The Rabalais Law Firm's La. Estates Blog

Luncheon Seminar for Louisiana State Employees

  Spoke today to about 70 employees of the Louisiana Department of Natural Resources. It was a lively audience with lots of questions and participation. Some of the many questions that I answered involved:

• revocable living trusts
• limited liability companies
• olographic wills
• power of attorney
• protecting assets with Medicaid Planning
• duties of an executor
• community property and separate property
• beneficiary designations

Thanks particularly to Mary Ginn, Human Resources Director, for asking me to speak. Thanks also to Mary for providing me with lunch and for the awesome Louisiana Department of Natural Resources brief case. I was pleasantly surprised to see so many people interested in estate planning - so much so that most of the attendees purchased an autographed copy of my book, Estate Planning in Louisiana.

If you have a group of interested Louisiana residents, and you would like to have me as a speaker at your event, feel free to send me an e-mail at paul@rabalaislaw.com. It's always a pleasure and an honor to be invited to speak.

Paul Rabalais

What's the Best Way to Loan/Give Money To Your Child?

A friend of mine called me the other day. He said he wanted to help his son out by giving him $350,000 toward the purchase of a home. He wanted to know the best way to structure it.

We talked about it for a few minutes. These kinds of arrangements frighten me because if the help is in the form of a loan, the child rarely ever pays it back, it creates friction among all family members, and it could cause the parent(s) to have adverse income tax consequences.

If the help is in the form of a gift, then the parent(s) use some of their gift and estate tax exemption, but at least there will be no 3% Louisiana gift tax because that tax was eliminated from the law earlier this year.

After weighing the factors involved, he decided to make an outright gift to his son. He acknowledged that he and his wife would have to file a federal gift tax return due April 15, 2009, but no gift tax would be due, and the gift would have no income tax effect to himself or his son. But he felt that this would not penalize him since their estates were under estate tax exemption (although who knows what will happen with the estate tax in the future).

There are a number of factors to weigh when transferring assets to your children during your lifetime, such as, income tax, capital gains tax, gift tax, estate tax, liability concerns, ability to repay loans, in-law problems, children's divorces, and much more. If you want some help in figuring the best way to transfer assets to your child, send me an email at paul@rabalaislaw.com

Paul Rabalais

Filing a Claim in a Louisiana Succession

Let's say that John Smith died. At the time of his death, John owed you $50,000. What do you need to do to collect your debt?

Here's how it works:

1. You must submit your claim in writing to the succession representative (the executor or administrator). No particular form is required other than that it be in writing;

2. The succession representative shall either acknowledge or reject the claim within 30 days. Failure of the succession representative to act constitutes a rejection of the claim;

3. If acknowledged, it creates a presumption of validity of the claim; and the burden of proving the invalidity of the claim shall be upon the person opposing it;

You may not sue the succession to collect the debt and enforce your claim until the succession representative has rejected the claim. If you want to know more about protecting your rights in a succession, feel free to send me an email at paul@rabalaislaw.com, and I'll do my best to help.

Paul Rabalais

Forced Heir Entitled To Only a Small Portion of Overall Estate

Was working with a family today. They were concerned about their child – a forced heir – and the child's inability to handle an inheritance. We talked about the specific assets owned by the couple. Most of their assets are in IRAs, 401(k)s and life insurance. Only a small portion of their estate (their house and some bank accounts) are part of their "probate estate." They discovered that the IRAs, 401(k)s and life insurance are not subject to forced heirship laws. And, the forced portion (1/4 of the house and bank accounts) could be placed in trust so that the forced heir would not be permitted to access all of it at once.

I find that people get hung up on the forced heirship laws. Forced heirship laws only apply when you want to exclude a child who is 23 or younger (or any age but permanently disabled). Many types of assets are not subject to the forced heirship laws. If you want to know more, send me an email at paul@rabalaislaw.com.

Louisiana Medicaid Application Asks Onerous Question

Today I was reviewing the Louisiana Long Term Care Medicaid Application. It asks the question,

"Has the applicant, their spouse, or anyone acting for them

ever

given away, sold, cashed in, or changed the

name listed on a policy or deed for any item of value such as land, houses, home property, life or burial

insurance, vehicles, or bank accounts?"

What I don't understand is why the Medicaid Application asks if the applicant ever made transfers. This means if an 80 year old Medicaid applicant made a gift to a child 30 years earlier, then it must be listed on the application. Really, Medicaid should only ask if the applicant made transfers in the previous five year period.

If an applicant made a transfer more than five years before applying for Medicaidm I do not see where it would affect the eligibility status of the Medicaid applicant. Do you thing I'm  right or am I being too overcritical of the Louisiana Long Term Care Medicaid Application process.

If you have a question about a loved one's Louisiana long term care Medicaid eligibility status, feel free to send me an email at paul@rabalaislaw.com. I enjoy getting all these emails and responding to help you  in your time of confusion and need.

Paul Rabalais

What Does Louisiana Forced Heir Receive If Dad's Will Leaves Everything to Dad's Wife?

Was working yesterday with our successions paralegal, Stephanie, on a succession. The deceased left his entire estate to his wife. The deceased however, left a child under the age of 23, and in Louisiana, this child is considered a "forced heir."

So, what is the forced heir entitled to - even though the Will left everything to the wife? Well, an obscure comment in the Louisiana Civil Code spells it out. If the husband's Will leaves everything to his wife and there is a forced heir who is entitled to one-fourth, the legacy to the wife is reduced to the disposable portion (3/4) in full ownership, and a usufruct for life, with the power to dispose of nonconsumables, over the forced portion (1/4).

So, if Dad left an estate of $400,000, and his Will left his entire estate to his wife, and he died with one forced heir, then the wife would inherit outright $300,000, she would have the lifetime usufruct of $100,000, and the forced heir would be the naked owner of $100,000. The forced heir would not fully own his or her inheritance until the Wife died.

If you have questions about forced heirship or other Louisiana estate planning issues, feel free to send me an email at paul@rabalaislaw.com. I'll do what I can to help.

Paul Rabalais

Louisiana Ancillary Probate Procedure

I've been emailing back and forth today with an Illinois attorney. He was handling a probate in Illinois for an Illinois resident who died owning Louisiana immovable property. When a non-Louisiana resident dies leaving Louisiana real estate, an ancillary succession proceeding must be instituted in a Louisiana court in order to transfer the Louisiana real estate to the proper heirs.

Louisiana follows the Uniform Probate Law, which provides, in pertinent part, that a Will admitted to probate outside of Louisiana, may be allowed and recorded in the proper Louisiana parish court in which the deceased shall have left an estate.

If someone dies as a resident of a state other than Louisiana, owning real estate in Louisiana, then an ancillary Louisiana succession will be necessary to sell or transfer that property. If you have questions about how an ancillary succession should proceed, feel free to send me an email at paul@rabalaislaw.com. I'll do what I can to help you sort through it. Thanks.

Paul Rabalais

Possession is Nine-Tenths of Succession Law

Spoke today with a nice woman from another state. Her uncle had recently died while residing in Louisiana. The uncle's only asset was a Louisiana bank account. The uncle had given another individual signature authority over the account. The woman wanted to know what she needed to do to settle her deceased uncle's estate.

I told her we could petition the proper Louisiana court to have her appointed as the Administrator of the uncle's succession. Once appointed Administrator, she can go to her uncle's bank and withdraw her uncle's funds and place them in a Succession bank account that she will open as Administrator.

She asked me, "What if the other individual already went to the bank, withdrew the funds, and spent them?"

I answered, "You've got a problem." I told her if that was the case, then she would have to locate that individual, file a lawsuit against the individual, get a Judgment, and collect the money from the individual. She suspected that her uncle's bank account had been closed out by this individual.

It remains to be seen what will happen. But if one of your loved ones dies, and the deceased owned bank or other accounts where the deceased had granted another person with signature authority over the accounts, you'd better act quickly because money often disappears after death when another person has signature authority over the accounts.

If you have questions about how a succession should be handled after the death of a loved one, feel free to send me an e-mail at paul@rabalaislaw.com, and I'll see if I can provide you with some assistance.

Paul Rabalais

Three Ways To Leave An Inheritance To Your Louisiana Spouse

Essentially, there are three ways to leave an inheritance to my spouse. Louisiana residents constantly confuse these three forms of bequests. Each form has its own advantages and disadvantages. It is important that you educate yourself about these three types of bequests so that your surviving loved ones will be protected.

The three most common forms of bequests to your spouse are:

1. Ownership. You can leave ownership of assets to your spouse. This is the simplest type of bequest but you lose control when you leave ownership to your spouse.
2. Usufruct. By leaving usufruct to your spouse, you might be limiting your spouse's control, but you may be protecting your children's future inheritance. Available for Louisiana estate plans only.
3. In Trust. By leaving assets in trust for your spouse and others, you can designate a separate trustee to make sure that your spouse and other heirs are protected. It's a little more complicated than the first two, but it may be necessary.

On my membership site, I have an article that thoroughly analyzes the advantages and disadvantages of each method (including tax and Medicaid effects), so you would want to read that when trying to determine how to leave assets to your spouse. If you want to know more, you can email me at paul@rabalaislaw.com

Paul Rabalais

My Hurricane Gustav Story

Louisiana was adversely affected by Hurricane Gustav. I've added information to the left hand side of my blog where you can assist the hurricane relief. Here's what happened to me and my family:

We watched the storm moving in all of last weekend on the Weather Channel and local news. I went to Home Depot just in the nick of time to purchase a portable generator. I filled up my three SUVs and I filled up five five-gallon containers of gasoline. We purchased supplies to last us a few days. Since I live about 60 miles from the coast, I wasn't expecting too much damage.

The storm rolled in on Monday, September 1, in the morning. Power went out about 11:00am. Winds started kicking up. We were told our area would get winds of about 50mph. I live in an area where there are lots of large pine and oak trees.

About 12:30pm, I was standing on my back patio when I watched a large tree split in two and fall in my neighbor's yard. I started to get nervous at that point because I have numerous trees near my home and I was concerned that if those fell, it would cause serious damage to my home and perhaps to my family. My wife, our five children, and our dog, stayed in an area of the home where we felt safest.

Then, I heard a large crash. I looked out my front window and saw that a tree from my across-the-street neighbor's house had fallen on top of another neighbor's RV. Trees were dropping all around us. Another tree fell on my riding lawn mower and my golf cart. Fortunately, no trees fell on my house. Many of my neighbors were not so fortunate.

President Bush came to Baton Rouge yesterday to assess the damage. I have three good friends on Governor Jindal's cabinet and I know that they are doing a super job bringing things back to order. It's been three days since the storm and I still do not have electricity - but that is expected given all the downed power lines. Unfortunately, my brand new generator does not work - I brought it in for repair. Thankfully, my parents' house had electricity restored the day after the storm so I was able to bring my family to their house until electricity at my house gets restored. There are downed trees and power lines all over the city.