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!

Family Home to One Child After Louisiana Probate

 

I want to talk to you today about a common scenario that happens in Louisiana when a parent dies and their home goes to the children but the children decide they only want one of their siblings to own the home. I'm working on two of these successions right now.

 

Here's the way you have to do it. Again the scenario: parent dies and the home goes to the children. The children agreed that one sibling will own the home. You have to do the parents succession because the first thing that needs to get done is to transfer the home from the parents name to the children's name. The second step is the children can either donate or sell their share of the home to the child that will own the home entirely. The children will agree to donate it to their sibling or sometime the siblings will have an agreement to buy their shares from each other. However, you do have to complete the parent’s succession first to get the property out of the parent’s names into the children’s names.

 

This is just another succession story. Be aware that anytime someone dies with something titled in their name, they have to do a succession.

Warning: Louisiana Successions Are Public Record

I talk a lot about avoiding Louisiana probate (or succession as we call it) with a Revocable Living Trust. Typically the primary reasons stated for avoiding succession are avoiding high costs and time delays, but there is one major reason to avoid a Louisiana succession that seems to be lost amongst the others. That reason is PRIVACY.

Louisiana Successions are court proceedings, and like all other court proceedings; they are a matter of public record. This means that the information contained in a succession proceeding is available to anyone who seeks it. With the internet age, public records are available worldwide to anyone with internet access.

This is troublesome because a required part of any Lousiana probate succession is a detailed and descriptive list of all of the assets and debts of the deceased and the approximate values of said assets at the time of death. The succession records also include the names and addresses of those inheriting from the estate of the deceased. With the ease of access to such records, it its not hard to imagine an unscrupulous salesman or creditor contacting your heirs to prey on them after your death.

This public nature of successions can be escaped by avoiding probate with a revocable living trust. To find out more about this probate avoidance procedure call me at (504) 722-3344 or send me an email to chris@rabalaislaw.com.

 

Chris Kane, Attorney

Director, New Orleans Office

     

 

Is Louisiana Succession Really Necessary When Deceased Left a Clear Last Will?

 

We work with some great families getting estates settled after the death of a loved one. Occasionally we are asked, "Is a Succession really necessary if someone dies with a Will and they are clear about who the heirs are?" Sometimes they ask, "Can't we just take my Dad's Will and a death certificate to the bank and ask the bank to give us Dad's money?"

Well it does not work like that. A Succession is necessary even though the deceased left a Will when there are assets titled in the name of the deceased. The Will is filed at the courthouse along with a number of customized Succession documents including the detailed list of assets and debts, petitions, and a Judgment.

If the judge's office determines that all of the procedural rules have been followed, the judge will sign a Judgment of Possession which orders banks and others to transfer assets from the name of the deceased to the heirs named in the Will and in the Judgment of Possession.

We work with phenomenal families from all 64 Louisiana parishes in order to get estates settled. The fact that we embrace technology in our office allows us to get this done in lickety split, keeping suriviving heirs from suffering through delays and other stresses.

Fixing an Incorrect Judgment of Possession

I recently met with a client who was in a bind because the Judgment of Possession or "JOP" issued after her husband's death inaccurately reflected the terms of his will. Apparently the attorney responsible for overseeing her husband's succession forgot to mention include her 1/2 interest in the family home and the entirety of the home was left to her daughter subject to a lifetime usufruct for the wife.

This was incorrect because in Louisiana the home was considered community property. Upon the death of her husband, the wife legally owns 1/2 of all the community property in the husband's estate free and clear of the claims of the children. The inaccuracy of this JOP led to flaws in the retitling of the home. Only the daughter is listed on the new title, this makes the wife unable to sell her interest in the home and creates a real hindrance for Estate tax gifting and her other estate planning needs.

However all is not lost. We can file with the court to amend this JOP to make sure the wife's interest in the home is provided for. After the amendment is granted by the court, then we will have the home retitled to reflect the new and accurate Judgment of Possesion. At this point the wife will be able to exercise all of her rights as co-owner of the property.

If you have experienced problems with the succession for one of your loved ones and would like to discuss your options give me a call in the New Orleans/Metairie Area at (504) 247-1980 or send an email to 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.

Chris Kane, Attorney

Director, New Orleans Office

       

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!

Working With the Courts on Successions Can Be Frustrating

We strive at our office to be prompt, accurate and efficient when we are providing our Louisiana Succession legal services. I have to admit that our client services attorney, Catherine Martinez, does a whale of a job creating and processing all of our succession pleadings and other probate paperwork.

Today I received word that the judge's office rejected two of our Louisiana Succession Petitions for Possession. Just so you'll know, a petition or other court pleading can be rejected if it is not procedurally correct or for another valid reason.

In both matters, the Petition for Possession and corresponding Judgment of Possession was rejected because, as the clerk for the duty judge put it, we did not file the required, "Affidavits of Death, Domicile and Heirship."

So they rejected our documents and sent them back to us to start over. What the law clerk failed to realize was that we had filed the required Affidavits of Death, Domicile and Heirship when we filed the Petition to Probate the Will. Anybody who knows anything about Louisiana Successions would have known to look to see if these Affidavits were previously filed.

The solution has to be to either better train the clerk of court employees who are in charge of handling and processing succession pleadings, or to create a probate court which would exclusively handle succession matters. Since there would be cost and politics involved in establishing a probate court, I don't see that happening anytime soon.

While a Louisiana Succession can often times be a streamlined processing of paperwork at the proper courthouse, any number of things can and often do occur to slow down or stop the process in its tracks. The only way to completely avoid a Louisiana Succession is to make certain there are no assets titled in your name at your death which would require a Louisiana Succession - often done by creating and funding a revocable living trust.

Paul