Estate Planning Law Firm of Louisiana

Unfortunate that the Estate Tax Law is Unclear

It is bad enough that we have high tax rates in Louisiana and in the United States. But perhaps it is worse when we don't even know if we have a tax!

About ten years ago, Congress enacted tax legislation that provided the following:

• $3.5 million dollar estate tax exemption for deaths occurring in 2009
• No federal estate tax for deaths occurring in 2010; and
• $1 million exemption for deaths occurring in 2011 and beyond.

All of the so-called experts predicted that Congress and the President would act prior to December 31, 2009, and "bring back" the tax effective for years 2010 and beyond...but they failed to act! Actually, the House of Representatives passed the legislation in early December, 2009, but the Senate never got around to it.

Then, shortly after the first of this year, everyone predicted that Congress would quickly enact legislation bringing back the estate tax, and making those estate tax laws retroactive back to death occurring on or after January 1, 2010...but they didn't do anything.

Now, it is March 10, 2010, and unfortunately, families of decedents have no idea what to do. Is Congress going to enact legislation that will bring back the estate tax and preserve the step-up in basis? Or will Congress fail to act and we'll have a one year hiatus from the estate tax, but heirs will inherit appreciated assets with a carry-over basis instead of a step-up in basis?

Who knows? We are now is a state of limbo. Congress should act immediately regarding the estate tax so that families that are grieving the loss of a loved one can also have some certainty with regard to the estate tax and the settling the estate of a loved one.

Webinar a Success In Many Ways

About two weeks ago I hosted a webinar where I discussed the benefits and pitfalls of a Revocable Living Trust in Louisiana as it relates to avoiding probate. It has been so nice in the last couple of weeks seeing families come into the office with a thorough understanding of how the living trust works so they can make a determination of whether it is right for them. Here are a few of my recent observations:

1. It is impossible for me to tell you whether a living trust is right for you. However, perhaps I can educate you so that you can determine the best solution to protect your assets for your family.
2. All Louisiana succession records are "public records." Anyone can access them. Keeping family financial records private is important to some families and unimportant to others.
3. All of the webinar participants are aware of the importance of Living Trust "Funding." If you do not transfer your assets to your trust, then there will still be a succession when you die.
4. It is impossible for me to accurately predict the future probate costs that will be avoided with a Living Trust, primarily because there is no "standard" for attorney fees in probate. If you are hiring an attorney in probate, follow the common sense rule of discussing specifics of attorney fees in advance and get it in writing - and be cautious of hourly rate billing.
5. We will be hosting future webinars in the future so if you want to be a participant, let us know and we'll put you on our email invitation list.

If you have any questions or comments about the Revocable Living Trust in Louisiana, simply leave a comment. I'll be happy to respond if necessary.

Register for 2/19/10 Louisiana Revocable Living Trust Webinar - It's Free

The Benefits and Pitfalls of Using a Revocable Living Trust To

Avoid Probate in Louisiana 

Want to find out the easiest way to transfer your family's possessions to your surviving family members and loved ones with minimal court interference, delay, tax, attorney fees, and family rivalry . Should you attempt to use a revocable living trust to avoid probate in Louisiana? Or should you have a Last Will and Testament, realizing that your family will go through probate when you die. To get answers, register for a free webinar, click the following link: http://www.successionattorney.com/webinar.html

Join me on Friday, February 19, 2010, starting at 2:00pm CST and ending at 2:30pm CST  for a free webinar from the comfort of your home. Please join the webinar at least five minutes before the scheduled start time. A webinar is a presentation that is delivered over the internet and the phone. Attending a webinar is like attending any seminar apart from the place that the event takes place. Once you have logged in you can sit back and listen to the presentation on your phone (or on your computer speakers) while watching it on your screen. During this free webinar, you will discover answers to the following questions:

0. What is a revocable living trust?
0. Since I live in Louisiana , should I have a revocable living trust?
0. Is it true that probate will cost your estate 5% to 10% of its value ?
0. What is the difference between a revocable trust and an irrevocable trust?
0. Will a revocable living trust help me avoid taxes ?
0. How does probate work in Louisiana? 
0. How much money will my family save by having a revocable living trust?
0. Should I put my home in a revocable living trust ?  

This webinar is customized for the lay person  or family that lives in Louisiana and wants to avoid legal, tax, and financial problems before or after death. If you want to avoid leaving your family with legal, accounting, tax, and financial problems, along with unnecessary delays, you won't want to miss this webinar. To register for the webinar, simply click on the link below.

http://www.successionattorney.com/webinar.html

P.S. Forward this webinar invitation email to any other individuals you know who would want to understand whether revocable living trusts are a benefit in Louisiana. With so much confusion out there, they will thank you.

No Estate Tax May Cost Your Family More

Last night, my 82-year old dad gave me an article from the Wall Street Journal. The article addressed how families may pay more in tax if the estate tax is eliminated. It caused me to take a closer look at our two different tax structures.

Let's say, for example, that Dad dies in 2010 with an estate of $3,500,000. His capital gains basis in these assets prior to his death was $500,000.

Under our current law, the family will pay no estate tax. The family will elect to use the $1.3 million step-up so that the total basis is $1.8 million. When they sell the assets for $3.5 million, they will pay approximately $340,000 in capital gains tax ($1.7 million appreciation * 20% federal and state capital gains tax).

If Congress brings the estate tax back with a $3.5 million exemption (and the corresponding step-up in basis), the family will have a total tax bill of $0. No federal estate tax because the estate did not exceed $3.5 million. No capital gains tax because of the step-up in basis at Dad's death to $3.5 million.

No estate tax: family pays $340,000.  Estate tax: family pays nothing.

So perhaps if Congress wants to "tax the wealthy," it should permanently eliminate the estate tax???

Have Your Power of Attorney Approved By Brokerage Firm Before It's Too Late

I took a call from a polite woman this morning. Her father has accounts at Morgan Stanley. Her father is in a home for Veterans. She took her father's durable power of attorney to Morgan Stanley recently so that she can transact her father's affairs. Her father's ability to manage his accounts has diminished.

The brokerage firm basically told her, "We do not honor any power of attorney form except for our own. Take the Morgan Stanley Power of Attorney form to your father, have him sign it in the presence of a Notary, and bring it back to us. Then - and only then - can you transact your father's accounts.

Hopefully, her father still has the mental capacity and physical ability to sign the Morgan Stanley form. If not, the daughter will have no choice but to go through a difficult court interdiction proceeding to have her father declared legally incompetent.

This is just another of many instances where third parties sometimes don't honor a durable power of attorney. My advice - take your Louisiana durable power of attorney to your banks, financial institutions, and investment firms and make sure they will honor it when your Agent needs to use it. It doesn't do any good to have the best Louisiana Durable Power of Attorney in the world, if third parties won't honor it. So make sure they will honor it in advance.

At the end of the call the polite woman asked me to transfer her to our accounting department so she could give them her billing information so we could bill her for the call. I gladly told her, "We never charge anybody for a phone call."

If you need help with Louisiana estate planning issues, feel free to send me an email at paul@rabalaislaw.com, or call our office tollfree at 866-491-3884 to discuss how we might help you accomplish all of your Louisiana estate planning objectives.

Communicate Louisiana Estate Essentials With Your Survivors

Yesterday I reveived a call from a nice woman who was quite concerned about her father. Her mother had died not too long ago and her father took a turn for the worse in the last few days and the outlook was not good.

As the woman explained, her father was very private about his financial affairs and the woman - his only child - had no idea what her father owned or even where his records might be.

Fortunately for this woman, I was able to assure her that this would not be a problem because when her mother died, I handled the succession and we made a complete and detailed listing of every asset her parents had on the date his mother died. It's unlikely things have changed much since then. She was comforted knowing that she had a starting place to go to.

She also wanted to know if there was anything she needed to do hastily since her father's passing may be imminent. I told her "No." I told her she simply needed to care for herself and her father in these final days, and then she can contact me after he dies to start the process of getting everything settled.

This story reminds me to remind you that it is important to communicate at least some basic information about your estate to your survivors. At a minimum, you should communicate:

1. That you have (or you don't have) a plan in place.
2. Where your important papers are.
3. Where they can find a listing of your assets and liabilities.
4. Any attorney or other advisor that you would like them to work with upon your death.

It would also be a nice bonus if you also give them informal instructions regarding your funeral and burial wishes, health care wishes, desires regarding the distribution of personal effects, and instructions regarding how to use your Power of Attorney, and instructions to your executor.

We cover all these things in our Estate Planning Portfolio that every one of our Louisiana estate planning clients leaves our office with and maintains during their lifetime. If you'd like to talk to us at no cost to determine whether you'd like to use our estate planning legal services to plan your Louisiana estate, send me an email at paul@rabalaislaw.com, or give our office a call at 225-329-2450.

Paul Rabalais

Interdiction or Guardianship Procedure in Louisiana

From time to time a family member comes into our office and is required to undergo an Interdiction proceeding (states outside of Louisiana call this a Guardianship) because their loved one is alive but unable to transact their own affairs - and they have not designated anyone to transact for them with a Durable Power of Attorney. For example, let's say that Mom had a stroke and needs to sell her house, but she no longer has the capacity to transact.

A Louisiana Interdiction is more complicated and time-consuming than most people think. Even when it is obvious that a person needs to be interdicted in Louisiana, you have to follow the rules. Here are the rules in general (Note: these are general rules and some circumstances require that additional steps be taken):

1. A family member is the Petitioner and files the Petition for Interdiction. Need Petitioner's and proposed interdict's name, domicile, age, and current address, reasons why interdiction necessary, infirmities of proposed interdict.
2. Petition must be served on the proposed interdict by the sheriff.
3. Children and other parties must be notified by certified mail.
4. If the proposed interdict does not hire an attorney and answer the petition within 15 days, the judge must appoint an attorney to represent the proposed interdict. The court-appointed attorney must personally visit the defendant.
5. The court shall fixed a hearing or trial date.
6. A Judgment signed by the judge must appoint a curator and an undercurator.

This procedure must be followed even if all parties are in agreement that someone needs to be interdicted.

If you have a loved one or family member that needs to be interdicted in Louisiana, let us know. We can expedite the preparation and filing of necessary Interdiction pleadings. Feel free to send me an email at paul@rabalaislaw.com, or give our office a call at 225-329-2450.

Paul Rabalais, Board Certified Specialist Attorney in Estate Planning and Administration

What happens to estate if no surviving spouse, descendants, parents or siblings?

I was working with a nice couple this past Friday on their estate plan. They had accumulated quite a bit of assets. The husband was an only child and his parents and grandparents had passed away. They had two children and no grandchildren. The husband wanted to know, in the absence of a Last Will, who would inherit his estate if he, his wife, and his children all died in a common disaster.

Here's the Louisiana law on the issue: "If the deceased leaves neither descendants, nor brothers, sisters, or descendants from them, nor parents, nor spouse not judicially separated, nor other ascendants, his other collaterals succeed to his separate property. Among the collateral relations, the nearest in degree excludes all others. If there are several in the same degree, they take equally and by heads."

So, in this instance, I'm thinking the husband's aunts and uncles (his parents' siblings) would equally - by heads - divide his estate.

Of course all of this can - and will - change because he will designate in his Last Will who will inherit his estate given that the unlikely scenario occurs.

If you have questions about planning your estate, or if you'd like to inquire about our estate planning legal services, please feel free to send me an email at paul@rabalaislaw.com, or give my office a call at 225-329-2450. Until next time...

Paul Rabalais

"Aforesaid" Estate Planning Documents Can and Should Be Easy To Understand

I find that some lawyers like to "strut their stuff" by creating lengthy, complex legal documents that the educated lay person cannot understand. Often I'll read documents that have language like:

• The said person...
• Wheretofore,...
• At any time heretofore held against the aforesaid parties...
• Why not change, "In the event that," to "If"

In fact, you may have seen some legalese that you'd like to share with our readers. It's everywhere and it cause lawyers and their frustrated clients to spend lots of time (and in many cases lots of the clients money) explaining and reexplaining legal gobbledygook.

I'm on a mission to make all of your estate planning legal documents in Louisiana arranged in a way so that they accomplish all of objectives that need to be accomplished, but in a way that is easy for the educated lay person to understand.

If you have a good example of legalese that you'd like to share, by all means post it as a comment.

Or if you'd like us to arrange an estate planning portfolio of legal documents for you that is written so that you know what you're doing, and your heirs will understand, then send me an email to get started at paul@rabalaislaw.com, or give my office a call at 225-329-2450.

Paul Rabalais

P.S. If you want an easy to understand explanation of Louisiana estate planning terms, purchase my book at Barnes & Noble or amazon.com

Inheritance Rights of an Unborn Child in Louisiana

One of my employees was wondering today about the rights of an unborn child. I'm not going to tell you which employee asked me but I will tell you that one of my employees is 8 months pregnant.

Let's say that new Dad owns separate property. He is eagerly anticipating the birth of his first child when he slips on some Boudreaux's Butt Paste at Babies "R" Us and dies of a head injury. Who gets the separate property?

The answer? As long as the unborn child conceived at the death of the decedent is thereafter born alive, then the child inherits all of his father's separate property.

I've always advocated that parents of minor children have an estate plan in place, but I now also recommend that all parents of unborn children have their estate plan in place. It does not make sense for an infant to inherit outright and have the inheritance overseen by a judge until the child turns 18. Parents of unborn children should make sure that their children's future inheritance is placed in trust and managed by a competent trustee until the child is mature enough to manage it on their own.