Estate Planning Law Firm of Louisiana

WSJ Reports on Portable Estate Tax Exemption

I recently read an October 15, 2008 article in the Wall Street Journal which discussed the presidential candidates' views on the federal estate tax - my dad showed me the article. It appears that both candidates favor making the estate tax exemption "portable," which means that the exemption would be transferable from one spouse to the other.

This would be a major change to the estate tax law. Currently, if the first spouse to die leaves all of his or her assets to the surviving spouse, the couple wastes one of the estate tax exemptions that is available to each of them. Currently, if a Louisiana couple wants to make certain that each spouse uses the maximum amount of their exemptions, they must either leave each other the lifetime usufruct, or they must set up trusts (either revocable living trusts or testamentary trusts), so that the first spouse to die's assets do not go directly to the surviving spouse.

Making the exemption portable would especially help couples that have the vast majority of their wealth in a company retirement account or an individual retirement account (IRA). The surviving spouse is often named the beneficiary of these accounts, which under our current system, overuses the marital deduction and unnecessarily lumps assets into the surviving spouse's taxable estate. Making the estate tax exemption portable may solve this problem since the surviving spouse will be able to protect "double" the estate tax exemption.

If you have questions about minimizing federal estate tax - particularly if you are a Louisiana resident - feel free to send me an email at paul@rabalaislaw.com

Paul Rabalais

Louisiana Supreme Court Decides Case Involving LASERS Survivors' Benefits

On December 7, 2007, the Louisiana Supreme Court issued its ruling in the case of Louisiana State Employees' Retirement System v. McWilliams.

Basically, Mr. McWilliams' first wife applied to LASERS for survivors' benefits, based on the fact that she was married to Mr. McWilliams during part of the time that he was employed by the State of Louisiana's Department of Transportation and Development. At the time of his death, Mr. McWilliams was married to his second wife and he was employed by the DOTD at the time of his death.

The Supreme Court ruled that Mr. McWilliams' first wife was not entitled to a portion of the LASERS survivors' benefits. The Supreme Court distinguished survivors' benefits from regular retirement benefits.

Take Succession Funds and Risk Going To Jail

A recently reported Louisiana case underscores the importance of an executor's duties.

In State of Louisiana v. Anderson (La.App. 5th Cir. 2/6/08), the defendant Wray M. Anderson, served as the executor of his father's succession. The defendant apparently made transfers to himself from the succession account in an amount in excess of $100,000. He was supposed to obtain court approval prior to transferring succession funds.

The defendant was charged with theft and convicted. He was sentenced to three years hard labor and required to pay restitution in the amount of approximately $169,000.

We haven't seen to many executors go to jail for stealing succession funds, but we may see more of it in the future as estate bickering and estate mismanagement become more prevalent. If you are named an executor and you want to know exactly what your rights and obligations are, post a comment or send me an email at paul@rabalaislaw.com.

Paul Rabalais

Important Louisiana Law Change Regarding Separate Property

In Louisiana, income from separate property is community property. For example, if you inherit $100,000 and put it in a savings account, then the interest the savings account accrues is community property.

In Louisiana, a spouse may reserve these "fruits" of separate property as his or her separate property by signing a declaration and filing it in the proper parish records. Sometimes a married person will do this without his or her spouse knowing about it.

Not any more. Effective January 1, 2009, a copy of your declaration must be provided to your spouse prior to filing the declaration in the proper parish.

If you have questions about community and separate property, feel free to post a comment or send me an email at paul@rabalaislaw.com. I'll do my best to answer your questions and set the record straight.

Paul Rabalais

Don't Give Away Signed Originals Of Louisiana Power of Attorney

I spoke with a woman yesterday by telephone. Years ago, her husband had signed two Durable Powers of Attorney years ago authorizing his wife to act on his behalf. After signing the Powers of Attorney, her husband had a stroke. Over the last few years, the wife had given both signed original documents away. She was not sure who she gave them to because it was a while back, but she thinks she gave one to the IRS and one to a bank.

Now she needs to transact other business on her husband's behalf, but she does not have the documents to prove she has the authority.

Moral of the story? Never give away the only signed original of a Durable Power of Attorney. What may work better is to have an original recorded at the parish courthouse and have the clerk of court issue as many "certified copies" as you may need. Third parties, such as banks and title examiners, have the authority to rely on these certified copies, and you can get as many certified copies as you wish.

If you have questions about estate planning in Louisiana, feel free to send me an email at paul@rabalaislaw.com I look forward to hearing from you.

Paul Rabalais

Louisiana Parents Can Transfer Home To Child Without Medicaid Penalty

I took a call yesterday from a woman in New Orleans who had been living with her parents and taking care of them for more than 20 years. She said her parents were about out of funds and were about to move into the nursing home and apply for long term care Medicaid.

The daughter wanted to know if the parents could transfer their home to the daughter and still be eligible for Medicaid. My initial comments were, "No, you're stuck. Your parents can qualify for Medicaid but when they die, estate recovery laws require Medicaid to get reimbursed from your parents estate for the moeny spend on your parents' care." If her parents were to transfer the home, it would make them ineligible for Medicaid for as long as five years.

But I asked a few more questions and realized they might qualify for an exception to the transfer of asset penalties. In Louisiana, a parent can transfer the parent's home to a child without penalty if the child is:

• 21 or older;
• is not blind or permanently and totally disabled;
• was residing in the home for at least two years immediately before the date the individual became institutionalized; and
• provided care to the individual to reside at home, rather than in an institution.

This exception must be documented by a written physician's statement.

If you have questions regarding how to protect your family's assets from the rising cost of long term care and nursing homes, send me an email at paul@rabalaislaw.com. We've helped many save their life savings by taking advantage of smart Medicaid eligibility planning. I look forward to hearing from you.

Paul Rabalais