Paul Rabalais' Louisiana Succession Law Blog

Five Biggest Louisiana Estate Settlement Blunders

Over the 20+ years I've been providing estate settlement legal services to families in Louisiana, I've seen surviving spouses, surviving children, and other heirs make a host of mistakes when it comes to settling the estate of their loved one who passed away. While I could easily make a list of 20-30 common mistakes that are made, the following are five that we see quite often:

1. Working with the wrong lawyer or law firm. Every week we get calls or emails from people who are frustrated because they feel that their loved one's succession is stuck in mud, because the attorney can't/won't/doesn't know how to/refuses to do the work to complete the succession. Sometimes it's because the lawyer won't return phone calls. Sometimes it's because the lawyer doesn't understand Louisiana Succession law. Sometimes it's because the lawyer is too busy handling other things. Sometimes it's because you don't get along with the lawyer. Sometimes its due to miscommunication or no communication. It could be anything. You need to work with a lawyer of law firm who can work with you to develop a written plan to take you from start to finish, is available to handle things that come up during the estate settlement (and things WILL come up), and keeps you posted of progress along the way. Work with someone who provides their fixed fee in writing so you won't be unpleasantly surprised later regarding legal costs. Work with a lawyer or law firm that handles estate matters exclusively so they are not sidetracked by other more pressing legal deadlines that they have in their other matters.
2. Ignoring the estate settlement. No one is going to come knocking on your door after your loved one dies reminding you that it's your job to complete the estate settlement of your loved one. It's your job to take action, contact an estate settlement lawyer, and get the job done. Otherwise, there could be some hefty estate tax penalties and interest due if an estate tax return was required to be filed. Plus, you can't sell the house or any other estate assets until the Succession is complete. And, the longer you wait to do the Succession, the harder it is to gather all of the required date of death assets and values that must be disclosed on the Detailed Descriptive List of Assets and Liabilities. So, Git-R-Done.
3. Failure to Maintain Open Communication With the Heirs. This one causes family relationships to break. There is little that causes more stress than being involved in an estate settlement but not being able to get basic information about the workings of the matter. This causes stress, resentment, suspicions of impropriety, lack of trust, and worse, a complete and permanent breakdown of the relationships of what were formerly loving family members. Work with a law firm that has the legal, technical, and client service skills that will keep all of the heirs current on the progress of the estate.
4. Ignoring Current and Future Tax Consequences. If the Successsion / Probate / Estate Settlement (call it what you want) is done wrong, the heirs will pay more tax. Executors, trustees, and heirs have certain decisions they must make when the estate is being settled that will affect (often adversely) the amount of tax that the estate or the heirs must pay. Most estate settlements have tax consequences in the tax areas of: estate tax, capital gains tax, income tax, generation-skipping transfer tax, and property tax. One example is the "Executor's Fee." While the executor of a Louisiana is entitled to an executor's fee of 2.5% of the estate assets, an analyses must be made about whether to accept the fee. The fee is a deduction from the estate for federal estate tax purposes, but it is included in the taxable income of the executor. Work with a lawyer or law firm that understands the various tax consequences of settling an estate.
5. Failure to properly document "Usufruct" assets. When a married person dies, he often leave his surviving spouse the usufruct of assets in his estate. If his wife inherits the usufruct, she is going to be accountable to the naked owners when the usufruct later ends. Proper documentation of usufruct assets at the time of death AND proper documentation of the subsequent sale of those usufruct assets is a MUST to avoid complications at the end of the usufruct (which typically is when the surviving spouse dies) and the heirs of both spouses squabble over those assets. Work with a lawyer or law firm that understands the usufructuary accounting and can provide you with the necessary guidance so that the estate settlement goes smooth not only when the first spouse dies but also when the surviving spouse dies.

Mistakes are often made in estate settlement legal proceedings because most executors and heirs don't go through this very often, so they don't comprehend the consequences of a mistake. If you are the executor of an estate, or your loved one died recently with no Will, give us a call at 866-491-3884, and we'll help you develop a plan to get the estate settlement done quickly, easily, and without stress. We provide legal services for Successions in all 64 Louisiana Parishes. Call today!

Louisiana Executor Compensation

 

I want to talk to you today about a topic that comes up on occasion with successions. It's about executor compensation. When a person writes a will, they name their executor which is often a spouse, adult child or relative. Unless there's something in the will expressly providing for the amount of compensation the executor is is entitled a fee of 2.5% of succession assets according to Louisiana law.

 

The gentleman I was speaking with yesterday had a relative pass away and he was named as the executor. There was a specific dollar amount that the person who wrote the will designated for an executor so he is bound by that. This was a little bit unusual.  It's common for people to name an executor but it's not common to designate the executor’s compensation.

 

Just be aware of the executor’s fee when planning for things if you're involved in a succession. Sometimes it's waived because the executor's fee is subject to income tax and the inheritance is typically not subject to income tax. If you're starting as an executor of a succession and need some help, give us a call and we will help walk you through the process.

Why All Heirs Must Cooperate in a Louisiana Succession

 

I spoke with a gentleman yesterday who has been struggling for years to get successions done for a parent and a step-parent. The problem has been not all of the parties being on board.

The way our Louisiana succession system is set up, things can get done very quickly if you can get all of the heirs together, communicating and in agreement on what has to take place. Problems surface when there is a party not willing to communicate or agree. Things shut down and successions may never get done. In our office, we only handle successions where we can get everyone involved from the start.

If you are concerned about all of the necessary parties cooperating when a family member passes away, attempt to open the lines of communication and get everyone on the same page to create a plan to get things done. If there is someone being uncooperative, you have to work on that from the start.  You really need everyone working together in order to get things done.

If you need any help with this, our office would be happy to work with all parties involved in the succession.

Paul Rabalais

Louisiana Succession May Need More Than One Estate Account

Was working with a family today settling the estate of their parent. Based on the way their parent's accounts were set up, I advised them that they will need two estate accounts.

Once the child is appointed the Independent Administrator (we prepared all the documents allowing her to be appointed while she was in the office), she will open an estate bank account at a local bank and move all of the parent's funds into the new estate bank account.

The deceased also had an account at Edward Jones with investments in it. The family wants to sell the investments and divide the proceeds among the heirs. So, the Independent Administrator will open an estate account at Edward Jones, move the assets from the parent's single account into the estate account, sell the investments from the estate account, and then move the estate account cash from the estate account at Edward Jones to the estate account at the local bank for ultimate distribution to the heirs.

We've worked with several estates that have had to open multiple estate accounts, particularly if there are investments at multible brokerage firms that must be sold. Often these estate accounts are temporary but they are a means to an end of getting estate investments liquidated so distributions can be made to heirs.

If you are named as the executor of a Louisiana Succession in a last will, or if you would like to be appointed as the Administrator of a Louisiana Succession (because there is no last will), give our office a call and we'll be happy to have an opportunity to discuss serving your estate settlement needs.

Paul Rabalais

P.S. Thanks to Laura Bittel from our office. Our new client said that were it not for how nice Laura was when she called, she may not have come in. Thanks also to Catherine Martinez for getting succession pleadings prepared so quickly while our client was in our office that it saved our client an extra trip from out of town.

Final Steps in a Louisiana Succession

We are wrapping up several successions this week. Some of them have lasted several weeks; some several months; and there is one that has been going on for years. Every succession is different because every succession has different types of assets that must be transferred, different debts, and different personalities and relationships among the parties involved.

How we finalize a Louisiana Succession depends on whether the Succession was completed "with an administration" or "without an administration." Let's take a look at the differences.

Hypothetical: Dad died with a house, stock, a vehicle, and bank checking and savings accounts.

• Example 1: Dad left it all to Mom. Since Mom doesn't want to sell any of Dad's estate assets, she merely wants to have it put into her name. She already has access to the bank accounts because they were joint accounts. We would complete this succession without administration and petition the proper court to order that all of Dad's assets be re-titled into Mom's name.
• Example 2: Dad left it all to his three children. In this situation, we must have an administration. One of the kids will get appointed as the Administrator (if Dad had no Will) or the executor will be confirmed (if Dad had a Will naming an executor). The executor will open estate accounts, transfer Dad's bank accounts into the estate accounts, sell the stock, vehicle, and home, and ultimately distribute the cash and estate assets equally to the three children.

In either situation, the final step involves petitioning the court for a court order (also known in legal circles as the "Judgment of Possession") which orders parties to transfer assets to the heirs. This Order is filed in the real estate records of the parish where real estate is located, and it is also sent to investment firms, stock transfer agents, and banks when those parties need to be instructed to transfer assets into the names of the heirs pursuant to this order.

Successions can be difficult to understand because each one is so different and there are several different succession procedures (Will v. No Will; administration v. no administration; independent administration v. regular administration.

If you are in charge of completing a Louisiana Succession, give us a call and we'll talk you through all of the steps to complete it, and then we'll get it done in lickety-split.

Paul Rabalais

Splitting Assets of Deceased into Two Trusts

Started working on a Louisiana Succession this past Friday. The executor of the estate was in town - he lived out of state. He told me he thought he would have to stay in town until the entire estate was settled but he wanted to go home as quickly as possible.

The Will left everything that the deceased owned into two trusts: one trust for one child's family, and one trust for the other child's family.

Like I always do, once we reviewed the special terms of the Will and uncovered all of the assets titled in the name of the deceased, I went through step-by-step what we would do to take them from where they were at that moment in our conference room to the entire estate being settled. I told him, generally, that we do the following:

1. While they were in the office, I told them, our Director of Client Services, would gather the information and prepare the necessary Louisiana Succession pleadings to have the son confirmed as the Louisiana Independent Executor. I told him once he signed these pleadings in our office that day he was free to leave Louisiana and go back to his home state. He was pleased.
2. I told them that once the son was confirmed the Independent Executor, the court would issue several certified copies of "Letters of Independent Executorship" (Letters).
3. Once we have these Letters, we can help him open an estate bank account, close all of the deceased's bank accounts, and deposit all estate funds into the estate account.
4. In the deceased's Will, the deceased made some specific bequests of money. I told him he will write out checks to these people from the estate account and we would handle all the paperwork to get these checks to the heirs and have them sign the necessary Receipts of Legacy.
5. I then told the family that we would petition the court so that a judge would sign a court order, also called a Judgment of Possession, so that the judge will order that all remaining assets of the deceased be divided between the two trusts.

I told the executor-to-be that he was "free to leave the state" and go home. He was really excited that all of this could be handled from our office. He signed all of the pleadings which allow him to be confirmed as the executor which we will file at the courthouse tomorrow. This is a great family and it's both a pleasure and an honor to assist this family with the transfer of the family's estate from one generation to the next. 

Independent Estate Admininistration in Louisiana

Last week we encountered a client who was trying to get the succession for their father's estate completed. The father's will was created over 15 years ago in 1995 and was governed by the laws of Louisiana. Overall, the will was pretty standard with the exception of one detail. The will named one of the testator's children as an "independent executor". The odd thing is, this will was created before Louisiana ever recognized what is known as independent administration of a will. Louisiana only began allowing for independent administration in 2001. As you can imagine, myself and my associates were all surprised to see this term in any will created before 2001. Whether it be the extraordinary foresight of the will creator or just a stroke of luck, this "independent executor" term had a great effect on the ease with which the succesion could proceed.

Typically, all wills name an executor. The executor is the person who manages the estate's administration during the succession or probate of the will of the deceased. Administration can include selling estate assets, disbursing estate property, and other various management functions with regard to the estate. When an administrator or executor is not designated and approved as "independent", they must get a court order to take any action with respect to the testator's estate property. The process of getting court approval for all these management activities is cumbersome and could also be costly as court filing fees can quickly pile up.

When an executor is approved as an independent executor, they can take all of the aforementioned management activities without any court involvement. So clearly, independent administration is the way to go in Louisiana because of the ease it facilitates with any succesion. At the Rabalais Law Firm, we make sure to always include this "independent executor" language in every will we create and we will always seek to have an independent administrator or executor approved whenever we deal with a succesion.  If you have a will created prior to 2001 which most likely does not include the "independent executor" term it would be a good idea to update your will to reflect the changes in the law and any changes in your present circumstances. If you are encountering a succesion proceeding, then you will certainly want to have an independent executor or administrator approved to move the process along more quickly.

If you would like to speak with me or one of our other attorneys regarding a will or sucession feel free to call or email me in the New Orleans/Metairie Area at (504) 247-1980 or chris@rabalaislaw.com. On the Northshore, contact Brent Durham at (985) 246-3020 or brent@rabalaislaw.com. In Baton Rouge, contact Paul Rabalais at 225-329-2450 or paul@rabalaislaw.com. We will also be holding free seminars in Metairie on November 16 and Mandeville on November 17 to educate people looking to protect their estate and assets from estate tax and probate costs. Go to our website, www.EstatePlanningInLouisiana.com for more details and to register for this great event.

Chris Kane, Attorney

Director, New Orleans Office

        

8 Things to Know About Louisiana Successions

People often call our office after a friend or family member has passed away wanting to know more about successions in Louisiana. Below is a general explanation of our unique, and sometimes complicated, law of successions.

1) When is a succession “opened”?

• The succession opens at the moment of death, and successors have immediate ownership of the property they inherit. This is regardless of whether the succession is actually filed with the Court, although a court order will usually be required for banks and other institutions to transfer funds, as well as for transfer of land ownership.
• While the succession is technically opened automatically, we DO NOT recommend that you forego filing the succession with the proper Court. Letting a succession go for several generations is a common problem in Louisiana that results in an extremely difficult task for the family member or friend who eventually has to deal with everything years down the road when paperwork has been lost and memories have faded.

2) What happens to a person’s community property if they die without a Last Will?

• If a person leaves behind a spouse and children, ½ of the community property will belong to the spouse in full ownership. The surviving spouse will have the usufruct of the other ½ of the community, and the children will have naked ownership. The spouse’s usufruct lasts until the spouse dies or remarries, whichever occurs first. Upon the spouse’s death or remarriage, full ownership of the ½ of the community that was subject to the usufruct automatically vests in the children.
• If a person dies leaving a spouse, but no children, all of the decedent’s property will pass in full ownership to the spouse.

3) What happens to a person’s separate property if they die without a Last Will?

• If they leave behind descendants, they inherit all of the property to the exclusion of everyone else, including a spouse.
  • In all areas of successions law, “descendants” include children that have been given up for adoption. They are still entitled to inherit from their birth parents.
• If they leave no descendants, but leave behind parents and/or siblings or children of predeceased siblings, the parents inherit the lifetime usufruct of the property and the siblings (or children of predeceased siblings) inherit the naked ownership of the property. (This is true unless the property is something the parent donated to the child. In this case, the property reverts to the parent in full ownership.)
  • If there are parents, but no siblings, the parents inherit in full ownership.
  • If there are siblings, but no parents, the siblings inherit in full ownership.
• If they leave no descendants, parents, siblings, or children of predeceased siblings, the property goes to the surviving spouse in full ownership.
• If they leave no descendants, parents, siblings, children of predeceased siblings, or spouse, the property goes to any surviving ascendants, such as grandparents or great-grandparents.
• If they leave no descendants, parents, siblings, children of predeceased siblings, spouse, or other ascendants, the property goes to any other collateral relations, such as great-nieces and nephews, great-aunts and uncles, etc.)
• If the decedent leaves absolutely no relations, the property will go to the state.

4) What happens to a person’s property when they die with a Last Will?

• After the Will is probated and the Judgment of Possession is signed, the property goes to whoever is named in the Will.
• What can’t a person give away in their Will?
  • A married person cannot give away more than ½ of their community property, because ½ of community is owned by the surviving spouse when the other spouse dies.
  • A married person can leave his or her ½ of the community property to anyone they wish, even to the exclusion of their spouse, but they must take into account forced heirship laws.
    • The part that the testator can will away is called the “disposable portion.” The part that the testator cannot will away is called the “legitime.” The legitime will be equal to either ¼ (if there is only one forced heir) or ½ (if there is more than one forced heir) of the testator’s ½ interest in community property.
    • Where forced heirship prevents alienation of part of the testator’s ½ of the community, the testator may leave the usufruct of their ½ to their spouse with the naked ownership of the legitime to the forced heir(s).
      • At the testator’s discretion, this usufruct can last until the surviving spouse’s death, remarriage, cohabitation with another person in the manner of married persons, etc.
      • The forced heirs’ naked ownership may be left in trust with the surviving spouse named as the trustee. This will allow the spouse to deal with the property without having to get permission from the forced heirs (such as selling the home or cars).  

5) What if a person doesn’t want the property they are to inherit?

• The successor may renounce the inheritance, but such renunciation must be express & in writing.
• The property will then go to whoever would have inherited if the renouncer had predeceased the decedent.
  • In the case of a succession where the decedent left a Will, the testator is allowed to say what he wants to happen to the property if it’s renounced or disclaimed by an heir.
  • The person who is disclaiming the property CANNOT say where they want the property to go. It is up to the testator, or, if they made no provision in a Will, to the law.

6) Who handles the succession when a person dies?

• In the case of a death without a Last Will, someone, usually a relative, will petition the court to be appointed as an administrator. This person may act independently if all of the universal and general successors sign agreements. This allows the administrator to act without court approval for everything. If the successors do not agree to independence, the administrator will have to petition the court to do almost everything. The most common thing for which a non-independent administrator needs to ask permission is to sell immovable property.
• In the case of a death where the decedent left a Last Will, the decedent will almost always have appointed someone to serve as executor. This person will usually petition the court to be confirmed as executor. On occasion, the person named does not wish to or is unable to serve as executor. In this case, a person named as an alternate executor in the Will may petition the court, or, if there is no named alternate, any other interested person may petition the court to be named as “dative executor.”
  • The executor may act independently if either the testator stated that was their wish in the Will or if all of the universal and general successors sign agreements.
• The executor or administrator is entitled to payment for their services in the amount of 2.5% of the net estate, unless the decedent provided otherwise in their Will. This fee can be waived, and often is in the case of family members. If the fee is accepted, it must be reported as income on the executor’s/administrator’s tax return.

7) What are some duties of the administrator/executor?

• After being appointed by a court, the succession representative is issued Letters of Administration or Letters Testamentary. These Letters are proof of the succession representative’s authority to deal with matters on behalf of the estate. One of the main things that must be done is opening an estate account.
  • This account may be opened at any bank with a branch in Louisiana. To open an estate account, the representative will need to present the bank with:
    • A copy of the death certificate,
    • A Tax Identification Number, and
    • A certified copy of the Letters
    • Once the estate account is opened, the representative will take a copy of the Letters to the banks and financial institutions at which the decedent had accounts. They will ask that the accounts be closed, and that checks for the balance be issued to the “Estate of John Doe.” These checks will then be deposited into the estate account.
    • The representative will use the estate account assets to pay estate debts, which usually include:          
      • Legal fees,
      • Executor’s/Administrator’s fees,
      • Administration expenses,
      • Funeral and burial expenses,
      • Unpaid medical expenses,
      • 50% of community debts due at death,
        • This includes utility bills, credit card debt, car loans, mortgages, etc.
        • 100% of separate debts due at death
      • The representative will need to maintain a list of these debts, along with the proper documentation.
      • The representative will also need to make a list of the decedent’s assets and the value of those assets on the day the decedent died.
        • The most common assets that need to be listed include:
          • Immovable property (real estate),
          • Bank accounts,
          • Accounts with other financial institutions, such as brokerage accounts,
          • Stocks,
          • Bonds,
          • Cars, boats, trailers, and other titled vehicles,
          • Promissory notes owed to decedent,
          • Business interests (LLCs, corporations, etc.)
          • Assets that do not need to be listed because they are distributed outside of the succession include:
            • Beneficiary designated assets, such as IRAs, 401Ks, and insurance policies.
              • This is only if a beneficiary is actually designated. If there is no designation, or if the beneficiary has died or disclaimed the assets, the assets will be included in the succession, because they will be payable to the estate.
              • Savings bonds in the names of Decedent OR another person.
                • Ownership of these jointly owned savings bonds is transferred automatically to the survivor.
                • If only the decedent is named or if both named persons are dead, the bonds must be listed in the succession.

8) Once all of the paperwork is completed, and the Judge has signed the Judgment of Possession, our office will record the Judgment in the parish or parishes in which any real estate is located. The succession representative will handle distributions to the heirs, transfers of vehicles, stocks, bonds, etc.

If you are interested in retaining our law firm to provide you with our estate administration legal services, contact us for a no-cost initial discussion at 225-329-2450, or email us at laura@rabalaislaw.com.

~ Catherine Martinez

 

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Impressed With St. James Parish Clerk of Court

One of our valued clients passed away this past Friday - six days ago. His wife called our office that afternoon. She was concerned because she did not have access to any of the accounts and she knew there would be bills to pay.

Laura helped her out like she always does by talking her through it on the phone. My following Monday's schedule was jam-packed but I told Laura that the surviving wife could come in at 8:30am on Monday morning.

In anticipation of her early morning arrival on Monday, Catherine customized the initial set of succession pleadings confirming the surviving wife as the independent executor. By 9:30am, the suriviving wife had signed all the pleadings. Catherine quickly sent them off to be filed at the St. James Clerk of Court, which was the proper venue.

Today, three days after we sent them off and six days after the date of death, we received the signed court order and we received several certified copies of Letters of Independent Executorship. I called our client and told her the good news. She was ecstatic because she had been really worried that accounts would be frozen for months.

I applaud the employees and judge's office at the St. James Parish clerk of court. This is extremely prompt service. Our office's experiences with courthouse processing departments is rarely this efficient. Keep up the good work!