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!

Joint Tenants With Rights of Survivorship: What it Means in Louisiana

 

The following story is a trap where unknowing families often wind up paying hundreds of thousands of unnecessary estate tax dollars. I was working with a family where Dad died a few weeks ago and the family was doing a lot of things on their own. Dad had some IRA's that went to the surviving wife. They were able to do all of that paperwork with the financial institution because she was the designated beneficiary. They also had an account that had about a million dollars in it and was titled, "Dad and Mom, Joint Tenants with Rights of Survivorship." Now, that's a form of title that Louisiana simply doesn't recognize. However, they had that account and as far as that investment company knew, if it was titled that way and Dad died, they were going to put the account in Mom's name. That's exactly what they did. Mom has all of the money and they felt like we didn't even need to address that account. Dad's last will and testament said that Dad gave Mom the lifetime usufruct of his estate. So I told them how really important it was to document that account and put it in as a succession asset and itemize everything in that account because if it was left how it was then when Mom dies in the future it was all going to be in Mom's estate. This could be a lot of unnecessary estate tax creating a large estate for Mom. However, if we document everything correctly now by documenting what Dad's estate was that Mom had the usufruct of Dad's half of the community property, then those things that Mom had the usufruct of won't be counted as part of her estate for estate tax purposes when she dies. A lot of financial institutions just let Mom put everything in her name, but it's really important for estate tax avoidance purposes to document what's in the estate of the first spouse to die so that it gets excluded from the estate of the surviving spouse.  So make sure you take care of all those things.

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.

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

How To Handle a Lost Will and Unfunded Living Trust

I met with a gentleman this past Thursday. He had emailed me the night before inquiring about how to get a Judgment of Possession because his investment firm told him he needed a Judgment of Possession before they would turn over his deceased wife's investment account to him.

After we talked on the phone for a few minutes, we determined it would be best if he collected all of his wife's important papers and then he would bring them in for me to review. He mentioned he had a trust prepared in another state years earlier before moving to Louisiana.

At any rate, he came in with all of his papers including his revocable living trust he and his wife established in Missouri, along with a copy of her Last Will. We quickly determined that none of his assets were titled in the trust's name, and we determined that he could not find her original Last Will and Testament. He had a copy, but it was not a copy of her signed document. Her signature was not on the copy.

First thing I said was, "I realize you set up this trust to avoid probate and make it easier upon a death, but your trust does not accomplish this because none of your assets are titled in your trust, so we have to go through probate to get the assets out of her name."

Second, we realized that we would have to treat this scenario as if she had no Last Will, and use the Louisiana intestate laws to move the assets out of her name. I showed him our sample Louisiana Succession, and I explained how he would continue owning his half of their assets, and how he would inherit the usufruct, until his death or remarriage, of her half of the assets, and their children were inheriting the naked ownership of her half of the community property.

Next week he will be signing all of the succession documents and all of his new estate planning documents so that his wife's estate can be settled, and it will be easier for his kids to manage his estate if he becomes incapacitated, and it will be easy for them to settle his estate when he is gone.

Take a peek every now and then and make sure you have your original estate planning documents, and also make sure that if you establish a revocable living trust to avoid a probate or a Louisiana Succession, you have "funded" your trust and transferred your "probate assets" to your trust during your lifetime.

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.

Forced Heir's Portion May Be Placed In Trust

Was working with a family in our office yesterday. Mom had died leaving three children, one of which is a disabled forced heir. Years ago, Mom wrote a Last Will leaving everything to her two other children (the ones who are not forced heirs. Because there is a forced heir, we have to include that forced heir in the succession. Generally speaking, since there is one forced heir and only three children, the forced heir must receive 25% of the estate, even though the Will provides that nothing is to go to this child. Note that if there had been no Last Will, this child would receive 1/3 (or 33%) of the estate.

The family is worried that the receipt of the inheritance by the forced heir will jeopardize Long Term Care Medicaid benefits that the child would otherwise be entitled to.

As part of the legal services that we will be providing in the Louisiana Succession proceeding, we will petition the court to allow the "forced portion" to be placed in trust for the benefit of the forced heir, protecting it so that it won't all have to be consumed prior to Louisiana Long Term Care Medicaid eligibility.

It's a crazy system we work in: Forced heirship laws require that incapacitated children inherit, but Louisiana Long Term Care Medicaid Law penalize those who inherit. Planning ahead here is the key.

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. 

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.

Succeessions Happen Twice for Married Couples

One of the major issues you should consider when planning for you and your spouse's passing is the court supervised succession procedure because this will be needed at both spouse's deaths if not properly planned for. One of the main goals we encounter with married couples involves avoiding the succession all together by setting up a Revocable Living Trust. The Revocable Living Trust is used to allow for immediate transfer of control over your property to your spouse and ultimately your heirs without any court supervision.

Why would you want to avoid a succession? A court supervised succession procedure costs at least $5,000 and can drag on anywhere from months to years. In this time, your heirs will encounter roadblocks when it comes to controlling and accessing the property left in your estate. Of major importance, successions procedures are public record and the value and contents of your estate can be viewed by any person with an internet connection.

A lot of people seem to forget that with married couples two sucessions must take place; one at the death of each spouse. This jsut doubles, the cost, the time, the headache, and the amount of information that is open to the public. That is why Revocable Living Trusts, which avoid successions, are a great tool for married couples. 

If you are interested in avoiding this succession procedure 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