The Rabalais Law Firm's La. Estates Blog

I'm Giving Away My Book For Free

Yes, that's right. You can now download my entire book, "Estate Planning in Louisiana, A Layman's Guide To Understanding Wills, Trusts, Probate, Power of Attorney, Medicaid, Living Wills & Taxes."

So what's the catch? There is none. You don't even have to register to download the e-book. Simply click on the link on the left-hand column of this blog (just under the picture of the cover) and voila!...the book will appear on your screen.

If you want a hard copy of the book, you'll have to purchase it either at our office, at any Louisiana Barnes & Noble bookstore, or at www.amazon.com.

It would be awesome if you, after reading the book, would post a comment or two about it. Happy reading!!!

PAR

Stashing Cash in Safe Deposit Box Not Good Medicaid Planning

I've had more than a few folks over the years tell me that they have cash stuffed in their safe deposit box. They felt this was a good way to protect it from nursing home expenses. Not a good idea!

The Louisiana Medicaid Eligibility Manual reads, "Count the value of any countable resource contained in a safety deposit box. Advise the applicant/recipient not to open the box until the contents can be verified. Contents of a safety deposit box can be verified by:

• written verification from the financial institution; or
• sworn statements from third parties who view the contents.

The applicant/recipient's statements of the contents is not acceptable verification/documentation.

If the applicant/recipient is enable to provide verification, at the request of the applicant/recipient, the agency representative may accompany him to the financial institution and view the contents of the safety deposity box."

You should never try to "hide" assets from Medicaid, and you certainly should never lie on a Medicaid application. However, you should learn what Medicaid rules permit you to do and then PLAN AHEAD to preserve your estate from the rising costs of long term care.

Louisiana Wills Prior to 2001 Require Updating

It's been six years since the Louisiana legislature authorized the simpler "independent administration" of estates. What this means is that your executor can handle routine estate matters such as: selling your vehicles or home or other estate assets, paying your final bills, and even distributing your estate to your heirs, all without the court approvals that had been required prior to independent administration. It's a much easier way to settle estates - particularly when all parties are in agreement.

But your Will needs to allow for your executor to be an "independent" executor, and if your Will was signed prior to this 2001 law change, it won't have the necessary language. The language in your Will can be as simple as "I authorize my executor to serve as an independent executor."

Have you ever been an executor of an estate? If so, we like to hear about your experience. Thanks.

Intestate Succession When Married With Children

Met with a gentleman yesterday who had been referred by his co-worker. His wife passed away recently. She had never signed a Will. The gentleman had no idea what was going to happen to their assets. We went through it and I told him that he was going to keep his one-half of their community property, and he was going to inherit the usufruct of her half of the community property until he either died or remarried, and that her children were going to inherit the naked ownership of her half of the community property. I drew it out on my famous "white board" like I always do to make it easy for him to understand. We got started with the succession paperwork. On his way out he said he was glad he met me. I hope I helped!

Ever been involved in a succession? How did it go?

Convert Countable to Noncountable and Save $4,000/Month

Wrapped up some Medicaid Planning for a family today. One parent is in the nursing home and the other parent is not. They had too many assets to qualify the "institutionalized spouse" for long term care Medicaid, but they also had a car loan and a mortage. What's the answer? Simply use the countable assets to pay down the debt (Medicaid disregards debt) so that their countable assets are below the Community Spouse Resource Allowance ($101,640 for 2007 but going up in 2008).

"Simple Wills" Are Often Complicated

Met with a great couple yesterday. They married recently. One of them has a minor child from a previous marriage. The couple had purchased a home together prior to their marriage and they wanted to protect each other in the event one of them dies. They also wanted to provide for future children they plan to have. Many issues were involved: Louisiana forced heirship, trusts for minor children, guardians for minor children, ownership of separate property purchased prior to their marriage, providing for unborn children, who to name as trustee, guardian, executor of will, and agent on power of attorney, and much more.

We finally figured it all out and even though none of the documents have been signed (but that part is already scheduled), the husband said he felt much better knowing it's all been figured out and it's all in the works.

Do you have minor children with no Will or Trust to protect them if you die and your children are still young? Does it make you feel uneasy? How so?

Update Estate Plan Every Few Years

Met with a nice couple yesterday. I had prepared their Wills and estate plan in 1997. They came back in to make sure that their estate plan is still current. They said they were still completely satisfied with the way their estate is to be distributed when they die - no changes there. But we still need to change their documents since ten years had passed since they originally created their plan.

For example, in 2001, the State of Louisiana authorized a simpler "independent" administration" of estates that takes much of the court supervision out of our probate procedure. But you have to mention it in your Will to take advantage of it. So, we need to change their Wills. Also, many third parties won't honor a power of attorney that is more than ten years old - so we'll do new ones.

Now our clients will have a completely up to date estate plan. Remember, creating your estate plan is only half the challenge; keeping it current over the years is just as important. Any questions about whether your Louisiana estate plan is up to date, simply e-mail me at paul@rabalaislaw.com

Remember Trust Administration After First Spouse's Death

Many married couples with revocable living trusts believe that no actions need to be taken when the first spouse dies if all assets are titled in the name of the trust. While there may be no succession or probate required, there is what we call a "trust administration" that must be done.

Let's say, for example, that a married couple has a revocable living trust with $1.5 million in assets. Let's assume the husband dies first. The husband's one-half interest in these assets should be retitled into what we might call the "Decedent's Trust," which becomes irrevocable, and the wife's portion is retitled into the name of her "Survivor's Trust," which remains revocable by the surviving wife.

There are two primary reasons this must be done. First, if the trust administration is done properly, none of the Decedent's Trust assets will be included in the wife's estate for federal estate tax purposes when she dies. Second, the beneficiaries of the Decedent's Trust assets are fixed upon the death of the first spouse, while the wife can change the beneficiaries of her Survivor's Trust.

Proper trust administration after the death of the first spouse makes things easier both for the surviving spouse and for the trustee who will handle the affairs after the death of the surviving spouse - and it may help save a pile of estate tax too!

"Road Home" money excluded for Medicaid

On July 11, 2007, the Louisiana Medicaid Eligibility Manual was amended to provide that, "any assistance received because of a catastrophe which is declared to be a major disaster by the President of the United States," is an excluded asset for Medicaid eligibility. The manual further states that, "The Road Home program money is considered disaster assistance."

You can also exclude as income and resources any interest earned on your disaster assistance you receive. Perhaps its a good idea to keep your Road Home proceeds in a separate account.

Pre-Nup Doesn't Solve Medicaid Issue

Let's say, for example, that an older couple wants to marry. They are in their early 70's and their previous spouses had passed away. They want to keep their assets separate so they get a pre-nup (also known as a marriage contract and separate property agreement) done prior to their marriage. Good idea! Let's say, for example, that the wife has assets totalling $400,000 and the husband has assets totalling $40,000.

If the husband later has to reside in the nursing home, do they have to spend all of their assets before he qualifies for Medicaid? The answer: You betcha. Louisiana Medicaid disregards marriage contracts for purposes of determining his eligibility for Medicaid. Not only do they have to spend all of his assets, but they also have to spend her separate property before he qualifies for Medicaid - even if she continues living in her residence.

So, should they shack up as some suggest? I don't think so. They should plan ahead so their assets will be protected if one or both of them end up residing in a nursing home.