Inheritance battles can create new conflicts, inflame long-standing resentments and squander assets intended to make heir’s lives better. What can families do to prevent estate battles when a loved one’s intentions aren’t accepted is the question asked by the recent article, “Warning Signs Of Estate Disputes—And Ways to Avoid Them,” from mondaq.com.

Here are the more common scenarios leading to family estate battles:

• Siblings who are always fighting over something
• Second or third marriages
• Disparate treatment of children, whether real or perceived
• Mental illness or additional issues
• Isolation or estrangement
• Economic hardship

There are steps to take to minimize, if not eliminate the likelihood of estate battles. The most important is to have an estate plan in place, including all the necessary documents to clearly indicate your wishes. You may want to include a letter of intent, which is not a legally enforceable document. However, it can support the wishes expressed in estate planning documents.

Update the Estate Plan. Does your estate plan still achieve the desired outcome? This is especially important if the family has experienced big changes to finances or relationships. An estate plan from ten years ago may not reflect current circumstances.

Make Distributions Now. For some families, giving with “warm hands” is a gratifying experience and can remove wealth from the estate to avoid battles as everything’s already been given away. The pleasure of seeing families enjoy the fruits of your labor is not to be underestimated, like a granddaughter who is able to buy a home of her own or an entrepreneurial loved one getting help in a business venture.  However, make sure that if you make distributions now, it comports with an effective income tax strategy.  You don’t want to give heirs a big capital gains tax bill with the “gift”.  There may be a better way to distribute appreciated assets with built-in capital gains.

Appoint a Non-Family Member as a Trustee. Warring factions within a family are not likely to resolve things on their own, especially when cash is at stake. Appointing a family member as a trustee could cause them to become a lightning rod for all of the family’s tensions. Without the confidence of beneficiaries, accusations of self-dealing or an innocent mistake could lead to litigation. Removing the emotions by having a non-family member serve as a professional trustee can lessen suspicion and decrease the chances of legal disputes.

Communicate, with a facilitator, if necessary. Families with a history of disputes often do better when a professional is involved. Depending on the severity of the dynamics, this could range from annual meetings with an estate planning attorney to explain how the estate plan works and have discussions about the parent’s wishes to monthly meetings with a family counselor.

A No-Contest Clause. For some families, a no-contest clause in the will can head off any issues from the start. If people are especially litigious, however, this may not be enough to stop them from pursuing a case. An experienced estate planning attorney will be able to recommend the use of this provision, based on knowing the family and how much wealth is involved.

Addressing the problem now. The biggest mistake is to sweep the issue under the proverbial rug and “let them fight over it when I’m gone.” A better legacy is to address the problem of the family squabbles and know you’ve done the right thing.

Efforts to bring families together and prepare for the future will allow parents, children and grandchildren to enjoy their remaining time together.

BOOK A CALL with me, Ted Vicknair, Louisiana Board Certified Estate Planning and Administration Specialist, Louisiana Board Certified Tax Law Specialist, and Louisiana CPA to learn more about estate planning in Louisiana, incapacity planning, and Louisiana asset protection.

If you liked this article, “Can You Prevent Family Fights over Inheritance?” read also these additional articles: Top Five Estate Planning Mistakes and What Do You Need to Do When a Spouse Dies? and What If Estate Is Beneficiary of an IRA? and Will Making a Gift Conflict with Medicaid?

Reference: mondaq.com (Nov. 4, 2022) “Warning Signs Of Estate Disputes—And Ways to Avoid Them”

Several critical estate planning documents give another person—known as an agent or personal representative—the legal right to act on another person’s behalf. They include wills, trusts, powers of attorney and advance health care directives, as described in a recent article titled “The nomination of trustees, executors and agents” from Lake County Record-Bee.

Your will is only activated after you die. The will and executor then have to be approved by the court. Many people think being named as an executor confers instant authority, but this is not true. Only when the will has been deemed valid by the court, does the executor have the power to act on behalf of the decedent.

The best person to serve as an executor is usually a person with good organizational skills, honesty, competency, and a person willing to do the right thing and administer the estate according to law and the will.  A bad person is usually one who would act selfishly or has poor organizational skills or is a procrastinator.

After death in the probate proceeding, the court is petitioned for a court order appointing the executor and then letters testamentary are signed by the appointed executor. An executor then becomes active as an officer of the court with a fiduciary duty to act as personal representative of the decedent’s estate for the estate probate while it is being administered under Louisiana probate law.

If the named person declines to serve, the will should have a secondary person named as executor, who can then request the appointment be validated by the court. Others can petition the court to be appointed. However, it is best to name two people of your choice in your will.

If the decedent dies without a will, the person who represents the estate in the probate proceeding is call the “administrator”.  Under Louisiana law, the court is required to take into consideration an order of preference for the administrator.  The surviving spouse is generally preferred, next the children, then more distant relations such as siblings, then neices and nephews.  For any of them, the administrator has be duly qualified to serve as the administrator.

A trust is a separate legal entity with a trustee who is in charge of the trust and its assets. If a revocable will is created, the trustee is usually the same person who has the trust created, also known as the settlor (or grantor). For certain types of irrevocable trusts, but not all, the trustee is often someone other than the settlor (or grantor).  Keep in mind that it is a common misconception that the establishment of an irrevocable trust means that you would have to relinquish authority over the “stuff”, the assets in the trust.  For both, the appointment as trustee (or successor trustee) does not become official until the appointment is accepted, usually through signing a document or by the trustee taking action on behalf of the trust.

Just as an executor might not accept their role, a trustee can decide not to accept the nomination. However, once they do, they have a fiduciary duty to put the well-being of the trust first and manage it properly. You can’t accept the role and then walk away without serious consequences.

Powers of attorney are used while a person is living. The power of attorney’s effective date depends upon what kind of POA it is. A durable power of attorney is effective the moment it is signed. A springing POA sets forth terms upon which the POA becomes active, usually incapacity. The challenge with a Springing POA is that approval by the court may be required, usually with proof from a treating physician concerning the person’s condition.

Similarly, the health care power of attorney appoints a person who acts on behalf of another as their agent for health issues. They can decline the position. However, once they agree to take on the position, they are responsible for their actions.

If the POAs decline to serve and there is no secondary person named, or if all named POAs decline to serve, the family will need to apply for an interdiction (also called a “conservatorship” or “guardianship” in other states). This is a lengthy and expensive process requiring a thorough investigation of the situation and the person who needs representation. It can be contested if the person does not want to give up their independence, or by family members who feel it is not needed.  The person chosen by the court under Louisiana law is called the “curator”.  The court must also appoint an “undercurator” whose job it is to keep and eye on the curator.

These are commonly used terms in estate planning. However, they are not always understood clearly. Your estate planning attorney will be able to address specific responsibilities and requirements, since every state has laws and appointments vary by state.

BOOK A CALL with me, Ted Vicknair, Louisiana Board Certified Estate Planning and Administration Specialist, Louisiana Board Certified Tax Law Specialist, and Louisiana CPA to learn more about estate planning in Louisiana, incapacity planning, and Louisiana asset protection.

If you liked this article, “Who Is the Best Person for Executor?” read also these additional articles: What’s the Most Important Step in Farm Succession? and Is ABLE Account the Same as Special Needs Trust? and Pay Attention to Income Tax when Creating Estate Plans and How Changes to Portability of the Estate Tax Exemption May Impact You

Reference: Lake Country Record-Bee (July 30, 2022) “The nomination of trustees, executors and agents”

Many families have an out-of-state property, cabin, or vacation home that’s passed down by putting the property in a will. While that’s an option, this strategy might not make it as easy as you think for your family to inherit this home in the future.

Florida Today’s recent article entitled “Avoiding probate: What is the best option for my out-of-state vacation home?” explains the reason to look into a more comprehensive plan. While you could just leave out-of-state property in your will, you might consider protecting your loved ones from the often expensive, overwhelming and complicated process of dealing both an in-state probate and an out-of-state probate.

In other words, if you are a Louisiana resident with land, a condo, or a vacation home in Mississippi, your estate will be subject to a Louisiana probate, and your land, condo, or vacation home in Mississippi will be subject to a second probate.  That means hiring two (2) lawyers!  If you have land in three (3) states, that means hiring three (3) lawers!

There are options to help avoid probate on an out-of-state property home that can save your family headaches in the future. Let’s take a look:

• Revocable trust: This type of trust can be altered while you’re still living, especially as your assets or beneficiaries change. You can place ALL your assets into this trust, but at the very least, put the out-of-state property in the trust to avoid the property going through probate in the other state. Another benefit of a revocable trust is you could set aside money in the trust specifically for the management and upkeep of the property, and you can leave instructions on how the vacation home should be managed upon your death.
• Irrevocable trust: similar to the revocable trust, assets can be put into an irrevocable trust, including your out-of-state property.  You can leave instructions and money for the management of the property.  However, once an irrevocable trust is established, you generally can’t amend or terminate it.  But if the trust is established in a state other than Louisiana, you still may retain a “general power of appointment” (a type of “future interest allowed by common law states) over the property.
• Limited liability company (LLC): You can also create an LLC and transfer your out-of-state property to the LLC to eliminate probate and save you or your family from the risk of losing any other assets outside of the property if sued with respect to goings on at the property.  You can protect yourself if renting out a vacation home should the renter decide to sue. The most you could then lose is that property, rather than possibly losing any other assets. Having beneficiaries rent the home will help keep out-of-pocket expenses low for future beneficiaries. With the creation of an LLC, you’re also able to create a plan to help with the future management of the vacation home.
• Transfer via a deed: When you have multiple children, issues may arise when making decisions surrounding the home. This is usually because your wishes for the management of the house are not explicitly detailed in writing.
• Joint ownership: If the property is in a state other than Louisiana, you can hold the title to the property with another that’s given the right of survivorship. However, like with the deed, this can lead to miscommunication as to how the house should be cared for and used.
• Usufruct for Life:  If you are a resident of a state other than Louisiana and own property in Louisiana, this would be a option for your Louisiana property.  In this case, you get to use the property for your life, with ownership vested in the “naked owners” which they inure to fully upon your death.  It can have certain income tax advantages as well.

As always, be sure to consider the tax implications of each option.  Types of taxes that can affect your plan include state property taxes, federal estate and gift taxes, state inheritance taxes, and state property transfer taxes (like a “sales tax” as it pertains to real estate, which we don’t have in Louisiana).  State tax regimes can vary widely.

Plan for the future to help make certain that the property continues to be a place where cherished memories can be made for years to come. Talk to a qualified estate planning attorney for expert legal advice for your specific situation.

BOOK A CALL with me, Ted Vicknair, Louisiana Board Certified Estate Planning and Administration Specialist, Louisiana Board Certified Tax Law Specialist, and Louisiana CPA to learn more about estate planning in Louisiana, incapacity planning, and Louisiana asset protection.

If you liked this article, “Addressing Property in Another State in Estate Planning” read also these additional articles: What Should I Know about Burial Insurance? and Does Potential IRS Change Have an Impact on Estate Plan? and Understanding the Issues of Elder Law and What are the Advantages of a Business Trust?

Reference: Florida Today (July 2, 2022) “Avoiding probate: What is the best option for my out-of-state vacation home?”

Burial insurance—also called end-of-life insurance, final expense, or funeral insurance—is a whole life insurance policy that’s designed to pay for the costs of your burial. These costs may include a memorial service, cremation costs, a headstone for your grave or other expenses associated with end-of-life arrangements.

Bankrate’s recent article entitled “Burial insurance” explains that if you have your affairs in order, your family already knows what will happen when you die. You may have given instructions for how you’d like your body to be treated, as well as ideas for your memorial service or what you want written on a tombstone.

However, all of these things cost money. If you don’t want your family to be stuck paying those costs, you may want to consider a burial policy.

Because the payout for burial insurance is small compared to many regular life insurance policies, the premiums can also be quite affordable. The policies are easy to purchase and don’t require a medical exam. However, there may be a waiting period and the policy may offer only limited benefits in the first two years.

Burial insurance policies cover all the normal costs incurred by someone’s death, such as:

• Embalming
• A casket
• Flowers
• Cremation costs
• A burial plot
• The cost of transporting the body and/or remains
• A headstone; and
• Payment to clergy.

One type of burial policy, called a guaranteed issue life insurance policy, is available without any medical or health questions. It’s designed for those who are seriously ill and can’t get a policy any other way. Additionally, a burial policy is an exempt asset for purposes of Medicaid long term care.  In other words, the policy would not be counted as an “available resource” for Medicaid purposes.

If all the appropriate arrangements have been made, the process of filing a burial insurance claim should be fairly smooth.

BOOK A CALL with me, Ted Vicknair, Louisiana Board Certified Estate Planning and Administration Specialist, Louisiana Board Certified Tax Law Specialist, and Louisiana CPA to learn more about estate planning in Louisiana, incapacity planning, and Louisiana asset protection.

If you liked this article, “What Should I Know about Burial Insurance?” read also these additional articles: Does Potential IRS Change Have an Impact on Estate Plan? and Understanding the Issues of Elder Law and What are the Advantages of a Business Trust? and What Is the Best Asset Protection?

Reference: Bankrate (March 5, 2021) “Burial insurance”

A last will and testament is the document used to direct your executor to distribute assets and property according to your wishes. However, it’s not uncommon for disgruntled or distant family members or others to dispute the validity of the will. A recent article titled “5 Reasons A Law Will May Be Contested” from Vents Magazine explains the top five factors to keep in mind when preparing your will.  The five factors are discussed below, but read more to find THREE MORE that apply specifically to Louisiana.

#1: Undue influence is a commonly invoked reason for a challenge. If a potential beneficiary can prove the person making the will (the testator) was influenced by another person to make decisions they would not have otherwise made, a will challenge could be brought to court. Undue influence means the testator’s decision was significantly affected by a person who stood to gain something by the outcome of the will and made a concerted effort to change the testator’s mind.

Even if there was no evidence of fraud, any suspicion of the testator’s being influenced is enough for a court to accept a case. If you think someone unduly influenced a loved one, especially if they suffer from any mental frailties or dementia, you may have cause to bring a case.

#2: Fraud or Forgery.  Outright fraud or forgery is another reason for the will to be contested. If there have been many erasures or signature styles appear different from one document to another, there may have been fraud. An estate planning attorney should examine documents to evaluate whether there is enough cause for suspicion to challenge the will.

#3: Improper witnesses. The testator is required to sign the will with witnesses present. In some states, only one witness is required. In most states, two witnesses must be present to sign the will in front of the testator. A beneficiary may not be a witness to the signing of the will. Some states have changed laws to allow for remote signings in response to COVID. If the rules have not been followed, the will may be invalid.

#4: Mistaken identity seems farfetched. However, it is a common occurrence, especially when someone has a common name or more than one person in the family has the same name, and the document has not been properly signed or witnessed. This could create confusion and make the document vulnerable to a challenge. An experienced estate planning attorney will know how to prepare documents to withstand any challenges.

#5: Incapacity.  Capacity in the law means someone is able to understand the concept of a will and contents of the document they are signing, along with the identities of the people to whom they are leaving their assets. The person doesn’t need to have perfect mental health, so people with mild cognitive impairments, such as depression or anxiety, may make and sign a will. A medical opinion may be needed, if there might be any doubt as to whether a person had testamentary capacity when the will is signed.

The three factors that apply to Louisiana, and which very often come up because of reliance on unqualified Notaries or even attorneys that don’t understand Louisiana law pertaining to estate planning is as follows:

#6: Lack of an Attestation Clause.  Louisiana has some of the most stringent form requirements for a statutury will out of the 50 states.  Louisiana law provides that if your will does not have the “magic language” or an “attestation clause” your will is invalid.  The purpose and the words of the “attestation clause” are meant to reflect that when you signed your will you orally declared to the witnesses that you were signing your last will and testament, and the witnesses listended to you make this declaration.  Without an attestation clause

#7: Lack of a Signature on Each Page of the Will.  For your will to qualify as a statutory will in Louisiana you have to sign each page of the will.  Many states don’t have this requirement, and this (along with the “attestation clause” discussed above) is a major reason to avoid do-it-yourself form wills online.  And in addition to the “attestation clause” noted above, your will msut also be signed by two witnesses and notarized by a Notary Public.

#8: Forced Heirship.  Louisiana’s forced heirship law remains in place.  By default, a forced heir is any child under the age of 24.  But a forced heir can also be any other child over the age of 24 if that child (1) suffers from an inherited disease or medical affliction that renders the child incapable of caring for himself or his affairs; or (2) has a medical condition that could, in the future, potentially render the child incapable of caring for himself or his affairs.  If you disinherit a forced heir, this could trigger a will challenge if you don’t have your will drafted properly.

A will contest can be time-consuming and expensive, so keep these issues in mind, especially if the family includes some litigious individuals.

BOOK A CALL with me, Ted Vicknair, Louisiana Board Certified Estate Planning and Administration Specialist, Louisiana Board Certified Tax Law Specialist, and Louisiana CPA to learn more about estate planning in Louisiana, incapacity planning, and Louisiana asset protection.

If you liked this article, “Shocking! 8 Things That Can Spark a Will Contest” read also these additional articles: SCOTUS Rules States Can Recoup a Larger Share of Injury Settlements and Three Estate Planning Options for Your Art Collection and What Common Mistakes are Made with Living Trusts? and How Do I Maximize My IRA?

Reference: Vents Magazine (May 6, 2022) “5 Reasons A Law Will May Be Contested”

What is an Affidavit of Small Succession in Louisiana?  It can avoid probate in certain cases.  Read on.

This is an affidavit, signed by at least two (2) people, before two (2) witnesses and a Notary Public, that can, in certain circumstances, be used in instead of a Louisiana succession (probate).

In my practice, I most often use the Louisiana Affidavit of Small Succession when someone has died, and the only thing owned of substance by the decedent was a house, mobile home, autos and boats, or other modestly valued real estate.  It is usually not a good option if the decedent had bank accounts (for reasons detailed below).  The Affidavit of Small Succession must be signed under penalties of perjury, so you can’t lie on the form just to avoid probate.  It is generally no longer than about 3 pages, and it can save a lot of time and expense, if you qualify.

The Louisiana Affidavit of Small Succession is authorized by statute in La. C.C.P. art. 3421.1. It’s obvious purpose is to help small estates avoid the costs and expense of probate.  Other statues may apply, such as La. C.C.P. art. 3432, and La. C.C.P. art. 3431, etc.

How would you qualify?  First, under current law (2021) the decedent must have died with assets less than $125,000 in value.  If the decedent’s assets exceed $125,000, you will have to go the normal probate route.  Note that this is gross value, not net value.  Now, before you start saying, “Can’t I just do a Louisiana Affidavit of Small Succession and say that daddy’s $200,000 house was worth only $125,000?”  Well you can, but keep in mind that if the IRS (or the Louisiana Department of Revenue) audits you after you sell daddy’s house for $200,000, they will take the position that the house had a tax basis of only $125,000, when in fact if you had gone through the regular probate process you would have said it was worth $200,000 (thereby stepping up its tax basis).  After all, you said in the Louisiana Affidavit of Small Succession, a signed statement under oath, that it was worth $125,000.  So, bingo, you just created a $75,000 capital gain that you and the other heirs would be taxed on.  The moral of the story is: don’t lie.

The second big requirement is that all heirs who are available to sign the Louisiana Affidavit of Small Succession must sign it.  So if there are 5 heirs, the general rule is that all 5 must sign to avoid a probate proceeding.  There is an exception that I will not discuss here.  Note that at least two (2) people have to sign the Affidavit of Small Succession in Louisiana.  Accordingly, if there is only one heir, then another person familiar with the decedent’s estate must also sign.

The third big requirement, although not mentioned in the statute, is generally that the succession should be free (or relatively free) of debt.  This is because if there are relatively substantial debts of the decedent, the succession will be obligated to pay those debts.  A probate proceeding is the normal route needed to pay off debts, because if there are debts, the heirs who inherit pursuant to the affidavit will be obligated to pay those debts (to the extent of the property they inherit).  Another way to put this is that you don’t want a creditor of your father or mother hounding you.

There are many other things that must be sworn to in the Louisiana Affidavit of Small Succession, but the three big things above are the important ones for purposes of this article.

Sounds like a good deal to avoid probate, doesn’t it?  Well, it can be a good deal to avoid a Louisiana probate in certain narrow situations.  But in my experience, the Affidavit of Small Succession’s application in Louisiana is limited.  Most importantly because the Affidavit of Small Succession is used most often for a small home worth less than $125,000, as well as mobile homes, cars and boats, and little to nothing else.

That is because most banks or investment account custodians will never accept a Louisiana Affidavit of Small Succession.  Even though the affidavit is authorized in Louisiana in lieu of a succession proceeding (a probate proceeding), banks want the signature of a judge in a probate proceeding authorizing you to be put on a decedent’s bank account (unless you happen to be the surviving spouse, then some banks generally relax their own internal rules).  This is their approach even if the bank account balance is very small.  So if the decedent had a bank account of any size, or had an out of state bank or brokerage account, a Louisiana Affidavit of Small Succession is not going to work for you.  Generally, I would put the bank account size at no more than about $800 – $1,000 to do the affidavit procedure (because this is cash you will lose; the banks generally won’t give you access to the account with only the affidavit).  There are no bright lines here, this is just my estimate.

Another reason the Louisiana Affidavit of Small Succession’s application to avoid probate is limited is that if that home needs to be sold (remember, this procedure is generally for a home under $125,000 and little else), this affidavit is a poor choice.  That is because if all heirs are now owners of the home made possible by the Louisiana Affidavit of Small Succession, and one of those heirs is living in the home (or is not living in it but wants to), the only way for the other heirs to get their share of the home’s value would be to sue the heir(s) that does not want to sell (because he or she is typically living in it rent free) in a Partition lawsuit.  The remedy in a Partition lawsuit is almost always the home is sold at a sheriff’s sale for cash or sold at a private sale for cash.  The partition lawsuit can be an expensive judicial process.

The only way to avoid this bad situation is to go through the normal probate procedure and petition the judge to list the house for sale and eventually sell the house in the succession proceeding.  In my experience, most judges will grant this petition (even if it is opposed) if the alternative is siblings suing one another in a Partition proceeding, part of which is the eventual sale of the home.

The bottom line is that the Affidavit of Small Succession to avoid probate in Louisiana can be a useful tool in certain narrow circumstances.  But don’t let your estate planning revolve around it eventually being used.  It’s not a planning device.  It’s a cost avoidance mechanism if the situation is right.  I usually draft Louisiana Affidavits of Small Succession for those clients at rates much lower than a full blown succession, and court costs are usually saved as well.

Transferring Automobiles, Mobiles Homes, Trailers and Boats by Affidavit

In addition to the Affidavit of Small Succession discussed above, and if the succession will not go through the normal probate process, you could transfer mobile homes, automobies, cars, trailers (including trailers that haul boats) and any other vehicle registered with the Louisiana Department of Motor Vehicles.  This form issued by the Louisiana DMV is meant to transfer the title of the vehicle from the name of the decedent into the names of the decedent’s heirs.  All heirs must sign and it must be signed before a Notary Public.  Here is the form: Louisiana Department of Public Safety and Corrections Office of Motor Vehicles Affidavit of Heirship

Because it is likely that not all heirs will want to jointly own the vehicles, the heirs can donate their share of the vehicle to other heirs.  Use this DMV form to donate:  Act of Donation of a Movable

Should you wish to sell the vehicle to someone, use this generic DMV form as the Bill of Sale: Bill of Sale

These forms are presented to the DMV to transfer title on vehicles without liens on them.

A similar form can be used for boats through the Louisiana Department of Wildlife and Fisheries.  Use this form for boats: Louisiana Department of Wildlife & Fisheries Boat Title and Registration Affidavit for Transfer of Decedent’s Boat

Heirs can also transfer their share in the boat to other heirs by using this form (instead of an Act of Donation) and use only $1 as the transfer amount.  This form would be given to the Wildlife and Fisheries to title the boat in the name of one person: Bill of Sale of Boat/Motor

For all of these forms you will need the VIN number (obtained from a copy of the title or DMV registration certificate) and the boat license number as well as a state-issued original of the Decedent’s Death Certificate.

Keep in mind that these forms are not necessary if you are listing the vehicles, trailers and boat in the Affidavit of Small Succession (discussed above) or if they are included in a regular judicial succession.  However, I occassionally see cases in which a Louisiana resident dies and all he or she owns is a vehicle, mobile home and/or boat, and these forms can be used in lieu of an Affidavit of Small Succession or judicial succession.

To learn more about Louisiana-specific estate planning topics read these articles: What is Louisiana Forced Heirship? and Is My Will Void If I Get Divorced? and How Do I Write a Will?

BOOK A CALL with Ted today to discuss how or if the Louisiana Affidavit of Small Succession could apply to your loved one’s estate and your situation.

Remember, if you fail to retitle your home into the name of the trust, you basically paid a lot of money for a piece of paper. Your trust is empty, and if it hasn’t been transferred, it’s not covered, says Yahoo Life’s recent article entitled “Why You Should Put Your House in a Living Trust.”

Let’s look at a few of the errors people make when dealing with trusts:

1. Failing to notify tenants of the change in ownership. If you’re retitling a two- (or more-) family home into the trust, and that property has rent-paying tenants, inform them about this change in landlord for rent payment purposes. You will also have to set up a bank account in the name of the trust for rent deposits.
2. Not notifying the insurance company of ownership change. Tell your home insurance company about changing the property owner from an individual(s) to that of a trust. If you don’t, the insurance company could deny your claim because the actual property owner—your trust—wasn’t insured.
3. Failing to transfer all of your property to your trust.  If you don’t transfer your property to your turst during your life, the property that you fail to transfer to the trust will generally have to go through probate.  Whoever you choose as your estate planning attorney should also make sure that all efforts are made to transfer your poperty to the trust.
4. Failing to name your insurance policy the beneficiary of your trust.  Sometimes the main inheritance of your heirs can be the life insurance policy on your life.  If they receive the policy proceeds outright through the beneficiary designation, that may be fine, but in some cases it is not.  For example, if your trust is meant to protect assets after your death (as an example, see “Protecting benefits for special needs individuals” below), then the proceeds of your policy will not be protected.  In the case of an irrevocable living trust, failing to name your irrevocable trust as the beneficiary may result in your assets being available for your spouse, resulting in a Medicaid spend down.

Here are a few benefits you may not have considered:

1. Probate avoidance.  Because a trust is a contract, it generally won’t go through the probate process—part of which includes notifying your relatives after your death. When the decedent’s assets are in trust, they won’t be probated. Although probate avoidance should not necessarily be the most important goal in a person’s estate planning, it can be a great goal because it probate avoidance can reduce costs and make things less complicated for your heirs.
2. A trust may be a simpler way to title assets in your new name. If you have informally changed your given name (i.e., not legally), a trust can be an easier way to retitle your assets.
3. Protecting benefits for special needs individuals. If you have a family member with special needs or who is receiving government services/benefits, such as SSI or disability, leaving your home to him or her outright can cause issues with continuing these services and funds. You can protect and preserve those benefits and still leave an inheritance by placing your home into a trust whcih will continue as a Special Needs Trust for your family member for the family member’s life.

BOOK A CALL with me, Ted Vicknair, Louisiana Board Certified Estate Planning and Administration Specialist, Louisiana Board Certified Tax Law Specialist, and Louisiana CPA to learn more about estate planning in Louisiana, incapacity planning, and Louisiana asset protection.

If you liked this article, “What Common Mistakes are Made with Living Trusts?” read also these additional articles: How Do I Maximize My IRA? and Can My Pet Help Me in Old Age? and Can New Program Help Dementia Patients? and RMD Formula Changes for First Time in 20 Years

Reference: Yahoo Life (Jan. 10, 2022) “Why You Should Put Your House in a Living Trust”

An executor is the person or institution responsible for managing the administration of a deceased person’s estate. The executor (also called a “succession representative” in Louisiana) is named in a will.  In Louisiana a person appointed by the court (if there is no will) is called an “Administrator”.  Both an executor and an administrator do effectively the same thing depending on the situation and the specific powers given in the Last Will and Testament (if any).  In addition to an individual, a bank, trust company, or other institution can serve as either.  The appointement of an executor and the duties of the executor are addressed in this article from The Balance: “What is an Executor?”

Executors are responsible for making sure the deceased person’s wishes are carried out and that the estate is wrapped up. An executor’s duties include applying for probate, paying taxes and bills, managing the deceased person’s property, distributing assets to the estate’s beneficiaries, and filing a final accounting with the court. You are not required to hire an attorney to assist you with these tasks, but mistakes can cost you money. You may be personally liable if something goes wrong with the estate or the payment of taxes. An attorney can help you make sure all the proper steps are taken and deadlines met.

In Louisiana a person can be named an “Independent Executor” (IE) in a Last Will and Testament.  An IE is allowed to sell assets of the succession without court approval.  This can streamline the probate process and reduce costs.  If a person is not named an IE, the Executor must obtain court approval to sell assets (and convert them into cash distributable to the heirs), which is generally a time-consuming and costly process.

The amount of time involved in being an executor varies with the size of the estate, but the duties involved need to be taken very seriously.  Also, the executor is entitled to compensation, subject to approval by the court.

BOOK A CALL with me, Ted Vicknair, Board Certified Estate Planning and Administration Specialist, Board Certified Tax Law Specialist, and CPA to learn more about estate planning, incapacity planning, and asset protection.

If you liked this article, “What Does An Executor Do?” read also these additional articles: How to Deal with an Estranged Child in Your Estate Plan and Should a Reverse Mortgage Be Used for Long-Term Care? and Did Actor Ray Liotta Have an Estate Plan? and What Is Congress Doing to Guarantee a COLA Increase for Vets?

TOD means “transfer on death”.  This is the person or persons named on your bank account to have the account transferred to upon death who legally becomes the owner of the bank account after you die.  Investopedia’s recent article entitled “Who Can Be a Transfer on Death (TOD) Beneficiary?” explains that the rules are quite broad when it comes to naming TOD beneficiaries.  But a TOD applies to most common law states, not Louisiana.

In Louisiana, we do not have what I would properly term a “transfer on death” statute.  We have a POD, meaning “Payable on Death” statute.  What is the difference?  A POD statue allows the bank to pay out the account balance to the payee named by you, but is not necessarily the proper owner of the account balance as per your last will and testament, or alternatively, Louisiana’s intestate inheritance regime.

In other words, the bank is authorized, even directed, to pay out your bank account balance to your person(s) named in your POD, BUT PURSUANT TO LOUISIANA LAW, THAT ASSET STILL HAS TO GO THROUGH PROBATE.

For example, assume you are a widow or widower, and you have two (2) children, Bob and Betty.  Your bank is Chase Bank, and you have a $100,000 in your bank account balance.  When you are at your local Chase branch, you talk to your banker and name Bob the 100% POD designee on your death.  However, your will provides that Bob and Betty share 50/50 in your estate.  Here is the potential problem.  At your  death, Chase bank pays out $100,000 as you specified, but Betty is allowed 50% of that bank account balance under your will.  In other words, Betty has the right to sue Bill for her share in a probate proceeding.

Unless your POD designations mirror your overall estate plan (or if you don’t have an estate plan, then the laws of intestacy, that is, death without a will), you may be creating a litigation nightmare for your heirs.  Read this blog article I wrote on the subject here: What Is a POD Account? A litigation time bomb.

But it is not necessarily all bad news.  A POD designee can be a person, charity, business, or trust, and here are some reasons why this may be a good idea.

Naming a payee on death (POD) beneficiary for your accounts can make the inheritance process much simpler for your heirs and family. That’s because your named beneficiary will automatically get the assets in the account. Although it technically would not bypass probate, if the persons who are designated on your POD are the same persons (with the same percentages) that would inherit under your last will and testament or through intestacy, then there is little risk of litigation or other controversy.  In other words, your POD designations should mirror your estate plan, not conflict with it.

You can also typically name as many POD designees as you like. You can use these to specify the percentage of assets that each designated beneficiary should get.

Note that with POD registration, the named beneficiaries have no access to or control over a person’s assets when the person’s alive, so you retain total control over your assets until you pass away.

Just make sure that your POD designations do not conflict with your last will and testament, and you should be ok.  You should nevertheless speak with an estate planning attorney about this, especially if you have a large bank account balance that you are planning to leave to heirs via a POD designation.

BOOK A CALL with me, Ted Vicknair, Board Certified Estate Planning and Administration Specialist, Board Certified Tax Law Specialist, and CPA to learn more about estate planning, incapacity planning, and asset protection.

If you liked this article, “What Is a TOD Beneficiary?” read also these additional articles: Can My Gun Collection Be Part of Estate Plan? and How Do I Pick a Life Insurance Beneficiary? and How Do Estate Plans and Trusts Work? and What Should I Know About Buying Funeral Services?

Reference: Investopedia (May 19, 2022) “Who Can Be a Transfer on Death (TOD) Beneficiary?”

People usually don’t buy funeral services frequently, so they’re unfamiliar with the process. Add to this the fact that they’re typically bereaved and stressed, which can affect decision-making, explains Joshua Slocum, executive director of the Funeral Consumers Alliance, an advocacy group. In addition, people tend to associate their love for the dead person with the amount of money they spend on the funeral, says The Seattle Times’ recent article entitled “When shopping for funeral services, be wary.”

“Grieving people really are the perfect customer to upsell,” Slocum said.

The digital age has also made it easier to contact grieving customers. Federal authorities recently charged the operator of two online cremation brokerages of fraud. The operator misled clients and even withheld remains to force bereaved families to pay inflated prices.

The Justice Department, on behalf of the Federal Trade Commission, sued Funeral & Cremation Group of North America and Legacy Cremation Services, which operates under several names and the companies’ principal, Anthony Joseph Damiano. The companies, according to a civil complaint, sell their funeral services through the websites Legacy Cremation Services and Heritage Cremation Provider.

These companies pretend to be local funeral homes offering low-cost cremation services. Their websites use search engines that make it look like consumers are dealing with a nearby business. However, they really act as middlemen, offering services and setting prices with customers, then arranging with unaffiliated funeral homes to perform cremations.

The lawsuit complaint says these companies offered lower prices for cremation services than they ultimately required customers to pay and arranged services at locations that were farther than advertised, forcing customers to travel long distances for viewings and to obtain remains.

“In some instances when consumers contest defendants’ charges,” the complaint said, the companies “threaten not to return or actually refuse to return” remains until customers pay up.

Mr. Slocum of the Funeral Consumers Alliance recommends contacting several providers — in advance, if possible, so you can look at the options without pressure. And ask for the location of the cremation center and request a visit. Also note that cremation sites in the U.S. are frequently not located in the same place as the funeral home and may not be designed for consumer tours.

Note that the FTC’s Funeral Rule predates the internet and doesn’t require online price disclosure. Likewise, most states don’t require this either.

Last year during the pandemic, the government issued a warning about fraud related to the funeral benefits. They said FEMA had reports of people receiving calls from strangers offering to help them “register” for benefits.

BOOK A CALL with me, Ted Vicknair, Board Certified Estate Planning and Administration Specialist, Board Certified Tax Law Specialist, and CPA to learn more about estate planning, incapacity planning, and asset protection.

If you liked this article, “What Should I Know About Buying Funeral Services?” read also these additional articles: Medicaid’s “Snapshot” Date and Its Crucial Impact on a Couple’s Financial Picture and Claiming Social Security Benefits at Age 70 and Does a Supplemental Needs Trust have an Impact on Government Benefits? and What Games Keep My Mind Sharp as I Age?

Reference: Seattle Times (May 15, 2022) “When shopping for funeral services, be wary”