Louisiana Estate Planning and Elder Law

Secure the Future of the Family Business - Draft a “Family Constitution”

Recently, two brothers, a sister and their parents - the owners of a $38 million manufacturing company, which manufactures specialty fuel tanks for construction and other equipment – held a weekend meeting in a quiet retreat near their Stow, Ohio headquarters. The family’s goal was to come up with a plan for the future of their company by drafting a family constitution. Over the weekend, they established standards for employment for family members and determined in broad terms how stock would be passed from generation to generation.

The family constitution spells out the family's history and commitment to the company, and it establishes policies that guide the relationship between the business and the family. Family constitutions do not replace estate plans, legal documents and trusts; they deal more concretely with the goals of the business. The sooner the better for drafting a family constitution; they need to be written before they are needed - while there is a feeling of trust and little conflict.

Some areas that should be addressed:

• The family's vision and commitment to the company
• The family values in their relations with customers, employees, suppliers, partners, and the community
• The desired behavior of family members who are employees
• Guidelines for hiring and retaining talented employees, including prerequisites for employment of family members, including education and experience
• Guidelines addressing who can own stock, which classes of stock, and how shares can be transferred
• A dividends and family benefits policy that advises shareholders on reasonable expectations for returns on invested capital

Source for Post: BusinessWeek "
A Guide for Family Businesses" 
By Ernesto Poza

Read the article here.

Writing a Memorandum of Intent for Your Special Needs Child

Raising children is difficult in the best of circumstances. You’ve spent years learning every like and dislike of your special needs child and then it hits you – who will know this when I’m gone?

The answer is a Memorandum of Intent, which is a letter that you write to the guardian of your child. In it you can express things that might be considered too small or that change too frequently to include in your will or trust. Listed below are just a few of the items that might be included in a Memorandum of Intent:

• Healthcare and therapeutic needs
• Contact information for family friends, doctors, therapists, pharmacists, teachers, etc.
• Insights into your child’s personality - specifically the things that are unique
• Preferences for education, camp, child-rearing and religious upbringing
• Food preferences and any allergies
• Items or practices that might provide comfort
• Item or practices to avoid
• Holidays and traditions celebrated by your family

A memorandum of intent will provide for your child’s emotional well-being. It is the compilation of a level of knowledge that you would only know by spending everyday with someone you love. This thoughtful information will help ease the transition for all involved when you are no longer available to care for your child.

Source for Post: The Academy of Special Needs Planners. Read the article here.

In Lieu of Flowers

For those of you who are regular readers or subscribers, you know I'm a big believer in leaving a legacy of your values as well as your assets. See a post on that concept here.

Here is a simple way to allow your family to honor your values. Ask them to include a request in your obituary to send a donation to your favorite charity in lieu of flowers. For example, my former high school, St. Joseph's Academy has encouraged their alums to make this request (pdf file).

Other ideas are: the hospice that cared for you or a loved one, your church, charities you have given to over the years such as the Humane Society of the United States. Flowers die in a day or two, but a donation in your honor helps your favorite charity carry on the type of work you value.

Estate Planning and Divorce

Leanna Hammill, an estate planning attorney in Massachusetts has an excellent series of posts on how divorce affects your estate plan and what you should do about it. In summary, Leanna suggests (and I agree) that you should:

Before the divorce is final, meet with your estate planning attorney to:

• Examine any powers of attorney (POA) in which you have named your current spouse and revise them to designate someone else as your agent. Also, check to make sure any entity that has a copy of the old POA is notified of the change and is provided a copy of the new POA. This is very important because most couples draft the POA to be effective immediately, which means your now about-to-be-ex-spouse has access to your bank accounts and other assets, even if those assets are titled in your name only
• Likewise, examine any health care proxies or powers of attorney for health care. Revise them to name an alternate agent and make sure those who have copies are notified of the change and provided new copies
• Examine your current will and any trusts and design a new plan for distribution of your assets and protection of your children

When the divorce is final (as soon as possible), meet with your estate planner again to:

• Sign your new estate planning documents
• Review and revise all beneficiary designations on IRA accounts, investment accounts, life insurance policies, etc.

In addition to Leanna's suggestions, it's also important to advise your business partners of your pending divorce and review relevant provisions of your partnership or operating agreement. Most LLCs and partnerships have documents that address what happens to your interest upon divorce.

Consulting your estate planning attorney before the divorce is final can help you plan for your divorce and ensure that things you fight for in your divorce settlement are protected. If you are in the midst of a divorce or are thinking of filing for divorce and need help with your estate plan, feel free to contact my office to schedule a consultation.

Read Leanna's posts here and here.

Business Succession Planning, Estate Planning, Trusts

Pass on Your Real Wealth - Your Values

The Boston College Center on Wealth and Philanthropy estimates that $41 trillion will change hands by 2053. That's the largest intergenerational transfer of wealth in American history and increasing numbers of those transferring wealth are considering transferring their values as well as their dollars. In the past, most families avoided discussing death and inheritance, but now more and more families are doing so. As part of that discussion, families are discussing their values and purpose in life. In the article, Patricia Angus of Shelterwood Financial Services puts it this way:

"The definition is broadening to include not just financial capital but human, social and intellectual capital,” Ms. Angus said. “Professionals used to think it was just, How do I transfer my financial assets at the lowest tax costs? Now people are asking, What is the purpose and meaning of what I’m doing here, and how do I pass those down? It’s not about death. It’s about an experience in life, an opportunity to talk as a family about purpose and values that might not otherwise come up. For people who just write a document and put it in a drawer to be opened on their death, I don’t see that opportunity coming up."

I've discussed having a family meeting to discuss you estate plan here before. It's an excellent way to manage expectations, pass along your values and limit disagreements after you die.

Source for Post New York Times

Boston College Center on Wealth and Philanthropy

Business Succession Planning, Estate Planning, Trusts

Negative Inheritance?

Harry Margolis has an interesting post on this subject in his Elder Answers Blog.

What is a negative inheritance? According to Harry

The term (which was likely first used in the study of economics by Boston University Professor Laurence Kotlikoff) describes the situation when the costs to children of caring for aging relatives outstrip any gifts or bequests they might receive in return.

He also shares a typical example from his ElderLawAnswers.com discussion forum:

My parents are in their mid-eighties and continue to live at home. We sold our large home 2 years ago and moved in temporarily with my parents while awaiting the purchase of our new home. Alas I discovered how much they needed more care than just each other during our stay. My husband and I now stay at my parents home and we do not even visit our own home. I quit my job last summer to increase the level of care necessary for them. We pay all their bills except for food as well as our own bills. I am taking CNA classes so that I may continue to take care of them at home as opposed to the option of nursing home care. We are now dipping into our personal retirement savings to continue to care for them.

This example highlights the need to plan for caring for your parents. That planning may involve a special needs trust, long-term care insurance or other financing options. If you anticipate having to care financially or otherwise for your aging parents, it makes sense to consider that when drafting or revising your estate plan.

Technorati Tags: Elder Law, Estate Planning

Not Convinced? What Happens in Louisiana When You Die Without a Will

Over 80% of people in Louisiana don't have a will, so what happens if you die without one?

If you haven't written a will, the State of Louisiana has "written" one for you. Here's what it says in a nutshell:

My community property goes to my spouse in usufruct (basically, the use of) and to my children in naked (underlying) ownership. If I have no children, then to my spouse.

My separate property goes to my children and if I have no children, then to my brothers and sisters with a usufruct to my parents. If my parents are deceased, then to my brothers and sisters and if I have no parents, brothers or sisters, to my nieces and nephews.

Some questions to ask yourself about this plan:

• The usufruct allows your spouse broad rights to use your property until death or remarriage. What about the underlying ownership of your children? What happens if he wipes out your savings during his lifetime? Is anything left for your kids?
• Is the surviving spouse the mother of your children? If not, their stepmom is getting use of your property before your children do. Do you think they will all get along? How will your children be protected?
• If you have significant separate property, are your children old enough to get it? Responsible enough?
• Do I want my brothers and sisters to get my property? Under the law, half-siblings "count." Is that your intent?
• Do you have a spouse or children with disabilities and getting government benefits? An inheritance like this will likely jeopardize those benefits. Is that in their best interest?

I can give you many reasons why you should consult an attorney to draft a will and estate plan, but the bottom line is this: Do you want the will Louisiana has written for you?

Tips for Choosing an Executor

Most folks pick a spouse or other family member to serve as executor and in most cases, that choice is appropriate. However, if you have a large estate, feuding family members or even stepchildren, you may want to select someone else. Your executor should be:

• Sophisticated enough to understand fiduciary responsibility, which is basically acting in a prudent manner on the behalf of someone else. In this case, on behalf of the estate. The executor's personal interests may conflict with the estate. Can the person you choose understand and honor the distinction?
• Well-organized and detail-oriented. The executor needs to be able to juggle a variety of tasks such as filing insurance claims, filing tax returns, assessing and paying debts and collecting detailed asset information.
• Play well with others. The executor works closely with other family members, the estate attorney and sometimes CPAs and other professionals.

For more info on duties of the executor, click here.

Technorati Tags: Estate Planning

Tips for Choosing a Health Care Agent

Once you've decided to prepare a health care power of attorney, the next big decision is who to appoint as your health care decision-maker. Here are some thougths. Pick someone who is:

• Trustworthy: The most important consideration is appointing someone who will do what you would want under the circumstances. This is a person committed to your way of thinking over their own feelings.
• Tough-skinned: They can hold up under pressure from family that may not agree with your decisions and/or medical professionals steering them toward a decision without proper justification.
• Take-charge: They're not afraid to ask the tough questions and keep asking until they get a satisfactory answer.
• Observant: They know you well enough to notice changes in your condition and take note of how you are being treated by medical staff.
• In the Loop: Communication is key. The power of attorney document can't cover every possible situation. Make sure your agent fully understands your thought process so that they have a framework for making decisions based on your wishes.

Click here for Tips on Choosing a Guardian for Minor Children
Click here for more information on a Health Care Power of Attorney and other health care planning documents

Technorati Tags: Estate Planning

Tips for Choosing a Guardian for Minor Children

This is a hard issue to face, but what if something happened to you and your spouse? Who would take care of your minor children? Even though it is difficult to think about, do your kids a favor and don't leave it up to feuding family members or a judge. Many couples never name a guardian because they can't decide on who to name. Liz Pullianm Weston, a frequent columnist for MSN Money has some good tips on choosing a guardian for your child, including:

• Think outside the box - siblings, close friends, neighbors, the child's grandparent or even the oldest child. Each family situation is different.
• Separate functions - some people are great at raising kids but lousy with money. You can name your nurturing brother as guardian and your no-nonsense sister as trustee. The guardian takes care of the personal needs of the children; the trustee, their money.
• Choose one, plus have a backup or two.
• Plan to revisit the issue - reconsider your choices as your child or children grow.

Once you narrow down the list, consider some of these factors:

• Who already has a good relationship with the child?
• Where do they live?
• Do they share your values?
• How about their age, health and financial situation?
• Are there other children in the house?
• How do they feel about being named guardians?

Source for Post: Liz Pulliam Weston, MSN Money. Read the article here.