Estate Planning Law Firm of Louisiana

Have Your Power of Attorney Approved By Brokerage Firm Before It's Too Late

I took a call from a polite woman this morning. Her father has accounts at Morgan Stanley. Her father is in a home for Veterans. She took her father's durable power of attorney to Morgan Stanley recently so that she can transact her father's affairs. Her father's ability to manage his accounts has diminished.

The brokerage firm basically told her, "We do not honor any power of attorney form except for our own. Take the Morgan Stanley Power of Attorney form to your father, have him sign it in the presence of a Notary, and bring it back to us. Then - and only then - can you transact your father's accounts.

Hopefully, her father still has the mental capacity and physical ability to sign the Morgan Stanley form. If not, the daughter will have no choice but to go through a difficult court interdiction proceeding to have her father declared legally incompetent.

This is just another of many instances where third parties sometimes don't honor a durable power of attorney. My advice - take your Louisiana durable power of attorney to your banks, financial institutions, and investment firms and make sure they will honor it when your Agent needs to use it. It doesn't do any good to have the best Louisiana Durable Power of Attorney in the world, if third parties won't honor it. So make sure they will honor it in advance.

At the end of the call the polite woman asked me to transfer her to our accounting department so she could give them her billing information so we could bill her for the call. I gladly told her, "We never charge anybody for a phone call."

If you need help with Louisiana estate planning issues, feel free to send me an email at paul@rabalaislaw.com, or call our office tollfree at 866-491-3884 to discuss how we might help you accomplish all of your Louisiana estate planning objectives.

What happens to estate if no surviving spouse, descendants, parents or siblings?

I was working with a nice couple this past Friday on their estate plan. They had accumulated quite a bit of assets. The husband was an only child and his parents and grandparents had passed away. They had two children and no grandchildren. The husband wanted to know, in the absence of a Last Will, who would inherit his estate if he, his wife, and his children all died in a common disaster.

Here's the Louisiana law on the issue: "If the deceased leaves neither descendants, nor brothers, sisters, or descendants from them, nor parents, nor spouse not judicially separated, nor other ascendants, his other collaterals succeed to his separate property. Among the collateral relations, the nearest in degree excludes all others. If there are several in the same degree, they take equally and by heads."

So, in this instance, I'm thinking the husband's aunts and uncles (his parents' siblings) would equally - by heads - divide his estate.

Of course all of this can - and will - change because he will designate in his Last Will who will inherit his estate given that the unlikely scenario occurs.

If you have questions about planning your estate, or if you'd like to inquire about our estate planning legal services, please feel free to send me an email at paul@rabalaislaw.com, or give my office a call at 225-329-2450. Until next time...

Paul Rabalais

"Aforesaid" Estate Planning Documents Can and Should Be Easy To Understand

I find that some lawyers like to "strut their stuff" by creating lengthy, complex legal documents that the educated lay person cannot understand. Often I'll read documents that have language like:

• The said person...
• Wheretofore,...
• At any time heretofore held against the aforesaid parties...
• Why not change, "In the event that," to "If"

In fact, you may have seen some legalese that you'd like to share with our readers. It's everywhere and it cause lawyers and their frustrated clients to spend lots of time (and in many cases lots of the clients money) explaining and reexplaining legal gobbledygook.

I'm on a mission to make all of your estate planning legal documents in Louisiana arranged in a way so that they accomplish all of objectives that need to be accomplished, but in a way that is easy for the educated lay person to understand.

If you have a good example of legalese that you'd like to share, by all means post it as a comment.

Or if you'd like us to arrange an estate planning portfolio of legal documents for you that is written so that you know what you're doing, and your heirs will understand, then send me an email to get started at paul@rabalaislaw.com, or give my office a call at 225-329-2450.

Paul Rabalais

P.S. If you want an easy to understand explanation of Louisiana estate planning terms, purchase my book at Barnes & Noble or amazon.com

Copy of My Recent Developments E-newsletter

Sent out the following Recent Developments E-newsletter to my contacts yesterday. Thought you might be interested in the topics discussed:

In this edition of Recent Developments, you will discover:

• How the Decline in the Value of Your Estate Affects Your Estate Planning;
• Caution: Your Old Power of Attorney May Not Be Worth the Paper It's Written On;
• Avoiding Probate/Succession in Louisiana Worth Carefully Considering;
• Find Out More About Estate Planning, Successions, and Medicaid By Checking Out Paul's Blogs; and
• Did You See My Ad for www.SuccessionAttorney.com?

How the Decline in the Value of Your Estate Affects Your Estate Planning

From an estate planning standpoint, we are living in uncertain times. The stock market lost half its value but is slowly working its way back up. Real estate values dropped. I met with a family last week whose real estate value had dropped from $1,300,000 to $400,000 in a few short months. The estate tax ($3,500,000 exemption for deaths during 2009) is scheduled to disappear in 2010, but reappear with a $1 million exemption in 2011 and beyond. Congress and the President are proposing significant changes to our estate tax laws but nothing has passed yet.

So if you live in Louisiana, what should you do? Married couples often question whether - upon the death of the first spouse - they should leave their spouse "ownership" or "usufruct" of their estate. Here's the short answer: If a married couple has a combined estate in excess of $1,000,000 in fair market value, you should leave the "lifetime usufruct" of your estate to your surviving spouse. None of the assets over which you leave your spouse usufruct will be lumped into the estate of your surviving spouse. If you leave your spouse "ownership," then your estate will be lumped into your spouse's estate for federal estate tax purposes.

If your combined estate is - and will continue to be - less than $1,000,000 in value, then estate tax implications should not need to be factored into your decision. Even if you leave your spouse "ownership," there should be no estate tax when the surviving spouse dies - unless of course they make major changes to tax laws in which case we'll start this conversation all over again!

Caution: Your Old Power of Attorney May Not Be Worth the Paper It's Written On

I've been getting more calls lately from real estate title examiners, investment companies, and clients, about powers of attorney. Many people don't like dealing with old powers of attorney.

Not long ago, a major investment company told me that they will not honor a power of attorney that is more than five years old. I guess they are concerned about their potential liability in the event they were not aware that the person revoked or changed the power of attorney in the previous five years.

Also not long ago, I was talking to the corporate counsel for a major bank. The bank lawyers called me from Dallas to tell me that they don't honor a power of attorney when two people have to act together on the power of attorney.

So, what should you do to make things easy for your family? I suggest that you take a look at your Power of Attorney. If it is more than five years old, sign a new one. And don't set it up so that two people must act jointly on your behalf. It is common that if you want to name more than one person to act for you, set it up so they can act "jointly or separately."

If it's been more than five years and you want to update, let us know. If we are going to update your power of attorney, we will also want to talk to you to make sure that the rest of your estate plan is in order. There have been some changes to our Living Will laws and our Last Will and Testament laws in recent years that you may want to incorporate in your plan.

Avoiding Probate/Succession in Louisiana Worth Carefully Considering

You've probably read about it in the national journals: "Avoid Probate With a Revocable Living Trust." Louisiana traditionally has not been one of the "major players" in the Revocable Living Trust talks - primarily because probate (or in Louisiana it's called "Succession") in Louisiana can be simpler and less costly than the probate processes that exist in other states like California where statutory required delays exist, and legislatively imposed court costs and attorney fees drive a family's probate costs through the roof.

In Louisiana, however, a succession can be a cost and an aggravation that can be avoided with careful preparation. In East Baton Rouge Parish, for example, the court costs have TRIPLED in recent months, due largely to the fact that they are building a new monster courthouse downtown. And it seems lately that unreasonable delays exist in either getting a judge to sign a probate order, or in getting the courthouse employees to promptly process the necessary paperwork.

So is there a better alternative? Maybe. A revocable living trust that is both set up correctly and funded with all of your potentially probatable assets can make matters easier for your surviving loved ones. And when you consider that the financial cost of settling a succession may cost $5,000, $15,000, $25,000 or more (a married couple will incur this cost twice), then why not do some work on the front end to get your affairs in order with a revocable living trust?

But before you create your revocable living trust, read two things. First, read my blog post about how to avoid a Louisiana succession. Second, read my blog post about a situation where a revocable trust did not avoid probate. Then if you think a revocable living trust may be right for you, let us know and we will guide you through it.

Find Out More About Estate Planning, Successions, and Medicaid By Checking Out Paul's Blogs

In case you haven't noticed, I write a fair amount about protecting your Louisiana estate. I'm on a mission to make sure that Louisiana family relationships prosper from generation to generation, and hard-earned wealth stays in the family. I've written quite a bit on these subjects. In addition to my book which you can purchase from Amazon.com, Barnes & Noble, and other fine bookstores, I also maintain three separate blogs (short for "weblog"). Feel free to check out:

• My Louisiana estate planning blog;
• My Louisiana Medicaid Planning blog; and
• My Louisiana Successions law blog.

I'm confident you'll find my blogs helpful. I'd even like to encourage you to post a comment or two. On my Successions blog, you can even subscribe to get email updates every time I post to the blog.

Did You See My Ad for www.SuccessionAttorney.com?

If you read the Baton Rouge Advocate, you may have noticed my print ad. It is running for 30 consecutive days. I just released my new report, "How To Avoid or Minimize Taxes, Probate Costs, Executor Fees, Attorney Fees, Family Conflicts and Delays After the Death of a Loved One."

The ad and the Report have created a small tidal wave of families interested in coming in to discuss how a deceased loved one's estate can be settled quickly, professionally, and amicably. The Succession Report is creating so much interest that people are "dying" to read it.

To get your free report go to www.SuccessionAttorney.com.

Until next time...

Paul A. Rabalais

Board Certified Specialist Attorney in Estate Planning and Administration

Divorce Revokes Bequest to Spouse in Louisiana

I was asked today whether a bequest to a spouse is revoked if the couple gets divorced.

The answer is a resounding "Yes."

Not only is the bequest to the spouse revoked upon a divorce, but any other testamentary designation such as executor or trustee is also revoked. If, however, a divorced person WANTS to leave a bequest to his or her former spouse, they can do that. They may need to revise their Last Will after the divorce.

Since our law only addresses "divorce," I suppose a bequest to a spouse is valid if the testator dies the day before the divorce becomes final. So if you are separated and contemplating a divorce, you better call our office to revise your Last Will so that your "ex-spouse to be" does not inherit from you should the unthinkable happen before your divorce becomes final.

The question I'm uncertain about is, "What happens when you die and your ex-spouse was named as the beneficiary of your life insurance or retirement plan? Our Louisiana law addresses only provisions in a testament, but beneficiary designations are not testamentary dispositions. Perhaps the life insurance policy or the retirement plan document should have a provision revoking the designation upon divorce. Feel free to shed some light if you have some knowledge in this area?

Or what if your ex-spouse is still the beneficiary of your revocable living trust, and you don't amend your trust after your divorce?

Careful Wording For Bequest of Business in Will

Was working with a nice couple yesterday. They've spent years building a successful business. One of their children works with the business and much of the growth has been attributed to that child. The couple wanted to make sure that this particular child inherited the business, and that their remaining assets would be divided among all their children in a certain proportion.

Their business is owned by their LLC (limited liability company). Sounds pretty simple. Leave the LLC to that one child, and split up everything else.

However, they run their business out of a warehouse. What they failed to mention - until the very end of our discussion - was that the warehouse is owned by another LLC. In order to accomplish their objectives of leaving all the business assets to their child, we have to structure their Wills so that both LLC's are bequeathed to this particular child, with everything else being divided among the children.

We also talked about gifting small percentage interests of the business to the son annually to avoid estate tax - but that's another story.

Bottom line - if you are going to leave a business to someone in your will, make sure you structure the bequest so that it includes not only the name of the entity, but any other business assets that you may own individually or that you may own in another entity.

We can help. If you live in Louisiana and need help with estate planning for the succession of your business, give me a call at 225-329-2450, or shoot me an email at paul@rabalaislaw.com. Be happy to chat with you about it.

Paul Rabalais

Force Beneficiaries of IRA to Take Required Minimum Distributions By Naming Trust as Beneficiary

Have been asked a couple of times in the last couple of weeks to help people set up their IRAs so that when they die, the beneficiaries could only receive the required minimum distribution (RMD) from the IRA.

The reason people typically want to do this is twofold:

1. You virtually can guarantee that your beneficiary will receive annual income for the rest of the beneficiary's lifetime. The rules say that a non-spouse beneficiary must take RMDs over the beneficiary's life expectancy.
2. You can prevent your beneficiary from taking a lump sum distribution - requiring a hefty income tax bill - and then blowing the inherited funds.

Here's how it works:

• Determine who you want your beneficiaries of your IRA to be. It might be your children, your grandchildren, or other loved ones.
• Determine who will be the trustee of your "Stretch IRA Trust." This should be a responsible person or a trust company that will manage your IRA after your death and distribute to your beneficiaries their RMD amount.
• Work with an attorney like me to establish your Stretch IRA Trust.
• Give a copy of your Trust to your IRA custodian and make sure they will comply with the terms of your trust after your death.
• Name your trust as primary or contingent beneficiary of your IRA. Perhaps - if you are married - you want your spouse to be your primary beneficiary, and you want your trust to be the contingent beneficiary.

Paul Rabalais

How Louisiana Parents Can Designate the Legal Guardian for Their Minor Kids

This is an issue that is close to my heart. My wife, Amy, and I smack dab in the middle of raising our five children. Our children mean the world to us and we certainly want what is best for them.

One of the most important things you can do as a parent of a minor child is to designate their legal guardian in the event you die before your children reach the age of majority - which in Louisiana is 18.

Without the proper designation, a judge will select your children's guardian. Even if the judge puts your children and extended family through trying hearings to determine who the judge thinks would be best for your children, no one knows better than you who could best raise your children if you die.

The Louisiana term for guardian is "tutor." Essentially, it is the backup parent that will take your place if you die before your children reach age 18. Certainly you want to have a say-so in who will raise your children if you can't.

Louisiana have parents have two ways (and two ways only) to designate their children's legal guardian:

1. Designate it in your Will. This reason alone is enough for parents of minor children to have Wills. Reality is, however, that most parents of minor children procrastinate (a costly mistake and not a valid excuse) on getting all of their legal affairs in order; or
2. Sign a simple declaration executed before a notary and two witnesses.

I'm working on some legal documents that parents can download for free and designate the legal guardian for their children in the event the parent or parents die before the children reach majority. Every Louisiana parent should make this designation!

Stay tuned for additional information about these free legal forms that you can download, complete, and sign.

Paul Rabalais

Trust for Your Children - Benefits Often Overlooked

In Louisiana, trusts have been used sparingly. Common uses for trusts in Louisiana have included:

·         Testamentary trusts for young children used if the parents die before the children are mature enough to handle an inheritance;

·         Revocable Living Trusts are used occasionally by those wishing to avoid probate;

·         The Louisiana “usufruct” has taken the place of the “credit shelter trust” used in all of the other states to ensure that both spouses utilize their estate tax exemption;

·         Irrevocable “Crummey” trusts are not used as much since gifting to children’s trusts has less appeal now that the estate tax exemption has increased from $600,000 to $3,500,000; and

·         Informed middle class families often transfer assets to carefully drafted trusts to ensure Medicaid eligibility and protect one’s estate from rising nursing home costs.

But there is another type of trust that most attorneys and advisors overlook – or perhaps they do not know that this type of planning exists. In our office, we call it the Children’s Inheritance Trust. In Louisiana, there are limited benefits to you setting up a trust for yourself and putting your own assets into it (commonly called a “self-settled” trust). However, there can be tremendous benefits to your children if you set up your estate plan so that when you die, your assets go directly into your children’s special trust that you set up for them. The following table shows the benefits that your children can recognize if you set up your estate plan so that instead of your assets going directly into your children’s name (an outright bequest), your estate goes into separate trusts for each of your children. Your children can maintain control of their trust for their lifetime, and recognize the following benefits:

Children’s Inheritance Protected:	Outright Bequest	Bequest to Children’s Inheritance Trust
From Child’s Divorce	No	Yes
From Child’s Lawsuits	No	Yes
For Grandchildren When Child Dies	No	Yes
From Probate at Your Death	No	Yes
From Estate Tax When Your Child Dies	No	Yes
From Your Child’s Bankruptcy	No	Yes
From Probate When Child Dies	No	Yes
From Child’s Nursing Home Expenses	No	Yes

The biggest potential drain on your children’s inheritance will likely be taxes, divorce, lawsuits, and long term care expenses. What if you could leave them an inheritance that was protected from these all-too-often life changing events.

If you want to know how to protect your children’s inheritance, call our office at 225-329-2450 and schedule a no-cost meeting with me, or send me an email at paul@rabalaislaw.com. Make sure you put “Protect Children’s Inheritance” in the Subject Line. Don’t procrastinate on this one. Your children’s entire financial future is at stake!

Paul Rabalais

Louisiana Payable on Death Bank Accounts

We get many questions about whether an individual can set up a bank accounts, such as a checking account, savings account, or certificate of deposit (CD) and name a beneficiary or beneficiaries of that account, and whether a designation like that would be valid.

If you want a bank account to be payable to your spouse, one or more children, grandchildren, parents or siblings, you must, at the time the account is established, give your bank an affidavit stating that all designated beneficiaries of your account are within the required degree of kinship.

The title of your account must include the terms, "in trust for", "as trustee for", or "payable on death to"  your beneficiary or beneficiaries.

The above provisions "shall apply notwithstanding the fact the decedent designates a beneficiary by last will and testament."

Does this previous language mean that banks are released from liability for paying the designated beneficiaries even though ownership is supposed to go to the person designated in the Will? Or does it mean that a bequest in a Will is irrelevant when a bank account owner has properly designated a beneficiary.

Perhaps you should do both to be safe:

1. Designate your beneficiaries in accordance with our "Payable on death accounts" statute; and
2. Make a consistent bequest in your Will of these accounts.

If I'm missing something, feel free to comment. This is a big issue for many older Louisiana residents who want to assign certain accounts to certain family members,

Paul Rabalais