Estate Planning Law Firm of Louisiana

Property Insurance Proceeds Exempt for Louisiana Medicaid Eligibility

I had a telephone conversation the other day with someone who's mother received an $11,000 check from her property insurance company for roof damage that had occurred in a recent hail storm.

Her mother was about to apply for Medicaid and she wanted to know if her mother would be penalized for having this cash in her bank account, even though she planned to use the funds to repair or replace her roof.

I told her the funds were not countable based on her circumstances. The specific provision of our Louisiana Medicaid Eligibility Manual provides, "Do not count as resources the lump sum payments received due to claims resulting from natural disasters as long as the funds are used for replacement and repair of property."

Paul Rabalais

Trap For Transfers After February 8, 2006 But Before New Rules Issued

In February 2008, the Louisiana Medicaid Manual was changed. Many of the changes were made retroactive back to February, 2006.

If you or a loved one made a transfer of assets after February, 2006, hoping to qualify for Louisiana long term care Medicaid in three years or less, you'd better understand the newly issued rules.

For transfers prior to February 8, 2006, the penalty period started when the transfer was made. For transfers after February 8, 2006, the penalty period starts when the Medicaid Applicant is in the nursing home, has less than $2,000 in countable resources, and would otherwise qualify for Medicaid except for the transfer of resources. However, even though post 2/8/06 transfers fall under the new rules, the new rules were not issued to the public until February, 2008.

Bottom line - the Medicaid Eligibility Rules in Louisiana are more complicated and restrictive than ever before. If you want to know how they affect you or a loved one, post a comment or drop me an e-mail at paul@rabalaislaw.com. Don't take any action until you fully undersand the rules. My second piece of advice - don't procrastinate. Every month you procrastinate could cost you in excess of $5,000.

Basics of the Louisiana Usufruct

There are lots of internet inquiries these days about the Louisiana usufruct. The law in Louisiana regarding usufruct is both comprehensive and complex. But I prefer to keep things simple so here's a couple of pointers about the Louisiana usufruct. When someone asks me what a usufruct is, I usually give a short answer like this," If you own the usufruct of assets, you have the right to "use" them. When your usufruct terminates, then those assets you were "using" must go to the naked owners. Example. Husband dies with a wife and two children. His only assets are a house and $100,000 cash. HIs Will leaves his wife the lifetime usufruct of his assets and names his two children as the naked owners. Since the cash is a "consumable," his wife becomes the owner of the cash. She can put it in her name. But when she dies, Husband's two children are entitled to claim $100,000 from Wife's estate. Wife's heirs won't get anything until that $100,000 debt is satisfied. If there is not $100,000 in Wife's estate, the children get whatever is there, and Wife's heirs get nothing. The house, however, is a nonconsumable item. As usufructuary, Wife can live in the home or she can rent the home (whether she can sell the home is the topic of another blog post). Regardless of whether the house increases or decreases in value after Husband's death, when Wife dies, Husband's two children co-own the home. There more to the Louisiana usufruct than this, but this is the very basics. If you have a specific question about Wills and the Louisiana usufruct, feel free to send me an e-mail at paul@rabalaislaw.com, or read the chapter of my book about usufruct. Paul Rabalais

When are Grandchildren Forced Heirs in Louisiana?

Louisiana is the only state that has forced heirship. Forced heirship requires that children 23 or younger, or children of any age who are permanently incapable of "taking care of their persons or administering their estate," must inherit a portion (usually one-fourth) of their parent's estate. There are also two circumstances where your grandchildren would be forced heirs and required to inherit from you regardless of what you write in your Will: If your deceased child would have been 23 or younger when you die, then your deceased child's children are forced heirs. This does not occur too much. If, when you die, your deceased child has a child or children who are permanently incapable of "taking care of their persons or administering their estate," then those grandchildren are your forced heirs. There is a whole lot more to the Louisiana forced heirship laws than what I wrote above. I simply wanted you to know that there may be circumstances where grandchildren can be forced heirs. If you have any questions about this, feel free to comment to his post or send me an e-mail at paul@rabalaislaw.com. Thanks. Paul Rabalais

Understanding the Louisiana Surviving Spouse's Marital Portion

In Louisiana, when a spouse dies rich in comparison with the surviving spouse, the surviving spouse is entitled to claim the "marital portion" from the succession of the deceased spouse. While there is no concrete test, it is generally understood that if the deceased spouse's assets are more than five times the surviving spouse's assets, the surviving spouse will ordinarily be awarded the marital portion. So, how much does the surviving spouse get? If the deceased died without children, the surviving spouse gets one-fourth of the deceased spouse's estate; If the deceased died survivived by three children, the surviving spouse gets the lifetime usufruct of one-fourth; and If the deceased spouse died survived by more than three children, the surviving spouse gets a child's share in lifetime usufuct. In no event can the marital portion exceed $1,000.000 Example. Rich Husband dies (survivied by three children and Poor Wife) with $3,000,000 of separate property. He and Poor Wife have $1,000,000 of community property. His estate is $3,500,000. Her estate is $500,000. He has 7X what she has. She qualifies for the marital portion. In his Will, he leaves his entire estate to his children (or to anyone other than Poor Wife). She is entitled to the lifetime usufruct of $875,000. She must file a claim for this within three years of his death or she loses this right. If you have questions about a marital portion claim, post a comment or send me an e-mail to paul@rabalaislaw.com, and I'll see if I can help. Paul Rabalais

Where Do You Store Your Estate Planning Documents?

We now live in a digital world. You receive your bank statements online. You pay your bills online. You monitor your investments online. And you shop online. But when you die or become incapacitated, someone better produce your original, signed estate planning documents. So, where do you store these important papers? In a safe deposit box? In a safe? In your home? In your attorney's office? Many people keep their important papers in their safe deposit box. But your executor may not be able to access the box after you die without a court order. If you use a safe deposit box, you better make sure you put someone you trust as having the authority to access the box after you die. Check with your bank or credit union to see what their procedures are. Another note: We had to re-do a number of estate plans after Hurricane Katrina flooded many New Orleans area banks. A safe in your home might be a better storage place for your estate planning documents. Again, make sure others that you trust know how to access your safe. When we complete an estate plan at our office, we electronically scan and store all of our client's estate planning documents. You keep the originals and we encourage you to keep those in a safe place. Where do you keep your important documents? Besides your legal documents, what other documents do you keep in a safe place?

Would You Consider a Do-It-Yourself Estate Planning Kit?

Whether you like it or not, it's here. Lawyers and other professionals have pretty much bashed the online and offline do-it-yourself estate plans. There are numerous other companies in the market, with the larger ones being Legalzoom, Quicken Willmaker, and USLegalForms - there are many others. I actually see this trend gaining momentum. Certain financial institutions now allow account owners to change beneficiaries online. Revenues at these do-it-yourself legal doc companies are on the rise. On the one hand, many people feel they cannot afford traditional lawyer drafted estate plans which often cost in the thousands. On the other hand, the do-it-yourself kits often don't provide the customization necessary to meet your specific estate planning needs. So what's the consumer to do? What if there was a package that you could use that you felt comfortable that it would solve your basic estate planning needs, and it was inexpensive because it did not require that you meet with an attorney to have it prepared, maintained or executed. Would you consider it? I'm looking for feedback here so feel free to comment. Until next time... Paul Rabalais

Should You Include a "Spendthrift Trust" in Your Will?

Does your child have the same appreciation for hard-earned money that you have? If not, perhaps you should consider a spendthrift trust? Let's say you leave $500,000 of assets (or any amount) to each of your children. It is likely that within a short period of time, they will have: spent it; mortgaged it; or lost it to creditors. In order to protect your heirs from themselves, you can provide in your Louisiana estate planning documents that your children's inheritance will be placed in their Spendthrift Trust after you die. If it's set up properly, your children's inheritance will be protected because it: can not be spent immediately; can not be alienated, sold, or mortgaged; can not be taken by your children's creditors. If your children are like most, they won't fully appreciate the value of their inheritance because they did nothing to earn it. If you or a loved one live in Louisiana and would like to know how to protect an inheritance from themselves and their creditors, send me an e-mail at paul@rabalaislaw.com, and I'll be happy to e-chat with you about it. Paul Rabalais

Family Wants To Protect 95 Acres From Rising Nursing Home Costs

Met today with a daughter of a concerned couple. The couple has minimal assets but they live on a 95 acre tract that was given to them by the wife's father. I explained that if one of them go to a nursing home, then that spouse would be eligible for Louisiana Medicaid because the home is exempt and the Louisiana Medicaid Eligibility Manual provides that the home is defined as the residence plus up to 160 acres that the residence sits on. The daughter then inquired about Estate Recovery. She knew that the State of Louisiana would have a lien on the home and that after her parents died, the state could force the sale of the home and property to reimburse Medicaid for its expenses. The daughter happened to mention that her mother listened and followed Dave Ramsey, a radio financial guru. I mentioned that I had heard Ramsey preach that people shouldn't transfer assets for Medicaid eligibility purposes - so why was Mom wanting to do this. Daughter's answer? Mom worked at a nursing home and saw first hand how people's estates were entirely depleted due to nursing home costs.

Two Questions Today About SSI, Medicaid and Transfers

Had a phone call and an e-mail from two different people today with exactly the same question. The identical facts were as follows: a family member was receiving SSI and thus qualified for Medicaid. Both individuals wanted to transfer property - one of them wanted to transfer the home property, and another wanted to transfer property she was inheriting from a sister. I told both of them, "Good Question." Any of you out there have any experience with this issue? If so, feel free to post a comment. Thanks. Paul Rabalais