When a loved one dies, there are many things, both legal and personal, that need to be handled. It is a difficult time for many families. An important legal matter that must occur whenever someone dies owning assets in their name is the Louisiana Succession.
What Is a Succession?
A succession is the process of transferring assets from the name of the person who died into the names of the appropriate heirs. Other states often call this process “probate,” but in Louisiana, it is called a “succession.” The succession typically involves the family gathering information on what the decedent owned and bringing it to an attorney. The attorney then prepares numerous succession documents, including a detailed list of all the decedent’s assets and liabilities, as well as a Judgment of Possession, which a judge signs ordering the transfer of assets out of the decedent’s name and into the names of the heirs. The attorney then files these documents at the local courthouse requesting that the Judge sign the appropriate Orders. Once the judge signs the Judgment of Possession, assets can be transferred.
Information to Gather
The succession process typically begins with the family gathering the necessary information on the decedent’s assets that he or she owned at the date of his or her death. The information typically gathered includes the following:
- Statements from banks and other financial institutions showing account balances and investments at or near the date of death;
- The Act of Sale of the residence and other Louisiana real estate showing the legal description of property owned by the decedent;
- Stock certificates if the decedent owned stock in certificate form;
- The Last Will and Testament (if one exists) of the decedent;
- Titles to vehicles, boats, and trailers owned by the decedent;
- Promissory Notes or Mortgages owned by the decedent;
- Mortgages the decedent owed;
- Funeral expenses; and
- Documentation showing other assets and debts that existed at the date of death.
Assets Not Included in the Succession
Certain assets you own are commonly referred to as “non-probate” assets. These are assets that go directly to a previously designated beneficiary upon the decedent’s death. While these assets are typically not listed in the succession (unless the estate is the designated beneficiary), the attorney needs to be aware of these assets because they are included in the estate for federal estate tax purposes or they may have forced heirship consequences. Common non-probate assets include:
- Individual Retirement Accounts (IRAs)
- 401(k) accounts
- Life insurance
- Keogh accounts
- 403(b) accounts
- U.S. Savings Bonds titled in the name of the decedent “or” someone else
- Assets titled in the name of a trust
Once the attorney has all the relevant succession information, he can advise the family whether an “administration” is necessary. An administration occurs when the attorney prepares documents and presents them to the court so that an executor can be confirmed or an administrator can be appointed.
An administration is necessary when certain matters need to be tended to before the succession is completed. Common situations that require an administration include:
- A succession asset such as a house or other real estate, a vehicle, stock, or any other asset needs to be sold prior to completion of the succession;
- The executor or other third party needs access to the decedent’s accounts to pay succession debts prior to the completion of the succession;
- Someone contests a succession matter.
If an administration is necessary, the court will sign an Order confirming that the person named in the Will shall serve as the executor, or the Judge will sign an Order appointing an administrator of the succession if no Last Will and Testament exists. The clerk of court will then issue “letters testamentary” (if an executor was named in the will), or “letters of administration” (if no Will exists and the judge appoints an administrator). This document puts third parties on notice that an executor has been confirmed or an administrator has been appointed.
Louisiana's Independent Administration Procedure
Around the year 2001, the Louisiana Legislature authorized what is known as “independent administration.” The traditional administration is often cumbersome, time-consuming, and expensive. For example, if an executor needed to take some action on behalf of the succession, such as pay a succession debt (for instance, a utility bill for the home), sell a succession vehicle, or even sell the decedent’s home, the executor would have to petition the court for approval to pay the debt, sell the asset, or whatever other action needed to be taken by the executor. A judge would have to approve each of these actions in a written court order.
Now, if the executor is confirmed as an “independent executor,” he or she can take the necessary actions to administer the succession, such as pay succession debts and sell succession assets without having to obtain a judge’s approval each time to do that.
How does an executor become an independent executor? There are two ways. First, the decedent could have appointed the executor in his Will as an independent executor. Second, if no such designation exists, then all the heirs can agree (in writing) to permit the executor (or the administrator if no Will exists) to serve as an independent executor or an independent administrator. Having an independent executor can make settling the estate much easier for all parties involved.
Many successions are concluded without an administration. Even though the decedent signed a Will and designated an executor, it may be unnecessary to go through the time and expense of having that person confirmed as the executor. When the succession is relatively free of debt and uncomplicated, the administration can be avoided. The succession documents are prepared and signed, and assets are transferred to the heirs without getting an executor confirmed or an administrator appointed.
The attorney will prepare all the succession documents, many of which are called “pleadings.” The pleadings will be filed at the courthouse in the parish where the decedent lived (was domiciled) at the date of his death. The succession pleadings typically include:
- Affidavits of Death, Domicile and Heirship. These must be signed by two people familiar with the decedent’s family circumstances. This is proof to the court of the decedent’s death and family relationships.
- Detailed Descriptive List. This is a detailed list of all the succession assets and debts of the decedent as of the decedent’s date of death.
- Petition for Possession. This is a succession pleading prepared by the attorney that lays out the relevant facts of the succession and requests that the Judge sign the Judgment of Possession.
- Petition for Probate of Testament (used when the decedent had signed a Last Will and Testament). This is a document filed with the signed Last Will and Testament of the decedent requesting that the Judge sign an Order stating that the Will is valid and ordering that it be followed.
- Judgment of Possession. This is often the most important document the Judge signs. This document, when signed by the Judge, orders third parties, such as banks, other financial institutions, transfer agents of corporations, the Office of Motor Vehicles, parish real estate offices, and others, to transfer assets that were formerly in the name of the decedent into the names of the appropriate heirs.
The heirs that the attorney represents will typically be asked to sign a document called a Verification in which the heirs “verify” that the information in the Petition for Possession is correct.
Transferring Assets to Heirs
After all the legal documents have been prepared, filed at the courthouse, and signed, it will be time to actually transfer the assets to the heirs.
Transferring Real Estate
In Louisiana, there are no deeds for real estate. If the decedent owned real estate, a certified copy of the Judgment of Possession will be recorded in the Conveyance Records of the parish where the property is located. This recording transfers title of the property to the heirs.
Transferring Bank Accounts
The heirs will bring a certified copy of the Judgment to the bank or other financial institutions, and the Judgment will order the banks to distribute the money or other assets to the heirs in the proportions as described in the Judgment. The bank or other financial institution will often require a certified death certificate or other information in addition to the certified copy of the Judgment of Possession. If the decedent owned Certificates of Deposit (CDs), there will typically be no penalty for early withdrawal if the CDs are cashed in pursuant to a Judgment of Possession.
Transferring Stock in Certificate Form
Let’s say Mary owned 300 shares of ExxonMobil stock. In accordance with Mary’s Will, the Judgment of Possession orders that those shares be divided equally among Mary’s three children. ExxonMobil has a company that handles all stock transfers (known as the transfer agent). A certified copy of the Judgment of Possession and other paperwork the transfer agent requires is submitted to the transfer agent along with Mary’s stock certificate, and the transfer agent sends the three children their new stock certificates showing that they each now own 100 shares of ExxonMobil stock.
The person or persons entitled to inherit the vehicle(s) by the Judgment of Possession will bring a certified copy of the Judgment of Possession to the Office of Motor Vehicles (OMV), and OMV will be ordered to issue a new vehicle title in the name(s) of the heir(s).
Does a Succession Take a Long Time?
It is widely reported in the United States that probate can take many years to conclude. Many of these publications are also advocating the use of a probate avoidance tool, such as a revocable living trust. any people in Louisiana who have had to go through one or more successions due to the death of family member often complain that the court-supervised succession procedure takes "too long." Many things can cause a delay in the completion of a succession. Typical reasons for delay include:
- The family or the attorney have difficulties in determining all the assets and liabilities of the succession;
- A personal representative (executor or administrator) needs to be confirmed or appointed to handle matters during the succession;
- Someone contests the succession or disagrees how the succession is being handled (this could cause completion of a succession to be delayed for years);
- Either the attorney, an heir or the family members in charge procrastinate;
- A federal estate tax return must be filed. This requires that certain succession assets be appraised and often requires that assets be sold to pay the tax. The federal estate tax return is due nine months after the death of the decedent and often the succession is often not completed until federal estate tax matters are concluded.
Succession costs can vary from succession to succession, and from attorney to attorney. Attorney fees and court filing fees are a part of every succession. Some successions incur accounting fees and appraisal fees, federal estate tax, and other costs. Some successions only include a house, a vehicle and perhaps a bank account or two. Other successions are much more extensive. When heirs choose to fight their differences out in court, the costs can be staggering.
Court filing fees vary from parish to parish. Attorney fees will vary from attorney to attorney. Unlike some other states, Louisiana has no statutory fee schedule. Louisiana attorneys are required to charge a “reasonable fee.” Common examples of fee structures include:
· Hourly rate billing. The attorney will charge an hourly rate. This does not help clients, because the client has no idea for how many hours the succession will be billed at the end;
· Fixed fee. This is where the attorney designates either a fixed amount or a fixed percentage of the estate to perform the services to be rendered. Clients like this because they know in advance the fee and the attorney is rewarded for his or her efficiency.
Whatever you do, make sure you have an agreement in writing with the attorney so that you will not be unpleasantly surprised later with an invoice that knocks your socks off.
This book, in part, will teach you how you can create a revocable living trust and transfer your probate assets to your trust to avoid probate when you die. In Louisiana, probate is generally becoming more expensive and more time-consuming. To completely avoid the requirement of a succession in Louisiana, you must not have any succession assets titled in your name when you die. There are typically two ways to do this.
First, you may own non-probate assets such as IRAs, 401(k)s and annuities. These assets pass directly to the designated beneficiaries and avoid the succession process. Second, you may form a revocable living trust and transfer all of your succession assets to your trust before you die. Your trust will own your home, other real estate, and investment accounts. When you die, your assets are titled in the name of your trust. The succession process only governs the assets titled in your name.
Ignoring the Succession
Example. Bill and Mary were married for 40 years when Bill died. Mary continued to live in the home and drive the vehicles. She was the beneficiary of Bill’s life insurance, and she had access to all their bank accounts, because the bank accounts were in their joint names. Four years go by after Bill’s death. Mary never had the succession done, because she was told by her neighbor “she didn’t need to do it.” Mary received bad advice from her neighbor. There are a number of reasons Mary should have seen a lawyer to complete the succession, including the fact that Mary will not be able to sell the home or vehicles because they are titled in the names of both Bill and Mary. Those assets cannot be sold until Bill’s name is removed from the title.
Now, Mary cannot sell a vehicle and she cannot sell the home without completing the succession. In addition, Mary’s family will have to complete two Louisiana successions when Mary dies – they will have to complete Bill’s succession and they will have to complete Mary’s succession.
Out-of-State Real Estate
The succession of a Louisiana resident not only governs all the financial accounts and other “movable” property, wherever located, but it governs the real estate located in Louisiana. If a Louisiana resident owns real estate or mineral interests in another state, something called an ancillary probate will be required in that other state where they own property. Each state’s ancillary probate laws are different, but an ancillary probate procedure typically includes filing a certified copy of the Last Will and Testament in that state, along with other paperwork required. This is typically done after the conclusion of the Louisiana succession. Often the family is required to hire an attorney in that other state to oversee that ancillary probate.
Owning significant real estate in other states can be a reason to transfer that property to an entity such as a limited liability company or a living trust, so that multiple ancillary probates can be avoided in states that have a burdensome probate process.
Contesting the Succession
Most successions are uncontested. The family member dies, the succession is handled, the property is transferred to the heirs, and families move on. Some successions, however, are contested. It is unfortunate when heirs disagree. Often, no one wins. There is a common saying: “If you want to get to really know someone, share an inheritance with them.”
There are a number of reasons why successions are contested. Some of them include:
- A person contests the validity or interpretation of the Last Will and Testament;
- An heir feels the executor is either not listing all the succession assets and debts properly, or the heir feels the executor is not acting appropriately;
- The heirs just do not like or trust each other (not a valid reason).
How to Contest a Succession
There are several ways a person can contest a succession:
Opposing the Appointment of Administrator
If you want to be notified when someone files an application to be appointed administrator, you can have your attorney petition the court so you will be notified when someone else petitions the court to be appointed the administrator. An administrator is often appointed when someone dies without a Last Will and Testament (so they did not appoint an executor). When more than one person wants to be the administrator, the court will give preference to the persons in the following order:
- The best qualified among the surviving spouse, or competent heirs or legatees;
- The best qualified of the nominees of the surviving spouse, or of the competent heirs or legatees;
- The best qualified of the creditors of the decedent or the estate, or a co-owner of immovable property with the decedent.
Contesting the Validity of the Will
When a person dies having signed a Will, the executor will usually have the attorney file the Will in the succession proceeding at the parish courthouse, and the judge will sign an Order stating that the Will is valid and ordering that it be followed.
If someone wants to question the validity of the Will, they will need to have their attorney prepare a petition stating the grounds of invalidity. When the validity of Wills is questioned, it is common for the person to question whether the deceased, at the time that the Will was written:
- had the ability to understand what he or she was doing; or
- was influenced by someone else so the document is not an accurate expression of the deceased’s intentions.
Removing a Succession Representative
The succession representative can be either the executor of a Will or a court appointed administrator of an intestate (no Will) succession. If you think the succession representative should be removed, you can ask for a hearing where the succession representative must show why he should not be removed from office.
Duties and Rights of Succession Representative
The duties and rights of a succession representative include:
· He shall deposit all succession money in a succession bank account;
· He may invest the succession funds and make them productive;
· He may continue any business of the deceased;
· He may lease or sell succession property;
· He may pay succession debts.
Compensation of Succession Representative
If there is no provision in the Will to the contrary and no other agreement between the parties, the administrator or executor is allowed a fee of two and one-half percent of the succession assets. The court may increase the compensation upon a proper showing that the usual compensation is inadequate. In many successions, a family member is the executor or administrator, and that family member may waive this fee either because they are willing to do it for free because they are an heir and it is a family matter, or since the succession representative’s fee is subject to income tax, he feels satisfied receiving his inheritance, which is not subject to income tax.
A Louisiana succession is required when a person dies and the individual had property titled in his or her name on their date of death. The succession is the process of transferring assets from the deceased’s name to the heirs. A succession typically involves the following:
- You gather documentation regarding the deceased’s assets and deliver it to your succession attorney;
- Uncomplicated successions do not require an administration (the court appointment of an executor or administrator). If an administration is necessary, it is much easier if it is an “independent” administration;
- Your succession attorney will file documents at the parish courthouse where the decedent was domiciled. A judge will sign a court order requiring third parties to transfer assets to the proper heirs;
- Many individuals choose to ultimately distribute their estate through a living trust to avoid the costs and delays associated with the court-supervised succession procedure. Couples can avoid two probates by properly setting up a living trust;
- There are strict rules regarding how Wills and successions are to be handled. If an interested party has sufficient legal authority, he or she can contest the way a succession is being handled.