Louisiana Estate Planning and Successions

Successions In Louisiana II - Testate and Intestate

In Louisiana, if a person dies without a will, all of the assets are passed to his or her children, in equal shares.  The surviving spouse, if there is one, has a usufruct over all of the community property assets until his or her death or until remarriage.  In general “usufruct” means use of.  The children have a naked ownership interest in the community assets.  The gist of the “naked ownership” is that it is an underlying interest subject to the usufruct.  A decedent’s assets consist of a one-half interest in all community property and a full interest in all separate property.  If a person dies with a will, the assets are transferred according to the directions in the will.  However, some assets don’t pass via a will.  For example, accounts with a beneficiary designation, such as a retirement account, are transferred to the person named on the beneficiary designation form.

Successions In Louisiana: A Series

Part One: What is a Succession?

Generally speaking, a succession is the process of collecting information about the deceased person's assets and debts and by which assets are transferred from the deceased person to his or her heirs.  If the deceased person had a will, the assets are transferred according to the directions in the will.  This is called a “testate succession.”  If there is no will, the assets are transferred according to state law, an "intestate succession."

This process is called probate in other states.

Building an Estate Plan after a Second Marriage

Getting remarried is a happy occasion, but it also makes estate planning more complex.  Elder Law Prof Blog guest blogger, Hannah Watson, suggests some considerations for your new estate plan, summarized here:

• Discuss your plan with your family.  Don't allow children from a previous marriage to be surprised by changes in your plan.
• Talk to your new spouse.  Discuss the important issues that will need to be ironed out with your new partner so that he or she can live comfortably should something happen to you.
• Establish goals with your new spouse. You may want to give assets to charity instead of adult children.
• Consider a trust. While not appropriate for some families, a trust may be a fair way to split assets in blended families.
• Speak to an estate planning attorney.  Planning for your assets when blended families is complicated.

Read Hannah's article here.

Who Can Serve as Executor

If you take the time to draft a will you can choose your own executor.  An executor, or personal representative, is the person chosen to supervise the administration of your estate after your death.  First, you must decide if you want an individual or an institution to act as your executor. An institution can be a bank, a trust company, etc. Most people select an individual.  Next, you should verify that your choice of executor will be allowed to serve.  Some states have qualifications that an individual must meet in order to serve in this capacity.  For example, in Louisiana an individual executor must be:

• Over 18 years of age
• Not mentally incompetent
• Not a convicted felon
• A resident of Louisiana unless that person has appointed a resident agent
• Not unfit due to bad moral character

If you die without making a will or the executor you named cannot fulfill that duty, the court will choose an executor.  State law regulates who has priority to serve. First priority is usually given to the surviving spouse and children are next in line.  In the absence of spouse or children, other members of the family may be selected, but the court will decide if heirs cannot agree.

For tips on choosing an executor, click here.

What does the executor do? Click here.

Source for portions of this post: Elder Law Answers

It's Never Too Late. Or, is it?

It's never too late. Better late than never. Adages we run into everyday. But sometimes it is too late when dealing with estate planning documents.

Here are two stories from my files (not real names):

The Jordans created a revocable living trust and made wills that gave all of their assets to the trust. Later, they revoked the trust because they never used it properly and it was too complicated to manage.  But, then Mr. Jordan became mentally incapable of revising his will.  So his will which gave all of his assets to the trust is largely invalid. It was too late for him to revise the will to correspond to changed circumstances.

Sally, a single elderly lady refused to give her power of attorney to one of her adult children. Now, she is in failing health and has impaired mental abilities. She lacks the capacity to give her power of attorney to anyone. She's going to need a court appointed guardian to manage her affairs. 

When a person drafts estate planning documents such as a will or power of attorney, they must have the mental capacity to convey their wishes to an attorney and understand the documents being prepared. There does come a point when it is too late - when the client no longer has the mental capacity to understand the documents.

Lesson:Don't wait. Do your planning now while you are feeling good.

How Much Does a Will Cost?

I have to share this post by Danielle G. Van Ess from her blog, Massachusetts Wills, Trusts and Estates. Danielle makes some excellent points about wills downloaded from the internet and the process of estate planning. It's more about a relationship than a document. Please read her post here.

Then, ask yourself the real question: How much does it cost your family if you don't prepare with a comprehensive estate plan, including a well-drafted will tailored to your situation?

Lost Wills and Where to Look

I was contacted yesterday by an elderly client who was "pretty sure" she drafted a will and had a vague idea of the attorney's name. What she did remember was the name of the local banker who referred her to the lawyer. I just spoke with the banker this morning to get the lawyer's name and find the will. Just after I hung up, I read this excellent post by Leanna Hammill regarding finding a lost will. She has some great tips. Read them on her blog: Massachusetts Estate Planning and Elder Law.

Remarriage and Your Estate Plan

Congratulations - you're getting remarried!  It's important to take time to celebrate such an exciting event, but it's also a good time to review your estate plan.  Even though you may have assembled a solid estate plan during your first marriage, stepchildren and financial changes make a new estate plan a must.  To ensure that your interests are taken care of when you remarry, consider the following:

• Take an inventory of your assets and debts, and decide how to handle finances. For example, is one spouse selling a home?  Will that spouse contribute to the current or new home?
• Decide what you want to happen when you die. Are there certain assets you want to remain with your children from the first marriage? Is a trust necessary to protect your children?
• Change your beneficiary designations!  Can't stress this enough. It's not automatic.  Your divorce decree may limit your options.
• Consider a prenuptial agreement.
• Consult an estate planning attorney.  Even if you have minimal assets, it makes sense to sit down with a professional and discuss the issues.

Source for Post: Elder Law Answers. Read it here.

Your will. Do you know where it is? How about what is says?

Do you know where your will is located? A recent client was sure she knew where her husband's will was stored, but when she went to the file drawer it was not there. It's a good idea to tell someone else where the will is located and be sure you know yourself.

Sashsa Golden recently did an excellent post on outdated estate planning documents on her blog Massachusetts Elder Law Blog - read it here.  She makes some good points about reading your will on a regular basis. Family and financial changes may make parts of the will obsolete or against your wishes. Check yours.

Wills & Trusts: When to Distribute to the Children

Setting up a living trust or drafting a will including a trust involves making choices about how to regulate your children’s inheritance.  There are several things to consider:  your children’s ages, the size of the inheritance and your degree of concern. Generally speaking there are three options:

• An outright distribution, free of trust, to a child who is at least 18 years of age or older;
• A distribution to a trust for the child with defined provisions and a termination of the trust at a specified age; or
• A trust for the life time of a child.                                                            

The first option may be chosen, for example, if your children are age 30 or older and are free of health, marital, tax and liability issues. You may decide that an outright distribution to the child/children is best and, in addition, set up trusts for grandchildren if the child/children predeceases.  The second scenario may be the optimum choice if, for example, you leave minor children as heirs. The inheritance may be placed into a trust where distributions can be made to their guardian till they reach a specific age.  Once this specific age, i.e. 25, is reached, the remaining principal can be disbursed.  This trust can be set up to allow a trustee to make distributions for important events that come up such as a college education, a wedding or the purchase of a new car.  The third option, a life time trust, may be selected if the inheritance is such a large amount that you wish to have a trustee distribute the funds to the child/children over their life time. This is the most restrictive of the three.

All of your children are unique, and you can choose to arrange different terms for distributing inheritance for each child.  These matters are important and you have a variety of options. Discuss them with your estate planning attorney to decide what is best for you and your children.

Source for Post: California Estate Planning Blog