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.

"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

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?

Looking For Expert on Term Life Insurance AND the Internet

I'm on a mission to make it easy for parents with minor children to legally and financially protect their kids. My wife, Amy, and I have five kids and we know how busy it is these days for parents to take time to address these important but often neglected legal and financial issues. Most parents ignore that fact that they need to create important legal documents to name guardians for their kids, and to require that their children's inheritance be placed in trust for their kids.

Here's a few things I've done to accomplish this goal - but I've got a long way to go:

• I wrote a book in layman's terms which teaches parents of minor children what they need to do to protect their minor children.

• I created a website called www.yourkidsguardian.com. Louisiana parents can go to this website and create free legal documents designating the guardian of their minor children in the event parents die before their children reach age 18.

• I created a separate company which hosts a website which allows Louisiana parents to create self help legal documents like Wills, Wills with Testamentary Trusts, Durable Powers of Attorney, Health Care Powers of Attorney, and Living Wills. The site is still in test mode at this moment but you can check it out at www.YourLouisianaWill.com

I know that many parents have also neglected to purchase term insurance to provide for their minor children. On my www.YourLouisianaWill.com site, I'd like to give parents an opportunity to purchase term insurance (which would be payable to their children's trust).

I'm looking for someone who is an expert in both term insurance AND the internet that can partner with me to provide this valuable service to Louisiana parents. Do not contact me if you are not familiar with internet marketing, website development, marketing campaigns, and you are qualified, experienced, and licensed to sell term insurance in Louisiana. The person I work with must be courteous to others, self-motivated, and have a passion for what they do.

If you think you can help, send me an email at paul@rabalaislaw.com and let me know why. This is a tremendous opportunity.

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

Easy Approach To Business Succession Planning

I spoke to two different business owners recently about what would happen regarding the sale or disposition of their 100% owned business when they died.

The first thing we noted to each of these individuals was that their businesses were community property that they owned with their wives. Even though the business is titled in the husband's name, and the husband was the only spouse who built the business, as long as the business was formed during the marriage, it is community property and owned by each spouse.

It appears that both business owners will keep things simple with their estate plans. They will appoint either their spouse or some other third party as the independent executor of their estate. When they die, the surviving wife (as owner of one-half of the business) and the independent executor (as owner of the other one-half of the business) can transact whatever terms they feel necessary regarding the disposition of the business.

One business owner considered having key employees purchase life insurance on the business owner's life so that when the business owner died, the executor and surviving spouse would sell the business to the key employees. The key employees would use the life insurance proceeds to pay the estate and the surviving spouse for ownership of the business. This arrangement would need to be set up in advance.

If you live in Louisiana and want to find out more about how your business should be handled after your death, simply send me an email at paul@rabalaislaw.com (put "Need Business Succession Help" in subject line) or give our law firm a call at 225-329-2450.

Until next time...

Paul Rabalais

Nonspouse Beneficiary of Retirement Account

Was contacted yesterday from someone who wanted to know if their spouse would be required to sign a Consent if my friend wanted to know someone other than her husband as the beneficiary of her IRA.

401(k) rules and IRA rules are different. Last time I checked, this was the deal:

• If you are a participant in a 401(k) plan, and you want to name someone other than your spouse as beneficiary, then you must get your spouse to sign a Consent form. The rationale is that the spouse is giving up an ownership interest in your 401(k) plan.
• Louisiana law provides that an IRA owner can be permitted to name a non-spouse beneficiary, and the spouse's consent is not required.
• Some financial institutions, though, still require their IRA owners to obtain consent from the spouse when the IRA owner names a non-spouse beneficiary.

If you own an IRA and want to name someone other than your spouse as the beneficiary, and either your spouse won't consent, or you don't want your spouse to know about it, then you may need to look around to find an IRA owner that will permit you to do this.

I asked a friend of mine, Marcel Dupre, who owns WealthPlanners. He said his company permits IRA owners to name a nonspouse beneficiary without requiring the consent of the spouse.

Anybody else out there have any comments on this issue??

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

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