I've been working with a Lafayette, Louisiana family on the completing of a Louisiana Succession (also known as "probate"). We get a lot of questions about how the Louisiana Succession procedure works. Those are tough questions because each Succession is different, with different heirs, different assets and debts, different goals, and different Last Will provisions.
But I know it will help you if I give you an example of how one works and what is involved. In this matter, Mom died leaving three children. Mom owned brokerage accounts, IRAs, United States Savings Bonds, frozen bank accounts, and Mom's estate is due a refund from the nursing home and the IRS.
First, it's critical that all heirs are in agreement with the plan and that the heirs support one another. If there is one heir in a Succession that is not supportive and cooperative, then the Succession gets nowhere with assets sitting idly frozen for years.
Fortunately, in this situation, the children were agreeable and supportive of one another. The procedure we will follow to complete the Succession is as follows:
First, we will file the original last will along with a petition to get one of the children confirmed as the independent executor. That may take a month or so given the typical delays in processing petitions and court orders at the courthouse.
Once confirmed as the executor, the executor will open an estate bank account at a financial institution. Then, with the appropriate court orders, the executor will sell Mom's U.S. Savings Bonds, and the proceeds of the sale will be deposited into the court-supervised estate account.
The children will work with Mom's financial institution to apply as beneficiaries of the IRA. The financial institution will establish "Inherited IRAs", and the children will start taking distributions from these Inherited IRAs next year.
Later, we will get a court to order the banks and the brokerage firms to transfer Mom's account to the three children equally. The fact that the children already have their own brokerage accounts set up at the brokerage firm will help expedite this transfer once the court orders the brokerage firm to disburse the investments.
Mom's refund from the nursing home and the IRS will cause checks to by made payable to "Estate of Mom." Banks will not permit a check payable to "Estate of Mom" to be deposited into Mom's regular bank account. So these refund checks will deposited into the Estate Account that the executor was required to open. Ultimately, the court will order the executor to close the estate account and divide those funds among the heirs.
There is still the issue of the executor's fee and a holdback of funds that may be necessary to pay any outstanding debts and taxes that may be due April 15 of next year.
So, you're starting to see a few issues that get handled when someone dies and a court-supervised probate proceeding is necessary. Know that there are legal programs you can put in place that can prevent your family from having to go through this bureaucracy. Call our office at 866-491-3884 to either complete a Succession after a loved one dies, or to arrange your estate to avoid this government-controlled supervision of your estate settlement.