Who Pays Estate Debts in a Louisiana Succession?

I was asked yesterday about the responsibility of paying estate debts. Let's say, for example, for example that Dad dies. Dad was married to Stepmom. Dad had two children from his first marriage. Dad and Stepmom had joint bank accounts. Dad, in his Last Will, left some particular bequests to Stepmom and others. Who pays Dad's debts.

First some definitions:

• Estate debts - debts of the decedent and administration expenses
• Debts of the decedent - decedent's obligations or those that arose a result of his death, such as funeral and burial costs.
• Administration expenses - debts incurred in the settling of the decedent's estate, such as executor fees, attorney fees, accounting fees and court costs.
• Universal legacy - a bequest of all of the estate, or the balance of the estate that remains after particular legacies.
• General legacy - a bequest of a fraction or a certain proportion of the estate that remains after particular legacies. The practical effects of whether a bequest is universal or general are the same with reference to payment of debts and administration expenses.
• Particular legacy - a bequest that is neither general or universal. "I leave $20,000 to Fred."

So, here are some rules applicable to the payment of estate debts in a Louisiana Succession:

1. Debts attributable to identifiable property are charged to that property. A good example is the home mortgage.
2. Debts of the decedent are charged ratably to property that is the object of general or universal legacies, and to property that devolves when there is no Will.
3. Administration expenses are charged ratably to the fruits and products of the property that is the object of the general and universal legacies and property that devolves when there is no Last Will. When the fruits and products are not enough to pay administration expenses, remaining administration expenses are charged first to the property itself, next to the fruits and products of property that is the object of particular legacies, and then to the property itself.

There's more but this should give you a good start when trying to determine how estate debts and administration expenses are to be paid. My general analysis is that law appears to favor particular legacies. Unless you have a situation with a negative net worth, your paricular bequests will be satisfied without being burdened with a reduction due to an estate debt.

Note that you can change these rules when you are writing your Will.

If you are involved in a Louisiana succession and want to know how to proceed, you can do the following:

1. If you have general questions, post a comment. I'll get notice that you posted a comment and I'll do my best to post a reply. Plus, others in similar situations can post and benefit as well. We can all learn.
2. If you are interested in utilizing the estate administration legal services of our firm, you can call our office at 225-329-2450, or you can email me at paul@rabalaislaw.com.

Until next time...

Paul Rabalais