Louisiana Estate Planning and Successions

Successions In Louisiana II - Testate and Intestate

In Louisiana, if a person dies without a will, all of the assets are passed to his or her children, in equal shares.  The surviving spouse, if there is one, has a usufruct over all of the community property assets until his or her death or until remarriage.  In general “usufruct” means use of.  The children have a naked ownership interest in the community assets.  The gist of the “naked ownership” is that it is an underlying interest subject to the usufruct.  A decedent’s assets consist of a one-half interest in all community property and a full interest in all separate property.  If a person dies with a will, the assets are transferred according to the directions in the will.  However, some assets don’t pass via a will.  For example, accounts with a beneficiary designation, such as a retirement account, are transferred to the person named on the beneficiary designation form.

Top 10 Estate Planning Tips Special Needs Clients

 
The Special Needs Alliance Newsletter, The Voice, shares a top 10 list for estate planning for families with special needs members. Read here for their excellent review of top tips.

Consider subscribing to their newsletter. It's a great resource!

Building an Estate Plan after a Second Marriage

Getting remarried is a happy occasion, but it also makes estate planning more complex.  Elder Law Prof Blog guest blogger, Hannah Watson, suggests some considerations for your new estate plan, summarized here:

• Discuss your plan with your family.  Don't allow children from a previous marriage to be surprised by changes in your plan.
• Talk to your new spouse.  Discuss the important issues that will need to be ironed out with your new partner so that he or she can live comfortably should something happen to you.
• Establish goals with your new spouse. You may want to give assets to charity instead of adult children.
• Consider a trust. While not appropriate for some families, a trust may be a fair way to split assets in blended families.
• Speak to an estate planning attorney.  Planning for your assets when blended families is complicated.

Read Hannah's article here.

Who Can Serve as Executor

If you take the time to draft a will you can choose your own executor.  An executor, or personal representative, is the person chosen to supervise the administration of your estate after your death.  First, you must decide if you want an individual or an institution to act as your executor. An institution can be a bank, a trust company, etc. Most people select an individual.  Next, you should verify that your choice of executor will be allowed to serve.  Some states have qualifications that an individual must meet in order to serve in this capacity.  For example, in Louisiana an individual executor must be:

• Over 18 years of age
• Not mentally incompetent
• Not a convicted felon
• A resident of Louisiana unless that person has appointed a resident agent
• Not unfit due to bad moral character

If you die without making a will or the executor you named cannot fulfill that duty, the court will choose an executor.  State law regulates who has priority to serve. First priority is usually given to the surviving spouse and children are next in line.  In the absence of spouse or children, other members of the family may be selected, but the court will decide if heirs cannot agree.

For tips on choosing an executor, click here.

What does the executor do? Click here.

Source for portions of this post: Elder Law Answers

Healthcare Proxy and POA for Your Adult Children

I am re-posting this since it is important this time of year when many parents are sending children to college.

Your college-aged children should have a health care proxy and durable power of attorney in place. Even though you consider them as your children, your kids over age 18 are considered adults by law. As such, they are entitled to medical and financial independence and privacy. Without a health care proxy, the hospital is not allowed to discuss their medical issues with you. Likewise, a bank will not allow you access to your child's bank account without a durable power of attorney.

While your child is home for summer break, consider signing a health care proxy and durable power of attorney. Then make sure copies of the health care proxy get to your child’s college health clinic and primary care physician. You might consider putting a copy in the glove-compartment of his or her car and giving a copy to a roommate or close friend.

How Much Does a Will Cost?

I have to share this post by Danielle G. Van Ess from her blog, Massachusetts Wills, Trusts and Estates. Danielle makes some excellent points about wills downloaded from the internet and the process of estate planning. It's more about a relationship than a document. Please read her post here.

Then, ask yourself the real question: How much does it cost your family if you don't prepare with a comprehensive estate plan, including a well-drafted will tailored to your situation?

How Much Money Should be in the Special Needs Trust?

If you are the parent or guardian of a special needs child, you want to ensure that your child will remain financially secure when you are no longer there to provide support. Your child likely has significant, ongoing expenses, and uncertain future expenses and public benefits. Determining how much a special needs trust should hold is a big challenge.

Fortunately, help is available from attorneys and financial planners with expertise in disability issues, as well as from special needs calculators, such as this online version provided by Merrill Lynch. The calculator asks a series of questions to help you plan, such as:

• The beneficiary's sources of income - salary, public benefits, investment income and legal settlements

• The beneficiary's expenses - housing, transportation, medical and personal expenses
• The beneficiary's life expectancy
• The parent or guardian's time until retirement
• Expected rate of return and inflation

The calculator then comes up with an estimated lump sum needed to fund the trust.

Once you have this estimate, you'll need to decide how to generate the funds. You may need to balance the interests of your special needs child with your other children and your own. Don't forget to create or update an estate plan and determine which of your assets you’ll leave to the trust. Also, advise relatives to direct gifts and bequests to the trust, rather than the child, to avoid the risk of disqualifying the child from eligibility for public benefits.

Source for post: Special Needs Answers from the Academy of Special Needs Planners, August 2007

Technorati Tags: Estate Planning, Trusts

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