in the family for generations" vehicle. Placing the property in an LLC and leaving membership interests in the LLC to your descendants won't prevent an owner/member from (1) selling or disposing of their LLC interest; (2) a member's creditor seizing their interest; or (3) giving or bequeathing their LLC membership interest to a non-family member.

These conversations about keeping property in the family for generations often turn toward creating a family trust. Parents would name a trustee or co-trustees (perhaps the "responsible" descendant") who will manage the trust assets for the benefit of all of the children and grandchildren. Backup trustees would need to be provided for since this trust may be in existence for many decades. Thanks to trust law, the descendants (trust beneficiaries) would not be permitted to sell, alienate, or mortgage, their interest in the trust, and the creditors of a beneficiary could not seize their interest in the trust.

Other issues to consider before pulling the trigger on something like this include the gift and estate tax, future Medicaid qualification, leaving funds to the trust to provide for ongoing management and expenses, and perhaps having the parents transfer the property (or their LLC which owns the property) to a revocable trust now (which trust would become irrevocable when the parents die) in order to avoid having the property go through a court-supervised probate proceeding when they pass away.

Every set of family circumstances is unique. You likely only have one "shot" to get it right. And the decisions that you make (or don't make) will affect your descendants for many, many years to come.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais

Louisiana Estate Planning Attorney

www.RabalaisEstatePlanning.com

Phone: (225) 329-2450

Pros and Cons of Leaving Everything to Your Spouse

When married couples engage in estate planning, one of the questions they often are required to answer is, "If I die before my spouse, do I want to leave complete ownership and control of my estate to my spouse?" Or, "Do I want to leave my estate to my spouse in a way that my children (or other heirs) are protected?"

Leaving all of your assets to your spouse is pretty easy to understand - when you die, your spouse owns everything. Maybe you are thinking that it is ok to leave everything to your spouse because you are confident that when your spouse dies, your spouse will leave it all to your kids. Or maybe you like the thought of leaving your estate to your spouse because your descendants circumstances may change after you die and you want your spouse to be able to leave the estate to your descendants the right way.

However, if you leave your estate to your spouse, your spouse "could" leave your estate to people other than your children, like your spouse's next spouse!

Some people want to leave their estate to their spouse in a way that their children or heirs are protected. The two common ways to do this are (1) in trust; and (2) via the Louisiana usufruct.

Leaving your estate to your spouse may be the best overall tax outcome, but it used to be the worst. In the old days, it did not make sense to leave your estate to your spouse because when you lumped your estate on top of your spouse's estate, it caused the spouse's estate to be subject to a 50% or more federal estate tax upon the death of the surviving spouse. But now, with an $11.4 million estate tax inclusion, and with portability (making it easier for married couples to exempt $22.8 million from the estate tax), rarely are couples penalized for leaving everything to each other.

The tax benefit that often results from leaving your estate to your spouse is that your heirs will benefit from a "double step up" in basis, for capital gains tax purposes. In community property states (like Louisiana) all community property gets a new stepped-up basis when the first spouse dies. And when you leave all of your assets to your spouse, all of the assets will get another step-up in basis when your spouse later dies. This can save considerable capital gains tax when assets are later sold, particularly if there is appreciation that occurs from the date of death of the first spouse to the date of death of the surviving spouse.

In addition, if you live in Louisiana, you are prohibited from leaving your entire estate to your spouse if you have forced heirs. Forced heirs are children of your that, at the time of your death, are 23 years of age or younger, or, are of any age but incapacitated.

Leaving assets to the surviving spouse is common for traditional families - one marriage and all children are from the one marriage. And if you really want to make it as simple as possible on your spouse when you pass away, consider establishing a revocable living trust and titling the appropriate assets in your trust. Assets in your living trust don't go through the court-supervised probate/Succession procedure, so having your assets in your living trust will prevent your spouse from having to hire lawyers and go through the courts just to get ownership of your assets after you die.

Other factors that are typically discussed when married couples engage in estate planning legal services include: who makes your decisions when you are incapable; protecting assets from long term care costs; and how will assets be managed and disbursed after both spouses pass away. These are all important components of any estate planning legal program.

Note also that if you have no legal plans in place, Louisiana laws won't do your spouse any favors. These laws will favor your descendants much more than your spouse.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais

Louisiana Estate Planning Attorney

www.RabalaisEstatePlanning.com

Phone: (225) 329-2450

Designating a Trust for a Non-Spouse as Beneficiary of an IRA (Individual Retirement Account)

This article address the Required Minimum Distribution (“RMD”) rules when a trust for the benefit of a non-spouse is named as the beneficiary of an Individual Retirement Account (“IRA”).

To address this topic, we’ll need to first address the RMD rules for a non-spouse beneficiary, and then look at how those rules are impacted by naming a trust for a non-spouse as a beneficiary of an IRA.

Let’s take an example. Let’s say Dad owns a $500,000 IRA. He wants to name his son (“Son”) as the beneficiary, but Dad is worried that Son will blow the money after Dad dies. Nonetheless, Dad dies and Dad’s IRA gets transferred to Son’s Inherited IRA.

Some people mistakenly believe that Son can wait until Son is 70.5 years old before distributions must begin. Others mistakenly believe that Son will be penalized if he takes distributions prior to Son turning 59.5. However, the rule is that Son may take distributions based on Son’s remaining life expectancy. So, if Son is 30 when Dad dies, the IRS tables indicate that Son has a life expectancy to age 83 (53 year remaining life expectancy). Son must take a minimum of 1/53 (about 1.9%) of the IRA starting in the year after Dad dies.

However, Dad’s concern is that, due to Son’s immaturity, or perhaps due to Son’s wife’s influence over Son, Son will take a distribution of the entire amount, and spend it, perhaps without even being able to pay the tax on that significant amount – this would create a tremendous problem for Son.

So Dad looks into the possibility of naming a “Look-Through” or “See-Through” trust for Son as the beneficiary of Dad’s IRA. The trust would require that, after Dad’s death, the trustee would see to it that Son would receive his RMD, and the trustee could make additional taxable distributions to Son if the trustee determined that Son needed them for his health, education, maintenance, or support.

If Dad properly sets up the trust, Dad knows that Son will be an income until age 83, and that Son’s basic living needs will be met. Dad will also know that Son will not be able to blow the entire IRA, so Dad will protect Son from himself (and perhaps Son’s wife).

There are four requirement of a trust that must be met to get the “Look-Through” or “See-Through” treatment. But when these requirements are met, you can look through the trust and use the life expectancy of the individual trust beneficiary for RMD purposes. An ineligible trust will require taxable distributions at a much faster rate.

Note that for purposes of this article, we did not address the following circumstances: when a surviving spouse is involved, when there are multiple beneficiaries and the concept of separate accounts, and we did not address naming a charity, an estate, or an ineligible trust as a beneficiary of an IRA.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais

Louisiana Estate Planning Attorney

www.RabalaisEstatePlanning.com

Phone: (225) 329-2450

Should You Have a Will or Living Trust?

When people put their legal affairs in order, they have a decision to make. One of the questions they have to answer is, “ Should I use a Last Will and Testament (“Will”) as the legal instrument to pass along my estate to my heirs, or should I use a Revocable Living Trust (“Living Trust”)?

Let’s start with the basics. If you use a Will to pass your estate to your survivors, you’ll like have provisions leaving your estate, or parts of it, to your spouse, your children or others, or perhaps even leaving assets to a trust the terms of which are part of your Will (called a “testamentary trust”) that will be established with assets after your death.

With a “Will Plan,” you leave title to all your assets in your name: your home, your other real estate, your investments, and so forth. When you die, your assets are frozen (even though you had a Will), and your survivors must retain an attorney or attorneys to go through the court-supervised process of transferring assets to the people who are named in your Will.

If you have a Living Trust, your Living Trust will be prepared, for example, so that after you pass away, your trust provides that your estate, or parts of it, are to be transferred from your trust to your spouse, your children or others, or assets may remain in trust for the benefit of minors, irresponsible heirs, or heirs who are receiving government benefits so that they should not inherit assets in their name. When you establish your Living Trust, you will likely work with your estate attorney to transfer title of assets to your trust, such as your home, other real estate, investments, and so forth.

When you die, trust assets are not frozen. Attorneys and the court system do not have to get involved in the trust settlement because the court system only governs assets that are titled in your name when you die. In your Living Trust, you designated a Successor Trustee or Co-Trustees who will have immediate authority to transfer assets from your trust. Many people perceive it that their Living Trust replaces the Will.

So, which program should you have? It’s ultimately your decision, and some people make decisions like this based on their prior life experiences. Will clients often tell us something like, “When my mother died 12 years ago, I don’t remember her probate being too difficult. We had to do the probate to get the house in our names, but we were not in a big hurry.”

We hear from some Will clients the something like the following, “I don’t have any children so if my distant relatives and favorite charities named in my Will have to go through probate, so be it…I’ll be dead.”

Trust clients often tell us something like, “When my father died, his probate took years and it was difficult and expensive, and I don’t want my kids to go through that, so let’s set up a Living Trust.”

We’ll also hear, “My spouse and I want to make things as easy as we can on the surviving spouse when one of us passes, so let’s establish a Trust.”

Other Living Trust clients say, “If my spouse and I can establish a Living Trust and avoid the future delays and expenses of two probates (one when each of us dies), then a Living Trust seems like a no-brainer.”

And other Living Trust clients tell us, “We pre-arranged our funerals to make things as easy on our survivors and we’d like to do the same kind of pre-planning and pre-arrangements for our estate.”

Now, if you go the Living Trust route, make sure you watch my popular YouTube video titled, “If You Have a Revocable Living Trust, Watch This Now,” which address the important topic of trust funding.

Bottom line or Will vs. Living Trust? Take action. Talk to an estate attorney. Hopefully the attorney’s own biases don’t preclude you from making an informed decision. But get started. Failing to act puts the government in complete control of your estate, and who wants that?

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais

Louisiana Estate Planning Attorney

www.RabalaisEstatePlanning.com

Phone: (225) 329-2450

Two Reasons to Transfer Out of State Real Estate to a Limited Liability Company

Some people own real estate in their own state, and they also own real estate in another state. There is often a right way and a wrong way to structure ownership of these properties.

The following are two reasons people transfer their out-of-state real estate to a limited liability company (LLC).

The most often cited reason to transfer real estate to an LLC is to protect yourself from potential lawsuits or other liabilities. Here's the deal: if you own real estate in your name in another state, and someone gets injured on the property, the injured party will sue the owner of the property (you). And if they are successful in their lawsuit against you, you will have to satisfy a judgment from your personal assets. So, your personal assets are at risk if you own real estate in your name.

However, if you transfer your property to your LLC, and someone gets injured, that injured party will sue the owner of the property (the LLC), and your personal assets are protected.

A second reason people transfer their out of state property to an LLC is to avoid the ancillary probate. When you die with assets in your name, your survivors will be required to go through a court proceeding ("Probate" or "Succession" - same thing really) and have the government's court system oversee the administration and disbursement of your things - some people consider this to be tedious, time-consuming, and expensive. And if you own real estate in your name in another state (outside of your home state), your survivors must hire a law firm in that other state to transfer your out of state property to your heirs. The "home-state" probate does not transfer out of state real estate that is titled in your name when you die. So, some people transfer their out of state real estate to an LLC to (1) gain limited liability; and (2) avoid the ancillary probate. The ownership of your LLC that owns out-of-state real estate can be transferred through your home-state probate.

Another alternate is to transfer your out-of-state real estate to an LLC (get limited liability and avoid ancillary probate), and then transfer your LLC to a revocable living trust so that an in-state probate is not even necessary to transfer your ownership interest in the LLC when you pass away. Don't try this at home! This is not a do-it-yourself task. If you live in Louisiana and want to get these benefits, contact my office.

There are many things to consider when taking these actions. Prior to transferring your property to an LLC, check with your lender (if you have a mortgage on the property), and check with your liability insurer (to make sure your insurance won't have to shift to a commercial policy). Make sure you get good legal help to cover all your bases and get the peace of mind you deserve.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais

Louisiana Estate Planning Attorney

www.RabalaisEstatePlanning.com

Phone: (225) 329-2450

How To Amend or Modify a Revocable Living Trust

It is common for people, as part of the estate planning process, to establish a revocable living trust to provide for the disposition of trust assets outside of probate. Occasionally, people who previously established a revocable living trust want to amend or modify or revoke their trust.

Reasons why people would amend their revocable living trust include someone wanting to change the beneficiaries of their trust; someone wanting to amend how a beneficiary receives his or her portion or share; or perhaps changing the name of the Successor Trustee who is in charge of administering the trust after the death of the Settlor (the person who established the trust).

So, how do you amend or revoke your trust? Well, you must first look to the state law of the state that governs the trust instrument. The following is an overview of the Louisiana law applicable to modifying or revoking a trust.

What you should never do is pull out a pen and pencil and start marking on your trust. None of this will be valid. Most trust amendments or revocations in Louisiana are done by authentic act. An authentic act, generally, is a writing executed before a notary public and two witnesses, and signed by the person amending their trust, the witnesses, and the notary. Most trust amendments are done this way.

The Louisiana Trust Code also provides for modifying a trust by act under private signature, and also by testament. Even though Louisiana law provides for three different ways to modify a trust, most amendments are done through an authentic act.

Bottom line - don't try to amend or revoke a will or trust without getting some legal help from an estate attorney. Different rules apply to wills and trusts, and you must work with an attorney who understands all of this and helps you get it right the first time - there is too much at stake.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais

Louisiana Estate Planning Attorney

www.RabalaisEstatePlanning.com

Phone: (225) 329-2450

Arranging a Louisiana Estate for Asset Protection and Easy Inheritance

This post describes how Irrevocable Grantor Trusts are used to protect assets while parents are alive, and then to provide for an easy transition or inheritance to the children or other heirs.

As folks age, they often worry that they will run out of money before they die due to their longevity and all of the threats that seniors face these days.

Many seniors create trusts to help protect what they've worked for. They often keep some assets in their name, and they transfer other assets to a trust that they create.
 
Because their assets are titled in the right kind of trust, with the right kind of asset protection provisions, they are less likely to lose these assets from some kind of life-changing event.

These asset trusts are often irrevocable, but sometimes certain aspects of the trust are amendable. These trusts typically allow for trust assets to be sold and re-invested. These trusts usually have some provision for distributions of principal. Many of these trusts and estates are arranged so that probate is avoided at the death of the Settlors/Grantors/Trustors.

Check with the right estate planning attorney in your jurisdiction to make sure you establish an estate planning legal program that is right for you and your family. Don't try to do this yourself. Too much is at stake.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais
Louisiana Estate Planning Attorney
www.RabalaisEstatePlanning.com
Phone: (225) 329-2450

The Big Problem in America Regarding Revocable Living Trusts, and What to Do About It! Share This Video Today.

If You Have a Revocable Living Trust, Watch This Now! Congratulations. You took some major steps toward making settling your estate easier. The Probate can be difficult, it takes longer than people want. It's expensive, a hassle, it's a court proceeding.

There's a big estate planning problem out there. The titling process is getting neglected causing families to go through probate.

However, when the revocable living trust is fully funded, the estate settlement is a beautiful thing. But your living trust is only as effective as the assets that you title into it.

Many fully funded trusts are settled without attorney involvement. The surviving spouse maintains access to assets. The surviving spouse can sell the home and buy another, and can access all financial accounts.

Even when probate is avoided, survivors are having to deal with funeral homes, death certificates, the Social Security office, the VA, financial institutions that hold IRAs,  bills that keep coming in, and insurance companies if the deceased had life insurance or annuities. Then, when you add on top of that the requirement of a probate when it was unexpected, then that sometimes is that straw that broke the camel’s back – survivor’s are fragile – going through grief and stress of the loss of a loved one.

There are a few reasons that trusts don’t get funded. People forget they owned that piece of property. People thought they had beneficiaries on all accounts. People didn’t think about buying the new property in the name of their trust. People didn’t think about opening that new account in the name of their trust. People may not have known that they needed to transfer their LLC to their trust. They kept a minimal amount of shares out of the trust. They thought their attorney was going to handle getting everything in the trust, but an attorney can only transfer certain assets into your trust.

Do these three things:

(1) Share this information. Surely you know other friends and colleagues that can benefit from this information. If you are an estate planning attorney, share with your clients along with a note to contact you if they need legal help. If you are a financial advisor, share with your clients and prospective clients along with a note to contact you if they need help titling and beneficiary designations.

(2) Fund your trust. While the process isn’t difficult, it’s easy to get sidetracked or procrastinate. Just make funding your trust a priority and keep going until you’re finished. Take a look at everything you have this is titled. Determine whether assets are probate or nonprobate. Probate assets, in general, go in your trust. There are many excellent attorneys around the country willing to help. If you need a lawyer’s help, get it. While you are at it, update your beneficiary designations.

(3) Write a Comment. if this video can help one person avoid probate and make things easier for their survivors, it’s worth it. Comment with your positive comments and experiences on youtube or linkedin or wherever else you might see or hear this, so that others can and will benefit from your experience.

Now go leave a legacy! Your family will thank you for it.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais
Louisiana Estate Planning Attorney
www.RabalaisEstatePlanning.com
Phone: (225) 329-2450

Transfer on Death (TOD) and Joint Tenants with Rights of Survivorship (JTWROS) Designations Not Recognized in Louisiana

Many Louisiana residents get confused because they are under the assumption that they can name beneficiaries on their non-retirement accounts at their investment company - but they can't.

Example. Mom and Dad have three accounts at the investment company. Dad owns a traditional IRA. Mom owns a traditional IRA. And they have a joint investment account. They come into the law office to discuss how to leave assets to each other and their family outside of probate and they are convinced that they have named beneficiaries on all of their investment accounts. They later discover that they were only permitted to designate beneficiaries on their IRAs, but not their joint investment account. While other states permit probate avoidance designations on investment accounts, like Transfer on Death (TOD) and Joint Tenants With Rights of Survivorship (JTWROS), these designations are not recognized for Louisiana residents and investment companies do not permit their Louisiana customers to make these designations.

The following are a few examples of large investment companies that realize that the State of Louisiana does not recognize these designations, and thus, state so in their paperwork:

(1) Edward Jones Transfer on Death Agreement. "This Agreement shall not be valid and shall be of no effect in the State of Louisiana." https://www.edwardjones.com/images/transfer-on-death-agreement.pdf

(2) Merrill Lynch Joint Account Agreement. "JTWROS: Joint Tenancy with Right of Survivorship (not available for Louisiana residents)." https://olui2.fs.ml.com/Publish/Content/application/pdf/GWMOL/Joint_Account_Tenancy_Agreement_-_1277.pdf

(3) Merrill Lynch TOD Agreement. Transfer On Death Accounts are available to Account Owners (defined below) who reside in all states within the United States (other than Louisiana)." https://olui2.fs.ml.com/publish/content/application/pdf/GWMOL/TransferOnDeathAgreement.pdf

(4) T Rowe Price TOD Agreement. "TOD is not recognized by the state of Louisiana, so we do not offer TOD for Louisiana residents." https://individual.troweprice.com/Retail/Shared/PDFs/todreg.pdf?src=AccountFinder

(5) Charles Schwab Designated Beneficiary Plan Agreement. "The Plan is not available in Louisiana." https://www.schwab.com/public/file/P-831898/APP10780-16-ADA_-_5_19_2017.pdf

A related issue affects Louisiana bank account holders who make a POD (Payable on Death) Designation. Louisiana banking laws simply release banks from liability to heirs or the estate for paying a beneficiary in accordance with the POD Designation. But if the account owner has different heirs pursuant to a Will or Trust, the POD beneficiary may be accountable to those funds they received.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais
Louisiana Estate Planning Attorney
www.RabalaisEstatePlanning.com
Phone: (225) 329-2450

Three Aspects To Maintaining Your Living Trust Based Estate Plan

Once you sign your Revocable Living Trust and other ancillary estate planning documents, you should feel peace of mind with knowing that  you've taken steps to protect yourself and your family. However, you cannot set it and forget it. There's some work left to do.

The following are three aspects to maintaining your trust-based estate legal program. 

(1) Trust Funding. As far as avoiding probate is concerned, your trust is only fully effective at helping you avoid probate to the extent that your probate assets are titled in the name of your trust when you die. When you sign your trust, or immediately thereafter, is the best time to title assets in your trust name. You will sign documents transferring your real estate to your trust, and you will work with your financial institutions to make sure that your investments are titled correctly.

(2) Life Changes. You should review your estate program when you have a major change to your life circumstances, such as, divorce, have children, remarriage, enter a blended family, death of a beneficiary, agent, or trustee, you move to another state permanently, you inherit a significant amount, or you change your mind regarding who will inherit or who will be in charge of your estate.

(3) Law changes. Not every law change requires that you revisit your estate planning program. However, recent changes to our federal gift and estate tax system has caused people to structure their estate planning legal program with less emphasis on estate tax avoidance, and more emphasis on capital gains tax avoidance, income tax avoidance, and long term care Medicaid eligibility.

Again, congratulations are in order for taking steps to put an estate legal program in place. But make sure that you complete it in both the short term and the long term by funding your trust the right way, and revisiting your plan in the event of significant life or law changes.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais
Louisiana Estate Planning Attorney
www.RabalaisEstatePlanning.com
Phone: (225) 329-2450

What Is a "Pour-Over" Will?

Generally, people who establish an estate planning legal program either establish a Will-based estate plan or a Trust-based estate plan. When someone establishes a Trust-based plan, often one of the goals is to have assets titled in the name of the trust at death so that those assets can be distributed immediately to the trust beneficiaries without going through the Louisiana Succession, and its inherent delays, expenses, and aggravations.

People often ask, "If I have a trust, do I need a Will." Well, a pour over will is used in conjunction with a trust based plan. The purpose of the pour over will is to serve as a safety net. If, either intentionally or unintentionally, assets at death are titled in the name of the person who established the trust, then the probate proceeding will be necessary to pour-over those individually owned assets into the trust. 

Often, the ideal scenario is to have all assets titled correctly so that, at death, there are no "probate assets" in the individual's name, and the pour-over Will does not even need to be used. But the pour-over will is prepared and signed in virtually every instance where there is a trust-based plan.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais
Louisiana Estate Planning Attorney
www.RabalaisEstatePlanning.com
Phone: (225) 329-2450

How To Transfer Vehicle After Louisiana Owner Dies

Many people pass away in Louisiana each year with vehicles titled in their name. Often, surviving heirs want to transfer the title out of the name of the deceased so that the vehicle can be sold, traded in, or driven and insured.

One way to make sure that a vehicle gets transferred to the rightful owner is for all of the heirs to go through the full-blown Louisiana judicial Succession proceeding. When this takes place, the family hires one or more attorneys, Succession pleadings are prepared, detailed lists of assets and debts are submitted to the court, and a judge signs various court orders ordering that assets, including vehicles, be transferred to the right people. Most people feel like this is a hassle - because it is.

However, the Louisiana Department of Public Safety & Corrections, Office of Motor Vehicles, has an Affidavit procedure that surviving spouses and heirs can take advantage of to transfer a vehicle after a vehicle owner dies.

The Affidavit of Heirship requires that a copy of the Death Certificate or a Published Obituary be attached to the Affidavit. It also must be indicated whether the vehicle owner died with no Will (intestate) or with a Last Will (testate).  If the person died testate, a copy of the Will must be attached (or a notarized summary statement of Will contents). You must also attach the title or check off that the title cannot be located.

For example, let's say Dad had a Will leaving any vehicles he owned to Mom. Mom must sign the affidavit and have her signature notarized. In addition, Dad's children must all sign the Affidavit and have their signatures notarized. The rationale is that since Dad's Will is not going through the courts to be probated, then the Louisiana Office of Motor Vehicles want Dad's children to "sign off" on the transfer of title to Mom. If Mom later wants to donate the vehicle to someone else, she can then execute an Act of Donation to the ultimate recipient.

Even though in most cases, the full blown Succession judicial proceeding will be necessary when a vehicle owner dies because they will also own a home, other real estate, investments, or other Succession assets in their name, this procedure can simplify things for families when they are quickly trying to transfer a vehicle after the owner dies.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.