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Thursday, March 17, 2016

Avoiding Common Mistakes in Estate Planning

Avoiding Common Mistakes in Estate Planning

Estate planning is designed to fulfill the wishes of a person after his or her death. Problems can easily arise, however, if the estate plan contains unanswered questions that can no longer be resolved after the person's demise. This can, and frequently does, lead to costly litigation counter-productive to the goals of the estate. It is important that the will be written in language that is clear and that the document has been well proofread because something as simple as a misplaced comma can significantly alter its meaning.

Although the law allows for an individual to handwrite their own will, in my law practice I have seen some tragic situations where the testator did not consider all the consequences or where the words used actually contrasted with other parts of the will causing confusion. 

Planning for every possible contingency is a significant part of estate planning. Tragic scenarios in which an estate planner’s loved ones predecease him or her, though uncomfortable, must be considered during the preparation of a will to avoid otherwise unforeseen conflicts. Business succession planning also must be considered in some instances.

Even trained professionals can make significant mistakes if they are not well versed in estate planning. An attorney who practices general law, while perfectly capable of preparing simple wills, may not understand the intricacies of trusts and tutorships or the use of usufructs. A great many attorneys, not aware of the tax consequences of bequests involving IRAs, may leave heirs with unnecessary financial obligations. If an attorney is not knowledgeable enough to ask the proper questions, he or she will be unable to prepare an estate plan that functions efficiently and ensures the proper distribution of the estate's assets.

In spite of the wealth of an individual, the estate may be cash deficient if that wealth is tied up in immovable property at the time of the individual's death.  If the executor of the estate does not have access to funds to pay the estate's bills or taxes, the heirs of the estate may run into trouble.

Consulting with attorneys who specialize in estate planning is the cornerstone of creating a plan to ensure that one's desires are carried out and that all the bases are covered. Estate planning attorneys serve as invaluable repositories of all information necessary to strategizing a plan that not only meets one's personal needs and desires, but is legally binding.

Chip LoCoco

(504) 483-2332


Friday, January 29, 2016

When should you Consider Medicaid Planning

There are many factors to consider when deciding whether or not to implement Medicaid planning.  If you’re in good health, now would be the prime time to do this planning. The main reason is that any Medicaid planning may entail using an irrevocable trust, or perhaps gifts to your children, which would incur a five-year look back for Medicaid qualification purposes. The use of an irrevocable trust to receive these gifts would provide more protection and in some cases more control for you.

As an example, if you were to gift assets directly to a child, that child could be sued or could go through a divorce, and those assets could be lost to a creditor or a divorcing spouse even though the child had intended to hold those assets intact in case they needed to be returned to you. If instead, you had used an irrevocable trust to receive the gifted assets, those assets would not have been considered the child’s and therefore would not have been lost to the child’s creditor or a divorcing spouse. You need to understand that doing this type of planning, and using the irrevocable trust, may mean that those assets are not available to you and therefore you need to be comfortable with that structure.

Depending upon the size of your estate, and your sources of income, perhaps you have sufficient assets to pay for your own care for quite some time. You should work closely with an attorney knowledgeable about Medicaid planning as well as a financial planner that can help identify your sources of income should you need long-term care. Also, you should look into whether or not you could qualify for long-term care insurance, and how much the premiums would be on that type of insurance.

Need more information, call me to discuss. 

Chip LoCoco

Many & LoCoco

 


Monday, January 25, 2016

You’ve Finally Done Your Healthcare Directives – Now What?

Healthcare directives can be vitally important, as recent cases, like that of Terry Schiavo, clearly brought to light. These important documents can mean the difference between your health care wishes being carried out or family members fighting over whether a loved one should be placed in a nursing home or removed from life support. Healthcare directives usually include both a healthcare power of attorney and a living will, or a form which is a combination of the two. In a healthcare power of attorney, an individual authorizes another individual to make healthcare decisions for him or her if the individual becomes unable to do so. A living will expresses an individual’s preferences about life support.

Once you have executed your healthcare directives, you may be uncertain as to what to do with them. First, you should make copies of the documents and inform others of their existence. In addition to your health care agent, persons you should consider notifying of the directives include family members and your health care providers.  Ideally, the originals should be kept in a place that is both safe and easily accessible.

You may wish to consider using a secure registry service to store your healthcare directives. Such services allow you to access healthcare directives any time and in any location with access to the Internet.  Some also allow the documents to be accessed via an automated fax-back service. In addition to providing the healthcare directives, many registries also allow caregivers to access information like emergency contacts, allergies, and other pertinent medical information.

You should review your healthcare directives regularly.  As individuals get older, their preferences about health care and life support change, and it’s important that your directives reflect your current health care wishes.   Of course, life changing events such as marriage, divorce, or the death of a loved one typically require changes in those documents to ensure that the people named in them are still those you wish to make decisions on your behalf.  

Moving to another state? Many states provide that healthcare directives prepared in another state are valid, but you should consult an attorney to make sure your wishes will be carried out in the manner you desire.

Establishing your healthcare directives can spare your family a great deal of anguish if they need to make decisions at a time that is already very emotionally-charged. By keeping the documents in a secure place, providing copies to loved ones, and reviewing them regularly, you can be more certain that your healthcare wishes will be carried out.

Call us for more information.

Vincent B. "Chip" LoCoco

(504) 483-2332

 

 


Thursday, January 21, 2016

Tax Basis

A tax basis is essentially the purchase price of a piece of property. Whenever that property is sold, the seller must pay taxes on the difference between the sale price and the original purchase price. This concept applies to all property, including stocks, bonds, vehicles, mechanical equipment, and real estate. If debts are assumed along with the purchase price, the principal amount of the debt will be included in the basis. The basis can be adjusted downwards when a person deducts depreciation costs on his or her income tax returns, and may be increased for capital investments towards improving the property that are not deducted for income tax purposes. Selling a property that has been held for a long time can carry a serious tax burden because of inflation, particularly when real estate prices have increased.

But, when an individual receives property as an inheritance, the tax basis is reset to whatever the fair market value is at the time of death of the decedent. This means that the heir would pay significantly less taxes if that property is sold by the beneficiary than if the original owner were to sell it and devise the money to his beneficiaries. This is a huge thing to consider when a parent wants to donate a home to the children during their lifetime. The children's cost basis would be the same as the parent. However, if the parent holds onto the property in their name and dies, and by will left the home to the children, then the children get that step up in basis. By doing  so, the children can avoid or greatly reduce a potential capital  gains tax.

If you would like more information, please call us today.

 Vincent B. "Chip" LoCoco

Attorney  (504) 483-2332

 

 


Wednesday, October 7, 2015

Glossary of Estate Planning Terms

So often, attorneys use words and phrases that to us we know exactly what the meaning is; yet we sometimes forget to explain to the client the exact meaning. Here is a glossary of some of the words used in estate planning.


Will - a written document specifying a person’s wishes concerning his or her property distribution upon his or her death.

In order to be enforced by a court of law, a will must be signed in accordance with the provisions set forth in the Louisiana Civil Code.

Testator/Testatrix - the person who signs the will. Testator is male. Testatrix is female.

Decedent - The person who died.

Testate - refers to a person dies with a will. The estate will pass down in accordance with the wishes of the decedent as spelled out in the will.

Intestate - refers to a person who dies without a will. The estate will pass down in accordance with the rules as laid out under Louisiana Law.

Heirs/Legatees- beneficiaries of an estate. Normally heirs refers to individuals who inherit an estate when the decedent dies without a will. Legatees are person who inherit because they are named in a will by the decedent.

Executor/Executrix - the individual given authority by the testator in the will to make decisions to put the testator’s written directions into effect. (Testate)

Once the will is entered into probate, the executor’s signature is equivalent to the testator’s. The executor has a legal duty to the heirs of the estate to act in the best interest of the estate, and may collect a fee for performing such service. The fee is set by law - 2 1/2 percent of the gross estate.

Administrator/Administratrix - the person who assumes the role of the executor when a person dies without a will (intestate).

The Administrator must apply with the local probate office and may be required to provide a bond to be held in escrow as collateral for control over the assets of the estate.

Codicil - an amendment to a will.

In order to be valid, a codicil must comply with all the requirements of Louisiana Law.

Olographic Will- a handwritten will. These wills are still recognized in Louisiana. They must be written, dated and signed by the testator at the end in his own handwriting. They do not need to be witnessed  Just an FYI - in every other State of the Union this wills are called Holographic wills. Somehow, Louisiana lost the "H"

Notarial Will - a typed will, usually drafted by an attorney, which is dated and signed before two witnesses and a Notary Public, adhering to other strict requirements of Louisiana Law. A very formal document.

Bequest - a gift given by the testator to his or her heirs through a will.

Residual Estate - the balance of a testator’s belongings after debts have been paid and specific bequests have been distributed. 

Usufruct - a bequest that gives an heir the right to have exclusive use of a property for the remainder of his or her life, but without the power to transfer such property upon the death of that heir. In other words, the usufructary does not have full ownership - Just the use and enjoyment. Another person or persons, known as the naked owners, have the other part of ownership. The naked owner does not have the right to use the property.

The property will transfer to the naked owner upon the ending of the usufructary - thus making the naked owner the full owner of the property at that time.

Per stirpes - a Latin phrase precisely translated as “by the branch” meaning that, if an heir named in the will dies before the testator, that heir’s share will be divided equally among that beneficiary’s own heirs.

While it is a good idea to have a basic understanding of fundamental estate planning vocabulary, this cannot serve as a substitute for the services of an experienced attorney.

Chip LoCoco

Attorney at Law

Many & LoCoco

www.neworleansestatelaw.com

(504) 483-2332


Tuesday, September 22, 2015

THE LAW OF FORCED HEIRSHIP IN LOUISIANA

Yes, it is true. Louisiana is the only state in the union that has forced heirship as a law. In estate planning, the concept of forced heirship is the one thing that most clients do not understand. So, I decided to write this article in an attempt to explain it in layman’s terms.

I. WHAT IS IT?

The simple explanation of the law of forced heirship is the requirement that a portion of a person’s estate must be left to his or her children, of a certain age, who under law are known as forced heirs.

II. WHAT ARE THE SOURCES OF THE LAW OF FORCED HEIRSHIP? 

Forced heirship is an ancient civilian concept. It was derived from Roman law, ultimately with influences from German, Spanish and French law. Roman law originally held that the father was the head and master of the family, and therefore, he could leave his estate to whomever he desired. Preservation of the property was most important. Eventually, Roman law developed the idea that the family needed to be protected. Thus, laws were developed that insured a child would inherit the property of the father. By the time the Roman Republic was coming to an end, the idea arose that a child could claim a legitimate portion, or legitime. Emperor Justinian provided for the amount of the legitime, as well as grounds for disherinson of a child.  So, over the course of time, Roman law had gone from protecting the property as the priority to instead protecting the family.The concept of forced heirship than was modified over many years with influences by German tribal laws when they conquered Rome, Spanish law and French Law.

III. HOW DID IT END UP IN LOUISIANA? 

Before the State of Louisiana was founded, the citizens here lived under French Law. After the Louisiana Purchase, President Jefferson strongly desired that our laws be assimilated into the English common Law of the rest of the United States. The citizens of Louisiana rejected President Jefferson’s wishes, and continued to follow the French Civil Code. This of course only goes to show that we have always been a little different down here. The first Louisiana Civil Code Digest was written in 1808. It was written completely in French, showing the strong French influence during this state’s infancy. Of course, within those pages was the law of Forced Heirship, which is still the law of Louisiana, but it has undergone changes over the years.

IV. WHO ARE FORCED HEIRS?

Originally, every child was considered to be a forced heir. That law, over the years, has been changed and amended many times and now the law, as stated in Louisiana Civil Code Article 1493, has defined forced heirs as those descendants of the decedent who at the time of the decedent’s death are twenty three (23) years of age or younger or who of any age, because of a mental incapacity or physical infirmity, are permanently incapable of taking care of their persons or administering their estates at the time of the death of the decedent.

V.      WHAT DO YOU NEED TO LEAVE TO YOUR FORCED HEIR? 

The law spells out the portion of your estate that must be left to your forced heir. This is called the legitime or “forced portion”. If you die, leaving one forced heir, the “forced portion” is one-quarter (1/4) of your estate. If you die with two or more children, then the “forced portion” is one-half (1/2) of your estate, which must be split among the forced heirs. Simply put, other than for specific grounds of disinherison recognized by law, if you leave a forced heir, he or she will receive a portion of your estate when you die.

VI. THE IMPORTANCE OF ESTATE PLANNING WITH FORCED HEIRS

Proper estate planning is imperative when you have a forced heir. Since we know a forced heir has to get a portion of the estate, an estate planning agenda can be developed to perhaps leave the forced portion to your child in trust, so that they cannot access the funds themselves, with said funds being controlled by a Trustee whom you appoint in your will. Additionally, that forced portion could also be subject to a usufruct to your spouse, whereby your spouse has full use of the property during her lifetime. The forced heir merely has what is called the “naked ownership” of his or her forced portion. This is allowed under Louisiana Law. Also, in blended family situations, forced heirship can get quite complicated, when both parents have forced heirs, but the children are from other spouses.

Estate planning is an attempt, with an attorney, to take your own personal situation and tailor make a plan to make your dreams and desires legal. That is the importance of a well-thought out estate plan and the use of a Last Will and Testament. This article is a very brief discussion of forced heirship. Please call us today if you would like more information or if you would like to set up a meeting to begin your own estate planning agenda.

 

 CHIP LoCOCO

ATTORNEY AT LAW

NEW ORLEANS, LA

www.neworleansestatelaw.com


Saturday, September 5, 2015

A Terrible Scenario

I am seeing this terrible situation more and more, and if this blog can help one person correct this situation for their loved one’s, then I feel I have provided a great service. There is one thing about law practice – you do see some horrible situations that easily could have been avoided.

Here is a scenario.

Joe, 40, is divorced from Betty, who treated him terribly and had numerous affairs. Joe has no kids. He has no siblings, and just has a few distant relatives who he hates, but who hate him more. Joe has a home worth a million dollars.

Joe, never thinking he would marry again after he divorced his first horrible wife, meets Mary, 30, and after a very quick romance, they marry. They began their marriage life in Joe’s house, which he owns separately as he had purchased it before marriage.

They live as husband and wife for 10 years, the whole time remaining in Joe’s home. It is a wonderful marriage. All Joe wants to do is care for Mary. No children are born, and Joe still hates his distant relatives.

But then tragedy strikes. Joe dies.  Joe does not have a will. For estate planning purposes, Mary will become the owner of the home and will be able to continue to live there, right ?

Nope. Because Joe died without a will, his estate falls in accordance with Louisiana Law, and not to what his desires would be as laid out in a will. Because his home is his separate property, and because he has no children, the home would go to his distant cousins, who he hates, who immediately can take possession and throw Mary out of the home. Mary would have no interest in the home at all.

This is an all to seen situation and one that can be easily rectified during life. All that needs to be done is to write a will. All Joe had to do was write a will and leave his estate to Mary, including the home. 

If you are someone you know may be in this situation, please tell them to contact an attorney today and get a will drawn up.  It really can make life so much easier for the surviving spouse.

Chip LoCoco

Many & LoCoco

504-483-2332


Monday, August 31, 2015

8 Reasons Why Young People Should Write a Will

 

8 Reasons Young People Should Write a Last Will and Testament

Graduation from college is a good milestone to use as a reminder to create an estate plan.  If you haven’t created a will by the time you marry – or are living with a partner in a committed relationship – then it’s fair to say you are overdue.

Think you don’t need an estate plan because you’re young and just entering the work force?  Not true.  Here are eight excellent reasons for young people to complete a last will and testament.  And they have very little to do with money.

You are entering the military
.  Anyone entering the military, at 18 or any other age, should make sure his or her affairs are in order.  Even for an 18-year-old, that means creating a will and other basic estate planning documents like a health care directive and powers of attorney.

You received an inheritance
.  You may not think of the inheritance as your asset, especially if it is held in trust for you.  But, without an estate plan, the disposition of that money will be a slow and complicated process for your surviving family members.

You own an animal
.  It is common for people to include plans for their pets in their wills.  If the unthinkable were to happen and you died unexpectedly, what would happen to your beloved pet?  Better to plan ahead for your animals in the event of your death.  You can even direct the sale of specific assets, with the proceeds going to your pet’s new guardian for upkeep expenses.

You want to protect your family from red tape.  If you die without a will, your family will be in the position of handling your affairs without your specific directions on what you want to happen with your assets. With a Will, you direct who gets what and who will handle your estate.

You have social media accounts.  Many people spend a great deal of time online, conversing with friends, storing important photos and documents and even managing finances. Without instructions from you, will your family know what to do with your Facebook account, your LinkedIn account, and so forth?

You want to give money or possessions to friends or charities
.  When someone dies without a will, there are laws that dictate who will receive any assets.  These recipients will include immediate family members like parents, siblings, and a spouse.  If you want to give assets to friends or to a charity, you must protect your wishes with a will.

You care about what happens to you if you are in a coma or persistent vegetative state.  We all see the stories on the news – ugly fights within families over the prostrate bodies of critically ill children or siblings or spouses.  When you write your will, write a health care directive (also called a living will) and a financial power of attorney as well.  This is especially important if you have a life partner to whom you are not married so they can make decisions on your behalf.

 Chip LoCoco

Many & LoCoco

504-483-2332


 

 


Tuesday, August 4, 2015

Estate Planning for the Chronically Ill

There are certain considerations that should be kept in mind for those with chronic illnesses.   Before addressing this issue, there should be some clarification as to the definition of "chronically ill." There are at least two definitions of chronically ill. The first is likely the most common meaning, which is an illness that a person may live with for many years. Diseases such as diabetes, cardiovascular disease, lupus, multiple sclerosis, hepatitis C and asthma are some of the more familiar chronic illnesses. Contrast that with a legal definition of chronic illness which usually means that the person is unable to perform at least two activities of daily living such as eating, toileting, transferring, bathing and dressing, or requires considerable supervision to protect from crisis relating to health and safety due to severe impairment concerning mind, or having a level of disability similar to that determined by the Social Security Administration for disability benefits. Having said all of that, the estate planning such a person may undertake will likely be similar to that of a healthy person, but there will likely be a higher sense of urgency and it will be much more "real" and less "hypothetical."

Most healthy individuals view the estate planning they establish as not having any applicability for years, perhaps even decades. Whereas a chronically ill person more acutely appreciates that the planning he or she does will have real consequences in his or her life and the life of loved ones. Some of the most important planning will center around who the person appoints as his or her health care decision maker and also who is appointed to handle financial affairs. a will and/or revocable living trust will play a central role in the person's planning as well.  Care should also be taken to address possible Medicaid planning benefits.  A consultation with an estate planning and elder law attorney is critical to ensuring all necessary planning steps are contemplated and eventually implemented.

 

Vincent B. "Chip" LoCoco

clococo@bellsouth.net

(504) 483-2332 


Wednesday, July 22, 2015

CHILD BORN AFTER YOUR ESTATE PLAN IS IN PLACE

This question presents a fairly common issue posed to estate planning attorneys. The solution is also pretty easy to address in your will, trust and other estate planning documents, including any guardianship appointment for your minor children.

First, its important to note that you should not delay establishing an estate plan pending the birth of a new child.  In fact, if your planning is done right you most likely will not need to modify your estate plan after a new child is born.  The problem with waiting is that you cannot know what tomorrow will bring and you could die, or become incapacitated and not having any type of plan is a bad idea. 

In terms of how an estate plan can provide for “after-born” children, there are a few drafting techniques that can address this issue.  For example, in your will, it would refer to your current children typically by name and their date of birth. Then, your will would provide that any reference to the term "your children" would include any children born to you, or adopted by you, after the date you sign your will.

In addition, in the section or article of your will that provides how your estate and assets will be divided, it could simply provide that your estate and assets will be divided into separate and equal shares, one each for "your children." That would mean that whatever children you have at the time of your death would receive a share and thus the will would work as you intend, even if you did not amend it after having a new child. 

On a side note, you should make certain that your plan does not give the children their share of your estate outright while they are still young.  Rather, your will or living trust should provide that the assets and money are held in a trust structure until they are reach a certain age or achieve certain milestones such as college graduation or marriage. Any good estate planning attorney should be able to advise you about this and help walk you through the various options you have available to you.

 

VINCENT B. LoCoco

Many & LoCoco


Monday, January 5, 2015

Choosing the Right Guardian for your Children

First things first. Happy New Year. Just thought we would start off this new year with a discussion of one of the harder things estate planning makes us consider. If you are a parent and you are considering estate planning, one of the most difficult decisions you will have to make is choosing a guardian for your minor children.  It is not easy to think of anyone else, no matter how loving, raising your child. Yet, you can make a tremendous difference in your child’s life by planning ahead. 

The younger your child, the more crucial this choice is, because very young children cannot form or express their own preferences about caregivers. Yet young children are not the only ones who benefit from careful parental attention to guardianship. Children close to 18 years old will be legal adults soon, but, as you well know, may still need assistance of a parental figure after the fact.

By naming and talking about your choice of guardian, you can encourage a lifelong bond with a caring family. The nomination of guardians is a straightforward aspect of any family’s estate plan. It can be as basic or detailed as you want. You can simply name the guardian who would act if both you and your spouse were unable to or you can provide detailed guidance about your children and the sort of experiences and family environment you would like for them. Your state court, then, can give strong weight to your expressed wishes.

There are essentially four steps to this process. First, make a list of anyone you know that might be a candidate for guardian of your children.  It is important to think beyond your sisters and brothers and consider cousins, aunts and uncles, grandparents, child-care providers and business partners. You might also want to consider long-time friends and those you’ve gotten to know at parenting groups as they may share similar philosophies about child-rearing. Second, make a list of factors that are most important to you. Here are some to consider:

  • Maturity
  • Patience
  • Stamina
  • Age
  • Child-rearing philosophy
  • Presence of children in the home already
  • Interest in and relationship with your children
  • Integrity
  • Stability
  • Ability to meet the physical demands of child care
  • Presence of enough “free” time to raise children
  • Religion or spirituality
  • Marital or family status
  • Potential conflicts of interest with your children
  • Willingness to serve
  • Social and moral habits and values
  • Willingness to adopt your children

You might find that all or none of these factors are important to you or that there are others that make more sense in your particular situation.  The third step is to, match people with priorities. Use the factors you chose in step two to narrow your list of candidates to a handful.

For many families, it is as easy as it looks. For others, however, these three steps are fraught with conflict. One common source of difficulty is disagreement between spouses. But, consensus is important. Explore the disagreements to see what information about values and people is important to one another and use all of your strongest communications skills to understand each other’s position before you try to find a solution that you can both feel good about. Step four is to make it positive. For some parents, getting past this decision quickly is the best way to achieve peace of mind and happiness. For others, choosing a guardian can be the start of an intensive relationship-building process. An attorney who understands where you and your spouse fall on that spectrum can counsel you appropriately. 

Vincent B. "Chip" LoCoco

Many & LoCoco

Estate Planning Attorneys


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