Small Succession Affidavit

Who Should (and Shouldn't) Take Steps To Avoid Probate?

There's quite a bit written and discussed about whether people should take steps to avoid probate. On extreme you have the folks who say avoid probate at all cost because probate can be a significant legal hassle and expense, while others say that a Will is sufficient because when your heirs go through probate it will not be that bad.

The following are seven reasons why people commonly set up trusts to keep their survivors from going through the court supervised judicial Succession (also called "probate") proceeding, and three reasons why it may not be necessary to set up a trust to avoid probate.

Reasons often express why people should set up a living trust to avoid probate:

(1) Avoid multiple probates in multiple states when you own property in more than one state at your death;
(2) For incapacity planning, a power of attorney is only as effective as the third party is willing to honor it. Many financial institutions and title companies won't honor a power of attorney if it is old/doesn't have provisions they like, etc. If you have a trust and name a successor trustee, it is unlikely you will run into these "We won't honor your power of attorney" issues.;
(3) Reduce or Eliminate Post Death Settlement Costs. Probate costs the estate money, often in the form of attorney cost, executor fees, and court cost. Trust administration can often be done without any estate settlement cost.
(4) Potential for Conflict. Probate requires all parties to participate and be represented by attorneys. In addition, and in general, trust settlement is faster than probate. Generally speaking, the faster the settlement can take place, the less likely conflict will arise.
(5) Some Like to Plan Ahead. Some parents, for example, want to do as much as they can to make settlement matters simpler for their spouse and children. Setting up a living trust and titling assets in the trust is one way for parents to pre-arrange their estate, so that an immediate distribution is all that remains after death.
(6) Business Ownership. Some business owners like the idea that, immediately after their death, their Successor Trustee can transact business. In probate, there is delay.
(7) Just Make Things Easier. Some people want to do all they can while they are alive and well to make matters easier for their survivors.

Now, three reasons why you should not form a trust to avoid probate:

(1) The Small Succession Affidavit Procedure Will Apply. With an estate that does not exceed $125,000, and with your satisfaction of Louisiana intestate law, your estate will not have to go through the formal and judicial court-supervised Succession proceeding. Your estate can be handled through heirs signing Affidavits.

(2) There Won't Be Probate Anyway. If you own, for example, no real estate, and you just own an IRA (that has designated beneficiaries) and a bank account (which you've arrange to avoid probate at the bank), then you have no probate assets and there is no need to establish a trust.
(3) You Don't Care. Some people say they don't care that their heirs will go through probate. Some say, "I'll be dead."

You can get more in depth analysis on this subject by listening to my podcast titled, "Estate Planning with Paul Rabalais."

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
Phone: (225) 329-2450

Is There a Minimum or Maximum Amount of Assets to Watch Out For When Completing a Louisiana Succession?

Does someone ever own "too little" or "too much" to justify putting the family through a Louisiana Succession?

Two key points about a "minimum" amount to justify a Succession. The first point will be explained with an example. Let's say Dad died and the only asset remaining in his name is a bank account with $400.00. The account is frozen and the banker needs the Succession court order to release the funds. The family quickly finds out that the Succession court costs and attorney fees alone will cost several thousand dollars to complete. It would not make sense for the family to undertake the Succession just to get access to a $400 bank account.

A second point about a minimum amount required to complete a Succession involves the Louisiana Small Succession Affidavit procedure. Again, I'll use an example: If Dad dies WITHOUT a last will and testament, and his assets do not exceed $125,000 in value, then the heirs can skip the full-blown judicial Succession proceeding and gain title or access to assets by completing the new Affidavit procedure.

As far as a maximum goes, there is no getting out of a Succession for a large estate. In fact, the largest estates will have to deal with the IRS through the federal estate tax return. But a federal estate tax return must be filed only when the deceased's total assets exceed $11.2 million (for deaths in 2018). So, the wealthy must deal with the Succession, and they also must comply with the federal estate tax guidelines, and in some cases, pay federal estate tax to the IRS.

Who Should NOT Have a Will?

Recently, a Louisiana resident passed away. He had one son (who lived in Illinois) and the deceased father, trying to make things simple for his son to inherit, wrote a Louisiana last will and testament leaving his estate to his only son.

The son and I were talking on the telephone. The son was under the assumption that it would be a piece of cake to transfer Dad's $100,000 home and $3,000 bank account into son's name - that's all Dad had.

I told him that a judicial proceeding would be required to transfer the property into his name, and to gain access to the frozen $3,000 bank account. He said, quite simply, that he did not have the funds to pay for the court-supervised Succession process, in which lawyers are necessary to prepare and file all of the court pleadings and see to it that the judge signs the appropriate court orders which must be recorded in the real estate records of the parish where the property is located.

In the back of my mind, I was telling myself that things could have been simpler if his father died WITHOUT a last will and testament. Louisiana has a simpler estate settlement procedure when someone dies without a last will and testament AND the value of their assets is less than $125,000. Property can be transferred through an affidavit procedure and NO pleadings need to be filed at the courthouse.

Again, this procedure is only applicable if someone does not have a last will and testament AND they have minimal assets. If someone DOES have a last will and testament, then the law says judicial proceedings are necessary in order to have a judge determine that the WIll is valid and followed.