October is Special Needs Law Month-2

Posted on October 11, 2011 by Linda Melancon, Attorney

The National Academy of Elder Law Attorneys, an organization of over 4200 attorneys nationwide who are dedicated to improving the quality of legal services provided to seniors and those with special needs, has designated October as Special Needs Law Month. In conjunction with this, NAELA attorneys are taking time to educate the public about what special needs law is and why it such a vital cornerstone to protecting our country’s special needs population.

Government programs are often critical for those with disabilities as they provide cash benefits as well as medical coverage and long-term care support and services. These programs are generally based on a person’s income level and financial resources. Therefore, if a special needs person inherits property or other assets, they may lose eligibility for these benefits. This issue is critical in Louisiana for two reasons. First, if a person does not have a will or trust, his property is distributed according to the laws of intestacy which divides the property among the descendants. Further, in Louisiana a person who is disabled and cannot take care of himself is likely a forced heir and entitled to receive a portion of his parent’s estate even if there is a will or trust which does not provide for him. Therefore, it is imperative to create a special or supplemental needs trust for the disabled person in Louisiana to avoid the loss of benefits.

A special needs trust must be designed specifically to supplement and not supplant government benefits. Money from the trust cannot be distributed directly to the person with the disability, but rather, must be distributed to third parties for goods and services to be used by a person with a disability. The special needs trust can be used for such things as out of pocket medical and dental expenses, eyeglasses, transportation, insurance, rehabilitation, materials for a hobby or recreational activity or trips, vacations or entertainment.

Besides insuring continued access to government benefits, estate planning for special needs persons is especially important because the needs of that person may be much greater than the needs of others who may inherit from you. Without a will or trust, assets are likely to be divided equally among heirs not leaving enough for the disabled person. There may also be a need to explore the use of life insurance to provide additional resources for the special needs person.

Another key issue for special needs trust planning is the selection of an appropriate trustee. A trustee will be the person who steps in and handles the disabled person’s assets and care when you are no longer able to do so. In some cases, this will be another family member or friend who is highly responsible and who will be able to take care of the special needs person. In some cases it may be a bank or other financial institution that will be named for this purpose. Obviously, the choice of a trustee to take over in this situation is a very important decision that must be made with much thought for the special needs person’s well-being.

These and many more difficult issues present themselves when planning your estate to insure the best possible outcome for your loved one with special needs. The result of failing to face these difficult issues can be disastrous, but the peace of mind of knowing that you have prepared for the inevitable will make facing these difficult issues worthwhile. While it is always important to work with knowledgeable professionals to assist with your estate planning, if you are planning for a loved one with special needs it is critical because the consequences of a mistake can be disastrous for that person’s future well-being.

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October is Special Needs Law Month

Posted on October 8, 2011 by Linda Melancon, Attorney

The National Academy of Elder Law Attorneys has designated October as Special Needs month. Elder law attorneys, nation-wide, provide an enormous amount of legal education to their local communities for those with special needs, their families, and caregivers. NAELA attorneys are committed to improving the quality of legal services provided to seniors and people with special needs and to offer legal support, guidance, and service to those within the community with special needs.

The Legacy Center of Louisiana advises parents and grandparents about estate planning for children with disabilities. People with special needs deal with very unique and complex situations requiring services and guidance to help improve their quality of life. That is why October is such an imperative time of the year. The Legacy Center of Louisiana is passionate about building awareness of the importance of planning for children with special needs. Linda Melancon has written numerous articles educating families with disabled children, such as 10 Tips for Helping Families with Special Needs. You can go to www.legacycenterla.com to read more educational articles about children with disabilities.

We hope you will join us this month in spreading awareness about special Needs Law Month. The more understanding and awareness can only enhance the lives of disabled people.

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PAY ON DEATH ACCOUNTS IN LOUISIANA

Posted on September 8, 2011 by Linda Melancon, Attorney

A “Pay on Death Account,” also known as a “Transfer on Death Account” (commonly called a P.O.D. or T.O.D. account), is an account at a financial institution that allows payment of the funds in the account to a designated person upon the death of the account holder. These accounts are common in states other than Louisiana and have been allowed in Louisiana since 1984. However, there is still much confusion regarding P.O.D. accounts among the public, financial institutions and even the court system. This article will attempt to address that confusion.

In the absence of a P.O.D. designation, funds held in bank accounts (with the exception of IRAs held at banks) pass at death to either the intestate heirs if the deceased has no will or to the legatees named in the will, if there is one. However, in 1984, Louisiana passed a law that allows a bank to pay to a beneficiary designated by the account holder the funds in the account at death of the account holder. Originally this law provided the beneficiary must be related to the account holder, but now he can name anyone as the beneficiary regardless of whether the beneficiary is related to him or not. Some, but not all, banks in Louisiana offer P.O.D. accounts to their customers. Similar laws also allow credit unions and savings and loans to also offer such accounts.

To create a P.O.D. account, the account holder must give a notarized affidavit to the financial institution naming who is to be the account beneficiary upon his death. The law also allows the bank to rely on this affidavit to disburse the funds to the beneficiary upon receiving a death certificate showing the account holder is deceased. The law further provides that the bank is not liable to the estate of the deceased or any heir of the deceased as long as they pay the account funds to the designated beneficiary. It also relieves the bank from any claims by a former or current spouse, an heir, a legatee under a will, a creditor or any other person who may have a claim to the funds. The law makes it very clear that the bank is protected from any liability from any claims by any person when they pay the funds in the P.O.D. account as authorized by the account holder.

Although this law protects the bank or financial institution when it pays a P.O.D. account, Louisiana’s substantive law on heirship was not changed by the passing of the P.O.D. law. In fact, the P.O.D. statute itself provides that it does not prohibit any right of forced heirship or the collation or collection of funds due any spouse, heir, legatee, creditor, or other person having rights or claims to funds of the deceased depositor. Therefore, it’s possible for a bank to pay the money in an account to the designated beneficiary while Louisiana’s substantive law provides that the money belongs to someone else. A common example would be a married person opening a bank account only in his or her name and depositing money earned during the marriage into that account. The account holder spouse has the right to designate someone other than their spouse as the P.O.D. beneficiary even though one-half of the money in the account belongs to their spouse according to Louisiana’s community property law. If this occurs and the account holder dies, the surviving spouse should have a claim against the beneficiary to get back their one-half of the money in the account and possibly a usufruct or right to use the other one-half in the account. The surviving spouse would not have a claim against the bank, however, as the P.O.D. statute limits the bank’s liability for payment. The same thing could occur if there are forced heirs or creditors who are entitled to estate assets.
As you can see, P.O.D. accounts have the potential to cause a great deal of confusion. Therefore, you should use extreme care when establishing P.O.D. accounts at your bank or financial institution. While there are circumstances where P.O.D. accounts may be warranted, the better practice is for you to integrate P.O.D. and other beneficiary-designated accounts into your overall estate plan. Failure to do so, may create conflict and/or litigation between the P.O.D. beneficiary and the legatees named in your will. When planning your estate, make sure you work with professionals who are familiar with all types of probate and non-probate assets to ensure your legacy will pass to your loved ones as you intend.

Ms. Melancon has engaged in the practice of law in Ascension Parish for the last fourteen years. The primary focus of her practice is estate planning, probate and elder law. For more information or to attend an upcoming estate planning seminar, call her office at 744-0027.

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Mysterious Heiress Victim of Elder Abuse?

Posted on July 30, 2011 by Linda Melancon, Attorney

Reclusive heiress, Hugette Clark, daughter of copper tycoon and former U.S. Senator, William Clark, passed away in May leaving behind an estate that is estimated at over $400 million. The estate included multiple homes and apartments, an extensive doll collection, an impressive art collection (including Claude Monet’s “Water Lilies”) and lots and lots of money. A great portion of that money was given to her attorney, Wallace Bock, and her accountant, Irving Kamsler. Both men were to receive $500,000 according to Clark’s will. In 2010, both men were also under investigation of mishandling Clark’s estate by the Manhattan District Attorney’s office. The findings of these investigations have not been released.
According to Ms. Clark’s family, around six years go they were instructed by Bock to longer contact her. Did Bock bar her family without her consent and was she a victim of elder abuse? Someday the facts may come out and we will know. But Clark isn’t the only one who may have fallen victim to elder abuse. The Administration on Aging defines elder abuse as any knowing, intentional, or negligent act by a caregiver or any other person that causes harm or a serious risk of harm to a vulnerable adult. If Ms. Clark’s finances were in fact mishandled, this would be considered elder abuse.
Unfortunately, approximately half a million cases of elder abuse are reported each year. This abuse is not limited to financial exploitation. Other forms of elder abuse can include physical, emotional, or sexual abuse, neglect or abandonment by caregivers, and healthcare fraud. If you think someone you know is a victim of elder abuse, get the facts and check the signs and symptoms at http://helpguide.org/mental/elder_abuse_physical_emotional_sexual_neglect.htm.
Fortunately, there is help for those who need it. All fifty states have passed some type of elder abuse prevention laws. The National Committee for the Prevention of Elder Abuse (NCPEA) is a valuable resource, providing information about prevention, what to do if you suspect abuse, and everyday helpful tips for caregivers. Their website is http://www.preventelderabuse.org/index.html. Or, if you’re a resident of the state of Louisiana, the Governor’s Office of Elderly Affairs is another great resource. They can be found online at http://goea.louisiana.gov/.

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Planning for Your Child and Gradchild’s College Education – 529 Plans

Posted on July 7, 2011 by Linda Melancon, Attorney

Almost every time I pick up the newspaper I read about funding cuts or tuition hikes for Louisiana colleges and students. For those of us with college-aged students, the good news is that TOPS still exists, but for those planning for a younger child, this wonderful benefit might not be available. Therefore, it’s very important for parents and grandparents to understand the different options available for paying for post-secondary education so they will choose the right vehicle to fund their child or grandchild’s education. This month, we will discuss one of my favorite ways to save for post-secondary education — the 529 Plan.
A 529 Plan is an educational savings plan operated by a state or an educational institution that is authorized under Section 529 of the Internal Revenue Code. There are two types of plans: prepaid tuition plans and college savings plans. This article will discuss the college savings plan. These plans allow you to contribute funds to an account for a “beneficiary” to use for “qualified educational expenses.”
Qualified educational expenses include tuition, books, supplies and equipment required by the student who is enrolled in a “qualified educational institution,” which is defined as any college, university, vocational school or other post-secondary institution eligible to participate in a student aid program administered by the U.S. Department of Education. This includes virtually all accredited public, private and proprietary schools. Any school should be able to tell you if they are a “qualified educational institution” for 529 purposes. The costs for room and board are also qualified, as is special needs services needed by special needs students in connection with enrollment at a qualified educational institution.
529 Plans also offer tax benefits. Like and IRA, the funds in a 529 account grow free from any federal income tax. However, unlike an IRA whose funds are taxed upon distribution, distributions to pay for the student’s qualified educational expenses are also free of income tax. Louisiana’s 529 Plan, called the START Saving Program, also offers tax-free growth and a tax deduction for Louisiana residents for contributions made to the state’s plan. Unbelievably, Louisiana also matches its residents contribution to a START Saving Program account by annually matching a percentage of the deposits made to an account during the calendar year, depending upon the category into which the account has been classified and the federal adjusted gross income reported by the Account Owner for that year. This match is called an Earnings Enhancement.
In addition to the great tax benefits and earnings enhancement, as the owner of the account you stay in control of it. With few exceptions, the named beneficiary has no rights to the funds. You are the one who decides when withdrawals are taken and for what purpose. Most plans even allow you to reclaim the funds for yourself any time you desire although the earnings portion of the “non-qualified” withdrawal will be subject to income tax and an additional 10% penalty tax.
529 plans are also unique in that people can retain control over the plan’s assets and yet remove those assets from their estate for estate tax purposes. This type of control typically means the asset would be subject to estate tax, but not with a 529 plan. Further, you can move money out of your estate faster by contributing to a 529 plan than with regular annual gifting to your children or grandchildren. In 2011, there is a $13,000 annual exclusion ($26,000 for married couples) allowing you to give $13,000 to any individual without reporting that gift to the IRS. A 529 plan allows you to make 5 years of annual exclusion gifts up front; thus, you can invest up to $65,000 per beneficiary ($130,000 per beneficiary for married couples) without paying gift tax. If you live for at least five years, these assets will not be subject to estate tax either.
The following websites provide additional valuable information about 529 plans: www.savingforcollege.com, www.sec.gov/investor/pubs/intro529.htm, and www.startsaving.la.gov (provides information about Louisiana’s plan). While 529 plans are an excellent way to save for college and post-secondary education and can provide many other estate planning benefits, the tax rules can be complicated. Therefore, you should consult with estate planning professionals familiar with 529 plans to see if they will benefit you, your children and/or your grandchildren.

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Estate Planning and Baseball

Posted on June 17, 2011 by Linda Melancon, Attorney

While most grandparents go to their grandchild’s baseball game and think about them hitting the ball out of the park or making a fantastic diving catch, when I attended my granddaughter’s tee-ball game last week, it made me think about estate planning and young children. Usually, when we discuss estate planning we are concerned with planning for those my age or older. (Although I’m not going to disclose my exact age, I am old enough to have four grandchildren.) However, every year, many minor children in the United States lose a parent and it can dramatically affect the rest of their lives, especially without proper planning.
Since most children grow up in two income households, the loss of one parent can dramatically reduce the amount of money available for their care. Therefore, those with minor children should make sure they have adequate life insurance coverage to replace their income if they pass away unexpectedly. This will provide peace of mind to both you and your spouse and will ensure that your children will have the monetary resources to provide what you would have if you were able. While shopping for life insurance, also talk to your agent or your financial advisor about a policy for your children. As much as we hate to think about losing a child, accidents do happen and the death of a child could cause a financial burden to the unprepared family for funeral and other expenses they may incur. You may also consider disability or long-term care insurance in case you are disabled and are unable to work. Disability insurance can provide an income for your family and long-term care insurance can pay for your cost of care.
Besides the financial impact that loss of a parent can have on child, proper planning is necessary to ensure your child will be cared for by those of your choosing if you are not able to care for them. In the state of Louisiana, a child is considered a minor until the age of 18. If a minor does not have a living parent, then a guardian (or tutor as it is called in Louisiana) must be appointed for him. Our law provides that this right to appoint a tutor belongs exclusively to the surviving parent. If the parents are divorced, only the custodial parent has this right. If joint custody was awarded, this right also belongs to the parent dying last. Therefore, whether you are married or divorced, you should appoint a tutor for your minor children.
Appointing a tutor for your child can be done in a testament (a will) or in a separate writing that is executed before a notary and two witnesses. Typically, it is done in a will because there are other considerations you will want to address besides just who will physically have custody of your child or children. You will generally want to provide a trust for your minor children so their inheritance will be held by a trusted person (the trustee) until the child reaches an appropriate age to receive it. Without a trust, a child is entitled to receive his or her inheritance when he or she reaches 18 – an age usually too young to make sound financial decisions.

So, while you are enjoying your children’s baseball, softball or tee-ball games this summer, make sure they are safe on the field by requiring them to always wear batting helmets while batting and on base, using special equipment for catchers and staying inside the dug out behind protective screening when not up to bat. And, while you’re ensuring they’re protected on the field, make sure you have taken care of the things necessary to protect them off the field too if you become disabled or pass away unexpectedly. To find out more about how to protect your family in case of death or disability, you should contact an estate planning attorney, insurance agent or financial advisor who has the knowledge to provide you with solutions to protect your family.

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Making Fun Accessible to All

Posted on May 26, 2011 by Linda Melancon, Attorney

Morgan’s Wonderland, a theme park located outside of San Antonio,TX, is unlike any other theme park in the world. While it has rides and attractions like most, it is designed and accessible to everyone. Built by philanthropist Gordon Hartman, for his daughter, Morgan Hartman, the park is aimed at children with disabilities. The theme park is a huge success and has had visitors from all states except one and from 16 foreign countries. Attendance is limited each day so there are no long lines and everyone can enjoy their time there. To find out more or make reservations, visit Morgan’s Wonderland.

Closer to home, local attorney, Erin Lanoux and others are creating a park in Gonzales that will be accessible to those with disabilities.
The park, named Kidz Kove, will be located on 1.2 acres of land on Cornerview Street in Gonzales. So far, they have raised approximately $275,000 of the $750,000 needed to make the park a reality. To find out more about the park or to make a donation, visit http://www.projectkidzkove.com.

Thanks to all of those who are working so hard to make fun accessible to all.

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What Is A Succession and When Is It Required?

Posted on March 11, 2011 by Linda Melancon, Attorney

In many states, the process of transferring property at death is referred to as probate; in Louisiana, that process is typically called a succession. There are many misconceptions about what a succession is and when it is required and this article attempts to clarify those misconceptions.

Any time a person wants to transfer any type of property during their lifetime (whether it be a vehicle, stock or real estate) they have to sign some type of document to accomplish that transfer. Of course, when they pass away they can no longer sign documents to transfer their property and that is why a succession is necessary. In a succession, a list is made of all of the assets and debts of the deceased’s estate and a petition is filed asking the judge to put the deceased’s heirs (those entitled to inherit when there is no will) or legatees (those beneficiaries named in a will) in possession of the assets described in the list.

Thus, whether there is a will or not, a succession is usually required. There are a few instances where a succession is not required. The first is if all of the deceased’s assets are owned in accounts that do not pass through the probate estate. Life insurance, annuities and retirement plans with valid beneficiaries are non-probate assets that do not require a succession for transfer. Rather, they transfer to the named beneficiary in accordance with the rules of the account holder. Generally, a death certificate and the account holder’s forms must be submitted to accomplish the transfer.

Also, property owned in a trust and not by an individual does not require probate as the trust continues after the person’s death and the property is transferred to the trust beneficiaries in accordance with the trust’s terms. For most other types of property (bank accounts, CDs, investment accounts, real estate, and personal property), a succession is required for a valid transfer.

What type of succession is required depends upon the type and value of the assets owned. If the deceased’s assets were less than $75,000 and he owned no real estate then a small succession affidavit which does not have to be filed with the court can be used to transfer the assets. If, however, the assets are greater than $75,000 or there is real estate involved, a regular succession through the court system will usually be required.

For deaths occurring prior to July 1, 2004, Louisiana inheritance taxes are due and interest and penalties began accruing nine months after the date of death. So it’s important to complete successions for those dying before July 1, 2004 as soon as possible to avoid interest and penalties. Between July 1, 2004 and January 1, 2008, inheritance taxes were only due if a succession was not opened within nine months from the date of death. Again, it was important to open the succession as soon as possible to avoid those taxes. However, since January 1, 2008, Louisiana does not impose an inheritance tax on estates for persons dying after that date. Since no taxes are due some take the position that a succession is not required within any certain time period. However, there are still many practical reasons to complete a succession as soon as possible.

The first is that unless a succession has been opened, property belonging to the deceased cannot be sold or transferred. Thus, the desire to sell the deceased’s property is often the impetus to begin the succession process. Next, for income tax purposes, a step up in income tax basis is allowed for property passing from the deceased to his heirs or legatees. This means the heirs and legatees inherit the property at the value it had on the deceased’s date of death and only pay income tax on the difference between that value and the price they sell it for. This step up in basis can often provide a substantial income tax savings for heirs and legatees. It is much easier to value property if it is done in close proximity to the date of death. If many years pass before appraisals are done, it may be more difficult and costly to value the property to receive this stepped-up basis.

Also, as years pass, heirs or legatees may die making the succession process more difficult and costly as lost heirs must be found in order to complete the succession. I have been involved in many successions that took years to complete because they were not done in a timely manner and heirs had to be located all over the country. I have also been involved in those we were unable to complete because we could not find some of the heirs. Finally, wills and other important documents necessary to complete a succession may be lost with the passage of time and the correct parties might not even inherit as intended by the deceased because the will cannot be found.

As you can see, a succession will be required in most circumstances when a person dies. Whether that is a small succession by affidavit or a regular succession through the court system depends on the value and character of the deceased’s property. However, if he owned real estate, a regular succession through the court system is usually required. Also, from a practical viewpoint, it is best to complete that succession as soon as practicable after death to avoid lost documents, easier valuation of property, and the search for lost heirs. It is not only advisable, but also necessary, to complete the succession if the deceased’s property is to be sold or transferred to others.

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Estate Planning and Financial Peace of Mind

Posted on February 24, 2011 by Linda Melancon, Attorney

I recently read a book about financial issues for women that I highly recommend. Sarah Van Breathnach was a woman who seemed to have it all. She was a best-selling author, had a cottage home in England, a grand apartment in Manhattan, speaking engagements galore and lots of money. Unfortunately, this all came undone when she relied upon her new husband to manage her money and then the two of them divorced. It was at that point she realized she was broke and the bill collectors came calling. The result of this painful point in her life is her new book, “Peace and Plenty: Finding Your Path to Financial Security.” This book is a must read for any woman who wants to start enjoying “living well, spending less and enjoying more.”

Although there are tidbits of sound financial advice in the book – not living beyond your means, not relying on others for your financial security and how to dig out of debt – the thing that makes this book different is that it examines our emotional relationship with money. I (and, I guess others) had never really thought about my relationship with money and how that relationship influences so many things about my life. Additionally, I was a history major in college and Ms. Van Breathnach used many quotes from World War I and World War II era ladies magazines in her story.

The most delightful part of the book, however, was the suggestion to create a contentment chest to hold things you treasure — notes from your children or grandchildren when they were little; brochures from that cruise you hope to go on one day; pictures of loved ones; clippings from magazines or newspapers that made you smile; or anything that you can look at and it will make you smile. Once you have your contentment chest, when you are feeling blue or about to “jump out of your own skin because you’re worried about money” you can open up your chest (which can just be a cardboard box) and it will cheer you up and get your mind off of your troubles.

While there are many good financial planning books for the serious female investor, Peace and Plenty is a light read that just might give you a little more insight into yourself and your relationship with money. So whether you have a cottage house in England or a condo in Baton Rouge, “Peace and Plenty” is bound to offer you some advice about your finances that will benefit you.

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Getting Advice About Veterans Aid and Attendance

Posted on February 17, 2011 by Linda Melancon, Attorney

VA Aid and Attendance is a benefit that might be available to help pay the cost of long term care for a veteran or the surviving spouse of a veteran. Unfortunately, finding someone to give you accurate information about this benefit can be difficult. So, where should you look to find someone knowledgeable about Aid and Attendance that can tell you whether you or a loved one will qualify?

Your best bet is to find an elder law attorney who is accredited by the VA. Not only will that attorney be able to help with VA benefits, he or she should also be able to tell you if there are other sources of funding available to help pay for long term care and make sure you don’t do anything while qualifying for VA benefits that might disqualify you from Medicaid or other government benefits.

The VA only permits attorneys who are accredited by the VA to give advice about your specific case. To find out if a particular attorney is VA accredited, you can visit the VAs list of accredited attorneys at http://www.va.gov/ogc/apps/accreditation/index.asp.

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