Now that we are about halfway through 2012, let's take a look at the most popular reasons Louisiana families, from Houma to Baton Rouge to Lake Charles to Shreveport, engage lawyers to arrange their estate legal affairs:
Simplify the Estate Settlement for Loved Ones. No one wants to leave their surviving spouse, children, or other loved ones a legal mess once they are gone. Arranging your estate's legal affairs in a way that makes it easier for those in charge when you pass can be a true gift to your survivors.
Designate the Appropriate People to Be in Charge. I worked with a couple recently who wanted to make sure their daughter handled their estate when they were gone. Just as important was to make sure that their son would not be the one to handle their estate. If you don't designate someone in your estate legal documents to be in charge when you die or become incapable, a judge will select someone to manage your estate. No one knows better than you who should manage your estate when you die or if you become incapable.
Avoid Probate. Since it's simple to avoid, many families want to arrange their financial and legal affairs so that their surviving family members can avoid a court-supervised estate settlement. Those individuals who have been through a messy probate in the past are typically the first people in line at our door to set up their estate legal documents to avoid probate by typically, creating a revocable living trust to own their "probate assets," avoiding the freezing of accounts and real estate when they die, and appointing a family member/Successor Trustee to be in charge of distributing trust assets outside of the Louisiana Succession.
Specific Asset Distribution. I worked with a couple recently that wanted certain pieces of real estate to go to particular children. If you want to provide that certain assets be passed to along to certain heirs, you have to arrange your estate legal documents to do just that.
Avoid Nursing Home Poverty. It's a shame how many people wait to late to protect assets from nursing home expenses that can wipe you out. You MUST engage a qualified estate planning attorney at least five years before you or your loved one enters a nursing home. Otherwise, you may lose your life savings to the nursing home or to Medicaid. Don't dilly-dally around if avoiding nursing home poverty is a top priority.
Avoiding Taxes. With the estate tax exemption QUIETLY being reduced on January 1 from $5 million to $1 million, it's smart to act NOW to arrange your estate legal affairs to avoid this tax which can consume more than half of your estate when you die.
The bottom line is that everyone has different estate planning priorities but you all know that it's critical to have everything in order. Whether your primary issue involves avoiding probate, avoiding nursing home poverty, protecting minor or irresponsible children, avoiding taxes, putting the right family member in charge, or disinheriting a son-in-law, take action now to get all in order because you never know when your number might be called.
We get questions everyday on whether a handwritten will is valid in Louisiana. Should I have a handwritten will? Should the will be typed? What if it's handwritten and it's notarized? We get all of those questions all of the time. Let me lay it out for you. In Louisiana there's two kinds of valid wills. The one that we see most often by far is what's called the notarial will. It's the kind of wills that we prepare where it's all typed up and has all of the correct language in there that makes it a valid will. it has all of the proper bequests, executor designations, all the other legal stuff. There's a special clause at the end, it's signed on each page, it's notarized, it has to be witnessed by two people. So there's a lot of formality requirements that go into making a valid notarial will. Those are the the ones that are done most often. That's what we recommend. In Louisiana, our state allows whats called olographic wills or hand-written wills. They scare me to death. Yes, it is a valid will if you do it in your own handwriting, do it on your own, you sign it, you date it. However, the question for me is not "Is it a valid will?" The question is always, "Does it do what it needs to do?" If you write one word the wrong way it could cause havoc among your surviving family members. It's kind of like a doctor. Can you do your own surgery? Sure, but you may mess it up. Wills are the same way. Can you do your own will? Sure, but don't mess it up. You could be creating more problems than if you had no will at all. I also write a lot more about that in my book "Estate Planning in Louisiana." Feel free to check that out. But yes, handwritten wills, if they meet the necessary requirements, they're valid. But they often do more harm than good because the person who wrote the will is not properly trained in how to write a will to cover all the things that need to be covered in it. So be aware of that. Have a great day!
Hey, I'm Paul Rabalais. I want to talk to you today about a scenario that comes up quite a bit. I was working with a great married couple yesterday and they were trying to decide whether to leave everything to eachother when the first one dies or whether they should have some other arrangement. Here's what came up. The wife actually had her own house that she had before she was married. She doesnt have any children but after both of them die she wants the house to stay with her family. (her siblings and nieces and nephews) So what she is going to be doing, whether it's right or wrong, is leave that house to her husband and really trust that her husband is going to leave that house back to her family when he later died. So there's a lot of trust going on there because after she dies and leaves it to him he could write a new will and leave it to anybody he wants to. The alternative is that she could set things up so that when she died he would have a right to live in that house for the rest of his lifetime and then it would be an arrangement where when he later died, the ownership of that house would automatically revert back to the people that she had designated. There's no right or wrong in this. Many married couples decide to leave it all to eachother and trust that the surviving spouse is going to make the right decisions. Other people can etch that in stone more on the front end so the surviving spouse really can't leave it all to somebody else. So be aware you've got those decisions to make and there's a couple of different options. I'm Paul Rabalais and have a great day!
Hi, I'm Paul Rabalais. I want to talk to you today about two really big reasons why many Louisiana lawyers dislike living trusts. There's a lot of people out there going to lawyers wanting to know "Should I have a trust? Should I have a will? I live in Louisiana. What should I do?" There are many lawyers out there recommending that you shouldn't have a living trust and really recommend that no one should ever have a living trust. Let me give you two reasons why many Louisiana lawyers really suggest that you not have a trust. One, most lawyers are very comfortable writing wills and powers of attorney. It's what we were trained on in law school. It's what lawyers do. So they're very comfortable doing that and really trusts is a new field. If you're using trusts to dispose of what you have, it's a new area and new field. You have to learn a lot more. The other reason many lawyers dislike living trusts is because the succession business, the probate business is big business. It's a multi billion dollar business. Lawyers quite frankly make lots and lots of money on probate. (Louisiana calls it succession. Other states call it probate.) If you have a living trust that probate is eliminated so many lawyers feel comfortable writing the wills. Then when the person with the will dies, the family goes back to that lawyer and the lawyer has more probate business. So there's really two reasons. It's kind of a controversial area but I like just to lay it all out there so consumers can really weigh those decisions. There's a lot more to this in my book which you can get on Amazon or at Barnes and Noble. It's easy to get and easy to read. So I just wanted to make that point about those two big reasons why many Louisiana lawyers don't like living trusts. If you would like more information just visit our website or read some of our blogs. Have a great day!
It seems like every time I work with an individual or a couple to get thier estate legal affairs in order, the discussion of "How do i distribute my personal effects?" comes up. Whether its your diamond engagement ring, your furniture, all the way to your tupperware collection, people have certain feelings about how they want their personal effects distributed. I tell people there are a couple of different ways you can do that. One is that you can put all of that in your legal documents: "I want so and so to get this ring." "I would like this person to get this sofa." But that's a little bit rigid. If you want to change it in the future you have to change all of your estate planning legal documents. The way that it's typically done is it's done outside of the formal legal documents. This is our portfolio that everybody we work with gets. There's about fifteen sections in here. Of course, all of the legal documents are in here but a lot of other supporting things that help families are in here as well. We have something called an estate planning letter. Here's just one page of our estate planning letter. What many people do is we have all of the legal documents that control the disposition of all of your titled assets. But those personal things you just write them down. Write down who you'd like to get what. This is not a formal legal document but when your family sees that you've taken the time to write it down and communicate how you'd want your personal affects distributed, typically those wishes are honored by the surviving family members. This is something that you can add to, you can change, you can do it on your own because it's not a formal legal document that we have to prepare that has to be notarized and witnessed and all of that. So be aware that there's a couple of different ways you can provide for the distribution of your personal affects. The less popular way is to put all of that in your legal documents, which is binding, but a little bit rigid. The more popular way is less formally do it in your estate planning letter, it's part of your portfolio. Make sure your family's going to honor your wishes. So be aware you have a couple of options there. I'm Paul Rabalais, if you have any questions about getting that in order you can call our toll free number at 866-491-3884. Thank you!
We work with many married couples throughout Louisiana. Every once in a while we work with a married couple and their goal is to avoid probate and sometimes they ask the question "Should we have one trust or should we have two trusts?" Quite frankly, the answer is most married couples, particularly the traditional families (a married couple that have children together), those couples typically have one trust. They have the same beneficiaries so after both spouses pass away typically their children are going to share in the trust assets. However, when you have a circumstance when a married couple met later in life, they already have children, they get married, perhaps they even signed a marriage contract prior to their marriage because they wanted to make sure that all of the assets remain separate and each spouse has different heirs. Perhaps they want to provide for their spouse but ultimately each spouse wants to provide for and leave their assets to their perspective child or children. Often times in those cases we'll do two trusts, one for each spouse. Each spouse will get thier own portfolio with all of the trusts, and the wills, and powers of attorney, and all of the other supporting documents that go in here, all of the instructions for the people who are going to be in charge when you pass away. All that information goes in one place. So be aware married couples if your intent is to avoid probate with a trust you have a decision to make whether you want to have one trust or two. Typically it's one, but when things are kept separate it's often two. I'm Paul Rabalais and have a good day!
Years ago it was a big "no no" for married people to leave everything to thier spouse. There was a significant estate tax cost that the family incurred after both spouses passed away because the first spouse lumped everything into the surviving spouse's name. It caused the surviving spouse's estate to be really too large for estate tax purposes. Now that's not as big of a deal because of something called portability. I was working with a family and the wife passed away. She left eveyrthing to her husband and we are now able to file a federal estate tax return after the death of the first spouse so that the surviving spouse's estate can use not only the surviving spouse's exemption but the unused estate tax exemption of the first spouse to die. So now there's not this significant penalty for leaving everything to your surviving spouse from an estate tax perspective. There's a lot of other family and relationship issues that go in to whether you'd want to leave everything to your spouse but in the past it was something that was frowned upon so everyone left either usufruct to their spouse of they left things in trust for their spouse. So be aware of this new thing called portability. It may affect you and may enable your family to save a significant amount of federal estate tax. I'm Paul Rabalais, have a good day!
I was talking to a woman yesterday and her main concern was how she should title her different brokerage accounts. She asked if she should title her accounts Joint Tenants with Rights of Survivorship, Tenants in the Entirety, POD (payable on death), should she title them as Community Property, or in a Trust. We had the long explanation about how in Louisiana everything is different. Louisiana doesn't recognize many of those forms of ownership like Joint Tenants with Rights of Survivorship; however, what confuses people is that all of the large brokerage firms don't take all of the Louisiana unique laws into account. So they allow people to title things a certain way even though Louisiana doesn't recognize those forms of ownership. So, my final point was regardless of how you title your investment accounts, make sure your estate planning legal documents, whether it's wills or trusts are set up so that the legal documents are consistent with the way you set the title up on your investment accounts and other things that you own. So make sure those two things are consistent and things should just be fine for you in the end.
I had a nice conversation yesterday with a woman in Alexandria Louisiana. Her main concern was that she didn't want her child to receive his inheritance in one big lump sum. She thought he would blow it. She wanted to set things up so that after she passed away her son would receive an amount every month that he could benefit from for the rest of his lifetime as opposed to giving it all to him in one lump sum. So we talked about it and started the proces of setting up a trust for her son so that the whole inheritance that he would receive wouldn't be used for the wrong reasons and it would benefit him for the rest of his lifetime. She'd be giving him a tremendous gift by doing that. So be aware that you have that option. You don't have to leave it in a lump sum and if you have that concern that your children may not use that lump sum for the right reasons make sure you take charge. I'm Paul Rabalais and have a nice day!
Hi, I'm Paul Rabalais. I want to tell you about a question a very nice young lady asked me about yesterday in Shreveport. She was asking me if she should give her home to her child now. I asked her why she wanted to do that and she said she thought it would just make things easier. I told her she could give her home to her child now but there's a couple of things i wanted her to be aware of and they have to do with taxes. Number 1 is she'll lose the property tax homestead exemption if she gives that home to her child now. Number 2 is her child will have to pay a lot more in capital gains tax whenever, in the future, her child sells that home. There wont be a step up in basis when she dies if she gives that home to her child. So whenever her son sells the home he'll have to pay tax on everything that he gets in excess of whatever she paid for that home. So I wanted to make her aware of those two potentially adverse tax consequences to giving your home to your child or your children while you're alive. So there's some alternatives she's considering such as putting her home in a revocable trust to avoid the probate but then retain all of those good tax benefits.
I'm Paul Rabalais and have a good day!
