A Succession is the court-supervised process of transferring a deceased person's assets to his heirs.
What's the difference between a Succession and Probate?
Really, nothing. In Louisiana (where our laws are different from the laws of the other 49 states), the court proceeding is called a Succession. In all of the other states, it's commonly referred to as a Probate. For purposes of this book, since we will be focusing on the procedure that must occur when a Louisiana resident dies, I'll call it a "Succession." Although you are free to refer to it when talking to your attorney or others as "Probate." In Louisiana, both terms are acceptable.
Example. Carol and Peter had been married for 40 years. They owned a home, an investment account, two vehicles, bank accounts, and a certificate of deposit. Peter died. Peter's Succession is necessary. After Peter dies, title to the home, investment account, and other assets are frozen. Carol (or perhaps Carol and their children - depending on who the heirs are) will hire an attorney, and the family and the attorney will work together to gather family and asset information, prepare and sign court pleadings, and ultimately have a judge order the transfer of assets out of Peter's name into the names of the heirs. Peter's estate assets will be used to pay for these proceedings, and it is likely that it will take anywhere from a few months to years or more to complete this matter, based on many factors.
Which Families Must Complete a Succession?
Anytime a Louisiana resident (or "domiciliary") dies, owning assets, a Succession is required to oversee the management and distribution of the assets to the appropriate heirs. Some people mistakenly believe that if one dies with a Last Will and Testament, that the Succession is avoided. Unfortunately, those people are wrong. When a Louisiana resident dies with a Last Will and Testament, a Succession is still required. The Will simply names an executor (who is in charge of seeing that the court-supervised Succession is handled the right way, and the Will tells a judge who to make sure the remaining Succession assets get transferred to at the conclusion of the Succession proceeding.
What is the Louisiana Small Succession Affidavit Procedure?
A simpler procedure may be allowed if a Louisiana resident dies and all of the following occur:
- The gross estate of the deceased is less than $75,000; and
- The deceased died while domiciled in Louisiana; and
- The deceased did not have a Last Will and Testament.
Other requirements apply but if all of the requirements are met, the family does not have to go through the full-blown Succession judicial proceedings, but the family will still likely have to hire an attorney to deal with the complexities of the Small Succession Affidavit procedure. Further, some third parties may not honor the Small Succession Affidavit. Some brokerage institutions may require that the family complete the entire Succession judicial proceedings before the authorize the transfer of assets to the appropriate heirs.
Do All of the Assets Have To Be Involved in the Succession Judicial Proceeding?
Not necessarily. Many people own "non-probate" assets. There are assets that are titled in a way so that they pass to others at death without the requirement of Succession court orders.
Example. James died leaving three children. James' Last Will and Testament left his estate to his three children equally. When James died, James owned a home, 100 shares of stock in a brokerage account, a vehicle, a boat, an IRA, and an annuity. After James died, James' children were required to hire an attorney (or multiple attorneys) in order to complete the Succession and have the home, stock, boat, and vehicles transferred to the children. But the children were able to work directly with the appropriate financial institutions to have the IRA and annuity transferred to the children. IRAs and annuities are typically structured so that they have "beneficiaries" named. Since James had named his three children as the beneficiaries of his IRA and annuity, these assets were not part of the Succession proceeding. But since James was not permitted to name a beneficiary of his home, stock, boat, and vehicle, the Succession judicial proceedings were required in order for the government to oversee the distribution of James' "probate assets."
What Information Do You Need To Gather To Complete a Succession?
Your Succession attorney should be able to give you a list of what information you need to gather to complete the Succession. The information that you need to supply depends on what the deceased owned, who the heirs are, and other factors. But for starters, you can expect to have to provide the following:
- The names and addresses of all of the parties involved in the Succession, including all of the heirs and any creditors that are owed;
- A complete listing of all assets the deceased owned, including real estate legal descriptions, brokerage account statements, bank statements, and boat and vehicle titles;
- A complete listing of all debts of the deceased, including mortgages, credit card balances, and any other indebtedness;
- The original, signed Last Will and Testament. The original Will (not a photocopy) must be filed into the Succession record at the courthouse.
There can be quite a bit of additional information that is required, based on the circumstances, but this should get you started in the right direction.
What Kind of Attorney Should You Hire To Avoid Problems With the Succession?
Not every attorney is well-versed in the intricacies of Louisiana Succession and Probate law. Many attorneys spend their days and their careers dealing with car accidents, truck accidents, divorces, immigration law, criminal law, corporate law, or any of the many other legal fields. Most lawyers don't deal with Succession law every day. At a minimum, you should hire an attorney that has the following attributes when you are retaining counsel to walk you and your family through this difficult process at this difficult time:
- Hire an attorney who has significant experience handling Succession legal matters.
- Hire an attorney who will listen to your needs rather than simply vomit information at you.
- Hire an attorney that will help you determine the simplest path to complete all matters related to the Succession, and then provide you with a fixed fee amount, in writing, for the services to be performed. Don't get caught in the trap of, "We'll just simply bill you at several hundred dollars per hour," and then walloped with bills each month for your phone calls that weren't promptly returned, your emails that did not get responded to, and questionable time spent by the attorney or his staff in an attempt to complete a process that will take longer than you want or expect.
- Hire an attorney who understands the complex tax consequences that a Succession involves. Not just the estate tax - but the heirs are likely to have income tax and capital gains tax issues that can be minimized or avoided with the right Succession attorney advising you.
- Hire an attorney who is recommended. Does the attorney you are considering have dozens or hundreds of testimonial letters from previously satisfied clients, glowing about the attorney's professionalism, courteousness, and promptness? If so, this would be a sign that you are on the right track to hiring the right Succession attorney.
What is the Executor's Role in a Succession?
An executor is not necessarily involved in every Succession. Some Successions are completed "without an administration" rendering an executor unnecessary.
Example. Dad died with a Last Will and Testament leaving everything to Mom. Dad and Mom owned a home, three joint bank accounts, and two vehicles. A Succession was necessary after Dad died so that the home could be re-titled into Mom's name solely. This would allow the home to be sold by Mom in the future. Since the bank accounts were joint accounts, they were not frozen - Mom continued to have access to the three bank accounts after Dad died. Mom had no desire to "quickly" sell the home or the cars. When going through Mom's Succession, Mom was advised that she could complete the Succession without actually getting "confirmed" as the executor. Mom and the attorney petitioned the court to order that Dad's portion of these assets be transferred directly to Mom. The judge signed this court order (called "Judgment of Possession), ordering that the home and vehicles and bank accounts be transferred to Mom. The attorney filed the Judgment in the real estate records of the parish, and Mom brought a certified copy of the Judgment to the Office of Motor Vehicles. The end result was that the home and vehicles were put in Mom's name, and Mom still had access over their joint bank accounts.
However, when assets need to be managed in an estate, then the court often confirms an executor who gets access to these assets while the Succession is taking place.
Example. Tommy dies leaving his estate to many heirs. He includes bequests to all of his children, his grandchildren, and even most of his nieces and nephews. Tommy owned stock, several pieces of real estate, and a business. In Tommy's Will, he appointed Rita as his executor. Immediately after Tommy dies, Rita locates a buyer for one of Tommy's pieces of real estate. Because it will take many months or years to complete Tommy's Succession due to the complexity and the number of people who have to be represented by an attorney, Rita petitions the court to have herself confirmed as the executor. The court quickly confirms Rita, and now Rita can start the process of selling the property as the executor of Tommy's estate. The sale does not have to wait until years later after the property gets transferred to many co-owners.
What is an Independent Executor?
Back in 2001, the Louisiana Legislature created the position of "Independent Executor." When someone is simply an "Executor," every action they take in the administration of the estate must be approved by a judge - sell a car or piece of real estate, sell stock, pay debts, etc. But if the executor is an "Independent Executor," then the Independent Executor can take certain actions without the necessity of getting a judge to approve the action in advance. Having an Independent Executor does not eliminate the need for a Succession, but it eliminates some of the onerous aspects of a Succession.
What Taxes are involved in a Succession?
Plenty. While most estates are not subject to the federal estate tax, most Successions have some form of income tax consequences and capital gains tax consequences. Capital gains taxes can be incurred when an estate or heirs sell property, and income taxes are often incurred by heirs or beneficiaries - particularly if the heir is also a beneficiary of a Traditional IRA or an annuity.