The Rabalais Law Firm's La. Estates Blog

Don't Name Estate as Beneficiary of Living Trust

I met and was working with a nice woman today. Her husband died a while back and she had to go through a Louisiana Succession in order to sell her home and move into a new condo she is renting. She said the Succession was a lengthy experience.

She wanted to set up her affairs so that when she died there would be no Succession or probate. Funny thing was that she and her husband had set up a living trust before her husband died. The home, however, was not in the trust.

The couple had named a bank as the trustee of their trust to handle the trust investments. The problem was the trust instrument stated that after the couple dies, the trust assets are payable to the executor of the estate - this will require a Succession which is what she is trying to avoid.

While our new client was in our office, we called the Trust Department of the Corporate Trustee who agreed that we need to "merge" the provisions of her Will and her Trust so that all dispositive provisions are in her trust eliminating the need for a Louisiana Succession when she dies.

So we are helping her accomplish her wishes of providing for the disposition of her estate while eliminating the necessity of a Succession at her death.

Paul Rabalais

Is the "Living Trust" the "new Will"?

Louisianian's left and right are asking about the revocable living trust. So much so that it appears that the revocable living trust is now the new "Last Will."

Traditionally, people would go to an attorney and have their Will prepared to designate who would inherit from them and who would be their executor. But lately, people are findout out the benefits of the revocable living trust, and they want to take advantage of them.

People who seem to have the most desire to create a living trust include:

• people who have been involved in a difficult probate/succession;
• people who have heard that probate is expensive, time-consuming, and public; and
• people that have been involved in a simple trust administration.

Individuals or couples who have little or no desire to form a living trust include:

• those who had little or no problems going through a Louisiana succession for a deceased family member;
• young individuals or parents of minor children that prefer not to hold title of all of their assets in a trust for the remainder of their lifetime; and
• those who are new to the concept of estate planning and not at all familiar with probate-avoidance planning.

In Louisiana, living trusts are popular because:

1. The Louisiana Succession system involves families having to deal with our broken judicial system - the courts are now filled with unnecessary expenses, delays and ineffeciencies;
2. In recent years, the Louisiana Consitution was changed to grant the homestead exemption to homeowners that transferred their home to their trust; and
3. Consumers are using the internet and other educational tools to become more aware of estate planning concepts like probate avoidance and revocable living trusts.

If you live anywhere in Louisiana and would like your loved ones to obtain the benefits of having a living trust (such as quick and easy estate settlement without court proceedings), give us a call at 866-491-3884. You'd be surprised how easy it is for us to walk you through the steps to get this taken care of and provide for your spouse, children, or other loved ones.

 

Assets Louisiana Residents Do Not Need To Transfer To Their Revocable Living Trust

We've had quite a bit of interest lately from folks wanting to avoid the Louisiana Probate/Succession procedure by establishing and maintaining a revocable living trust.

I was working with a nice couple last Friday finishing up their trust when the discussion turned toward which of their assets they needed to transfer to their trust. They were under the false impression that everything they owned needed to go into their trust, including their multiple IRAs and their life insurance.

I told them that some assets, by their nature, avoid probate. Typically, it is not necessary to transfer IRAs, 401(k) accounts, annuities, and life insurance policies to a revocable living trust if the goal is to avoid probate. These accounts are payable to designated beneficiaries, and, as long as the beneficiaries are correctly designated, the trust does not have to be involved.

There are likely other assets that you own that do not need to be transferred to a revocable living trust and probate can still be avoided:

• Vehicles. The Louisiana Office of Motor Vehicles will accept a photocopy of a Will in order to transfer title to a vehicle after death - no court orders necessary.
• Checking accounts. If you add one of your adult children as having signature authority on your account, then after you die, that person can access the account, close the account, and divide the funds between your heirs, without the courts having to be involved.
• Savings accounts. See above.
• Personal effects. Your personal belongings are not titled. Family members typically divide personal effects after the death of their parent/loved one without any court involvement necessary.

Assets that require the courts to transfer after your death must be in your trust when you die if your estate is going to avoid probate. These typically include all of your real estate, mineral interests, stock, investments (outside of retirement accounts which have designated beneficiaries), out of state real estate (avoids ancillary probate in that state), Certificates of Deposit, and interests in limited liability companies or other business interests.

Because many people have the majority of their estate in retirement accounts, it can be pretty easy to avoid probate by transferring the home and other probate assets to your trust.

Paul Rabalais

Webinar Review Part 1: How To Decide Between A Louisiana Last Will and a Living Trust For Your Family

I'd like to thank everyone who attended yesterday's Webinar, "How to Decide Between a Louisiana Last Will and a Living Trust For Your Family". This great live event was designed to give your an opportunity to evaluate your family circumstances and choose which Estate Planning alternative best suits your needs and desires. For those who were unable to attend, I'd now like to offer a review of the topics discussed so you can get the gain the same great information received by yesterday's webinar attendees.

1. Your Two Estate Planning Alternatives

• A Professional Estate Plan is a must for anyone who wants to control the distribution of their assets after their passing. Without an estate plan this distribution is left up to our Louisiana Intestacy Laws which are not always in line with your individual wishes.
• Will based planning is the first and most common Estate Planning alternative. It is quick and easy, but your estate must go through probate when you die leaving a will and certain probate assets in your name.
• Trust Based Estate Planning is the second alternative. In this scenario a living trust will govern the distribution of most of your property with the added benefit of avoiding Louisiana probate which will be discussed in greater detail as we move along.

2. How Wills and Louisiana Living Trusts are Similar

• You can accomplish a number of common estate planning goals using either a will or a trust.

With both you can:

• Distribute your estate among many different classes heirs in the exact proportions you desire. Without a plan, only the highest ranking class of your heirs under Louisiana law will share in your estate to the exclusion of all others.
• Delay the inheritance left to your children, grandchildren, and other heirs so that they do not mismanage a large inheritance received at a young age.
• Keep assets in your family in the event of your spouse’s remarriage.
• Plan for Estate Tax Avoidance.
• Ensure a Step-up in basis on your property at death for purposes of capital gains tax planning.

3. The Simplicity of Will Based Planning

• Wills can be completed and put in place quickly. Once you have made all the important planning decisions regarding your estate, you can have a will in place in less than a day.
• No court filings are required
• No transfers or alterations of property titles are required.
• It is easy to revoke your will.

That does it for Part 1 of our webinar review. Tomorrow I will cover the burdens of probate and how living trusts work to avoid probate as well as factors to consider when deciding between a will and living trust.

If you have any questions or would like to meet with me to discuss you Estate Planning options call me at (504) 274-1980 or send me an email to chris@rabalaislaw.com.

 

Chris Kane, Attorney

Director, New Orleans Office

What is A Pour-Over Will?

In the past few months our firm has been preparing an abundance of Revocable Living Trusts for Louisiana residents seeking to avoid probate or succession as it is called in Louisiana. One of the essential parts of a Louisiana Revocable Living trusts is what's known as a pour-over will. Often clients are confused by this term, because their thinking is; "If I have a revocable living trust I shouldn't need a will".

Well I'm here to explain exactly what the pour-over will is used for. When you have a revocable living trust, your Louisiana pour-over will is a essentially the back-up plan for property that is not a part of your trust when you die.

First, The pour-over will governs the distribution of your assets that will not need to pass through a Louisiana succession or probate procedure. These assets include your vehicles and personal effects. The pour over will is in place to dictate what will happen to such assets.

The other assets that the pour-over will covers are assets which should have been placed in your living trust, but for some reason or another, have not made it into the trust. The pour over will is there just in case there are some assets that still need to go thorough probate. The pour -over will typically leaves these assets to your living trust to be distributed according to the terms of the trust. However, the hope, in setting up a Louisiana revocable living trust, is that your estate will never need to pass through a Louisiana Succession.

If you are interested in setting up a revocable living trust in New Orleans, Mandeville, Slidell, Covington, Metairie, Kenner, or elsewhere throughout Louisiana give me a call at (504) 722-3344 or send an email to chrris@rabalaislaw.com.

 

Chris Kane, Attorney

Director, New Orleans Office

Questions from Mandeville Living Trust and Estate Planning Seminar

 

Had another packed house this morning for our event in Mandeville. The above photo is me presenting my most closely guarded estate planning secrets. Barely had enough chairs in the room to accomodate everyone in attendance. Before we started my presentation filled with my estate planning secrets for Louisiana residents, I asked the audience if they had any questions that they wanted me to address during the presentation. I jotted them down as they asked. They asked the following:

1. What is a Living Trust?
2. Do you get to keep the property tax homestead exemption if your home is in your living trust?
3. What should you do if you own real estate that is out-of-state?
4. If you live in two different states, where should you make your Will or Trust?
5. How does a Power of Attorney and Living Will fit in with a Living Trust?
6. How long does it take to create and fund a Living Trust?
7. What is the cost to establish a living trust?
8. Should you avoid putting real estate into a trust?
9. What if I set up estate planning documents in Louisiana and then move to another state?
10. Should I do anything different if all of my children live out of state?
11. What considerations exist if a married person owns both separate property and community property?

These were all of the questions asked BEFORE the seminar even began. At the end I answered about another 40-50 questions. Quite the inquiring audience.

Of the three events I've given in the last 24 hours to packed rooms, I'd have to rate this morning's crowd as the most inquisitive. Looking forward to fielding questions from tonight's crowd at the Mandeville Community Center.

For Covington and Mandeville estate planning, give our Mandeville office a call at (985) 246-3020.

Packed Trust Seminar This Morning

I had quite the lively, energetic, and fun crowd this morning at our Living Trust Event in Metairie. We had a crowd that new some stuff and asked some challenging questions like:

• What if a trust doesn't designate a successor trustee?
• What are some reasons to "not" have a trust?
• How do lawyers charge for a Louisiana probate?
• How much FDIC insurance protection do trusts get?
• How can someone do a Louisiana Succession without one of the heirs knowing about it?
• What happens when someone abuses a Power of Attorney?
• What if someone lives outside of Louisiana but owns real estate in Louisiana?
• How effective is a "Transfer on Death" account designation in Louisiana?
• Do our services encompass transferring out of state real estate to a trust?

Fortunately I had the chance to personally meet many of the attendees before and after the event - several of whom will be coming into our office in the coming days and weeks to get their legal affairs in order for themselves and their family. The following is a photo Erika shot during the presentation.

 
Hope I have the energy to do this all over again this evening and twice again tomorrow on the Northshore. I'm sure I will...it's fun meeting so many incredible Louisiana people and their families.

Warning: Watch Out for Living Trust Salesman

Was working with a fine elderly gentleman yesterday. He was telling me the story about how he purchased a living trust salesman a few years ago from someone out of state. He said he never had a chance to meet the attorney because the attorney was "out of state."

He then proceeded to tell me that once the living trust salesman found out how much money the gentleman had, the living trust salesman immediately pitched a hard sale for annuities.

 

I've seen this too many times. Elderly people get "sold" a living trust by a salesman who proclaims that probate is hell. Since funding the living trust is important, the salesman finds out exactly how much money the elderly person has, and then proceeds to sell more lucrative annuity products.

In this case, the trust that was prepared was a joke. The trust listed the gentleman's beneficiaries as his "descendants." Funny thing is: this gentleman never married and had no children.

Be wary of this business model. These people have no interest in helping you passing on a legacy intact to your loved ones. They have a greater interest in getting a fat commission off the sale of an annuity to you.

Bottom line: Don't work with non-attorneys when you create important estate planning legal documents. Feel free to check us out and come visit with us in our Baton Rouge, New Orleans, or Mandeville offices.

Owning Real Estate in Louisiana AND in Other States

 

I'm working on two matters today involving families owning real estate in Louisiana and real estate in other states. It can get confusing if this applies to you.

First, I'm working on getting a Revocable Living Trust set up for a Louisiana family. They own a home in Louisiana and they own real estate in two other states. They want and need to get the real estate in those two other states transferred to their trust in order to avoid the ancillary probate which is required when someone dies a resident of one state and they own real estate - in their name - in another state.

If you live in Louisiana and you establish a revocable living trust, your Louisiana attorney/law firm should transfer your Louisiana real estate to your trust, but you will need to retain the services of another lawyer or entity to transfer your out-of-state real estate to your trust and have it recorded in the proper county. Don't expect your Louisiana attorney to transfer your out of state real estate to your trust. Seek, find and retain an attorney in those other states to transfer that property to your trust. Doing this right will avoid a Louisiana succession when you die, and it will also avoid ancillary probates in other states if your trust owns all of your real estate when you die.

Second, we are working on a Louisiana succession of a Louisiana resident who died owning property in another state. We completed the Louisiana succession which transferred the Louisiana real estate plus all of the other assets, EXCEPT the real estate outside of Louisiana. Like always, we advised the family to seek out and retain an attorney in those other states to handle the ancillary probate in those other states and get the non-Louisiana real estate transferred. Don't expect your Louisiana Succession attorney to handle the ancillary probate in those other states.

So what should you do if you are alive and well and you own real estate in multiple states? In order to avoid multiple probates when you die, consider creating a revocable living trust and working with different attorneys in each state where you own real estate to get all of the real estate "funded" into the trust. A little effort now can avoid multiple court proceedings in multiple states when you die.

Finally, if someone dies a resident of another state (not Louisiana) owning real estate in Louisiana, you can contact us about retaining our legal services to quickly and efficiently handle the Louisiana ancillary probate which will transfer the title of the Louisiana real estate (also called "immovable property") to the proper heirs.

Webinar Review Part 2: What Louisiana Lawyers Won't Tell You About Avoiding Probate Using Revocable Living Trusts

Yesterday you learned more about revocable living trusts and how they allow you to avoid probate. Today I'd like to continue the review of our recent webinar "What Louisiana Lawyers Won't Tell You About Avoiding Probate Using Revocable Living Trusts" This information could help you and your family avoid many headaches in the future by creating a properly executed trust.

Your Property In Trust

• Not all of your assets need to be placed in trust, only certain assets in your name are considered probate assets and only those assets are must go through a probate procedure to be fully transferred to your heirs.
• Probate assets include:
  • Your Home
  • Other Real Estate Holdings, whether located in Louisiana or another state
  • Stocks and Investments
  • Certificates of Deposit
• Non-Probate Assets include:
  • Personal Effects - your family will handle distribution of these assets internally.
  • Vehicles and Boats  - State law provides for transfer of these assets at Office of Motor Vehicles or Department of Wildlife and Fisheries.
  • 401Ks, IRA’s  - These pass by beneficiary designation.
  • Life Insurance Policies - These pass by beneficiary designation.
  • Bank Accounts - Can stay out of your trust as long as you grant a child or other trusted friend or relative as a signatory on your accounts.

Why Louisiana Lawyers Ignore Trusts

• žMany are unfamiliar with Trusts
  • While trusts have caught on along the West Coast and in the Northeast. Our local culture has not yet accepted the transition from using wills to using trusts for basic estate planning
  • There seem to be adherence to traditional methods of probating wills
• Common Misconceptions about Revocable Living Trusts
  • –Revocable Trusts are not taxed as a separate entity, the assets in revocable trusts are veiwed as your assets for tax purposes. No separate tax return needs to be filed for the trust.
  • You will not lose your  homestead exemption by placing your home into trust
  • –You retain control over your assets in trust and can remove assets in trust at any time 
• žLawyers can make more money from probate fees
  • The cost to set up a trust is often far less than the cost of probate
  • Many lawyers charge a percentage of the estate value, so probate fees on large estates can be exorbitant
  • Multiple probates for married couples and out of state property means more fee.

Is a Trust Right For You?ž

• A trust will replace your will and will revoke all of your prior wills.
• If you are young and still acquiring assets, a trust is probably not right for you. Wait until you have acquired the majority of your assets before setting up a trust.
• žTransfer of assets into trust can be complicated. 
• žThe ultimate question: Do you want to do a little work now to save your family money and time after your death?

I hope you have found this review to be valuable. If you would like to discuss your estate and how a revocable living trust could benefit you, give me a call in the New Orleans/Metairie/Northshore Area at (504) 247-1980 or send an email to chris@rabalaislaw.com. In Baton Rouge, contact Paul Rabalais at 225-329-2450 or paul@rabalaislaw.com.

Chris Kane, Attorney

Director, New Orleans Office