PODCAST 77: Who Gets Ownership of My Property After I Pass Away?

Get your complimentary guide to go with this episode:

The Greatest Gift, Outline Your Wishes with an Estate Plan (PODCAST)

By submitting your contact information, you consent to be contacted regarding retirement income strategies that utilize investments and insurance products.

 

Below is a transcription of the Ask Gregory Podcast 77 – Who Gets Ownership of My Property After I Pass Away?

Hey welcome. I’m your host Gregory Rick’s a financial advisor here to answer your questions and help you win with your money.

On today’s episode of Ask Gregory Podcast, we’re gonna walk through the process of what happens with your property when you pass away. Joining us for this episode is West Blanchard of WJ Blanchard law, as well as Brandon Bergeron a wealth advisor here with Gregory Ricks & Associates. We also have a complimentary download waiting for you on this topic. If you go to www.gregoryricks.com/podcast77. Again, that is www.gregoryricks.com/podcast77

We have Chris from Folsom, Louisiana has a question for you ask something to do with Napoleonic Code. Chris, welcome to winning at life. How can we help you today?

I’m just curious about the I guess usufruct law where, okay, someone from another state, I’m married to a man down here that his family has a bunch of land? Well, they’ve given it to him. So what are the laws when he passes away? What happens to that? Do I just have permission to live there? And my kids inherited or how does that work?

Yeah, so it sounds to me like it’s it’s a much bigger question and the, you know, use of usufruct in that particular situation, right. So what you’re saying to me is, he’s inherited landers been given land by his family. And in fact, it’s very interesting, because Gregory and I talked about this particular issue, when we were teeing up topics for the show this morning. There’s a separate property in a community property aspect to ownership, right. And here, because that property was given to him, or he inherited it, that is considered his separate property. So unless he disposes of it in his will, you know, leaves it to you or gives you some portion or use of it. You know, that that is going to be controlled by Louisiana law. And by Louisiana law, separate property devolves to his children, not the spouse got it. So there’s got to be something that is interesting point there, that separate property doesn’t go to the spouse, correct?

Wow.

I thought that it had changed that a long time ago. And it went up to the age of 21, to protect the children. So in all reality, it is still in place, as it was 34 years ago.
Yeah. So I think at this point, you know, the question that you need answered is, do you have a will? And do you have something that provides for an opt out of the legal structure provided by statute, because it would seem to me like that is, at least from what you’re telling me, it seems like, that’s what’s in everybody’s best interest at this time. And you got some options, you can make use of usufruct, or full ownership. And, you know, we can walk you through that as well.
We’ve never addressed it quite that way. But it came up. And it’s separate property. And generally, it comes up. A lot of times instead of land, it’s inherited money, non qualified assets, separate money. And if he keeps it in a separate account, the current wife no matter how long that’s been a wife, but that separate property is not going to go to the wife. Under if he doesn’t have a document instruction, that would be a will or a trust. In doing so, it goes to the kids. And as even if it’s the kids, mom,
right, that and neck and look, everybody’s not got tons of land tons of money. That could be the only value.

Yeah, so think about it this way, too. It’s, it’s really all about the nature of that property. Is it community, is it separate? So if it’s separate, we just discussed, it’s gonna go to the kids first. But let’s go down the list and see how far down the list of spouses Okay, on separate property. Okay, first to the kids, if not to the kids, it goes to brothers and sisters. If not the brothers and sisters. It goes to nieces and nephews, if not the nieces and nephews to the parents, if not to parents than to the spouse see number five on the list as the spouse or separate property. And what what the law is trying to tell you right there is this is bloodline property, and we’re going to do everything in our power to keep it in that family. Right.

That was declared by a lot of people from a bunch of states but we’re talking about Louisiana. That’s right law there. So let’s you mind jumping over to Mississippi for a moment on that. Yeah. So they’re separate property is a little bit different. Their Louisiana law and Mississippi law are I don’t know that they could be more different in the way that they leave assets to spouses. Right. So the default rule in Mississippi is going to be, hey, it’s going over to your spouse. All right. Now there’s some something as simple as joint tenants. Yeah, man. Right. Right. So
in the initial machinations that go into there, not every single thing fits throughout a big word there. Yeah, go ahead.

So just a caveat is what we would say. Right. But the idea there is, you know, just by by being domiciled across that state line, the very concepts that we’ve just discussed, and, you know, parsing out separate property versus community property, are really not things you have to worry about. So you look, we’ve got things to worry about over here in Louisiana that you guys don’t have to worry about, and certainly vice versa. But when it comes to this separate and community property issue, it’s, it’s a big thing to understand where you are, and that equation,
we talking about the totem pole, though, the wife is way down the list on that. I, I don’t know, I maybe I look at things a little bit differently. But I’d want the wife weigh up higher on the totem pole, myself, but it also could be, you know, and so many things and people’s families and beliefs and how they want that controlled going forward. But one of the things is, no matter how you feel that should be, it would be easy to go and document that because we’re talking about the lay of the land without instructions, which what are acceptable instructions, a will and or trust to handle that. Now going back to lands is harder to get commingled, right, because landsec to keep a separate property, but if it was 200,000 You came into, you have to keep that in a separate account title.

And I’ll just use you know, if you get 200,000. You inherit it, and you keep it in account in your name. That’s right. But if you say, you know, I’m just going to put it in the joint account with the wife, separate properties history then.

So yes, and here’s the only way you can unravel that ball of yarn. So just to big picture here, you inherit $200,000. That’s your separate property. Until then, unless you mingle it with community property in such a way that it can’t be discerned as to what part is what? So two ways to look at that. You inherit 200,000, you put it in a joint community property account that already has $10,000 in it. Well, look, we can tell what’s going on in that account, right? But you put it in an account that has $205,000 in it. Well, how do you tell what money got spent? Were right, on the other on the other side, where you had just 10,000, you can spin, let’s say you spend 15. And you say, Okay, wait, no matter what happens here, we still have $195,000. That’s separate property. On the other hand, when you when you have apples and apples, you can’t really discern what’s what and the courts have made clear, we’re not even going to try. So unless it’s just explicitly clear and easy for us to tell, which is which we’re not even going to try you made that mistake. And that’s something you decided to do. So you have to be very careful. And we’ve set up plenty of wills and trusts, such that when a child is inheriting an asset, maybe it’s a brokerage account, maybe it’s a bank account, it’s done in such a way that at inception, it’s titled in that child’s name. Some of some of my clients have even asked to have a new bank account opened as part of the inheritance, okay, a new bank account will be opened, these assets will be transferred into that new bank account with this child’s name on it only. And that’s to underline the point that we’re keeping this separate. If you take it out of this new accounts and mix it up. That’s when you that’s when you you decided to do that. But I don’t want you to think you’ve only got one account, it happens to be with your spouse. So that’s the only place that could go. And now you’re in a you know, a mixed up situation from day one. So you know, they’ve really tried to create that that soft wall between, you know, they inherited, child and spouse. And sometimes that works. You know, that’s a great place to start. But those are the reasons we’re doing that is because you know that the separation of inherited money and inherited assets is a big deal.

So let’s flip to the other side where we’ve talked kind of clearly talked about Louisiana, go back over to Mississippi, and because it’s pretty automatic few quirks in there, but pretty much that that separate property is going to go to the wife. So you could have under this like, oh, no, I don’t want that I want I want my 50,000 acres to go to the boys, because I want to keep that the family for a long time, then it’s got to go to their boys. Well, that’s just not automatically going to happen that way. Yeah. And so those adults, the mom, it’s hard, she’s gonna then have control
those situations where you need a will. Right. And and that’s, that’s it where where I would say, you know, 95% of the folks in Louisiana need, neither will you just need something because unless unless you you know, you’re single person and you’ve got two kids and look that it’s only going down to to one person or one child. Okay, I get it. But most most scenarios are not like that in Mississippi. You’re on the other side of that where the law is set up in your favor for the most part, except when you want to make an adjustment.

Can you and two minutes give me and this is? Well, I’m sorry, Kim’s question about the difference between a will and a trust.

So largely, they can do a lot of the same functions, they distribute your your assets to your heirs, the biggest benefit that you’re going to get from A trust is going to be the ability to avoid succession or avoid probate on those assets. Right. And we can talk about, you know, on the other half of the break here, what that succession process looks like and how it can get a little bit messy if it’s not a very straightforward situation, and why it could be something you want to avoid. It’s not for everybody, some some folks have had great experience with successions. Other folks have done it once or twice, and they say never again. And so it is a bit of a personal preference. But that’s going to be your main benefit. We can talk again, a little more about the ins and outs of some tools you can utilize in a trust versus the will. But big picture, your big benefits going to be avoiding probate avoiding succession using a trust, you know, and people you know, I’ve failed at these questions I know you have to is like how long does Why does succession or probate take so long? What are how can we speed this up and you like to get it expedited.

I know that but you also don’t control that and there’s things in place that takes a while. And that’s where a revocable, I like a revocable trust because you can change your mind. And there’s situations where you probably don’t want things change, that’s fine. But I kind of like to change my mind sometime you know, wind blows, I changed my mind or what I want to do with my truck. Okay, so you can Chafee but you don’t have all those hindrances, right, right, other than kind of got to get the truck retitle the land, retitle and such like that, but there’s like, not a drawn out process, and a will, from a standpoint of something that can be done pretty quickly. I don’t know about the trust, you can talk about that how that process goes. And there’s probably I think, what is it? If you got everything, trust it up, what what is it carry over will or will pour over kind of that it’s to clean up the crumbs that are left out there. So

So anytime we’re talking about a will a setup, it’s, it’s by its nature going to be a lot quicker than setting up a trust. But the long term benefits are not as strong, right? Oftentimes, we have language in a will, that is sort of sweeping and broad and generalized. And you know, the the first option for most married couples is I’m leaving it to my spouse. And then the second option from there is, okay, maybe now we’re talking about some specifics going to certain folks, and maybe we’re using a trust to hold on to that for some of the grandkids until they’re out of college, or to pay for college. Maybe we’re restricting use of some of this property to a certain extent, maybe they can’t own it outright, maybe they can only use it up until the age of 30. And then at that point, it’s got to be sold, that sort of thing. But all of that really just is encapsulated in the ability to kind of do that quickly. You can make those decisions and throw that into a will. And that’s going to be what holds up in court. When you when you probate your will that’s going to be what the judge decides to do with it. On the other side of things, if you’re looking at a trust, you almost have to look like and look at it as its own little business. So your business doesn’t have anything until you start putting things into the name of your business. You open up a business bank account, maybe you buy a business card, maybe you buy a building with your business. Maybe you acquire office equipment employees
and this you’re speaking of the trust

Correct. Revocable or non? Both. Either way, yeah, so a non revocable I mean, a revocable can have been treated like that business entity.

And so the concept there is, in order for the trust to have the same effect that you’re looking for in a will you need to place those assets that you want to trust to control inside of that legal trust.
Okay, so from a tax ID standpoint, is that your social honor of speaking of a revocable trust, meaning you can change your mind move stuff in and out of that trust? Is there a tax ID number?
No, you can use your social and and that’s simple. Yeah, I like that. Yep. And that really is just sort of a bird’s eye view. It’s because the the overarching concept is maintenance of control. It’s its primary purpose is to avoid succession. It’s not going to give you any tax benefits. It’s not treated as its own taxable, distinct entity. Right? It’s really Its job is to avoid that succession, that probate process. And so from the the governmental perspective, you’re not going to get any protection of assets, you’re not going to get any tax breaks. So why why establish a new legal identity for it with its own tax ID number. Now, if you move on to an irrevocable trust, that’s a different story, because you are getting some of those benefits, you are getting asset protection, you are getting tax differentiation, right. But that comes with strings as well, you’ve lost now, the control of the property that goes into those to an irrevocable trust. And so that’s the big conversation, when we have had discussions with prospects is a lot of folks come in, and that’s what they want. They’re really hammering down, hey, I want my assets protected.

Okay, let’s talk about what the trade off is there. And whether you can protect your assets with adequate insurance, or whether you want to take the major step to divorce yourself from control of that asset. And that is something that I don’t think a lot of people are prepared for. And frankly, oftentimes, it’s not worth it. You know, that equation is the negative most of the time and so, if we’re trying to avoid succession and probate, that’s where it kind of always trickles back to that.

 

Thanks to everyone for tuning into this week’s episode of the Ask Gregory podcast. We want to give a big thank you to our guest this week, Wes Blanchard and Brandon Bergeron for joining us. And don’t forget we have a complimentary download waiting for you on this topic. If you go to www.gregoryricks.com/podcast77 Again, that is www.gregoryricks.com/podcast77
Gregory Ricks & Associates is an independent financial services firm that utilizes a variety of investment and insurance products. Investment Advisory services offered only federally registered individuals are AE Wealth Management LLC. AE Wealth Management and Gregory Ricks & Associates are not affiliated companies. investing involves risk, including potential loss of principal. Any references to protection si P or lifetime income generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying ability of the issuing carrier. This podcast is intended for informational purposes only it is not intended to be used as a sole basis for financial decisions nor should it be construed as advice designed to meet the particular needs of an individual’s situation. Gregory Ricks & Associates is not permitted to offer and no statement made during the show shall constitute tax or legal advice. Gregory Ricks & Associates has just needed partnership with tax professional Jude Heath can provide tax advisor or firm is not affiliated nor endorsed by the US government or any other governmental agency. need permission and opinions contained herein provided by third parties have been obtained by sources believed to be reliable, but the accuracy and completeness cannot be guaranteed by Gregory Ricks & Associates.