Louisiana usufruct

Do Mom’s Heirs Get Money When Dad (With Lifetime Usufruct) Sells Home?

We get this question often. Here's the situation. Mom dies with a last will and testament leaving Dad the lifetime usufruct of her estate, and naming her children as the naked owners. Dad then decides to sell the family home. Do Mom's kids get any of the money from the sale? 

No. They don't. Dad's usufruct will continue over the proceeds of the sale. Mom's kids may have to sign to allow the sale to take place, but they are not entitled to any sale proceeds.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais
Louisiana Estate Planning Attorney
www.RabalaisEstatePlanning.com
Phone: (225) 329-2450

What is Your Standard Of Care if You Have the Louisiana Usufruct

I was asked a question recently by a husband whose wife had recently passed away. She left her husband the usufruct of a significant investment portfolio of stocks, bonds, and mutual funds. The wife named her children as the naked owners of her estate.

He asked me, "Paul, what standard am I going to be held accountable to now that I have the usufruct of an investment portfolio? I don't want the naked owners coming after me alleging that I managed the assets the wrong way?"

I told him that, in regards to a usufructuary's standard of care, the usufructuary is answerable for losses resulting from his fraud, default, or neglect.

I told him that he should be fine so long as he makes decisions that a prudent owner or a prudent administrator would make. I told him there was some Louisiana case law that stated that a usufructuary is bound to take the same care of the property as if it were his own. And I told him, that if the investments were sound, and there was a general downturn in the markets, that he may be ok due to the fact that Louisiana courts have stated that a prudent administrator is not responsible for the decline of rental income attributed to the general decline of the economy.

We also discussed the fact that he was inheriting the usufruct of nonconsumables. And upon their sale, we discussed the consequences to him and his estate when nonconsumables (such as stocks and bonds) are converted to a consumable (cash).

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais
Louisiana Estate Planning Attorney
www.RabalaisEstatePlanning.com
Phone: (225) 329-2450

Wife Inherits Usufruct. What are Usufructuary Rights? Obligations To Naked Owners?

There's lots of confusion out there in the great state of Louisiana about there about the rights and obligations of someone who owns the usufruct. This should start to clear things up.

It is common, when a married person dies, whether they had a last will and testament or not, for their surviving spouse to inherit the usufruct. People try to guess what everyone's rights are without realizing there is specific Louisiana law which dictates the rights and obligations of the usufructuary.

First, we must determine whether an asset is a consumable thing or a nonconsumable thing. Then we can determine the usufructuary's rights.

Let's say, for example, that Husband died without a last will and testament. On the date that Husband died, Husband and Wife owned community property. They owned $400,000 in their bank accounts, and they owned 1,000 shares of stock in ABC Corporation.

Money is a consumable thing because it cannot be used without being expended or consumed. The share of stock are a nonconsumable thing because they may be enjoyed without alteration of their substance.

When Wife inherited the usufruct of $200,000 of money (a consumable thing), Wife became the owner of it and could consume it as she sees fit. But when she dies or remarries, she owes the naked owners $200,000, regardless of what happened to the money after she received it.

When Wife inherited the usufruct of 500 shares of stock of ABC Corporation (a nonconsumable thing), she gets to keep the dividends that the shares produce, but when she dies or remarries, whichever occurs first (the termination of Wife's usufruct), she must deliver the 500 shares to the naked owners, regardless of their appreciation or depreciation. 

And when a nonconsumable is sold, the usufruct attaches to the money that is the proceeds of the sale, and usufruct becomes a usufruct of a consumable.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais
Louisiana Estate Planning Attorney
www.RabalaisEstatePlanning.com
Phone: (225) 329-2450

How a Surviving Spouse Owns Home After Inheriting the Intestate Louisiana Usufruct

Whenever a Louisiana married resident dies owning a home with their spouse, and they pass away without ever having signed a Will or Trust (they died "intestate", issues always arise.

I was working with a surviving husband whose wife had died a few weeks earlier. The surviving husband really wanted to own their home. He said that he may want to sell it in the upcoming months or years, he may want to create a home equity line of credit, and he also said that while he has no plans for remarriage, he would want to be able to provide a roof over a new wife's head if he dies before her.

When he came into my office he told he that she had never signed a WIll. He "assumed" that he would own the house since they bought it together and it was paid for. But his assumption was false. I had to tell him that since his wife passed away without any estate legal program in place, that he would continue owning his "one-half" of the house, and that he would be inheriting the "usufruct" of his wife's half of the home until the earlier to occur of his death or remarriage. I further told him that their children would inherit the "naked ownership" of her half of the house.

Some Louisiana folks mistakenly believe that when a married person dies without a Last Will, then half of the deceased's half would go to the surviving spouse, and the other half of the deceased spouse's half would go to the children. But this is an incorrect assumption.

The husband asked me how in the world could he get ownership of the house solely in his name. I told him that we would need to complete his wife's succession first. The succession will require that the home be re-titled so that their children are naked owners of his deceased wife's half of the home, and the surviving husband would own the usufruct of her half until he died or remarried.

Then, his children will sign the necessary paperwork to donate their naked ownership interest back to their father. This would enable the surviving father to have "full ownership" of the home. He needed the children's cooperation to obtain full ownership but the children were completely supportive of the concept of their father owning the home that he had acquired and paid for.

In order to avoid sticky situations when a family member or loved one passes away, it always makes sense to take care of this ahead of time and create an estate legal program that makes settling your estate easier and the right way.