Many & LoCoco Legal Blog

Saturday, July 6, 2019

Reverse Mortgages and Older Americans

Perhaps you’ve seen the catchy commercials for a reverse mortgage stating that many older Americans are struggling to get by because they currently do not have enough in savings and retirement funds to manage their expenses, but yet many have equity in their homes. To solve the financial difficulties, the commercial recommends using a reverse mortgage to access that equity.


Suppose you’re one of the many individuals such commercials are targeting. You’re struggling financially but have significant equity in your home – perhaps you paid off your mortgage ten years ago. How exactly does a reverse mortgage help you?

At a basic level, a reverse mortgage is a loan from a bank secured by your house – just like a regular mortgage. The primary difference is that for a reverse mortgage, you receive a lump sum payment or continuous payments from the bank and do not make payments on the principal balance. Whereas in a regular mortgage you take out a loan and then make monthly payments, a reverse mortgage doesn’t require any payments to be made until a specified event occurs, such as your death, the sale of the property, or another event identified in the loan agreement.

What about interest?

Interest still accrues in a reverse mortgage. However, you do not make recurring principle or interest payments. Thus, if you take out a reverse mortgage, your outstanding principal balance will continue to rise as interest accrues.

If interest accrues, what happens if the principal balance exceeds the home’s value?

Federal regulations ensure that the debtor cannot be liable for the difference if the principal balance exceeds the home’s value when repayment is required. When making a reverse mortgage, the bank is taking the risk that the principal balance may exceed the home’s value. There are two reasons that the principal balance can exceed the home’s value. First, the individual may live longer than anticipated and thus interest accrues in excess of the home’s value. Second, a market downturn can cause the home’s value to drop below the principal balance.

What should I do if I’m interested in a reverse mortgage?

The reverse mortgage can be a great option for many older Americans who have significant equity in their homes, but they are complex financial instruments that should be carefully considered. Keep in mind what a reverse mortgage means to your heirs upon death.

Some key points to consider. When the borrower dies, the lender must be repaid. However, if one spouse has died but the surviving spouse is listed as a borrower on the reverse mortgage, he or she can continue to live in the home, and the terms of the loan do not change. With the death of the last spouse, the reverse mortgage needs to be dealt with, and done so quickly. Heirs will need to immediately settle on a course of action. A lender will typically explain options for paying off the loan to the borrower's estate. They heirs can keep the property, sell the property or turn the keys over to the lender. Heirs only have 30 days to decide what to do. That decision is almost always driven by whether there's equity left in the property.

If the heirs decide to not turn the house over to the mortgage company, they have six months to sell the property or pay off the reverse mortgage, possibly with a new mortgage. The heirs will have to pay the full loan balance or 95 percent of the home’s appraised value, whichever is less. Heirs can request up to two 90-day extensions. To get that full year, they must show evidence that they are arranging the financing to keep the house, or they are actively trying to sell the house, such as providing a listing document or sales contract. Insurances must be kept on the home the entire time as well. But your heirs won’t have to pay more than the full loan balance or 95 percent of the home’s appraised value, whichever is less.

If you are considering a reverse mortgage, please make sure you know and fully understand all the requirements that will be place don you and that you can meet those requirements so that the loan does not become due during your lifetime. You should also consider the burden the reverse mortgage will be on your heirs. As for the heirs, upon the death of borrower, being aware of the rules that are in place can keep the heirs from making poor decisions when trying to resolve the issue with the reverse mortgage.

Chip LoCoco

Attorney at Law

Many & LoCoco Law Firm


Thursday, May 9, 2019

The Unique Louisiana Law of Forced Heirship

By Vincent B. "Chip" LoCoco, Esq.


One legal term I am most often asked to explain is forced heirship. Louisiana is the only state in the union which has forced heirship as a law. Let me reiterate that again.
Read more . . .

Wednesday, April 3, 2019

4 Reasons Everyone Needs an Estate Plan

Many people are under the misconception that estate plans are only necessary for those with substantial wealth. In fact, estate plans are important for everyone who wants to plan for the future. For those unfamiliar with the concept, an estate plan coordinates the distribution of your assets upon your death. But that's not all, as we will see below. There are many reasons that everyone needs an estate plan, but the top reasons are:

1. Protecting You and Your Family

Most people associate an estate plan with death, but an estate plan also comes into play if you become incapacitated. Through a proper estate plan, you can designate who will be responsible for making your financial and medical decisions, the authority they will have, and restrictions you would like placed on their power.

2. Distributing Your Assets as You See Fit

Without an estate plan, your assets will be distributed according to intestacy laws. This may be counter to what your wishes and desires are which could be perfected if you have a will. In addition, not having a will or trust in place lends itself to the potential of disputes between surviving family members. The best way to ensure that your beneficiaries receive the inheritance you intend for them is by having a well-conceived estate plan.

3. Reducing Taxes

Whether married or single, having an estate plan can significantly reduce taxes owed upon the transfer of your assets to your heirs. Without proper planning, any transfers from you to a beneficiary may be subjected to federal taxation. Trusts, one of the most well-known, but least understood, estate planning tools, present  excellent opportunities for reducing taxes associated with inheritance.

Through a system of trusts and transfers, you can reduce the overall tax burden associated with the inheritance. For those with substantial assets, more advanced tax planning strategies will be necessary. Regardless of your current wealth, you will likely be able to reduce the taxation of your estate’s assets with the help of an experienced estate planning attorney.

4. Providing for Your Family as You Believe Best

By combining the ability to distribute assets with other estate planning tools such as trusts, you can include conditions for each recipient. This ensures that the money you want to give your nephew for college will actually be used for college, even if that is still 10 or 15 years away.

As noted, estate planning is for everyone – not just the super-wealthy. Whether it’s avoiding a future family dispute, helping a loved one later in life, or reaching any other goals or objectives, having an estate plan is the best way to protect your interests.

Chip LoCoco

Wednesday, February 20, 2019

An Overview of Retirement Plan Options

Retirement planning is essential given ever-increasing life expectancies in the United States. Unfortunately, many Americans fail to save adequate amounts to make it through retirement. Often, individuals believe that they will be fine on Social Security. However, Social Security is only designed to compensate for 40% of your income; Social Security is designed to be an income supplement rather than a sole income source. To make matters worse, workers tend to overestimate how late into their life they will be able to work.
Read more . . .

Saturday, December 22, 2018

Pre-Printed Will Forms - Don't

This will be a very brief article today, as it's fairly simple to explain.

The State of Louisiana has very specific rules as to the requirements of what makes a document a valid Last Will and Testament. Our rules are different from other parts of the country. For example, the law requires the testator to sign the bottom of each page. Failure to do so will render the will invalid.

Read more . . .

Friday, November 30, 2018

Using Your Will to Dictate How to Pay Off Debts

Most people realize that they can use their last will and testament to set out who should receive particular assets or income. However, few people understand that they can also describe how they would like specific debts paid off in their will as well. Unfortunately, many of your debts do not just disappear when you pass away; they are often passed on to your loved ones to address.

Thankfully, some careful planning and forethought now can help your family and friends deal with these issues much more efficiently in the future, cutting down on confusion and stress.  

Types of Debts You May Leave After You Pass

Generally speaking, there are two types of debt. Which kind you have will affect how you can pay these items after your death.

1. Secured Debt.

Debt that is connected to an object is considered “secured debt.” That is, the debt is attached to some object or real property. The most common examples of these types of debts are a mortgage or a car payment. If you do not pay these debts, you could lose whatever property is associated with the debt.

2.  Unsecured Debt.

Unsecured debt is much more fluid. It is not associated with any particular object, even if you used credit to purchase the object. Credit card obligations and medical bills are two of the most common unsecured debts.

Leaving Loved Ones Property (and Debt!)

If you leave a loved one an object that is connected to debt, then that debt will also move with the property. For example, if you bequest your loved one your house, but you still owe $30,000 on your home, then your loved one has not only gained a house, but he or she now has a $30,000 debt as well.

Many people overlook these debt obligations when they craft their will or trust documents. Failing to account for how that debt will be repaid can put unnecessary strain on your loved ones if you fail to plan properly.

You can explicitly state whether you want your loved one to take on the debt in your will. Otherwise, your loved one may simply sell whatever property you have provided to obtain the equity from it, instead of taking on your debt obligation.

Setting Out How Debts Will be Paid

You can state how you would like debt to be paid in your will. Generally, your debts must be paid before your executor can make a payment to beneficiaries. However, you can state, for example, that you would like a specific bank account to be used first to pay debts. You may also indicate which particular property you would like sold to pay debts, instead of having that property pass on to your heirs. You can get creative with how you want to address your debt obligations.

No matter what you do, it is crucial that you do something. Sticking your loved ones with debt or using your entire estate to pay debts is not practical or beneficial for anyone. Your estate planning attorney can help you craft a plan that will work for your particular situation.

Chip LoCoco

New Orleans Estate Planning Attorney


Wednesday, November 14, 2018

Judgment of Possession - Transferring Title after Death

Attorneys sometimes forget that certain legal matters which we consider hornbook and obvious, to our clients it is uncharted territory. One such question I often get, and one that I do my best to make sure to explain fully to all clients so they know the answer, regards the transfer of a home to the surviving spouse after the death of the other spouse. The best way to explain the mechanism of what happens is to use an example.

Bob and Mary Wayne have been married for 50 years. The year they were married, 1968, they bought a home on St.

Read more . . .

Thursday, November 8, 2018

Responsibilities and Obligations of the Executor/Administrator

When a person dies with a will in place, an executor is named as the responsible individual for winding down the decedent's affairs. In situations in which a will has not been prepared, the probate court will appoint an administrator. Whether you have been named  as an executor or appearing as the administrator, the role comes with certain responsibilities including taking charge of the decedent's assets, notifying beneficiaries and creditors, paying the estate's debts and distributing the property to the beneficiaries.

In some cases, an executor may also be a beneficiary of the will or as administrator may be an heir of the decedent, however he or she must act fairly.

An executor/administrator is specifically responsible for:

  • Finding a copy of the will and filing it with the appropriate state court or opening the estate of someone without a will.

  • Informing third parties, such as banks and other account holders, of the person’s death

  • Locating assets and identifying debts

  • Providing the court with an inventory of these assets and debts

  • Maintaining any assets until they are disposed of

  • Disposing of assets either through distribution or sale

  • Satisfying any debts

  • Appearing in court on behalf of the estate

In the role of succession representative, the executor/administrator can pay all of the decedent's outstanding debts and distribute the property to the beneficiaries according to the terms of the will or the heirs. They are also is also responsible for filing all federal and state tax returns for the deceased person as well as estate taxes, if any. Lastly, an executor or administrator is entitled to compensation for the time he or she served the estate. 

In the end, being named an executor or appointed as an administrator ultimately means supporting the overall goal of distributing the estate assets according to wishes of the deceased or state law. In either case, an experienced probate or estate planning attorney can help you carry out these duties.

Chip LoCoco

A New Orleans Estate Planning Attorney

(504) 483-2332

Friday, October 12, 2018

The Basics of Powers of Attorney

A power of attorney is an estate planning document that has a variety of uses. There are several types of these documents available, and each one performs a slightly different function. One or more of these plans may be a good idea to include as part of your estate plan.


What is a Power of Attorney?

A power of attorney gives another person permission and authority to make decisions regarding various aspects of your life if you can’t make those decisions yourself or if you just want to hand over control to a friend or loved one for any other reason.

A power of attorney gives someone else the ability to make decisions for you. You are essentially authorizing this other person to act on your behalf.

You must complete a document to give this power to someone else. This document needs to be notarized and witnessed. 

Types of Powers of Attorney

Several kinds of powers of attorney may be useful for your estate plan. These often overlap in many circumstances.

  • Durable General Power of Attorney. This power of attorney is the most extensive option available. It gives the agent broad authority to make decisions and take action on your behalf. These are often used in situations where you become incapacitated or you are unavailable for any other reason. It is crucial that you trust the person you are granting this power to because this type of document can be prone to abuse. The word "durable" means that the   power of attorney will still be active even if you lose your mental capacity.
  • Limited or Special Power of Attorney. This document applies to only very specific aspects of your life. For example, you may want to grant someone control over a property to maintain and manage it while you are out of the country. A document that fulfills this purpose may be limited in both timeframe and scope.
  • Springing Power of Attorney. This type document only “kicks in” if certain conditions are met. The most common example is one where you lose mental capacity, and you have arranged for a loved one to take care of your affairs if this happens. Be careful though, because of  HIPPA laws, it sometimes makes it difficult to prove a person's incapacity without having an existing power of attorney in place so one can speak to a doctor or review medical records.
  • Healthcare Power of Attorney. A healthcare power of attorney gives someone the authority to make your healthcare decisions if you are disabled due to illness or an accident. This person will provide doctors with permission to operate, for example, as well as make all medical decisions on your behalf. It is critical that you let this person know your expectations regarding how you want your healthcare to move forward in these situations. particularly with end of life issues. A Living Will, or advance medical directive, works in conjunction with a healthcare power of attorney as it puts on paper your desires relative to those issues.

Someone who creates a power of attorney must be competent at the time to do so. That means that planning ahead is vital to creating a valid, legal power of attorney document.  Also, keep in mind that you can appoint the same individual as your agent for both the financial and healthcare power of attorney, or you can appoint different people for each one. The choice is totally up to you. Perhaps you have one child who is a financial wiz and another child in the medical profession. Thus, you may want to appoint each respective child as agent for their area of expertise.

The key to all of this is signing a power of attorney while you have the capacity to do so. So many times in my law practice I am called in to do a power of attorney, but the individual does not have the capacity to sign. At that point, the families only option is interdiction which can be costly. That is why powers of attorney must be a part of every estate plan.

Chip LoCoco

Attorney at Many & LoCoco



Wednesday, September 5, 2018


Interdiction is its own area of Louisiana Law, yet one that is not understood by a lot of clients. So this brief article will attempt to explain just what it is and the procedure required to obtain a Judgment of Interdiction. Of course, the Tom Benson matter did bring the world of Interdictions to the forefront of the news media.


For some members of our society, legal protection may be necessary even after they have entered adulthood.  These individuals may have been injured in an accident, continue to suffer from an incapacitating physical illness or psychological disorder, or because of their age, they are prevented from caring for themselves.

Read more . . .

Thursday, August 30, 2018

Self-Settled vs Third-Party Special Needs Trusts

Special needs trusts allow individuals with disabilities to qualify for need-based government assistance while maintaining access to additional assets which can be used to pay for expenses not covered by such government benefits. If the trust is set up correctly, the beneficiary will not risk losing eligibility for government benefits such as Medicaid or Supplemental Security Income (SSI) because of income or asset levels which exceed their eligibility limits.

Special needs trusts generally fall within one of two categories: self-settled or third-party trusts. The difference is based on whose assets were used to fund the trust. A self-settled trust is one that is funded with the disabled person’s own assets, such as an inheritance, a personal injury settlement or accumulated wealth. If the disabled beneficiary ever had the legal right to use the money without restriction, the trust is most likely self-settled.

On the other hand, a third-party trust is established by and funded with assets belonging to someone other than the beneficiary.

Ideally, an inheritance for the benefit of a disabled individual should be left through a third-party special needs trust. Otherwise, if the inheritance is left outright to the disabled beneficiary, a trust can often be set up by a court at the request of a Tutor/Curator or other family member to hold the assets and provide for the beneficiary without affecting his or her eligibility for government benefits.

The treatment and effect of a particular trust will differ according to which category the trust falls under.

A self-settled trust:

  • Must include a provision that, upon the beneficiary’s death, the state Medicaid agency will be reimbursed for the cost of benefits received by the beneficiary.
  • May significantly limit the kinds of payments the trustee can make, which can vary according to state law.
  • May require an annual accounting of trust expenditures to the state Medicaid agency.
  • May cause the beneficiary to be deemed to have access to trust income or assets, if rules are not followed exactly, thereby jeopardizing the beneficiary’s eligibility for SSI or Medicaid benefits.
  • Will be taxed as if its assets still belonged to the beneficiary.
  • May not be available as an option for disabled individuals over the age of 65.

A third-party settled special needs trust:

  • Can pay for shelter and food for the beneficiary, although these expenditures may reduce the beneficiary’s eligibility for SSI payments.
  • Can be distributed to charities or other family members upon the disabled beneficiary’s death.
  • Can be terminated if the beneficiary’s condition improves and he or she no longer requires the assistance of SSI or Medicaid, and the remaining balance will be distributed to the beneficiary.

Chip LoCoco

Attorney at Law

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