BEWARE OF REVOCABLE LIVING TRUST

Many consumers are executing Revocable Living Trusts. They are being sold on this product on the promise to avoid a succession and probate.

Revocable Living Trusts do help the person avoid succession and probate. But, that’s all it does and this benefit may not be as valuable as one might initially think.

Some Revocable Living Trusts are expensive and may costs as much as a small uncontested non problematic succession. So the financial benefit that you get, may not be as great as you think.

What is important to remember is what Revocable Living Trusts do not do! Revocable Living Trusts are revocable. This means you can remove any property you put into that trust at any time.

Since you can remove the property from the trust, there is no asset protection. If you owe money, your creditors will be able to seize whatever assets you placed into the trust.

Also, you obtain no tax advantage to creating a Revocable Living Trust. You will continue to pay your taxes the same way you always have paid them.

Finally, placing property in a Revocable Living Trust does not shelter it from government entities for you to pay for your long term nursing home care. Medicaid and the Veteran’s Administration will count all property placed into a Revocable Living Trust just like you own it. There is a five (5) year look back period for Medicaid and there may also soon be a look back period with the Veteran’s Administration. You may be missing out on an opportunity to shelter your assets while you are healthy by placing your assets into a Revocable Living Trust.

To obtain additional information on legal and innovative estate planning strategies, you should always consult an experienced estate planning attorney. Kent S. DeJean

Will I Owe Louisiana State Inheritance Taxes?

The answer to whether you will owe estate taxes in a Louisiana succession, is probably no.

Under Louisiana law, there are no inheritance taxes for estates of persons that died after June 20, 2004.

There are also no inheritance taxes for estates of persons that died on or before June 20, 2004 as long as an inheritance tax return was not filed before July 1, 2008.

It is unclear whether estates of persons that died on or before June 20, 2004, which filed an inheritance tax return before July 1, 2008 will owe estate taxes.

If you have any questions on successions, contact an experienced estate attorney. Kent S. DeJean

What Do I DO If I Left Off A Succession Asset?

Heirs and legatees are required to file a Detailed Descriptive List with the court in a succession. A Detailed Descriptive List itemizes all debts and assets of the person that died as of the date of death under oath. Although heirs and legatees should make every effort to present to the court an accurate list of assets, assets can be left off by mistake.

Heirs or legatees may discover real estate or bank accounts belonging to the decedent after a Judgment of Possession is rendered.

If assets are discovered after a Judgment of Possession is rendered, it will be necessary to file a Supplemental Petition for Possession along with a Supplemental Detailed Descriptive List itemizing the missing asset. After permission is granted by the court, a Supplemental Judgment of Possession can be rendered by the court to add the additional asset.

If you have any questions concerning successions, contact an experienced estate attorney. Kent S. DeJean

Reasons A Succession May Need An Executor Or Administrator

Many people are surprised to learn that under Louisiana law, an heir or legatee is not required to have an executor/administrator appointed by the court to administer the estate of a person that has died. In fact, the heirs and legatees are placed directly into possession without the need for an administration in most Louisiana succession.

However, there are situations where having an executor/administrator appointed by the court to administer the estate of a person that has died, is recommended.

1. We don’t know what the decedent owned property or debts that were owed at the time of death. It may be necessary to appoint an administrator or executor to investigate. Through this appointment, an executor or administrator will have the power to change the mailing address for bills and statements, open mail, and speak to banks and other companies in order to investigate.

2. The heirs or legatees are fighting. If there is a dispute amount their heirs or legatees of the decedent, it may be necessary to appoint an executor or administrator to administer the estate or facilitate completion of the succession pending litigation of the disputes.

3. There maybe lawsuits pending. If there is litigation pending either on behalf of the decedent or against the decedent, it may be necessary to administer the estate while the litigation is pending. Otherwise, the heirs and legatees may not know whether the estate is solvent or not.

4. There may be an ongoing business. It may be necessary to manage an ongoing business which the decedent had an ownership interest pending the completion of the succession to prevent problems with continuation of business activities.

If you have any questions concerning successions, you should consult an experienced estate attorney. Kent S. DeJean

How Soon Should I Open A Succession?

Unless you have a multi-million dollar estate which requires that you file a Federal estate tax return within nine (9) months of death, there are no deadlines to file a succession within a certain time after the death of your loved one. Therefore, you can take your time from a legal standpoint under Louisiana law.

From a practical standpoint, it isn’t a good idea to procrastinate very long. It is in your best interest that you retain an attorney and commence the succession proceeding as quickly as possible. There are several important reasons to proceed as soon as possible.

First of all, the law requires that a Detailed Descriptive List be prepared listing all assets and debts of the person that died on the date of death. It will be difficult to get an inventory of the assets and debts as time passes along. Persons that have knowledge of the estate may lose capacity or die. Institutions that have information may close. Assets can be lost, deteriorate and change.

Secondly, it will be impossible to transfer title to certain assets such as vehicles or real estate completing the legal succession proceedings. You may miss a sale because you don’t have the titles transferred to the heirs or legatees.

Thirdly, heirs and legatees may die. This can complicate the original succession by requiring that a second succession be commenced for the heirs and legatees of the deceased heir. This can cause even more delays and expenses. Further, the new heirs and legatees will add additional persons to notify and/or obtain their signatures for pleadings. Also, the new heirs and legatees may not be so agreeable and may make the succession contested. This can lead to an expensive litigation.

Should you have any questions, you should contact an experienced succession attorney. Kent S. DeJean

Who Will Make My Funeral Arrangements?

Under Louisiana law, the following persons will have the authority to make decisions concerning your funeral arrangements and internment when you die, in the following descending order:

(1) The surviving spouse, if no petition for divorce has been filed by either spouse prior to the death of the decedent spouse.
(2) A majority of the surviving adult children of the decedent, not including grandchildren or other more remote descendants.
(3) The surviving parents of the decedent.
(4) A majority of the surviving adult brothers and sisters of the decedent.
(5) A majority of the adult persons respectively in the next degrees of kindred as established by law.

If you wish to be cremated, it is important that you execute an Affidavit of Disposition of remains. The funeral home director will be required to honor your wishes to be cremated once he is presented with this affidavit.

If you wish to make sure that your own funeral arrangements are done, it is a good idea to have a pre-planned funeral arrangements set up with a funeral home in the event of your death.

Should you have any questions, you should consult an experienced estate planning attorney. Kent S. DeJean

Beware! Without A Will Separate Property Is Not Inherited By Your Spouse!

Under Louisiana law, separate property is any property that:

1. You owned before you got married;
2. You inherited; or
3. Was given to you individually; or
4. Was acknowledged to be your own property by your spouse.

Most are surprised to learn that their spouse will not inherit your separate property if you die without a will. It is your children and your family that will inherit any separate property you have when you die pursuant to Louisiana law.

If you want your spouse to inherit your separate property, you must provide for it in a valid will.

If you have any questions concerning wills, please consult an experienced estate planning attorney. Kent S. DeJean

Always Have Back Up Agent In Your Power of Attorney

I cannot tell you the number of powers of attorney documents that I have examined that only name an agent to administer the estate or person signing the power of attorney. These powers of attorney are silent as to what happens if that appointed agent is unwilling or unable to serve. It is very important that all powers of attorney also name a successor agent.

Many unforeseen things can happen which may render the agent unable to serve. The agent may also become incapacitated. The agent may die. The agent may also wish to resign.

If the agent is unable to serve and no successor agent is named, an interdiction will have to be filed against the principal to appoint a curator. This interdiction process under Louisiana is long and expensive which otherwise could have easily been prevented by naming a successor agent.

If you have any questions regarding powers of attorney, you should consult an experienced estate planning attorney.-Kent S. DeJean

Do I need an appraisal in a Louisiana succession?

Guessing as to the valuation of real estate in Louisiana is not a good idea for several reasons.

  • Heirs and legatees are required to file a detailed descriptive list in the succession proceedings. In the detailed descriptive list, the heirs and legatees take an oath that the list is complete and accurate. Therefore, valuations must be accurate. If the heirs and legatees knowingly give inaccurate valuations of assets, they may be guilty of contempt.
  • Valuing real estate too low can also have adverse tax consequences. Should the value of the real estate be too low and later sold at a higher accurate value, the heirs and legatees may be subject to increased capital gains taxes. The rate of taxation for capital gains is significant.

If you are unsure as to the value of real estate, it is recommended that you spend more time, effort and money on getting an appraisal. The relatively small amount of money that you spend on an appraisal may pale in comparison to what you may owe in capital gains taxes if you are wrong.

Should you have any questions about succession, you should consult an experienced estate planning attorney.

Kent S. DeJean

Living Trusts: Not Always Appropriate

While a living trust can be a useful tool, it may not be appropriate for every circumstance.  Mr. Pete Losavio provides for us a few factors useful in determining when a living trust is not the way to go:

<<Living trusts are a good device for avoiding probate, or as it is called in Louisiana, succession.  However, living trusts may not always be appropriate for your situation.

Living trusts are not a good asset protection device.  In fact, it can be detrimental to asset protection.  For example, if your home is transferred into a living trust and you take bankruptcy, then the home no longer has the exemptions because it is no longer considered to be owned by the debtor in the bankruptcy.

A living trust is tax neutral.  There is no tax advantage to the living trust.

Living trusts may be detrimental to affording long term care. Furthermore, if the settlor, or creator, of the living trust transfers his or her house into the trust and later becomes ill and needs to qualify for Medicaid, the house is no longer exempt under the Medicaid rules and is considered a resource, thus that person cannot qualify for Medicaid.

While the living trust may not be a good device, the irrevocable trust is the appropriate device to protect assets.  Not all irrevocable trusts will protect in all situations.  If the person is interested in protecting their assets from Medicaid, then the trust needs to be an irrevocable Medicaid protection trust which is more complex trust than the normal asset protection trust.>>

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