Disclosure: This post is sponsored by Bartage & Anderson, Attorneys and Counselors at Law. These materials are for informational purposes only and do not constitute legal advice. If you are interested in creating an estate plan, please call Ben Bartage at (225)364-9182 now through April 30th for special pricing or fill out this questionaire. With very reasonable fees, starting at just $500/person for an estate plan package consisting of a will, living will and durable power of attorney, Ben is happy to help give you the peace of mind that estate planning can bring.
With tax season upon us, now is a great time to consider a way to use some of that “extra” return money coming in. We know this can be a sensitive topic for many of us to discuss, but the peace of mind that estate planning can bring can be so meaningful to parents in an unpredictable world. We welcome local attorney, Ben Bartage, today to shed light on estate planning and help us navigate the importance of it as parents.
Estate Planning: What Parents Need To Know
I often have people ask me: “What is an estate plan?” An estate plan is simply a series of documents that set forth what you direct will happen in the event of your death or incapacitation. You decide your destiny – NOT someone else or the government. Your estate plan covers important matters such as transfer of ownership of your assets and conditions that must be met in order to transfer assets (if any). Some of us will endure a reduction in physical and/or mental capabilities while still alive. You can name an Agent to manage your affairs in the event of a disabling injury or illness that renders you incapable of caring for yourself. You may also decide whether or not you would ever choose to be put on life support if you became terminally ill and had no quality of life.
Unfortunately, none of us know when these events will happen, we just know that they WILL happen. It’s best to take steps to ensure your affairs are in order to avoid a lot of hassles, headaches and unnecessary costs for your loved ones. Below, I’ve provided some reasons why it’s a good idea to have an estate plan in place, naming specific benefits for each type of document that our basic estate plan package consists of.
A. LAST WILL & TESTAMENT
As much as we hate to admit it, we are all going to pass away some day. Your Last Will & Testament is the document which ensures your assets are distributed according to your desires after you die. I’ve listed 7 important benefits of having a will below:
1. Naming a Legal Guardian (aka “Tutor”) for Minor Children
In the absence of a will, if both parents are deceased and the children have not yet reached the age of 18, the court system will choose from grandparents, aunts, uncles, and other relatives of the child to name a tutor to raise your child. There is no guarantee that the relative the court names is the relative the parents deem best qualified to raise the children. Verbal agreements you may have made with a certain relative regarding custody arrangements can very easily be attacked.
It is far, far easier for all the relatives if the husband and wife mutually agree on a Tutor and Undertutor (alternate Guardian) and specifically naming them in their will to raise the minor children.
2. Protecting your surviving spouse
Louisiana recognizes two distinct types of property: separate and community. Generally speaking, separate property consists of the assets a spouse acquires prior to marriage. Community property consists of the assets acquired and monies earned during the marriage. There are exceptions to these community property generalizations, but a discussion on community property is not the purpose of this document. The purpose is to set forth the benefits of having an estate plan.
In the absence of a will, if you die first, your spouse will not inherit any of your separate property and, further, if you have children, your spouse will not inherit any of your community property in full ownership. He or she will be granted what’s known as a usufruct over your interest in the community property while the children will receive what is known as naked ownership of the property. This is contrary to what many people desire (which is to leave all of their property to their spouse, if their spouse survives them).
3. Naming an Executor
The Executor in a will is the person who administers the assets of the estate to the heirs. In the absence of a will, the Executor will be appointed by the court. In the absence of a will, he or she is required to post bond (security) to insure his or her performance of duties. This bond is usually issued by an insurance company.
The amount of the bond must exceed by one-fourth the total value of all property of the estate. For example, if the assets of the estate are worth $500,000, the representative’s bond would be no less than $625,000 ($500,000 X 1.25). The court has the discretion to lower the bond if it can be shown that it is more than what is needed to protect the creditors and heirs.
A person named in a Last Will and Testament as executor is usually not required to post bond.
4. Making specific bequests
Many people have possessions and heirlooms that hold significant meaning to one or more members of their family. Jewelry, painting, coins, stamps, book collections, place settings and old toys can hold a special place in a certain family member’s heart. In the absence of a will, there is nothing to require an appointed executor to give these items to whom they are most meaningful. The absence of a will can, and unfortunately often does, open the door for bickering among relatives.
5. Making changes is inexpensive
Many people think that it’s wise to hold off on drafting a will out of fear that they will change their mind about certain clauses. It is unwise to wait; one never knows if something unfortunate will happen unexpectedly. It’s best to have an estate plan in place in case it does. If things change (for instance, you have another child or get divorced), altering a will can be done very quickly and affordably.
It’s important to review your will periodically to ensure it still represents your wishes. Major life events such as having a child, purchasing a home, and getting married or divorced are all good triggers to remind you to review your will.
6. For small business owners, it can protect your estate from litigation among heirs
For individuals who own small businesses or shares therein, it is crucial to have an estate plan that covers what your wishes are regarding continuing operations/selling/licensing your ownership interest. For small businesses with multiple owners, this process will often require review of operating/shareholder agreements that may place restrictions on transfer of shares.
7. Navigating Forced Heirship
Louisiana has a doctrine known as forced heirship. It gives specific inheritance rights to all children under the age of 24 and to disabled children regardless of age. Forced heirship provides that, if you have one child under the age of 24, or who is permanently incapacitated (regardless of age), by law, that child is entitled to 1⁄4 of your estate. If you have multiple children under the age of 24, or children who are permanently incapacitated (regardless of age), the children, combined, are entitled to 1⁄2 of the estate. Further, if you have a child pass away before the age of 24 and that child had children of his/her own, your grandchildren will step into the deceased child’s shoes and be entitled to forced heirship rights.
Despite the laws of forced heirship, we can protect your spouse’s rights to use your property and to ensure the children’s assets are protected and spent wisely through a spendthrift trust.
B. POWER OF ATTORNEY
The Power of Attorney document names an Agent to manage your financial and healthcare affairs in the event you become physically or mentally incapacitated. This is important because, for married couples, spouses do not automatically have Power of Attorney. Further, for unmarried individuals, it is crucial to name someone you trust as Power of Attorney in the event you are unable to care for yourself. Your Agent will have authority to pay your bills, sell assets in order to assist you and to make medical decisions for you. Powers of Attorney can be drafted as Durable or Springing (meaning they “spring” into effect once the incapacitation occurs). Which type of POA is best depends on your specific situation. Finally, for small business owners, it is absolutely crucial to have a plan in place in the event you are no longer able to manage your business.
C. LIVING WILL
A Living Will is also known as an ‘advanced directive’ or the life support decision. It removes the burden from your loved ones of making a very difficult decision in the unfortunate event there is a question of whether or not you should be put on life support.
As you take time and consider all of these options, remember to think about the peace of mind these decisions could bring and the security you could provide for your family.
Interested in preparing through estate planning? Call Ben Bartage at (225)364-9182 and/or fill out THIS questionnaire.