Estate Planning Law Firm of Louisiana

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

Types of Louisiana Trusts

I held a Staff Training Meeting with everyone in the office today - just like I do every Thursday. The attorneys and paralegals are all in attendance. It's a great opportunity to learn and share ideas. This week's topic was trusts. We discussed many of the uses for trusts in Louisiana estate planning. Some of the uses include:

• Testamentary Trusts. These are often used when parents have minor children and the parents don't want a court overseeing their children's inheritance, and the parents don't want their children's inheritance dumped in their children's inheritance when the children turn 18.
• Medicaid Living Trust. If you don't want your entire life savings depleted on long-term care, you should consider our Medicaid Irrevocable Trust. If you do it right, you'll maintain control over your assets, but you won't have to spend them before qualifying for Louisiana Long Term Care Medicaid. Avoids probate too!
• Children's Inheritance Trust. This valuable trust enables you to make your children's inheritance divorce-proof. Would you like to provide for your children AND THEN your grandchildren? No problem. If your children don't spend all of their inheritance before your children die, use our Children's Inheritance Trust to make sure that your grandchildren will inherit when your children die.
• Revocable Living Trust. A common probate avoidance tool. Put all your assets in your Revocable Living Trust, and when you die, your family will avoid the probate - or in Louisiana called the Succession.
• IRA Trust. Want your big IRA to go for your spouse? Sure you do. But what if your spouse then leaves it to people other than your children? Simple solution - name your IRA Trust as the beneficiary of your IRA. Your spouse can benefit after you die, but you control where the assets go when your spouse later dies. This may be one of the most important estate planning tools that is available to you - particularly if most of your wealth is tied up in a roll-over IRA.Watch out for income tax rules though!!!
• Irrevocable Life Insurance Trust. If you're not careful, your life insurance death proceeds will be subject to the federal estate tax. Would you like half of your life insurance to go to Uncle Sam? Of course not. Use the ILIT to exclude your life insurance from your taxable estate.

There are tons of other types of trust. In fact, I was working with a Florida attorney last week. We were working on the provisions of what is commonly referred to as a "Gun Trust."

Bottom line - find out how trusts can help you accomplish your estate planning objectives. If you want to know more, either send me an e-mail at paul@rabalaislaw.com (you'll be amazed at how quickly I respond to your questions) or you can even call my office toll-free at 866-491-3884. Until next post...

Paul Rabalais

Synchronize Your Beneficiary Designations With Your Will and Trust

Many people go to great lengths to make sure their Last Will and Testament, or their Revocable Living Trust, is set up just right so their heirs are protected and the inheritance is not squandered. For example, a couple with two minor children set up their Wills so that if the parents pass away, the parents' assets go into trust for the minor children, and a trustee is named, and the children can't access the assets on their own until they reach the age of 25. The Will is perfect.

What the parents fail to realize is that most of their wealth is in assets like 401(k) plans and life insurance policies. These assets are payable at death to the named beneficiaries, regardless of what the Will says. If the parents die with minor children, and the children are named as beneficiaries, the money will be paid to the court appointed legal guardian, and the minor's will have it thrown into their lap on their 18th birthday.

The solution? Make sure, as part of your estate plan, that your beneficiary designation documents are consistent with your other testamenary provisions. For example, some parents will name their spouse as their primary beneficiary of their life insurance and retirement accounts, and then name the trust for their children as the contingent beneficiary. The will avoid life insurance and retirement account proceeds being dumped into a child's lap. Done right, you can leave your children an inheritance that will benefit them for the rest of their lifetime.

Paul Rabalais

Make a Trust the Beneficiary of a Trust

Can a one trust be the beneficiary of another trust in Louisiana? Yes it can.

Let's say that you want to leave an inheritance for your child. When your child dies, you want the remaining assets to go to your child's children. Let's also say that your grandchildren are too young to receive an inheritance anytime soon. What do you do?

Name your child as the income beneficiary of a trust and allow principal distributions to him or her for their support, maintenance, education, or medical expenses. Then, instead of naming your grandchildren as principal beneficiaries, name a trust for your grandchildren as the principal beneficiary of the trust. Sound confusing? It might, but you can do some powerful things for your children and grandchildren by using multiple trusts. It can be simple. And it's not just for the wealthy.

Paul Rabalais

Warning: Be Careful With IRA's and Revocable Living Trusts

Here's an example I dealt with recently: An individual moves to Louisiana from another state. Prior to moving to Louisiana, she created and funded a Revocable Living Trust in that other state. Her goal was to avoid probate. While in that other state, she named her Revocable Living Trust as the beneficiary of her large IRA.

When she died, the custodian of the IRA said that since the Revocable Living Trust provisions required that the trust be terminated at her death, the entire IRA must be taxed to the decedent in the year of her death. Had she named her children as the beneficiaries of the IRA (instead of the trust), they could have been able to take minimum taxable distributions over their lifetime.

Moral of the story: If probate avoidance is your primary goal, name individuals as beneficiaries of IRAs and 401(k)s. They avoid probate and there won't be any question about your beneficiaries' distribution options.

Paul Rabalais

Remember Trust Administration After First Spouse's Death

Many married couples with revocable living trusts believe that no actions need to be taken when the first spouse dies if all assets are titled in the name of the trust. While there may be no succession or probate required, there is what we call a "trust administration" that must be done.

Let's say, for example, that a married couple has a revocable living trust with $1.5 million in assets. Let's assume the husband dies first. The husband's one-half interest in these assets should be retitled into what we might call the "Decedent's Trust," which becomes irrevocable, and the wife's portion is retitled into the name of her "Survivor's Trust," which remains revocable by the surviving wife.

There are two primary reasons this must be done. First, if the trust administration is done properly, none of the Decedent's Trust assets will be included in the wife's estate for federal estate tax purposes when she dies. Second, the beneficiaries of the Decedent's Trust assets are fixed upon the death of the first spouse, while the wife can change the beneficiaries of her Survivor's Trust.

Proper trust administration after the death of the first spouse makes things easier both for the surviving spouse and for the trustee who will handle the affairs after the death of the surviving spouse - and it may help save a pile of estate tax too!

New Report on Revocable Living Trusts Gives Answers

If I had a nickel for everytime someone asked me whether they should have a Will or a Revocable Living Trust, I'd have a lot of nickels. About 30 minutes ago, I finished drafting my Special Report titled, Revocable Living Trusts in Louisiana: Choosing Between a Will and a Trust as Your Primary Estate Planning Tool." I've been working on it for about a week and I'm excited because you will now be able to get most - if not all - of your questions answered about revocable living trusts which are highly promoted in many national estate planning consumer publications.

If you want to be one of the first to review this 14-page Special Report, simply comment to this post and I'll personally e-mail it to you at no charge.

Revocable Living Trust for Family That Wants To Avoid Probate

I spoke on the phone today with a gentleman. I had prepared Wills for he and his wife ten years ago - a very nice couple. Since then, he's been handling his elderly mother's affairs. She lives in another state and she has a Revocable Living Trust. He stated that he wanted a Revocable Living Trust for his family because: (1) he saw how easy it was for his mother to establish her trust; (2) he wants to avoid the probate expense; and (3) he has real estate in another state and he wants to avoid the ancillary probate in that state.  We'll be preparing his family's trust and we'll put it into effect when he gets back from a week long trip to visit his mother.

While I'm officially neither pro-trust nor pro-will (it depends on the circumstances), I do benefit from hearing your stories about probates you've been involved in - whether good or bad, easy or difficult. Please feel free to comment.

Revocable Living Trust When Property in Multiple States

I met with a nice couple today. After "googling" me, they drove a couple of hours to get to my office. Their initial concern was that they had done no prior planning and they wanted to know if a Will or a Revocable Living Trust was right for them. After discussing their concerns, we decided that the Trust was the way to go because they owned real estate in multiple states and they can avoid the ancillary probate in other states if their assets are owned by their Revocable Living Trust.

I'm currently writing a Special Report analyzing the advantages and disadvantages of Wills and Revocable Living Trusts in Louisiana. I'm excited about releasing this Report. If you'd like a copy when it's complete, simply Comment to this Post or send me an e-mail at paul@rabalaislaw.com