Specific Bequests

Prohibited Substitution in Louisiana Last Will is Null

The Prohibited Substitution estate planning rules in Louisiana are a trap for the unwary. When someone writes a Louisiana last will and testament, or a trust, in a way that it contains a prohibited substitution, then the bequest is null.

So, what is a prohibited substitution? Well, here's an example of a provision in a Will that would be interpreted as a prohibited substitution, "I leave ownership of X to Person 1. I require that Person 1 preserve X and, when Person 1 dies, I require that Person 1 leave ownership of X to Person 2."

You cannot donate or leave something in full ownership to one person with a charge to preserve it and deliver it to a second person at the death of the first person. You would be depriving the first person from the power of testation.

A prohibited substitution might be something that I'd see in an olographic testament. Some people attempt to write their own wills in their own handwriting, but they mess up the provisions of the Will. People in Louisiana sometimes argue that they can write their own valid will, but they often fail to realize that the wording that they put in their will can make their loved one's lives miserable.

A prohibited substitution is null - it's as if it was never written. The bequest to the first person is not even valid.

There are a couple of alternative you can use if you want to leave an asset for the benefit of someone, and then when that someone dies, have the asset pass along to another someone. One way to do this is to use a trust - check with your estate planning attorney to help you do this the right way. Another option that might be feasible is to leave usufruct of an asset to someone, and name the naked owner to receive the asset at the termination of the usufruct. Again, check with your estate planning attorney to make sure that you understand the pros and cons of leaving things in trust or in usufruct.

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 Leave a Bequest To Charity

Not everyone wants to leave part of their estate to charity. But some do. And for those who do, there can be a right way and a wrong way to leave assets to charity. The following are two things to consider when leaving assets from your estate to charity.

(1) Designate the Right Organization. There a many charities out there. Some people want to leave part of their estate for cancer research, heart research, or to an organization that helps pets. But each of these causes has numerous organizations. And some of the larger organizations have local, state, and national organizations. Make sure you research your potential charitable bequest and leave it to the right organization.

(2) Restrict Your Bequest? Some people are not aware that they can restrict their charitable organization for a specific purpose. For example, a university alumni who studied engineering may want to restrict his bequest to the university to support scholarship for students pursuing an engineering degree. You do not have to leave your bequest to the general fund of the church, school, or other charitable organization. Know that you can restrict what your bequest will be used for, so long as it is in furtherance of the organization's charitable purpose.

Most serious discussions regarding leaving part of an estate to charity involves making tax-smart decisions. For example, someone with an IRA along with other assets may choose to name a charity as the beneficiary of the traditional IRA since income tax has not been paid on these funds, and if these funds are left to a charity, then no income will need to be paid on the distribution to charity. So some people leave their charitable bequests from their IRA or other pre-tax retirement account.

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.

Starting a Louisiana Succession: Info To Gather

There is certain information that needs to be collected prior to starting a Louisiana Succession judicial proceeding. Getting off on the right start with the right information can enable the attorney and the family to design, agree on, and implement a plan to be as efficient as possible.

It typically starts with determining whether a Last Will and Testament exists. Many surviving family members have come to my office to discuss completing a Succession - but they neglect to bring the Will.

If a Will exists, we want to look closely at who the executor is. Is the executor an independent executor? Who are the heirs (also known in Louisiana as "legatees")? Are all of the people named n the Will still alive? Answers to all of the questions will help determine who the participants are in the Succession. You need to include all of the participants early on because their cooperation is necessary to conclude various Succession matters.

In addition, you'll want to gather all of the asset information. Make sure you get everything - all of the legal descriptions of real estate that the deceased had an ownership interest in, all of the bank accounts and investment accounts, any small business interests like limited liability companies, corporations or partnerships, any, vehicle titles, and anything else titled in the name of the deceased, or that the deceased had a community or separate property ownership interest in. Failing to gather all of the necessary asset and debt information on the front end may lead to frustration on the back end when you have to either start over or continue going back to court to petition a judge to amend the Succession court orders - this all takes additional time and money.

Once you have a good understanding of the provisions of the Will, the participants in the Succession, and all of the assets are involved, you and your attorney(s) should be able to devise a plan to complete all matters related to the Succession - from start to finish.

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.

Difference Between Pre-Nup and Will or Trust

I was working with a couple recently. Each spouse had children from a previous marriage, and they wanted to make sure their estates were set up the right way to protect themselves, their spouse, and their children - the right way. They knew there was the potential for conflict when they die because the sets of children did not know each other very well, and we all know what happens when people who do not know each other well have to share an inheritance!

The couple had a pre-nup from before they got married about 20 years earlier. Note that pre-nup can also be referred to as "Marriage Contract," or "Separate Property Agreement." They also had old Wills. Some of the provisions of the Wills were in conflict with what the pre-nup stated.

This led me to want to educate you about the difference between the two. In general, the purpose of the pre-nup is to determine who owns what. In the typical pre-nup when spouses get married later in life, and they each have their own children, the spouses will want to deviate from the presumed community property regime, and they will want to keep everything as separate property - what the husband has and what the husband earns during the marriage is HIS, and what the wife has and what the wife earns during the marriage is HERS. So it is real clear who owns what when one of them dies (or, if they get divorced) - no community property. The pre-nup is not the place to say who gets what when you die. In Louisiana, each party is represented by a separate attorney, each party signs the pre-nup, and it is typically recorded at the courthouse. It's a contract.

The Last Will, or the Revocable Trust, dictates who gets what when you die, and who is in charge of the administration and distribution. The WIll or Trust is not the place to try to control what is separate and what is community. Sure, your assets may retain their community or separate property status when placed in a trust, but the WIll or Trust should merely be used as a vehicle to dispose what you own, not declare what you own with your spouse.

Too many times we see conflict between the provisions of the Marriage Contract and the Last Will or Trust. You are asking for trouble if that is the case. Make sure you understand the role of each so that there will be a simple and quick estate administration when you die, with everyone (and the lawyers) being clear on everyone's rights.

Advice to Husbands Whose Wives Don't Handle the Money

One of the most important things you can do to enrich the lives and relationships of those you leave behind is to make sure all of your estate affairs are in order - and I'm not even talking about your estate legal documents. Sure, having all your estate legal documents in order is an important component to leaving a legacy (and not a headache) to your family, but here are five OTHER MATTERS that our best clients do for their loved ones to ensure a peaceful, stress-free, harmonious estate settlement:

1.    Funeral and Burial Instructions. If you've had your estate planning legal affairs documented by our law firm in the last 25 years, you received an Estate Planning Portfolio containing numerous sections. One of those sections includes your customized Burial and Funeral Instructions. Countless people have revealed their heart-felt wishes regarding their burials to me, but it really doesn't do much good to tell ME what you want, because I'm not likely to be the one handling your funeral arrangements. Document your detailed wishes in the appropriate section of your Estate Planning Portfolio. Your family will thank you for it and they'll brag about you to others.

2.    List Your Closest Family Members and Friends. There's a section in your Estate Planning Portfolio that we assemble for our clients where you can list the names, addresses, and telephone numbers of your closest family members and friends. Don't leave your family with the job of having to track down the contact information for those dozens of people who need notification. Do this work ahead of time and keep it up to date.

3.    Instructions to Your Executor / Successor Trustee. If you've worked with us and you have your Estate Planning Portfolio, there's a section in your Portfolio which has detailed instructions for the person that you designated to handle your legal, tax, and financial affairs when you are gone. You simply need to let that person know of the existence and location of your customized Estate Planning Portfolio, and they'll be able to flip through to the section that contains their instructions on what to do to get the job done.

4.    Organized Asset Information. You can have the most superior set of estate legal documents customized for your family, but if your surviving wife or other surviving family members do not have detailed records of what you own and what you owe, you will leave them with a frustrating, never-ending headache.  This will delay your estate settlement because no one will ever know if there is another account or asset that will be uncovered at a later date that will cause all of your heirs to drudge through more settlement paperwork. In a Rabalais Estate Planning Portfolio there is a section that includes the assets you own which will take the "guesswork" out of your estate settlement.

5.    Your Estate Planning Letter to Your Heirs. Included in a Rabalais Estate Planning Portfolio, you can communicate your wishes to your family regarding your desired distribution of personal effects, such as guns, jewelry, furniture, and other personal non-titled items. For some, making sure the personal effects wind up in the right hands is more important than the division of funds. Plus, it's easy to divide $1,000,000 among four children, but many families have been torn apart because of a fight over personal effects which had far less fair market value than other estate assets, but FAR MORE SENTIMENTAL VALUE than a bank account or investment portfolio. So take a few moments to describe your wishes and your feelings to your surviving wife, husband, children, or other loved ones. It will be your final message to them.

If you left your lawyer's office with your estate legal documents folded up in an envelope - without an organized set of supporting documents, you've missed the boat. Sure - having a superior, customized set of estate planning legal documents is critical to easing the process of settling your legal affairs, but having all of the above supporting letters, records, and instructions for those you leave behind can be the key to leaving a legacy.

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.