Probate attorney Baton Rouge

What does Avoid Probate mean?

What does avoid probate mean?

To understand what avoid probate means, you have to understand what probate is.

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Some basics: Probate, in general, is the court-supervised process of transferring assets in the name of a deceased person to the heirs. In Louisiana, probate is referred to as "a Succession." But because there are different laws, rules, and regulations that apply to different types of assets you might own, I'd like to use an example.

Let's say that Alan and Alice Peterson own five assets:

(1) A bank account;

(2) An individual retirement account (IRA);

(3) A brokerage account;

(4) A vehicle; and

(5) A home.

One die, Alan dies. Alice goes to the bank where they tell her that she still has access to their bank joint bank account. Alan goes to their brokerage firm where she is told that as the designated beneficiary on Alan's IRA, she can produce a death certificate (when she gets it) and the financial institution will transfer Alan's IRA into an IRA in Alice's name. So far, Alice is on a roll.

But when Alice inquires about their joint brokerage account, the brokerage firm tells Alice that the account is frozen, and that Alice and her family must hire an attorney to get the appropriate court orders in order to gain access to the brokerage account funds.

Then Alice discovers from the Office of Motor Vehicles that she cannot sell or otherwise transact the car until she produces the appropriate court order ordering the Office of Motor Vehicles to take Alan's name off the vehicle title.

Then, when Alice starts to inquire about selling the home, she discovers that she can't sell the home until she "completes Alan's Succession," which will clear up the title to the home.

So, even if Alan had a last will and testament, it's the fact that he had assets titled in his name when he died that required his survivors to hire lawyers to complete this court-supervised procedure, even though Alan's IRA "avoided probate."

So Alice and the kids hire a lawyer, spend a few grand or more, take several months or more, to complete the court proceeding and all that goes along with settling Alan's estate.

Years later, Alice dies, also owning five assets. Even though Alice may have had a last will and testament naming an executor, and naming her children as her sole heirs. The kids must now "lawyer up" and go through the court proceeding in order to get Alice's bank funds and brokerage account, and to sell Alice's vehicle and home.

Some people want their survivors to "avoid probate," which means they want to arrange their affairs in a manner so that their survivors will have immediate access to assets, without their survivors having to have assets frozen while survivors hire lawyers and wait on the judicial system to oversee the settling of the estate.

So perhaps Alan and Alice would have, in order to avoid probate, established the "Alan and Alice Peterson Revocable Living Trust." They would have transferred their "probate assets" to their trust, such as their home and brokerage account, while they would have kept the IRA out of the trust since IRA law permits IRA owners to designate beneficiaries of their IRA accounts.

Then when Alan died, Alice, as the trustee of their trust, could sell the home and access the trust brokerage account, without having to go through probate. Things in a trust do not have to "go through probate" when you die. Only certain assets titled in your name require a probate (or in Louisiana, "a Succession") when you die.

After both Alan AND Alice die, then the Successor Trustee so designated by Alan and Alice in the trust instrument, would have immediate access to sell trust assets (like the home, if appropriate), and disburse trust assets to the principal beneficiaries of the trust, without having the traditional attorney and court involvement that is required when you die with assets in your name and a Succession is required.

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 Required in Louisiana to Become an Independent Executor or an Independent Administrator?

The Succession Detailed Descriptive List

In every Succession in Louisiana when someone dies with assets in their name, the lawyers must prepare a number of court pleadings. One of the documents is commonly referred to as the "Detailed Descriptive List" or the "Sworn Descriptive List of Assets and Liabilities." I'll refer to it as the DDL.

The DDL is a snapshot of all of the assets and debts that a person owned when he or she died. If the deceased owned separate property, those separate assets would be listed. If they owned community property, then all of the community assets would be listed on the DDL. You would see the deceased's one-half value of the community property listed.

So, what assets get listed in the DDL? Well, it's all of the Louisiana real estate, the bank accounts, the investments, the business interests, and the boats, trailers and vehicles. No formal appraisal of real estate is required but a value must be placed on each asset listed on the Detailed Descriptive List. Note that if the estate is larger than $11.2 million, and a federal estate tax return is required, then the real estate will need to be appraised for purposes of federal estate tax return reporting. 

It's also important to note here that the capital gains tax basis of any appreciated assets gets stepped up to the fair market value on the date of death. Some people, years after the death of a loved one, go back and refer to the values listed on the detailed descriptive list to determine the basis of assets.

In addition, all of the debts of the deceased, and administrative expenses, get itemized on the DDL.

It's important to get the DDL right because all of the data from the DDL get transferred to the Judgment of Possession, which is the important court order that a judge signs ordering the transfer of assets to the heirs. One difference between the DDL and the JOP is that the JOP does not typically list the values of the assets to be transferred - it just lists the assets.

In 2017, the Louisiana Legislature provided that the Detailed Descriptive List, which in the past was public record, can now be sealed in the Succession record. This sealing of the DDL may prevent predators from searching probate records and preying on surviving spouses who have some wealth.

To get more information about completing a Succession in Louisiana, you can subscribe to our youtube channel, or view our website at www.RabalaisEstatePlanning.com.

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

The Louisiana Independent Executor

In 2001, Louisiana law first authorized the independent administration of a Succession. Prior to that time, any act that an executor or administrator took in the administration of a Succession was required to be approved by a judge. If the executor wanted to pay a utility bill, it must have been approved by a judge. If an administrator wanted to sell the clunker vehicle for $500, it had to be approved by a judge in advance of the sale. If an executor wanted to sell the home of a deceased person, a burdensome amount of legal advertising and judicial approval was required to sell the home. It made the administration of a Succession very difficult, time-consuming, and expensive.

Now, Louisiana allows executors to be "independent executors." And Louisiana law allows administrators of an intestate Succession to be "independent administrators." So what does that mean?

An independent executor and independent administrator can take certain actions without having to get pre-approval by a judge. The independent administration does not by any means eliminate the Succession, but the independent administrator or independent executor can pay bills, sell Succession assets, and take other certain specific actions without having to get a judge to approve the action in advance. The inventory or sworn detailed descriptive list is still required. Accountings are required (unless waived), and a judge is still required to order the transfer of assets.

How does one become an independent executor? One of two ways. Either the Will authorizes it expressly. Or, if the Will does not authorize it, the heirs all sign off on an Agreement to allow the executor to be independent.

How does an Administrator become an Independent Administrator. Well, all of the heirs who will inherit under state law must sign an Agreement to allow the court-appointed Administrator to be an Independent Administrator.

Note that if you are involved in a Succession in Louisiana and the executor or administrator is not independent, it is highly likely that one or more parties are being uncooperative, and the Succession will last a long time and be a significant burden on all parties involved.

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.