Louisiana Estate Planning and Elder Law

Remarriage and Your Estate Plan

Congratulations - you're getting remarried!  It's important to take time to celebrate such an exciting event, but it's also a good time to review your estate plan.  Even though you may have assembled a solid estate plan during your first marriage, stepchildren and financial changes make a new estate plan a must.  To ensure that your interests are taken care of when you remarry, consider the following:

• Take an inventory of your assets and debts, and decide how to handle finances. For example, is one spouse selling a home?  Will that spouse contribute to the current or new home?
• Decide what you want to happen when you die. Are there certain assets you want to remain with your children from the first marriage? Is a trust necessary to protect your children?
• Change your beneficiary designations!  Can't stress this enough. It's not automatic.  Your divorce decree may limit your options.
• Consider a prenuptial agreement.
• Consult an estate planning attorney.  Even if you have minimal assets, it makes sense to sit down with a professional and discuss the issues.

Source for Post: Elder Law Answers. Read it here.

Your will. Do you know where it is? How about what is says?

Do you know where your will is located? A recent client was sure she knew where her husband's will was stored, but when she went to the file drawer it was not there. It's a good idea to tell someone else where the will is located and be sure you know yourself.

Sashsa Golden recently did an excellent post on outdated estate planning documents on her blog Massachusetts Elder Law Blog - read it here.  She makes some good points about reading your will on a regular basis. Family and financial changes may make parts of the will obsolete or against your wishes. Check yours.

Special Needs Trust Issues: Commingling Funds

A recent case from Rhode Island portrays how easy it can be for untrustworthy people to steal from a trust created to benefit a child with special needs.  Matthew Goodness was born with cerebral palsy and later obtained a deferred annuity as a partial settlement of a lawsuit.  The payments started on Matthew’s 18th birthday.  They were deposited into a trust for special needs created by his parents, Mary and Francis Goodness, for his sole benefit.  His parents were assigned as the co-trustees of the trust, and Fleet Bank (now Bank of America) was appointed as successor trustee.

By the time Matthew started receiving the annuity payments, his parents were separated and seeking a divorce.  Mary and Francis began withdrawing money from Matthew’s trust and putting the funds into their separate personal bank accounts.  While Mary used trust fund money to buy groceries and pay rent, Francis spent the funds he took on beer.  Although Matthew’s essential living expenses were paid for, neither parent coordinated his care with the other.  Eventually both Mary and Francis asked the court to remove the other as a co-trustee.  After a hearing, the Rhode Island Superior Court ousted both Mary and Francis as trustees and appointed Bank of America as the successor.  The court concluded that both parents “(1) breached their duty of loyalty to the Trust; (2) impermissibly comingled Trust funds with their personal funds; (3) wasted and depleted Trust fund assets; and (4) breached their fiduciary duty to the Trust.”

The Goodness case serves as a drastic example in commingling trust funds with personal assets, and should alert reliable parents who are the trustees of a special needs trust.  Trustees have a “fiduciary duty” to administer a trust in the best interests of the beneficiary. Key to successfully managing a trust of any nature is the separation of trust assets from the beneficiary’s and the trustee’s personal property. One who takes funds designated for the beneficiary and uses them for himself without approval is not only violating his fiduciary duty, but also stealing.  Common solutions to this problem are to appoint an independent trustee to serve alongside a family member trustee or establish a committee of trust advisors to monitor the trustee.  The trustee must remember to keep the best interests of the beneficiary at heart and to work with a qualified special needs planner to monitor and supervise the trust.

To read the opinion, click here.

Source for Post: Academy of Special Needs Planners

Wills & Trusts: When to Distribute to the Children

Setting up a living trust or drafting a will including a trust involves making choices about how to regulate your children’s inheritance.  There are several things to consider:  your children’s ages, the size of the inheritance and your degree of concern. Generally speaking there are three options:

• An outright distribution, free of trust, to a child who is at least 18 years of age or older;
• A distribution to a trust for the child with defined provisions and a termination of the trust at a specified age; or
• A trust for the life time of a child.                                                            

The first option may be chosen, for example, if your children are age 30 or older and are free of health, marital, tax and liability issues. You may decide that an outright distribution to the child/children is best and, in addition, set up trusts for grandchildren if the child/children predeceases.  The second scenario may be the optimum choice if, for example, you leave minor children as heirs. The inheritance may be placed into a trust where distributions can be made to their guardian till they reach a specific age.  Once this specific age, i.e. 25, is reached, the remaining principal can be disbursed.  This trust can be set up to allow a trustee to make distributions for important events that come up such as a college education, a wedding or the purchase of a new car.  The third option, a life time trust, may be selected if the inheritance is such a large amount that you wish to have a trustee distribute the funds to the child/children over their life time. This is the most restrictive of the three.

All of your children are unique, and you can choose to arrange different terms for distributing inheritance for each child.  These matters are important and you have a variety of options. Discuss them with your estate planning attorney to decide what is best for you and your children.

Source for Post: California Estate Planning Blog

Death, Taxes and Credit Card Debt?

While a growing number of homeowners are shirking their mortgage payments and banks need lofty bailouts in our present economy, one group still paying its bills is alive and well:  the dead.

According to DCM Services, an agency specializing in collections that began as a law firm in 1999, the dead are the latest frontier in debt-collecting.  Whereas the living are fearful and often so financially strapped that they can’t afford minimum payments on their debts, collecting from the dead is steadily increasing. Improved data base technology is allowing collection agencies easier access to open estates in the 3000 United States probate courts.

Specially trained agents are currently working on the third floor of DCM Services, contacting the deceased’s next of kin and politely inquiring if they want to settle the balance on a bank loan, credit card or final bill.  This training often includes classes that teach “empathetic active listening” which combines the impartial tones of a good friend with the consoling air of a funeral director. The result is a professional collector who is trained to care.

Many survivors who are called have no legal responsibility to assume their loved one’s debts; however, they are increasingly arranging payments to reconcile the accounts of their dead spouses, siblings or parents. Some relatives who are financially crippled are so moved to repay the outstanding accounts that they do so at only a few dollars a month. Agencies say that emotions play a powerful role in feeling the moral obligation to repay deceased debts. Survivors claim to want to honor the last wishes of their dead loved ones or sometimes feel a strong loyalty to the bank or credit card company in question.

Best solution: get some advice before you agree to pay.

Hat tip: New York Times Online. Read the article here.

Virtual Executor

Once upon a time, it was easy enough to leave your belongings to your family in a will and allow someone access to the safe deposit box in order to collect important documents. Now, much of our information is stored online and is password protected. For example, e-mail addresses and correspondence, Facebook profiles, and online accounts with banks, brokerage houses, PayPal and eBay.

When a person dies, access to these accounts can be extremely difficult. Fortunately, a new industry has sprung up to help people pass on the digital keys to their online lives should they die or become disabled. Call it "digital estate planning" or creating a "virtual executor."

Typically, users sign up and pay an annual fee to upload everything into a private account. Upon the user's death or disability, pre-designated individuals are notified about how to open the account and access the information.

Using Insurance to Cover Estate Taxes: Get a Check-up

Many people use life insurance to cover the cost of the death tax, but the strategy is failing in some estate plans now.  Why? Because of low interest rates.  A plan issued when rates were higher could be counted on to generate investment returns in an amount that would cover premium payments. But if interest rates decline over time, the policy may be taking out internal loans to keep up with the premium payments.

So what do you do if your plan relies on life insurance to pay taxes? Have your attorney for insurance expert do a check-up on the health of the policy.

Source for Post: Wall Street Journal Online. Click here to read the entire article.

Minor Children & Your Estate Plan

Another reminder of the dangers of not have an estate plan in place if you have minor children. This one from The California Estate Planning Blog.  One of their authors writes (and is right):

I am constantly amazed at how many parents do not have an estate plan in place to protect their minor children.

It's one thing not to be overly concerned when your children are older, but if you have minor children in your home, life insurance policies, real estate and the usual extended family with grandparents, aunts, uncles -- there is almost nothing more important that consulting with an estate planning attorney to find out what you need to do to protect your minor children in case you and your spouse pass away.

If something happens to both Mom and Dad, there are guardianship issues, money issues and other issues that immediately come up. You want to make it easy for your family and friends by providing clear instructions on who should be the guardian, the executor, the trustee and the like. You don't want to make it any harder should your children be facing the loss of both Mom and Dad unexpectedly.

I could go on and on, but consulting with an attorney to draft up wills, trusts, and other related documents is a definite must do.

Hat tip to: The California Estate Planning Blog.

How to Roll Your Own Will

Much of this blog is dedicated to convincing readers to see an estate planning attorney to draft a will and other estate planning documents. In these economic times, some may decide that's too expensive and download a form off of the internet. I hear the adds too: "checked by a law school professor and found to be valid." 

In my experience, that's not the case. In fact, I have yet to have a client come in with a will downloaded from the internet that was valid in Louisiana. I firmly believe sitting down with an estate planning attorney to plan your estate is well worth the investment. 

However, hand writing a will is probably better than the download option and is definitely better than no will. So, if you must roll your own, here are some tips:

• A handwritten will is valid in Louisiana
• Make sure it is entirely handwritten by you and dated and signed in your handwriting
• Don't have it notarized or type portions of the will
• One will per person. Combo wills don't work.
• Two people will have to testify to identify your handwriting

And the Oscar goes to...

Heath Ledger, but since he died in January '08 many have speculated as to who would get the coveted statuette if he won.  His daughter, Matilda?  But wait, she's only 3 and is legally unable to sign the winner's agreement — a contract required of all nominees that says the recipient won't resell the Oscar without first offering it back to the Academy for $1.  So, who gets it?  Read about it here.

Hat tip: Wills, Trusts & Estates Prof Blog