Estate Planning Law Firm of Louisiana

Basics of the Louisiana Usufruct

There are lots of internet inquiries these days about the Louisiana usufruct. The law in Louisiana regarding usufruct is both comprehensive and complex. But I prefer to keep things simple so here's a couple of pointers about the Louisiana usufruct. When someone asks me what a usufruct is, I usually give a short answer like this," If you own the usufruct of assets, you have the right to "use" them. When your usufruct terminates, then those assets you were "using" must go to the naked owners. Example. Husband dies with a wife and two children. His only assets are a house and $100,000 cash. HIs Will leaves his wife the lifetime usufruct of his assets and names his two children as the naked owners. Since the cash is a "consumable," his wife becomes the owner of the cash. She can put it in her name. But when she dies, Husband's two children are entitled to claim $100,000 from Wife's estate. Wife's heirs won't get anything until that $100,000 debt is satisfied. If there is not $100,000 in Wife's estate, the children get whatever is there, and Wife's heirs get nothing. The house, however, is a nonconsumable item. As usufructuary, Wife can live in the home or she can rent the home (whether she can sell the home is the topic of another blog post). Regardless of whether the house increases or decreases in value after Husband's death, when Wife dies, Husband's two children co-own the home. There more to the Louisiana usufruct than this, but this is the very basics. If you have a specific question about Wills and the Louisiana usufruct, feel free to send me an e-mail at paul@rabalaislaw.com, or read the chapter of my book about usufruct. Paul Rabalais

When are Grandchildren Forced Heirs in Louisiana?

Louisiana is the only state that has forced heirship. Forced heirship requires that children 23 or younger, or children of any age who are permanently incapable of "taking care of their persons or administering their estate," must inherit a portion (usually one-fourth) of their parent's estate. There are also two circumstances where your grandchildren would be forced heirs and required to inherit from you regardless of what you write in your Will: If your deceased child would have been 23 or younger when you die, then your deceased child's children are forced heirs. This does not occur too much. If, when you die, your deceased child has a child or children who are permanently incapable of "taking care of their persons or administering their estate," then those grandchildren are your forced heirs. There is a whole lot more to the Louisiana forced heirship laws than what I wrote above. I simply wanted you to know that there may be circumstances where grandchildren can be forced heirs. If you have any questions about this, feel free to comment to his post or send me an e-mail at paul@rabalaislaw.com. Thanks. Paul Rabalais

Understanding the Louisiana Surviving Spouse's Marital Portion

In Louisiana, when a spouse dies rich in comparison with the surviving spouse, the surviving spouse is entitled to claim the "marital portion" from the succession of the deceased spouse. While there is no concrete test, it is generally understood that if the deceased spouse's assets are more than five times the surviving spouse's assets, the surviving spouse will ordinarily be awarded the marital portion. So, how much does the surviving spouse get? If the deceased died without children, the surviving spouse gets one-fourth of the deceased spouse's estate; If the deceased died survivived by three children, the surviving spouse gets the lifetime usufruct of one-fourth; and If the deceased spouse died survived by more than three children, the surviving spouse gets a child's share in lifetime usufuct. In no event can the marital portion exceed $1,000.000 Example. Rich Husband dies (survivied by three children and Poor Wife) with $3,000,000 of separate property. He and Poor Wife have $1,000,000 of community property. His estate is $3,500,000. Her estate is $500,000. He has 7X what she has. She qualifies for the marital portion. In his Will, he leaves his entire estate to his children (or to anyone other than Poor Wife). She is entitled to the lifetime usufruct of $875,000. She must file a claim for this within three years of his death or she loses this right. If you have questions about a marital portion claim, post a comment or send me an e-mail to paul@rabalaislaw.com, and I'll see if I can help. Paul Rabalais

Where Do You Store Your Estate Planning Documents?

We now live in a digital world. You receive your bank statements online. You pay your bills online. You monitor your investments online. And you shop online. But when you die or become incapacitated, someone better produce your original, signed estate planning documents. So, where do you store these important papers? In a safe deposit box? In a safe? In your home? In your attorney's office? Many people keep their important papers in their safe deposit box. But your executor may not be able to access the box after you die without a court order. If you use a safe deposit box, you better make sure you put someone you trust as having the authority to access the box after you die. Check with your bank or credit union to see what their procedures are. Another note: We had to re-do a number of estate plans after Hurricane Katrina flooded many New Orleans area banks. A safe in your home might be a better storage place for your estate planning documents. Again, make sure others that you trust know how to access your safe. When we complete an estate plan at our office, we electronically scan and store all of our client's estate planning documents. You keep the originals and we encourage you to keep those in a safe place. Where do you keep your important documents? Besides your legal documents, what other documents do you keep in a safe place?

Would You Consider a Do-It-Yourself Estate Planning Kit?

Whether you like it or not, it's here. Lawyers and other professionals have pretty much bashed the online and offline do-it-yourself estate plans. There are numerous other companies in the market, with the larger ones being Legalzoom, Quicken Willmaker, and USLegalForms - there are many others. I actually see this trend gaining momentum. Certain financial institutions now allow account owners to change beneficiaries online. Revenues at these do-it-yourself legal doc companies are on the rise. On the one hand, many people feel they cannot afford traditional lawyer drafted estate plans which often cost in the thousands. On the other hand, the do-it-yourself kits often don't provide the customization necessary to meet your specific estate planning needs. So what's the consumer to do? What if there was a package that you could use that you felt comfortable that it would solve your basic estate planning needs, and it was inexpensive because it did not require that you meet with an attorney to have it prepared, maintained or executed. Would you consider it? I'm looking for feedback here so feel free to comment. Until next time... Paul Rabalais

Should You Include a "Spendthrift Trust" in Your Will?

Does your child have the same appreciation for hard-earned money that you have? If not, perhaps you should consider a spendthrift trust? Let's say you leave $500,000 of assets (or any amount) to each of your children. It is likely that within a short period of time, they will have: spent it; mortgaged it; or lost it to creditors. In order to protect your heirs from themselves, you can provide in your Louisiana estate planning documents that your children's inheritance will be placed in their Spendthrift Trust after you die. If it's set up properly, your children's inheritance will be protected because it: can not be spent immediately; can not be alienated, sold, or mortgaged; can not be taken by your children's creditors. If your children are like most, they won't fully appreciate the value of their inheritance because they did nothing to earn it. If you or a loved one live in Louisiana and would like to know how to protect an inheritance from themselves and their creditors, send me an e-mail at paul@rabalaislaw.com, and I'll be happy to e-chat with you about it. Paul Rabalais

Louisiana "Class Trust" a Great Gift To Grandchildren

Finished up a class trust today. You may want to consider this for your grandchildren or to any other group of beneficiaries. Let's say you want to leave a bequest to your grandchildren. You are concerned, however, that you may have more grandchildren after you die, and those grandchildren would be excluded. You can disignate in your Will or Trust that your leaving a bequest to the "class" of your grandchildren (or great-grandchildren), even though some of the members of the class may not be in existence at the time of your death. You might provide that the class closes when the oldest member reaches the age of 25. At that time, there will be separate trust accounts established for each of the grandchildren in existence when the oldest grandchild reaches the age of 25. Using this class trust, you can be sure that grandchildren born after your death will not be excluded from this generous bequest. If you'd like to know more about Louisiana estate planning, or if you'd like me to answer any questions you have, or if you'd like to go ahead and get started with your estate planning, give our office a call at (225) 329-2450, or send me an e-mail at paul@rabalaislaw.com Until next time, Paul Rabalais

Situation Where Revocable Living Trust Fits Well

Worked on a Louisiana Revocable Living Trust yesterday. It was a good fit for the RLT. The couple has no children. His mother had died a few years ago and she had a revocable living trust at the time of her death, and the husband was the trustee. He mentioned it was a breeze to settle her trust with his siblings - no lawyers, no probate, no problem. It was good that he was familiar with how RLTs work. They own some real estate outside of Louisiana so they wanted to avoid the ancillary probate - another good reason to have a Louisiana Revocable Living Trust. By using the trust, married couples have the ability to provide income to a certain group of people after the married couple dies, and then provide that the trust assets will benefit another younger group of people after the successor income beneficiaries die. The list of options is really unlimited. If you want to find out whether a Louisiana revocable living trust could make things simple for you and your family, shoot me an e-mail at paul@rabalaislaw.com, and I'll be happy to put my two cents in. Paul Rabalais

Children From A Prior Marriage? Protect Your Life Insurance

It used to be that the traditional estate plan was the one where you had a married couple and all of the children were born of that one marriage. Today, it seems that the majority of estate plans involve spouses - and one or both of them have had children from a prior marriage.

Worked with a couple today. One of their main concerns was to protect the life insurance - and their estate - for (1) their surviving spouse; and then (2) for their respective children.

Here's the problem. Husband dies and leaves his $1,000,000 life insurance policy to his wife. After Husband dies, Mom applies for and receives a check for $1,000,000 from the life insurance company. When Mom later dies, she leaves this money - and the rest of her estate - to "her" children. Husband's children are left with zippo.

What the solution? Perhaps Husband should have left the life insurance to a trust. Wife could be the trustee of the trust and Wife could use the principal for her maintenance and support. But the trust would provide that when Wife later dies, the trust principal reverts back to Husband's children.

Want to know how to protect your estate for your children from a previous marriage, just send me an e-mail to paul@rabalaislaw.com, or give my office a call at 225-329-2450. Make sure you tell my law firm's receptionist that you read about this on my blog. Until next time...

Paul A. Rabalais

Importance of Estate Planning Amplified When There's A Second Marriage

Had a fantastic estate planning meeting today. My new client wasn't sure if it was the right time to start estate planning, but I assured her it was (actually anytime is the right time to plan). She wanted to make certain that her children would inherit from her - as opposed to her step-child.

We used usufruct, and we left things in trust for the children. We named an executor, a trustee, and a power of attorney. She seemed pleased with the outcome and I look forward to providing this service to her over the next couple of weeks.

If you want to know how estate planning can help you and your family, drop me an e-mail at paul@rabalaislaw.com. Or, give me a call at (225) 329-2450. If you call, make sure you tell our awesome receptionist, Laura, that you read about me on the blog. Thanks.

Paul Rabalais