Disability Documents

Estate Planning Case Study: Married Couple with $3m Estate

While every individual and couple that engages in estate planning has a different set of circumstances - no two are the same, the following is a case study of a Louisiana couple that has accumulated some wealth, never engaged in estate planning before, has two adult children who are late 20's and early 30s, and wants to keep control of their estate, provide for the surviving spouse, preserve it for the kids, keep estate matters simple, and avoid tax and government interference.

Let's say that the couple owns a home in Louisiana and a condo on the beach in another state. The husband worked for a chemical company, built up his 401(k), and when he retired, he rolled over his 401(k) into his traditional IRA. They have a joint brokerage account, vehicles, and a boat. Total estate is $3,000,000.

Some of the issues we would discuss include:

(1) First Spouse Dies. We would discuss how they want to leave their estate to their spouse when the first spouse dies. Do they want to leave their estate in full ownership to their spouse? Do they want to leave their estate in trust for their spouse so that assets get preserved for the children after the surviving spouse dies? Or, since they live in Louisiana, do they want to leave usufruct to their spouse, giving their spouse an obligation to account to the kids at the termination of the usufruct? Each of these options has varied estate tax, income tax, and capital gains tax consequences. Gotta do this right the first time before the first spouse dies.

(2) Surviving Spouse Dies. Do they want to leave assets to their children outright or in trust? Do any children have special needs, the inability to handle a lump sum inheritance, marital issues, or some other issues that would warrant leaving the inheritance to a child in trust? Lots to discuss here.

(3) Who's In Charge When You Can't? Who should be primary and backup for Trustee, Executor, Durable Power of Attorney, Health Care Power of Attorney, etc. We'd discuss the life-support machines decision.

(4) Taxes. We discuss the distribution rules for IRAs and retirement accounts and how those rules differ for spouse and non-spouses as beneficiaries. We'd discuss the step-up and double step-up in basis which can save the heirs a fortune when the sell your assets.

(5) Avoid Probate. We'd discuss the pros and cons of the "Will Based Plan" and the "Revocable Living Trust Based Plan," which can allow the surviving spouse and the children to avoid multiple probates in multiple states - given that the couple owns real estate in two states. The RLT Program would keep brokerage accounts from being frozen in the future.

Again, since very person is different - their objectives, their family, what they own, don't take this info and think that it perfectly applies to you. You need to work with the right estate planning attorney the first time so that problems don't surface later.

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

Avoid Multiple Probates When Owning Property in Multiple States

Was helping a gentleman put his estate legal program in place. He had an old olographic last will and testament but he knew his family would need to go through probate when he died, and he knew he had none of the incapacity legal planning in place.

He owned a home here in Louisiana. And he owned a property on the beach in Florida, and he owned some land in Mississippi. We talked about how, if he owned all of that property in his name when he died, his family would first go through the Louisiana Succession to get his Louisiana property and his investments transferred to them. Then, they would go hire a new set of lawyers in Florida to go through the Florida probate to get the beach property transferred to them - the Louisiana Succession does not transfer out of state real estate. And then, his family would be off to seek out Mississippi lawyers to go through a Mississippi probate to transfer the Mississippi property to the family. Three probates. Three sets of lawyers. Three delays. Three hassles.

We then discussed how he could set up one Living Trust, and transfer all of his properties from different states into the one trust.  Then, when he dies, his Successor Trustee or Co-trustees can immediately either sell the properties or transfer them out of the trust to the appropriate family members - all outside of any probate.

Owning property in several different states can be a good reason to create your trust, transfer your properties to your trust, and avoid all those probates. Probates in other states, when you lived in Louisiana, are referred to as "ancillary probates." You can avoid them by planning ahead the right way.

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

A Last Will and Testament Ain't Asset Protection

Was working with a Louisiana couple that came in to discuss getting their estate legal affairs in order. While different people have different priorities when it comes to estate planning (taxes, nursing home expenses, probate, blended families, children who spend, disabled children, in-laws you don't like, protect grandchildren, who will be in charge, health care decisions, to name a few), this couple perceived their biggest threat the potential to lose their savings and home to nursing home expenses. One of the spouses had an illness that didn't pose an immediate threat to independent living, but there is certainly the likelihood down the road that long term care will be needed.

One of the spouses, who was not real educated, mentioned on one or more occasions something like, "While I kinda heard that when it comes to estate planning, all you need is a Will." 

I get that in coffee shops and in barber shops people give advice to their friends and colleagues. But when it comes to the intricacies and varied issues involved these days, one-size-fits-all advice just doesn't work.

Obviously, if you write a Last Will and Testament, you are going to leave all of your assets in your name. If you have assets in your name and you go into a nursing home, you must spend your assets first before Medicaid pays for the care. They let you keep your home but Medicaid will have Estate Recovery rights so that when you die, your home must be sold to reimburse Medicaid for what they spent on your care - after you spent all of your own money.

Because there is uncertainty in life, I don't know how this family's story will end. They've worked hard to accumulate what they have. It sounds like their children and grandchildren could really benefit from an inheritance. But only time will tell what will happen in the future.

Paul Rabalais
Estate Planning Attorney
paul@RabalaisEstatePlanning.com
Phone: 866-491-3884

Nine Elements of a Louisiana "Avoid Probate" Estate Legal Program

Many seniors in Louisiana express a desire that their family and loved ones avoid the court-supervised probate process when they die. Because every family is unique and each person or couple owns different types of assets, it's important that they have a foundation for their Program. The following is a description of nine different elements of the Louisiana "Avoid Probate" Estate Legal Program.

(1) Revocable Living Trust. Their Revocable Living Trust ("RLT") is the foundation of their program. This is the customized legal instrument where you state who is in charge of your trust when become incapable or when you die, who will inherit or receive distributions from your trust after you die, and it will also state the rights and obligations of all of the parties that are involved. Your RLT really replaces the traditional "Last Will and Testament." The disposition of your trust assets are controlled by your trust instrument, not your Last Will and Testament.

(2) Pour-Over Last Will and Testament. If you happen to own any assets in your name when you die, and the title of which becomes frozen when you die because they are in your name, your Pour-Over Will is necessary. The executor of the WIll, after your death, will hire an attorney and go through the court-supervised Succession procedure to have those assets in your name transferred to your trust. Note that many people who set up an "Avoid Probate" Legal Program never need to utilize the Last Will because all assets will be titled in a way making the Succession unnecessary. "Funding" your trust (or re-titling your assets) is a critical step in the process so that nothing is left in your name when you die that would require a judicial proceeding.

(3) Durable Power of Attorney. This can also be referred to as Financial Power of Attorney, General Power of Attorney, or POA. An example of when this may be needed is when you are incapacitated and there is an IRA in your name and you are unable to transact the IRA due to your incapacity. Your POA should enable your "Agent" to act on your behalf at the financial institution where the IRA is held.

(4) Health Care Power of Attorney. Also called a Medicaid Power of Attorney or Health Care Proxy. This will enable your trusted family member or friend ("Agent") to talk to doctors and access your medical records in the event you are unable to do this yourself.

(5) Living Will Declarations. This is the legal instrument where you make your wishes known regardling life support machines. People who execute Living Wills typically want to relieve their family from the burden of making an end of life decision by putting their wishes on paper, in advance.

(6) Asset Transfers. All of your funding and re-titling documents should be organized in the Asset Transfers portion of your Estate Legal Program. This is where transfers of real estate, investments, and business interests are documented.

(7) Burial and Funeral Wishes. Part of completing your Estate Legal Program may involve informal documentation of your wishes regarding certain aspects of your passing, such as your burial and funeral wishes. 

(8) Distribution of Personal Effects. Some people provide for the distribution of their non-titled personal effects (jewelry, furniture, guns, etc.) in their formal legal documents. Others take a simpler approach and make an informal list of how they want their personal effects disbursed. Check with your attorney regarding the best way to provide for the distribution of your personal effects.

(9) Trustee Education. Since the establishing of an estate legal program may be new to you, your attorney should provide both you and your Successor Trustee(s) with education and instructions as to how to best serve as a Trustee of Co-Trustee. 

While every client is different, with different needs, this should give you a pretty good example of what the typical estate planning program consists of. Now go take care of business!

Paul Rabalais
www.RabalaisEstatePlanning
Law Offices: All over South Louisiana
Phone: 866-491-3884

Seven New Louisiana Estate Matters That Walked Into Rabalais Estate Planning During The Last Two Days

I have been fortunate to have seven different families, from Metairie, Baton Rouge, Shreveport, Gonzales, and Zachary. ask me to help them with various estate matters over the last two days. Each family has a different situation and a different concern, so I thought I'd give you a general overview of their problems and how we are solving them so that if you have a similar problem you will know that you are not alone and there is someone that can help who has helped others in similar situations.

Here are the seven different situations that families have retained me in the last two days to help them:

  1. Mom's Investment Account Frozen. A gentleman came and met with me two days ago. His mother had passed away and, as a result, her investment account was frozen. Mom and the son had the same investment advisor. The investment advisor suggested that the son come see me so that we could complete the probate (also known in Louisiana as "Succession") to obtain the necessary court orders which will allow the family to have access to Mom's currently frozen investment account.
  2. Want To Protect Each Other and Teenage Child. A couple came in that had been referred by another financial advisor. The couple had a teenage child and wanted to make sure that their "legal affairs were in order" because they had done no estate legal planning in the past. We will be setting up an estate legal program for this couple to make legal matters easy or nonexistent when one spouse dies, and then making sure that guardians and trustees are named for their minor child should something happen to the parents before the child is an adult.
  3. Couple With No Children. Working with a couple that has been married for decades with no children. They have some pets that are important to them. We will be setting up an estate legal program so that when one of them dies, matters will be under the continued control of the surviving spouse, and that after they both pass away, funds will be set aside for the care of their pets, with the remainder of their estate being divided among four charitable causes that they care deeply about. Nice and fun couple - organized too!
  4. Blended Family. Working with a couple each of whom was in their second marriage. They each had one child. The children lived geographically far apart and had not spent much time together. The couple wanted to make sure that protections were in place for each other so that when one dies, there is no interruption from the children, and then when both spouses die, things are in place for the two children to inherit outside of probate and other court legal proceedings being necessary. Another really nice couple.
  5. Protect Mom's Money From Nursing Homes. Working with a family where Mom is currently residing in an assisted living facility. The family realized that all assisted living facilities in Louisiana are private-pay, but they are worried that if Mom's conditions worsens, Mom will have to move to a skilled nursing facility and be forced to spend $6,000 monthly or more on her care.  We are setting up a legal plan for the family so that Mom's money will be protected if she has to reside in a nursing home in the future. Plus, probate will be avoided when Mom dies.
  6. Execute Will. I wrote a Will for a woman many years ago. She passed away recently. I met with the family and they retained us to execute Mom's Will and complete Mom's Succession so that the home and Mom's CDs, and the vehicle, could be transferred 100% into Dad's name. We are also updating all of Dad's estate planning legal documents because he wanted to change how things would be disbursed upon his death.
  7. Plan For Two Children. Now working with a gentleman who contact me after "watching some of my videos and reading some of my blog posts online." He has a rather large estate, much of it in real estate, and he wants to make sure that it goes to his two children the right way and he wants it to be easy for his two children to inherit the property. We also had some discussions about capital gains tax and estate tax to make sure that his children would avoid as much tax as possible as this property gets transitioned to the next generation.

While many people think that estate planning is the same for everyone, you can see from reading these seven examples that every family and every individual has a unique situation that requires unique solutions. If you have an estate that you want to protect for your family, feel free to give my office a call at 866-491-3884 to start a conversation about the easiest ways to protect what you have for your loved ones.

Paul Rabalais

 

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.