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Essential legal documents

Essential Legal Documents

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Essential legal documents for those who wish to protect their families and themselves should develop an estate plan. Making sound decisions regarding finances and healthcare can become challenging as you age due to diminished mental capacity or declining health. Putting these five must-have essential legal documents in place before life becomes too difficult to handle is crucial for your protection and wishes. It is not legally permissible for you to create these documents if you are too far into ill health, and guardianship will become necessary for decision-making on your behalf. Retaining a trusted elder law attorney is the first step to setting these legal guidelines to carry out your wishes.

Will

The will is a legal document that outlines who receives your assets after death. A valid will is critical for adults to possess regardless of age. It is especially true if you have dependent children since your will identifies guardians for them. Without a will, the courts decide who is responsible for raising your children and what happens to your assets. Each state has statutes that prescribe the formalities to observe in making a valid will. Writing, signature, witnesses, acknowledgment, and attestation may vary slightly depending on where you live.

Revocable Trust

This type of trust allows the settlor to amend, add assets to, or terminate the trust for as long as they like or until they can’t manage the trust competently. The grantor names a trustee who will eventually make daily decisions regarding certain assets on behalf of the trust and transfers these assets to beneficiaries upon the settlor’s death. Assets in the trust generally pass outside of a will and outside of probate. A revocable trust can make a potential guardianship process unnecessary.

A revocable trust is an estate planning tool used to reduce probate fees and delays in asset distribution and protect assets from becoming a matter of public record. You don’t need to have significant assets to benefit from this trust. You can place your home, checking account, life insurance policies, jewelry, or other valuable assets into your trust. Your estate planning lawyer can design your revocable trust to reduce federal estate taxes. A revocable living trust is one of the most important documents for nearly anyone to have in their estate plan.

Medical Directives or Advanced Directives

This document, also known as an Advanced Directive, is a comprehensive and specific document outlining the wishes of a person’s healthcare choices in anticipation of incapacitation, illness, or end-of-life care. Some individuals want medically heroic measures to remain alive. Others might opt for a peaceful passing and less invasive care. For example, if you want artificial support to breathe or eat via a ventilator or feeding tube, that is an individual choice. A medical directive allows you to state these types of choices.

Most often, individuals prefer to weigh the benefits of medical intervention as it affects their quality of life. One can be alive yet hardly “living.” A medical directive provides clarity and guidance in decision-making for medical teams and family members regarding your ill health, incapacitation, and end-of-life choices for care.

Durable Healthcare Power of Attorney

This document permits the legal transfer of authority to make medical decisions on your behalf. The designee, known as the agent, can determine what medical procedures are allowable on the principal’s behalf in the event of incapacitation. This document differs from a medical directive that only explains your health care wishes. A healthcare power of attorney assigns decision-making power to act on your behalf when you are no longer capable.

The combination of a medical directive and healthcare power of attorney assures you will receive the care you desire. The medical directive serves as the blueprint for your health care decision preferences. The healthcare power of attorney gives the legal authority to effect decisions based on this blueprint..

Power of Attorney for Finances

Depending on how the document is written, this designated agent can make many financial decisions for the principal. They may include overall financial affairs, bill pay, property sale, bank safe deposit boxes, contract for services, property rental, tax audits, and more. There are four basic types of power of attorney:

  • Limited– This power of attorney type is narrow or limited in scope. An agent may act on your behalf for a specific purpose. This can include signing a property deed in your name while you are out of town. Usually, a date will terminate the agent’s power, or it is contingent upon completing the outlined task.
  • General– This is a comprehensive power giving your attorney-in-fact all rights and authority you have. A general power of attorney may sign documents, pay your bills, and conduct financial transactions on your behalf. People with complex business affairs and hectic travel schedules often use a power of attorney for conducting financial matters. This agent’s legal designation and power will end upon your death or incapacitation unless you rescind it before that time.
  • Durable – This power of attorney type can be limited in scope or general but will remain in effect after your incapacitation. Absent a durable power of attorney; if you become incapacitated, there is no legal representation to act on your behalf unless a court appoints a guardian or conservator. A durable power of attorney will remain in effect, managing your financial affairs until your death or choice to rescind it while mentally sound. In Louisiana, all powers of attorney are automatically durable, unless the document says otherwise.
  • Springing – Much like a durable power of attorney, a springing power of attorney can act as your attorney-in-fact. However, this only becomes effective when you become incapacitated. If you choose to employ this power of attorney type, it is critical to determine the standard that identifies your incapacity. This identifying trigger that enables power of attorney must be clearly written in the document.

Essential Legal Documents

Before making a selection, it is important to understand the different types of power of attorney. Your attorney will be most effective for your situation. Your attorney-in-fact (agent) will control your finances, so the agent you select must be someone you trust implicitly. If you do not have a viable candidate for a financial power of attorney, you may consider using your attorney or a licensed fiduciary company.

Speak with your lawyer today to implement these five critical essential legal documents in your estate plan. An unexpected adverse health event can happen anytime and at any age. These essential legal documents will protect your wishes, well-being, and assets at a time when you and your family are at the most vulnerable.

For assistance, please contact our Ruston, LA office by calling us at (318) 255-1760.

Revise Your Estate Planning

Divorce Will Require You to Revise Your Estate Planning

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Revise Your Estate Planning

It is usually a difficult emotional experience to go through a divorce (especially if children are involved) along with a difficult financial outcome. While your estate plan may be the furthest thing from your mind during a divorce, without updating your documents, your ex-spouse may receive assets in ways you neither want nor expect upon your death. If you are going through a divorce or are already divorced without revising your estate plan, reviewing and making changes that reflect your current wishes is essential. Divorce will require you to revise your estate planning.

Your will is an excellent place to begin. Your estate planning attorney can update your will with a codicil that alters, changes, or subtracts the provisions. However, the many changes resulting from your divorce probably make writing a new will your easiest option. Your more recent will supersedes those written earlier, and your lawyer will include language stating all prior wills are revoked.

Updating Your Will

You will name an executor (personal representative in some states) who pays the decedent’s final debts and taxes, conducts a discovery of assets to distribute to heirs after probate, and ensures any named guardian of minor children assumes their role. Your lawyer will construct your will’s guardianship of minors to complement the existing divorce decree’s child care arrangement. Your assets in a previous will may no longer be part of your estate and should be removed from the document, adding newly acquired assets where appropriate.

In most states, when you get a divorce after you make your will, any gifts to your former spouse are automatically revoked without affecting the remainder of your will. However, relying on state law to protect your ex-spouse from your inheritable assets is unreasonable. Also, if you do not want your former spouse to inherit your property, you probably don’t want them to be your will’s executor. It is wise to appoint a new executor and an alternate.

Beneficiary Designations

Many assets may pass outside your will through beneficiary designations. These account types include life insurance policies, retirement accounts like 401(k)s and IRAs, POD (payable on death) bank accounts, and TOD (transfer on death) brokerage accounts. Changing the beneficiary is usually fairly simple, but each account may have a different process, so do your research. You may also speak to a benefits consultant with the company holding the account to ensure you remove your ex-spouse and name a new beneficiary.

Certain qualified plans like pensions, 401(k)s, and employer-provided life insurance policies are governed by ERISA (The Employee Retirement Income Security Act). This federal law will override state law deeming a plan administrator must turn funds over to the plan’s documented named beneficiary. If your former spouse is still on the paperwork, they will inherit the account.

Trustees

If you are the settlor of a trust, review the trustee, and if it is your ex-spouse, you will likely want to remove them. There may be exceptions to this trustee removal. For example, some spouses run a business together and may continue to use the trust to manage business assets. A special needs trust for a child may be another instance where an ex-spouse may remain a trustee because of the shared child. Your estate planning attorney can advise you on when to keep an ex-spouse as a trustee.

Real Estate Property

Whether the family home, a vacation beach house, or a lake cabin, real estate property will likely shift ownership in the divorce. Your estate plan will have to remove those properties that you no longer own and change the designations of the remaining properties.

Advance Directive or Living Will

Appoint a new healthcare representative in your living will if your ex-spouse is your current designation. Your estate planning attorney must either revoke your prior living will or make formal changes reflecting your state’s regulations for it to be a legally binding document.

Powers of Attorney

If your ex-spouse is your designated durable financial or medical power of attorney, you will want to appoint a new individual(s). A financial power of attorney can designate a trusted family member or friend who you know to be competent and will best represent your interests. If you are ambivalent or unsure about who to turn to, you can select your lawyer or a licensed financial institution that routinely fills these roles.

The person you choose for your durable medical power of attorney must be assertive and strong-willed to advocate for your healthcare wishes when you are no longer able. This individual should live near you, or at least in the same state, as proximity can become critical. You can name the same person as financial and medical power of attorney, but this can represent a lot of time and effort for one individual. In some states, it is not permissible. You may name a family member, friend, or caretaker as your agent.

Depending on your estate plan type, you can make some changes to your will before your divorce is final or immediately upon the divorce filing. Explain to your attorney how you envision the new estate plan. Details of asset and property transfers gained or lost in the divorce can be added. Beneficiaries, executors, guardianship of minor children, property, and powers of attorney all require review and are likely to change. Your estate planning attorney can readily make the changes you desire so that your legacy continues to reflect your wishes accurately. Divorce Will Require You to Revise Your Estate Planning. It is usually a difficult emotional experience to go through a divorce (especially if children are involved)For assistance, please contact our Ruston, LA office by calling us at (318) 255-1760.

Don't Make These Common Mistakes in Your Estate Plan

Don’t Make These Common Mistakes in Your Estate Plan

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In the minds of many Americans, estate planning is something they do once, file away, and forget about. However, without being aware of the potential impact, people will make gifts during their lifetime or change listed beneficiaries on accounts. Which can have enormous unintended consequences on their will or trust. Review your estate plan regularly to help to prevent these common mistakes.

Gifting Money During Your Lifetime Without Changing Your Will

It is a common practice for people to include cash gifts in their will. Whether money for a favorite nephew or niece, childhood friend or household worker, there can be significant sums of cash for distribution to inheritors listed in your will. Often, family members learn these gifts were already satisfied during your lifetime. They hear the story about the joy it brings to the recipient.

Without modifying your will after gifting cash during your lifetime, the named individual will still get the gift when the will enters probate. Smaller gift amounts may not create issues in an estate but don’t match your intentions. More considerable sums of money can create situations that financially break an estate plan. A court will not know that a gift was satisfied during your lifetime either, and there is no one left to speak to the intention of the will, resulting in a second gifting of cash.

The cash gift is paid again if the inheritor chooses not to be forthcoming. While many in the family will view a lifetime gift as an advance on an inheritance, if the recipient does not agree, you may have to litigate, which can be costly. If you give lifetime gifts of cash and do not intend to give a secondary gift upon your death, change your will after the gift.

Too Few Assets to Fund a Trust

If your trust is years old and its overall assets have decreased in value, reviewing the gift provisions outlined in your trust is crucial. You may not have enough assets to pay for all of the gifts. It is not unusual that in flush financial times, people create grand estate plans. Leaving cash to family and friends and creating trusts for others’ benefit. These good intentions can fall far short of reality in leaner times, leaving some people to receive less than hoped or nothing at all.

Sadly, it will be the lawyer or trustee’s responsibility to advise these recipients of what they were supposed to receive from the trust, but unfortunately, they will not. Regular review of your trust and its goals can avoid this situation. Crafting a trust with realistic goals or making amendments to those goals during less abundant times will keep the trust’s intentions valid and achievable.

Thinking All Assets Pass Through Your Will

Some people leave a lot of money that they believe satisfies all the gifts listed in their will. They total all their assets, which seems large enough to address all beneficiaries. However, all assets may not pass under the will.

Probate assets will pass through the decedent’s name into their estate and be distributed according to the will. In contrast, non-probate assets pass outside the will, usually  through a beneficiary designation. Knowing the difference between the asset classes provides the true value in the estate and receives distribution according to your will. Also, be clear your estate will need to deduct any outstanding debts, expenses, and taxes. Which will reduce the probate asset number again.

Changes to Beneficiary Designations

Beneficiary designation changes can have unintended consequences on your estate plan. The most common problems occur with changes to beneficiaries in life insurance policies. The policy may be payable to your trust. To cover the cost of bequests, pay estate taxes, or shelter monies from estate taxes. Similarly, a retirement account due to an individual but changed to another may result in adverse income tax consequences. You may upend the intention of your estate plan by changing the beneficiary designation without thinking it through.

These are some of the more common mistakes people make that can negatively affect your estate planning goals. Regularly review your intentions and legal documents with your estate planning attorney. Clarify changes in assets and asset types, lifetime gifts, beneficiary designations, and joint ownership additions. Doing so will keep your legacy as you intend it to be.

For assistance, please contact our Ruston, LA office by calling us at (318) 255-1760.

 

Planning an Estate for Non-Traditional Families

Planning an Estate for Non-Traditional Families

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The practice of planning an estate for non- traditional families is evolving due to changing family structures. In the past, a traditional family consisted of a husband and wife who married young, bought a home, had children, and worked for financial stability and security. In 1949, 79.8 percent of American households were married couples, but in 2021 that number declined to 47.3 percent.

The rise of blended families, cohabitating couples, artificial reproductive technology, same-sex marriages, and other trends mean only one-third of American households are “traditional” families. The other two-thirds are non-traditional families experiencing unique needs that challenge current estate planning models.

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More complex family structures tend to avoid estate planning. But the absence of planning leads to an increase of needlessly squandered assets lost. Estate taxes and family infighting over an inheritance. Dying without a will (intestate) means your estate will go through probate. Then, it follows the state’s intestacy laws that currently don’t favor unmarried partners and step-children. Fortunately, proactive planning with an estate attorney to build a modern plan can provide the best outcomes for the legacy and security of your non-traditional family.

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Blended Families

In particular, if you divorce, remarry, have additional children and grandchildren, or experience other significant changes in your family dynamics, do not delay creating or updating your estate plan. While the decision-making about specific assets, beneficiaries, and transferring wealth during family changes sounds overwhelming. Your estate planning attorney is there to guide and support you. Updating your plan can avoid unintended consequences such as strained relationships, wasted financial resources, and more.

Conventional estate planning tends to favor traditional family structures and equal wealth bequests; however, this may not be your intention in a blended family with step-children. Creative solutions that reflect your contemporary family structure can successfully address these issues. Customizing your plan to meet unique needs makes more sense.

Pre- and Post-nuptual Agreements

Clarify your needs using pre and post-nuptial agreements if you intend to remarry. A new spouse needs to be aware of how you intend to distribute your assets to your children, mutual children, spouse’s children, and any other beneficiary. Early on, agreement on critical decisions about estate and gift tax exemptions can prevent future problems. A family law attorney can work with your estate planning attorney to ensure that the agreement structure complements your intentions regarding your estate.

Trusts and Other Strategies

In a blended family, you may consider alternative strategies to transfer wealth. If you choose to remarry, you may promote better family relationships with lifetime gifts to your children rather than after-death bequests. You can also use payable on death accounts which transfer directly to the beneficiary outside of your will and any trusts if necessary.

In the case of trusts, expand and clarify estate planning provisions and potential issues that may easily be overlooked, like:

  • Scenarios where your children enter into a committed relationship without marriage and have children
  • Representatives or trustees who may not share or understand your goals for future beneficiaries. For example, if you create a trust for grandchildren, will you include future step-grandchildren? Or those born from artificial reproductive technology? Will a biological trustee follow through with your wishes for non-biological children, or do you need a neutral third party?
  • Cultural and religious traditions that don’t align with your estate planning documents related to inheritance and end-of-life wishes. Do your trust provisions, investments, and discretionary distributions reflect your values? If you are against fossil fuels, will you limit trust equities to permit only green energy investments? Do you have specific political views or particular people you do not want receiving any of your assets second hand? Does your end-of-life plan reflect your spiritual beliefs?

If your family system is non-traditional, be aware that most US laws and estate planning practices tend to favor a traditional family structure. Which can leave some of your loved ones overlooked without careful planning. Knowing about these default favoritisms and standards should help you think carefully about specific provisions for your non-traditional family. Open discussions with your family and estate planning attorney will help you craft a better and more representative plan suited to your family.

For assistance, please contact our Ruston, LA office by calling us at (318) 255-1760.

Important Facts About Living Wills

Important Facts About Living Wills

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If you became seriously ill or injured and were unable to make decisions with important facts about living wills for your healthcare, what would happen? You don’t have to be old to become incapacitated. A living will, a component of an advance health care directive can outline your wishes so that your loved ones can make informed decisions about your care in an emergency.

Your living will doesn’t passes assets and property to beneficiaries like a standard will. Instead, it advises your doctors and family about how you want to receive medical care and may limit certain treatments. Your living will can bring your family comfort in times of uncertainty, knowing they understand your healthcare wishes. Creating your living will can bring peace of mind knowing there is a plan for medical emergencies. There are ten important facts about living wills.

1.    Rules for Living Wills Vary by State

Depending on your residential state, this document may be referred to as an advance directive. Each state has different requirements and procedures for a living will’s creation and execution.

If you spend significant amounts of time in another state, ensure your living will is valid in the second state. Most states (but not all) will accept a living will from another state if it is valid in the state where it was created. Check with your attorney about your state’s rules. If you spend significant time out of the country, you want to know the country’s laws to create a valid living will while there.

2.    Your Living Will is a Binding Legal Document

Do not rely on an informally written document or verbal consent as your living will. Before you become incapacitated, you must document your healthcare wishes in compliance with state law and legally address instances of incapacitation, permanent unconsciousness, or a terminally ill diagnosis.

3.    Medical Doctors Determine the Incidence of Incapacitation

Whether terminally ill, permanently unconscious, unable to communicate, or incapable of making rational decisions due to injury, a medical doctor’s assessment, and usually a second opinion, is the determining factor putting your living will into effect. If you see your doctor regularly, discuss your wishes and living will ahead of time to see if they will comply with your instructions or if there is something to talk through.

4.    You Can Change Your Living Will

You can revoke, revise, or create a new living will at any time. However, simply destroying the old copy complicates the connection it may have to other estate planning documents or files. Your attorney can help you fully and formally revoke or modify your living will correctly.

5.    There is a Difference Between an Advance Directive and a Living Will

There are numerous advance directive document types as it is a broad category of legal instructions regarding your healthcare. The more familiar include a medical power of attorney, living will, and do not resuscitate order (DNR). A living will is a subset of the advance directive specifically expressing medical treatment preferences in the case of terminal illness or incapacitation.

6.    Younger People Need a Living Will

Adults of all ages can benefit from implementing this legal document. Seemingly healthy young individuals can become unexpectedly ill or injured. Procrastinating about creating your living will until you get “old” could leave you in an unfortunate situation after an accident or serious illness.

A living will does more than convey your desire to remove yourself from life support under certain conditions. It can specify treatment and care preferences, including medical techniques and devices you accept (or do not), pain management, and clergy visitation.

7.    You May Appoint a Healthcare Agent

You may choose a healthcare agent. The agent may not be your doctor or medical team to avoid conflict of interest. Nor can they own, manage, or work for the facility where you receive treatment. Often, a family member who you trust with the significant responsibility of handling stressful emergencies will accept this role — review your emergency, critical, and end-of-life care preferences with them.

8.    Have a Healthcare Power of Attorney

This power provides an individual the right to make medical decisions on your behalf if you cannot do so. Appointing a healthcare power of attorney is not the same as your living will, but it is part of the estate planning process.

9.    Will the Medical Staff and My Family Comply with My Living Will?

Ultimately your medical doctor is responsible for your course of treatment. They technically do not have to follow your living will, yet most will. However, in an emergency, your doctor’s choice may override your living will if they feel an ethical obligation to the Hippocratic oath. Talking to your doctor about your choices in advance and sharing access to your medical history with family members using a HIPAA form are your best courses of action to feel secure that everyone will comply with your wishes.

Having a living will is essential to a complete estate plan. Creating this document with your estate planning attorney can bring you and your family peace of mind.

For assistance, please contact our Ruston, LA office by calling us at (318) 255-1760.

Tax Reform with Estate Planning

Tax Reform with Estate Planning

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To stay on top of changes to federal estate tax laws, gifts, and generations skipping tax exemptions, it may be necessary to revisit and update your estate plan annually. On the first day of 2026, the federal tax assessment on estates worth at least $11.7 million, indexed for inflation annually, will revert back to pre-2018 exemption levels. Any estate valuation over this amount will trigger a 40% federal estate, gift, and GST tax rate. As tax reform law affects your estate planning strategy, it is wise to review your unique estate situation routinely.

Changing Estate Tax Exemption Amount 2017 – 2025

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Estate Planning Strategies to Deal with New Tax Laws

Even if your current taxable estate is under 12.6 million, you must still plan pivoting strategies for future estate tax changes. When the current federal tax laws sunset on January 1, 2026, the new laws will significantly change various estate planning techniques. Predicting exact numbers is impossible; however, some proposals plan to reduce estate and gift tax exemptions from $12.6 million per individual taxpayer to $3.5 – $6.85 million. Focusing on your plan today can help you position your estate for the changes ahead. Lifetime gifting is a strategy that still makes sense even if you are well below the $12.6 million threshold.

Estate Tax Strategies Designed for Your Situation

Additionally, checking your existing estate plan documents to ensure they will align with your goals is crucial as current federal exemptions can demonstrably affect your plan. For example, suppose your will states an amount equal to your remaining federal exemption will go to a “bypass trust” or “credit shelter” for your surviving family. In that case, the remainder passes outright to your spouse. Therefore, if you die with a $10 million estate today and used no exemption during your life, the whole of the $10 million would pass in trust under current law. Aside from not being aligned with your wishes, depending on your state of residence, this scenario may subject your estate to a higher state estate tax upon your death. Understanding the complexity of these tax laws and how they affect your estate plan is critical for protecting your family’s inheritance.

Gifting Amounts Over the 12.6 M Threshold

Suppose your taxable estate is currently over the $12.06 threshold. In that case, the most straightforward strategy is to begin giving away more money, remembering that current exemption amounts provide a limited opportunity to make these larger tax-free gifts. Gifting strategies remove the gifted asset from your taxable estate and all appreciation on the asset from the gift date until you die. Reviewing your current estate documents with your attorney can identify if these changes are warranted.

Many pre-2018 tax-saving strategies still make sense under the current law. Annual gifting exclusions of $16,000 per recipient, and $32,000 if spouses split their gifts, are permissible without using any lifetime exemptions. Annual exclusions for medical or educational purposes are also a viable strategy remembering that contributions to a 529 education plan will eat into the annual exclusion amount. Known as “Med/Ed” Gifts, variable amounts are gifted for limited purposes. The payment, however, must be made directly to the educational or medical provider. Your estate lawyer can help you understand these gifting “freebies” and how they can complement your estate planning strategy.

Estate Tax Planning with Trusts

Suppose you employ a Crummey Trust strategy for gifting while minimizing tax consequences. In that case, the annual exclusion gift to a trust instead of outright gifting requires a Crummey Trust notice to beneficiaries in connection with the gift. There are many trust types and how they may be useful to your estate depends largely on your family and financial situation. Tax minimizing estate trusts can also include:

Estate Planning and Tax Laws Vary by State

At a state level, your estate taxes will depend on which state you reside in and if you have properties in multiple states. Each state has different gift and estate tax laws. Your estate planning attorney can explain the discrepancies between federal and state law exemptions amending your estate documents accordingly. If you live in a state with estate taxes, it is crucial to address these laws and how they affect your federal estate tax planning strategies.

Because of the decision to sunset existing tax laws, even without Congressional action, the exclusion rate will reduce by half effective January 1, 2026. While federal exemptions are still relatively high, there is a short time frame to reduce your taxable estate through additional gifting or establishing new trusts. Your estate planning attorney can determine how to optimize your gifting strategy and if your estate planning documents require significant changes.

For assistance, please contact our Ruston, LA office by calling us at (318) 255-1760.

Preventing and Ending Estate Battles Between Siblings

Preventing Estate Battles Between Siblings

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There is no getting around preventing and ending estate battles between siblings in most families. With the passing of a parent, old rivalries can become more pronounced depending on how your family members interact. Adult children who are emotionally upset and in the unfamiliar territory of an inheritance process can invent new problems or magnify existing ones.

Protecting Family Relationships

Rivalry issues often present in heartbreaking ways, damaging family relationships and altering the parent’s original intent for estate distribution. It can potentially cost family members significant time and money in litigation. The death of a parent is a difficult test for siblings, particularly in cases where assets are shared unequally.

It is possible to avoid many inheritance disputes with some forethought if a parent implements a few key steps before and after death with sound estate planning. Comprehensive estate planning includes a will and trust with a non-sibling trustee or executor and the chance for equitable gift-giving during the parent’s lifetime, providing the opportunity to elaborate on or defend their decisions. Non-family fiduciaries who can act in the estate distribution include an attorney, CPA, or other financial institution that provides this service. Professional services may be well worth implementing as a strategy to diffuse issues between contentious family members.

Gifting to Children Before Death

One technique for a parent to quell potential issues is to legally gift up to $16,000 annually to each child without owing taxes on those gifts and spending down the estate’s cash assets, so there is less to argue over. You can’t argue about assets that have already been gifted. Every parent has the right to do whatever they choose with their money during their lifetime.

Using Neutral Parties to Distribute Assets after Death

After a parent dies, a mediator is particularly useful if one of the family’s adult children is the executor or trustee of the estate. The mediator remains neutral and can counsel all siblings about the estate’s distribution process while helping to keep emotions on an even keel. A mediator can also help executors or trustees formulate a plan to liquidate estate assets and split the proceeds among heirs, sometimes using the services of an independent fiduciary for assistance.

Income Disparity Among Siblings

Sometimes sibling economic disparity creates different perspectives about what is fair. Suppose a financially stable adult child prefers to hold onto an inheritable asset for a long-term payout. While another heir in greater need requires an immediate return. A mediator may aid in negotiating the sale of that interest to the more financially stable heir while cashing out the other sibling, keeping the deal within the family.

Situations that Can Lead to Contesting the Will

New spouses and step-children, disabled and dependent siblings who require care, and estranged children are very likely to mount challenges to the status quo of inheritance. If they feel they are being unfairly compensated. Legal actions citing undue influence for personal gain are not uncommon but can be difficult and expensive to prove. It is legally permissible for a parent to leave a child out of their will. To avoid legal challenges by the disinherited (and likely disgruntled) child, the parent should discuss their reasons with the child upfront or explain the decisions they made in their will.

Letters of Intent

A handwritten letter of instruction for gifting family keepsakes can outline who gets what. And, although it is not legally binding, can be helpful in most circumstances. Without written guidance, how siblings choose to distribute heirlooms among themselves is left to chance. Try to establish an agreeable framework among siblings in advance. Once someone digs their heels in about a certain keepsake, they can quickly lose objectivity. While it doesn’t make sense, there are instances where sibling litigants spend more money trying to win a family heirloom in court than the object itself is worth. A systematic approach agreed to upfront can circumvent these emotional responses to family keepsakes.

There are as many potential problems to resolve in estate distribution as there are personalities. However, parents usually know which children are likely to fight over their inheritance. Action that prevents conflicts among heirs while a parent is alive is the most direct way to solve the problem. A parent can also make changes to their plans as financial circumstances and feelings among siblings change.

Reviewing and revising your estate plan to account for marriages, deaths, divorces, and births shows that heirs receive due consideration. Decreasing the potential for conflict. An estate planning attorney can advise you about gift-giving while you are alive. Additionally, create an estate plan that reduces the chances of sibling rivalry and infighting after your death. Proactive planning and honest discussions with your lawyer can help craft a plan that provides the best opportunity for peaceful outcomes among siblings.

For assistance, please contact our Ruston, LA office by calling us at (318) 255-1760.

Having an Estate Plan Discussion with Your Spouse

Having an Estate Plan Discussion with Your Spouse

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To create an estate plan that meets your family’s needs, you need to speak to your spouse or life partner.  Before meeting with an estate planning attorney, it is best to discuss your ideas to present a united goal. This conversation can be challenging if you and your loved one have different points of view about your future and the legacy you will leave behind. Suppose you have a blended family; how do you choose to provide for them? There is a lot to process with many emotional topics regarding your mortality, being fair to children, and more.

First, you must decide what elements in an estate plan are most important to you. Once you have a clear idea, you can readily communicate your needs and identify avenues of compromise. At the start of your discussion, state some clear objectives to promote a positive and productive conversation.

Children in Blended Families

Some couples will agree on family beneficiaries, although a blended family with stepchildren may find it challenging. Looking at the big picture first and then fleshing out details can help minimize any tension. There will be back and forth as you craft your ideas and negotiate priorities. Even if you don’t agree on everything, you can discuss why certain elements are crucial to you and openly discuss your point of view until you reach a compromise.

A Partner’s Right of Survivorship

“Rights of survivorship” and “Joint Tenancy” do not apply in Louisiana. Thus, when you pass away, your property will not automatically go to your spouse, much less an unmarried partner. Because of this, it is critical to create an estate plan specifically addressing how to provide for your loved one.  Some payable on death accounts and other designated beneficiary accounts like IRAs or 401(k)s will pass outside probate and be paid to them directly; however, in the absence of a will and other estate plans, the surviving partner often has no legal rights to automatic inheritance. It can be contested. Children inherit before the spouse.

Setting the Stage for Your Talk

Choosing the right time and place for a serious conversation can lead to a positive discussion. The best circumstances for a talk are different for each couple. Be sure the environment isn’t full of unfinished chores or lots of activity that can sidetrack your estate planning intentions. If you meet resistance to future planning, talk about why you believe estate planning is important to protect yourselves and your family.

Take some general notes and stay open to your partner’s or spouse’s perspective. Avoid being judgmental. If the meeting begins to focus on how you disagree, take a break and give yourself some time to reflect on those issues and revisit the topics when frustration levels are lower. Your estate planning attorney, who understands the best way to structure your estate and is a neutral third party, may be able to help resolve some sticking points later. Continue to focus on the areas where you can agree.

Responsible Estate Planning Takes Time

You will need to craft a will, power of attorney, living will, and healthcare proxy. Some couples will require trusts and insurance policies as part of their estate plan. Your estate plan will cover asset preservation, management, and distribution after you die. It will identify those individuals who will act on your behalf to close your estate properly. If you become incapacitated, your properties, financial obligations, and medical wishes will be clear.

If you already have an estate plan in place, don’t forget the importance of reviewing your documents every couple of years or when family circumstances change surrounding births, deaths, marriage, and divorce. If there are substantial financial changes, it is also wise to review how you plan to address these ups and downs.

While it can be uncomfortable for some couples to broach estate planning, it is a crucial step toward securing your future together and your family’s legacy after you are gone. Approach conversations with a positive attitude and problem-solving spirit. Let us review and guide your process to create an estate plan well-suited to your life and wishes. Contact our Ruston, LA office by calling us at (318) 255-1760.