If You Have Usufruct, You Have Debt

This post should help you understand the full consequences of either leaving someone the Louisiana usufruct of an estate, or inheriting the usufruct of an estate.

Here's an example. Dad dies leaving a Last Will which left the usufruct of his estate to Mom. Together, Mom and Dad had about $1 million in the bank (checking, savings, and a number of CDs). About a year later, after Dad's Succession was complete, all of these bank accounts were put in Mom's name only - which the usufructuary is permitted to do. Family circumstances warranted that Mom change her Will. Mom died a couple of years after that.

All of Mom's heirs assumed that since all of the money was in Mom's name, and that Mom left a Last Will and Testament, that all of the money would go to them. But there were dead wrong - pun intended.

Since Dad left Mom the usufruct of his estate, Mom (or Mom's estate) owed a debt to Dad's heirs (also called a usufructuary accounting due to the naked owners). Dad had left Mom the usufruct of about $500,000. That "usufructuary debt to Dad's naked owners" needed to be satisfied first before any of Mom's heirs inherit a penny.

And if Mom had spent some of the money and only had enough at her death to satisfy the usufructuary debt, then Mom's heirs would not inherit - even though she had a very clear Will leaving her money to her heirs.

While usufruct can be appropriate in some circumstances, you and your spouse need to be aware - on the front end - about what might happen on the back end. While usufruct might be the way to go, there are a number of other alternative ways you can leave your estate to your loved ones. To start a discussion, call our office at 866-491-3884.

Go TIgers!