It's been a reasonably quiet year insofar as Louisiana estate planning law changes are concerned. However, we are seeing several new trends in the Louisiana estate planning arena. On the federal side, it's a different story. It appears that Congress does not know up from down, and the estate tax appears to be nothing but a barganing chip and an after-thought which makes it really tough for you to determine how to set up your estate to leave it to your family with minimal government confiscation.
Here's a few observations as we wrap up 2011 and move into 2012:
- Federal Estate Tax Exemption for 2012. As of the date of this writing, the federal estate tax exemption for people who die in 2012 is $5 million. In addition, we have something new in place called "portablility," which allows the surviving spouse's estate to use the unused portion of the exemption of the first spouse to die. For example, if Dad dies in 2012 and uses only $2 million of his $5 million, Mom's estate (at Mom's later death) can have an exemption of $8 million. Clearly this is a tool for the wealthier families out there.
- Federal Estate Tax for 2013. Different ballgame. Unless Congress and the President change the law, the federal estate tax exemption for deaths occurring in 2013 is only $1 million, and portability will not be available. If your net estate exceeds $1 million and you die in 2013 or beyond, your estate will have to pay estate tax at a rate of up to 55% of the value of your estate!
- Using Trusts for Succession Avoidance. We're seeing an increase in the demand to keep the courts out of an estate settlement process. The way to do this is to create a revocable living trust and transfer your "Succession Assets" to your trust so that when you die, your family will not be forced to go through an expensive, time-consuming and often-stressful court proceess to transfer your estate to your heirs.
- Nursing Home Medicaid Planning. With monthly nursing home costs around $5,000 ($10,000 per month for couples), many Louisianians are asking us how to avoid depleting your life savings on nursing home costs prior to Medicaid eligibility. We're also helping lots of folks protect the value of their home from Medicaid Estate Recovery rights which give Medicaid the right to force your home to be sold after you die to get reimbursed for costs incurred by Medicaid.
- Powers of Attorney. In the last week, four people have to me how valuable it was that they have a Power of Attorney for their parent. People don't appreciate the value of an up-to-date, propertly prepared Financial and Health Care Power of Attorney until it needs to be used. Having a Power of Attorney in place prevents your family from having to go through the nightmare of a Louisiana Interdication, which is where you have to sue your family member to have them declared incompetent.
- Trend Toward Keeping it Simple. In this complex world of estate planning, consumers are asking to keep their estate planning documents simple. While some attorneys prepare Wills, Trusts and Powers of Attorney that exceed 100 pages in length, we strive to keep your estate planning documents thorough enough to do the job, but simple enough so that it doesn't take you weeks on end with a Black's Law Dictionary at your side to review them.
Here's to a prosperous 2012. Remember that estate planning is not a one-shot deal. If you've had a major change in your family circumstance, or your estate is large enough so that federal estate tax is possible, it's probably a good idea to have us take a look at your circumstances to that your estate plan does not get left behind.