Estate Sells Home

Banks and Brokerage Firms: We Hardly Use Letters Testamentary These Days

After a Louisiana resident passes away, a surviving loved one often goes to the deceased's bank, credit union, or brokerage firm, in an effort to settle the estate of their loved one. The financial institution promptly responds by saying something like, "Your loved one's accounts at this financial institution are all frozen. You must bring back "Letters Testamentary" or "Letters of Administration" in order to gain access to funds.

These days, the financial institutions are asking for the wrong things. They should be requesting "Letters of Independent Executorship" or "Letters of Independent Administration."

Since 2001, Louisiana has authorized the independent administration of estates - less court supervision. Virtually all Wills written since 2001 authorize this procedure. And if a Will does not authorize it, then the heirs can agree to operate under this independent administration procedure.

After a death, when the family gets the executor confirmed, and if the executor is acting as an independent executor (which is the case in an overwhelming majority of Successions), the court does not issue "Letters Testamentary." The court issues "Letters of Independent Executorship."

So the bank requests Letters Testamentary, and then we have to tell them that we will not give them what the bank is requesting. We will give them Letters of Independent Executorship.

It would be easier on everyone if the financial institution tells the survivors of its clients and customers that they can bring in the Letters of Independent Executorship to gain access to the funds of the deceased.

To some, this may seem to be a trivial matter. But when we deal with so many confused survivors, anything the legal and financial industries can do to help those in need at a difficult time would make everyone's job easier. Just my two cents.

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.

Two Successions For Alexandria, Louisiana Family: Child Dies After Parents Pass Away

I was contacted recently by the son of a set of parents who died while living in Alexandria, Louisiana. The son told me that his mother died 12 years ago, and his father died four months ago. The parents owned three homes and they also had a bank account. Unfortunately, after the father recently died, another son passed away (without a last will and testament) just a few weeks after the father died. The surviving son was worried about completing the necessary Louisiana Successions, particularly how the deceased son's three children might be affected.

We determined that neither parent had ever signed a last will and testament. So, we created the following plan to get both Estates/Probates/Successions handled without a bureaucratic nightmare. Here is the plan we developed:

  1. Son Appointed Independent Administrator. First, we will prepare the necessary Agreements and court pleadings so that the surviving son can be appointed by the appropriate judge as the Independent Administrator of both the Succession of Mom and the Succession of Dad. The court will issue documents called, "Letters of Independent Administration."
  2. Establish Estate Accounts. Once appointed by the court as the Independent Administrator, the surviving son can establish Estate Accounts in the name of each Succession, at the bank of son's choosing. He will then have the authority to move the money from his parents' account into the estate accounts.
  3. Sell the Homes. As Independent Administrator, Son will be able to sell the three homes that were owned by his parents. The proceeds of the sale of these homes will be placed in the estate accounts.
  4. Pay Estate Expenses. Son will use these estate funds to pay necessary estate expenses.
  5. Judgment of Possession. Once the final accountings, detailed descriptive lists of assets and debts, and other court pleadings are prepared and filed with the court, and once the judge's office is satisfied that all court documents are in order, the judge will sign a "Judgment of Possession" which orders third parties to transfer estate assets to the heirs. In this case, the surviving son will inherit one-half of the remaining estate assets, and the deceased son's three children will inherit the other one-half of the assets.

The son wanted to work with an attorney that knew exactly what he was doing, because the son knew that one wrong move could delay the Succession for months or years, causing additional costs, and perhaps even ruining family relationships. He said he wanted to make sure that everything was done "by the book" so that no one could complain about his actions as the court-appointed Independent Administrator.

The son was also pleased that we would be able to complete these Successions without court appearances and without unnecessary travel by our attorneys or by the heirs.

If you have had a family member pass away, and you have other family members who all have good relationships and you want to make sure they stay that way by completing the Louisiana Succession in the most efficient manner possible, you may want to give our office a call at 866-491-3884 and start a conversation about a plan to complete these matters the right way.

Baton Rouge, Louisiana Family Opens Succession Estate Account to Collect Estate Funds

We've been working on a Louisiana Succession for the last several weeks. Dad passed away having left a last will and testament naming Son as executor, and leaving all of the assets to his four children.

The children were confused about the steps that needed to be taken because they had gone to several of Dad's banks. Some banks would not give the children any information. Some banks told the children they needed "a letter from the attorney." And some banks started processing the accounts instantly so they could be transferred to the children. There was also a home and some stock involved. They came to me to sort it all out. After about two hours of talking, digging, and a few phone calls to a few banks, I revealed the following steps that needed to be completed to get Dad's estate (or probate or Succession - whatever you want to call it) settled.

Here are the steps we are going through.

  1. Son Confirmed as Independent Executor. We prepared all of the court petitions and filings to enable a judge to sign the appropriate court orders confirming that the Son was the executor. Since the Will authorized the Son to act as an "independent executor," the court will issue court documents called "Letters of Independent Executorship." Even though the probate is still necessary, being confirmed as an "independent" executor is better than being an executor, because an independent executor can take more actions (such as paying debts or selling a vehicle) without having to ask a judge for permission every time the executor needs to do something.
  2. Open Estate Account. Once the initial court orders are issued, Son can go to the financial institution of his choosing and open an estate account. Then, Son can go to the various banks and other financial institutions and collect the funds from the frozen accounts, and deposit those funds directly into the estate account.
  3. Detailed Descriptive List. The family will get us the necessary information so that we can prepare the formal accountings including the Detailed Descriptive List of Assets and Liabilities. A judge won't allow assets to be transferred to the heirs until all of the Assets and Debts and Expenses are itemized the right way in this Detailed Descriptive List.
  4. Judgment of Possession. One of the last things that will happen in a Louisiana Succession is that the judge will sign the Judgment of Possession that we prepare and that all of the heirs sign off on. This judgment orders the executor and banks and other third parties to transfer remaining assets to the four children. The home will be listed as an asset of the Succession which must be transferred to the four children. This judgment will be recorded in the real estate records of the parish where the property is located - formally retitling the property into the names of the four children - so they can sell it when they are ready.
  5. IRAs. An IRA is one of those accounts where a beneficiary can be designated. Since Dad named the four children as the designated beneficiaries, the four children can work with the financial institution to have Dad's IRA transferred to the four Inherited IRAs. The children can elect to take taxable distributions over their lifetime of they wish, deferring the income tax while the investments continue to grow.
  6. Tax. The family was relieved that no federal estate tax was due since Dad's estate was well under the $5.45 million estate tax exemption. The only tax consequence is that the children will include in their taxable income the distributions that they get from what previously was Dad's IRA.

Completing a Louisiana Succession can be tricky. Getting the wrong advice or working with the wrong people can add months or years to an already difficult process. Check us out if you have a loved one who has passed away, and you and all of the other heirs want to streamline the estate settlement process.

Gretna, Louisiana Estate Planning Audience Worried About Losing Assets To Nursing Home Expenses

Gave an estate planning presentation to a great group of folks in Gretna today. When each of the individuals walked in, I asked them what they were hoping to learn during the presentation. The responses were all very similar, although each response was based on a particular background or family experience. Some of the responses were as follows:

  • Husband has dementia. One woman stated that her husband has dementia and she was worried that she would have to put him in the nursing home in the future, which would cause them to lose their life savings, and ultimately, lose their home. She said most of their net worth was in their home and she was hoping to be able to leave the home to their children.
  • Couple Wants to Avoid Leaving It to the Government. Another Gretna couple said our information is exactly what they were looking for. They have worked hard and had saved. They want to see their hard-earned estate go to their children instead of to the government or the nursing home. They said that one of their two children was an attorney - I told them that I would not hold that against them. :)
  • Couple owns rental real estate. One couple owns several doubles in Jefferson Parish. The husband, in his late 60's, had seen other family members deplete their estate due to nursing home costs. They were concerned about protecting their property and their savings for their one child. We discussed the capital gains tax problems associated with donating the properties to their son right now.
  • Husband Died Two Years Ago. One woman in attendance lost her husband two years ago and had not started on his Succession. She is getting to a point where she can't manage the home and is considering selling it and moving into something smaller. There are family issues that may make completing the probate difficult, if not impossible. Perhaps we can help her.
  • Future Executor Worried. One gentleman said he was named as the executor of his elderly parent's Will, but prior to attending my presentation, thought he would be able to go to the bank and brokerage firm after his parent dies with the Will and get immediate access to funds for immediate distribution to his many siblings. Now he is a little worried because the sibling relationships are less than rosey, and he anticipates many problems when his parent dies and he tries to fulfill his duties as executor.

All in all, it was a great crowd in Gretna today. All were worried about the various potential interferences that could mess up their trying to leave their estate to their children. I look forward to the opportunity to work with many of these folks and help them establish a Louisiana estate planning program out of our Metairie office so that they can pursue their senior years without worry that there will be difficult estate issues when they die.

If you live in Louisiana, and would like to discuss how an estate legal program might help your family protect 100% of your estate, give us a call at 866-491-3884, and let's set up a time to chat about how easy it is to get your estate legal affairs in order.

 

Why To Promptly Complete Succession After Death of Loved One

I was consulted on a Louisiana Succession matter today from a Houma, Louisiana family. Mom passed away about two years ago and her Succession was never complete. After Mom died, the family thought, "There's no need to complete a Succession after Mom's death because Dad has no plans to sell the house or other real estate or stock, and he already has access to their joint bank accounts."

The problem that occurred was that after Mom died and before her Succession was complete, two of Mom's heirs passed away. These two heirs each had several heirs. Now, completing Mom's probate in Louisiana will be a nightmare. There are several personalities that are now involved that would not have been involved had the Succession promptly been complete shortly after Mom died.

Some Louisiana families mistakenly believe that if they ignore the necessity to complete a Louisiana Succession long enough, then the requirement to complete the Succession will go away - but there is nothing further from the truth. In fact, the longer a family waits to complete a Louisiana Succession after the death of a family member who owned property, the harder it will be to complete it later as more personalities get involved - all of whom must be parties to this court-supervised probate proceeding.

If you have an interest in completing a Louisiana Succession so that property or investments can be properly re-titled after the death of a loved one or family member, and you'd like to talk to us about retaining us to complete the probate matter, give us a call and we can have a conversation about how easy it is to complete these court proceedings in a way that is efficient and keeps family relationships prospering.

Importance of Documenting the Accounts in a Louisiana Succession After the First Spouse Dies

We started working on a Succession today out of our Baton Rouge office. The wife had passed away. Her husband was talking to me about helping the family get the Succession complete. The couple had been married for about 20 years, but they each had children from their prior marriages. The deceased wife had two children. The surviving husband had three children. The husband said that, for now, the relationships were good between himself and the two sets of children. He was hoping that the fact that his wife's estate needed to be settled would not harm the relationships among all of the parties involved.

Usufruct To Spouse - Naked Ownership To Children

We discussed how her wife left a Will leaving him the lifetime usufruct of her estate, and she named her two children as the naked owners. He stated that he wanted his three children to inherit his estate when he dies.

He brought in a list of all of the various bank accounts and investment accounts. They had about five bank accounts, an investment account at Fidelity Investments, and they owned a home worth about $500,000. We discussed how important it is now to fully document all of the bank accounts, investment accounts, debts, credit card balances, funeral expenses, and medical bills outstanding, because when the husband later dies, the children of the two spouses will look back to how the assets were listed when the first spouse dies to determine who inherits what after the surviving spouse dies.

I gave the husband an example. I said, "Let's assume that the two of you owned bank accounts totaling $200,000 when your wife died. Let's also assume that the two of you had credit card and home equity debt of $40,000. Further, let's assume that there were $15,000 of funeral expenses. What all of this means is that when you die, your estate will owe your wife's children $65,000."

Usufructuary Accounting

He asked me how I came to that calculation. So I said, "Well the $200,000 of bank accounts are community property so you each own half of those accounts. As the usufructuary. you own your half of the accounts, and your estate will owe your wife's children her half of the accounts when you die. So, let's start with the fact that you will owe her children $100,000. Now, since there was $40,000 of community debt, your wife's share of that is $20,000, and you can deduct $20,000 from what you owe her children. And since there were $15,000 of funeral expenses, you can also deduct that amount from what you owe. So, $100,000 minus $20,000 minus $15,000 totals $65,000. That's the amount your estate will owe your wife's children when you die."

Then, we started talking about their home. The surviving husband said he intended to sell the home in a few months and move into something smaller. So I gave him another example regarding their home. I said, "Let's say you sell the home in six months for $520,000. At that moment, you converted a nonconsumable (the home) into a consumable (cash). If you sell the house for $520,000, you will get to keep all of the money, but upon your death, your estate will owe your wife's children $260,000 (one-half of the sales proceeds). 

The mistake many families make is that even though money typically does not go to the children upon the death of the first spouse, it is critical to properly document the assets as part of the Succession process. If things are accurately documented in the Succession (also known as "Probate") when the first spouse dies, it will make it much easier to accurately divide the assets after the surviving spouse dies. Shoddy records after the first spouse's death will likely lead to estate settlement disputes after the surviving spouse dies because the families will often have to "guess" at what assets and accounts existed years earlier when the first spouse died and there are no longer records from years earlier.

Louisiana Statewide Succession and Estate Planning Legal Services

If you want to set up an estate legal program and you live in Louisiana, whether you live in Baton Rouge, Covington, Metairie, Lafayette, Lake Charles, Shreveport, Monroe, or Alexandria, or if you've lost a family member and you want to make sure that the estate settlement is handled the right way to avoid disputes, now or later, among family members, give our Louisiana toll-free number a call at 866-491-3884, and we will be happy to have a conversation about how easy it is to do it the right way, the first time.

Shreveport Gentleman Asks Great Question About Leaving Home For Wife

I was working with a Shreveport couple recently helping them set up their estate legal program. One of their three children lived in Shreveport. Another lived in Monroe. The youngest lived in Alexandria, Louisiana. All three of their children were married and some of those spouse exercised a lot of influence over their spouse.

The husband asked a question that we get quite often. It goes something like this, "How can I make sure that when I die, if my wife wants to sell our home, that she does not have to get the permission of our children to sell the home?

Well, the most popular ways to do this are as follows:

  1. Will Home Outright to Wife. The husband can have a Last Will and Testament and bequeath the Shreveport home outright to his wife. After he dies, the wife will have to complete the husband's Succession/Probate with any of the other heirs before she would be permitted to sell the home.
  2. Will Usufruct of Home With Authority To Dispose. This one can be tricky. The husband can write a Last Will leaving the usufruct of the Shreveport home to his wife. But that is not enough for her to freely be able to sell it after he dies. In the husband's Last Will, he will name the naked owners of the home, but he must provide (this is where it gets a little complicated) that the naked ownership interests are held in trust with the surviving wife as the trustee. It also helps if in his bequest of usufruct, he also grants her the "authority to dispose of nonconsumables." A Louisiana Succession will still be necessary after he dies to remove the property from the Husband's name.
  3. Put Home In Trust. He can put his home in a trust and designate that his surviving wife is the trustee of the trust after he dies. This may be the simplest way accomplish the husband's wishes. After the husband dies, a Louisiana Succession is not necessary to re-title property in trust. The home will simply remain in the trust after the husband dies, and the wife will immediately be able to sell the home without having to seek the permission of any of the children.

Whether you live in Shreveport, Monroe, Alexandria, Lake Charles, Lafayette, or any other Louisiana town or city. you can arrange your estate legal program so that your spouse will not have difficulty after you die if your surviving spouse wants to sell the home or other property. When a surviving spouse is forced to get the permission of all of the children (and indirectly that often means the spouses of the children chime in) it can often create irreparable family conflict which never improves.

Give our Louisiana statewide telephone number (866-491-3884) a call if this makes sense to you and you'd like your estate to be handled the easy and right way when you die. I look forward to the opportunity to have a conversation with you about your estate planning goals and how we might be able to help you accomplish them.

Paul Rabalais

 

 

How To Complete the Probate of a $1 Million Louisiana Estate

I've handled many Louisiana Successions over the last 25 years. Every one is different and there can be many different ways to "skin the cat." But I want to give you an overview of what typically is involved when a "typical" one million dollar estate is being probated in Louisiana.

First, some terminology - Probate or Succession. When someone dies with assets in their name in the United States, it is up to our government (the judicial system) to see to it that those assets are managed properly and then ultimately transferred to the rightful heirs after all applicable delays and court costs, attorney fees and other administrative expenses have been taken care of. The fact that the government must oversee this is the topic of another discussion.

All other states, except Louisiana, call this court-supervised process "Probate." In Louisiana, it is also commonly referred to as a "Succession." For purposes of this discussion, I will call this procedure in Louisiana - "Probate."

So let's look at an example. Dad died years ago leaving everything to Mom. Now, Mom just passed away three weeks ago. Mom lived in Louisiana when she died. Mom had previously signed a Last Will and Testament ("Will") leaving her entire estate equally to her three children. She named her oldest child ("Sonny") as the executor of her Will. When Mom died, she owned a home worth $300,000, bank accounts valued at $100,000, CDs valued at $200,000, an IRA valued at $150,000, a separate stock account valued at $100,000, an annuity valued at $50,000, US Savings Bonds valued at $50,000, a vehicle valued at $20,000, and other personal effects valued at $30,000. Mom also had a few debts. Mom has two credit cards (each with a $5,000 balance). There are ongoing insurance and maintenance expenses associated with the house. Mom's daughter, Sissy, paid the $10,000 funeral expense out of her own pocket.

So, here are the typical steps involved in settling this million dollar estate.

  1. Attorney For The Children. Generally, each child must have an attorney since all of the children are participants in this court proceeding. For purposes of this situation, let's assume that all of the children are represented by the same attorney. All communications with the attorney will be with all of the children present. There is no conflict between any of the children. If there is any conflict among the children, then different children will have different attorneys and the proceeding will likely move much slower through the court system - in fact, many contested probates never wind up getting fully resolved.
  2. IRA and Annuity. Let's assume that Mom designated her three children as the equal designated beneficiaries on the IRA and the annuity with the particular financial institutions. If so, then the three children can apply directly to these financial institutions to get their benefits. We'll talk taxes later, but the beneficiaries will include distributions they receive from Mom's IRA as taxable income, and they will also have to pay income tax on the gain that was recognized inside of Mom's annuity.
  3. Get Sonny Confirmed as Independent Executor. Court pleadings will be prepared, signed, and filed at the courthouse to open the Probate and to petition to be confirmed as the Independent Executor. Let's assume Mom's Will not only designated Sonny as the executor, but she authorized him to act as an Independent Executor. It is critical that Sonny be confirmed as the Independent Executor so that he can start to gain access to Mom's accounts, pay bills on behalf of the estate, and perhaps sell estate assets that need to be sold. When the judge signs this first court order, the clerk of court will issue certified copies of the "Letters of Independent Executorship."
  4. Open Estate Account. Once Sonny receives the court-issued Letters of Independent Executorship, he will go to a bank and open an Estate Account. Sonny cannot open an estate account until he has these "Letters."  Let's assume he opens the Estate Account at the same bank that Mom used. The bank will open the Estate Account and they will transfer Mom's frozen bank account funds and her frozen CD funds into the estate account. There will be no penalty for early surrender of the CDs when the bank transfers the funds out of Mom's CDs into the Estate Account.
  5. Detailed Descriptive List of Assets and Liabilities. The family provides information to the attorney regarding the specifics of Mom's assets and debts when she died. The court requires that a detailed listing of all assets and debts be filed into the court record before a judge can authorize a distribution of estate assets to the heirs.
  6. Separate Stock Account. The children talked and decided that since they have no emotional attachment to the stock that Mom owned, it would be best to sell the stock and divide the proceeds of the sale among the children. Sonny, armed with his Letters of Independent Executorship giving him authorization to sell estate assets, sells the stock. The check from the sale is made out to: Estate of Mom. Sonny deposits this check into the Estate Account at the bank.
  7. Mom's Home. Since all three children have their own homes, the children agree that it would be best to sell the home. The children quickly clean out the house and Sonny, as the Independent Executor, gets with a realtor to list the home for sale. Two months later, they find a buyer to buy the house from the estate. Sonny attends the closing. The check for $300,000 produced at the house closing is payable to "Estate of Mom." Sonny deposits these funds into the estate account.  There is no tax on the sale of the house because, even though Mom and Dad purchased the home years ago for $120,000, the children will enjoy the "step-up in basis" at Mom's death. Since the new basis is the value of the home at Mom's death, and since there is no better way to determine fair market value than what a willing buyer and willing seller agree to shortly after death, it is fair to say that the basis was the sales price ($300,000). So, there was no capital gains tax to be paid upon the sale of the home.
  8. U.S. Savings Bonds. When Mom died, she owned 87 U.S. Savings Bondsthat were valued at $50,000 when Mom died. Mom had originally paid $33,000 for these savings bonds. The children decide to keep things simple by selling all of the bonds. Sonny goes through the process of selling all of the bonds, as the Independent Executor, and depositing those proceeds into the Estate Account. Income tax will have to be paid on the difference between what the US Savings Bonds were sold for ($33,000) and what they were sold for ($50,000). This taxable gain is $17,000.
  9. Mom's Vehicle. The children decide to sell Mom's old Lincoln. Sonny sells the vehicle. The check is payable to Estate of Mom. Check deposited in Estate Account.
  10. Personal Effects. The children get together at Mom's home shortly after Mom died and, informally, agreed on how Mom's personal effects are to be divided. Perhaps Mom may have even communicated to the children, or made an informal list of instructions, regarding her personal effects. Since these personal effects are not "titled," like an account or a piece of property is, the children are satisfied with their own personal division of personal effects. The attorney does not have to get involved in this aspect of settling the probate.
  11. Paying Estate Bills. Sonny will use the funds in the Estate Account to reimburse Sissy for the funeral expenses she incurred, and Sonny will also use the Estate Account to pay off Mom's credit cards, and to pay house maintenance expenses of the home from the time Mom died until the house is sold. Sonny may very well be required to prepare and file a final income tax return for Mom, which will be due April 15 of the year after Mom died.
  12. Executor Fee. As executor, Sonny is entitled to an executor's fee of 2.5% of the Succession Assets. Sonny does the math and concludes that he is entitled to an executor's fee of $25,000. Sonny has a decision to make: Does he collect the $25,000 executor's fee from the estate (he will pay income tax on this amount because he is being compensated for the services he rendered). Or does he waive some or all of the fee and allow the three children to simply inherit the estate assets one-third each without income tax consequences.
  13. Estate Tax. No federal estate tax is due because the value of Mom's estate is less than the applicable estate tax exemption of $5.45 million. No Louisiana Inheritance Tax is due because Louisiana no longer has an inheritance tax. We discussed above income tax consequences to the children's receipt of the annuity and IRA and US Savings Bonds.
  14. Judgment of Possession. Finally, a judge signs a Judgment of Possession which may close the estate and order that all remaining estate assets be transferred to the three children equally. Sonny, as executor, may want to hold back a sum of money just in case bills come in after all of the funds would have been otherwise distributed.

There you have it. While every Louisiana Succession or Probate is different, this is just one example of things that occur during the legal proceedings related to settling a $1 million dollar probate. Actually, the procedure would be the same whether the estate was worth $200,000 or $4,000,000.

If you have lost a family member, and you want to work with an attorney who will help your family get through all of this quickly and easily while keeping the family relationships intact, give us a call at 866-491-3884 to start a discussion about handling the Louisiana Succession.

Louisiana Family Establishes Estate Legal Program for Two Children and Grandchildren

I was working with a Baton Rouge family recently who wanted to set up an estate legal program the right way for their family. Their goals were to make things simple for the surviving spouse; designate both of their children to work together, while staying out of the Louisiana probate, after both spouses died; and making sure that the money they left their grandchildren would be used for the right reasons.

So, we are establishing their revocable living trust so that the surviving spouse is the sole trustee after one spouse dies and is in complete control of everything (no Louisiana Succession or Probate); their two children will be the Successor Co-Trustees after both parents die, and since there will be no probate, the children could sell the home immediately after the parents pass; and third, instead of dumping $100,000 or so into each grandchild's lap when the grandparents die (encouraging even more bad habits from the grandchildren), the grandchildren's parents (who are very responsible) will serve as the trustee of the trust for the grandchildren. The parents will have total discretion regarding what the funds are used for, and the grandchildren's parents will transfer the inherited funds to the grandchildren when the grandchildren show the maturity and financial responsibility to be able to handle this kind of money the right way.

Should Louisiana Real Estate Be Put In Trust If It's About To Be Sold

I met with a couple today that was about to retire. They had about four different pieces of real estate. They owned property in Baton Rouge, Metairie, New Roads, and Shreveport.  Real nice couple - two kids and four grandkids. Seemed to be a pretty normal family - and we don't see many "normal" families anymore.

They had two main concerns. First, they said they wanted to avoid probate. Second, they said they wanted to avoid losing everything they had if one or both of them had to go into a nursing home in the future.

We decided to postpone any Medicaid Planning. They were relatively young, but the big issue is that they had a significant sum in their 401(k) and IRAs. It's harder to protect IRA and 401(k) assets from nursing home expenses in Louisiana, because these assets are countable resources. To get a 401(k) account or IRA out of your name, you have to take the money out of the account and pay all of the income tax - this strategy did not make sense to any of us. In addition, the husband already owned a long term care insurance policy so they had "some" protection in place from long term care expenses.

Regarding their desire to avoid probate, we discussed setting up their revocable living trust so that the following would happen:

  1. The couple would stay in control of everything while they were alive and able;
  2. The surviving spouse would stay in control after one spouse died, with no Succession or probate court proceedings necessary after one spouse dies;
  3. The two children would be the co-trustees of the trust after both parents die, with the immediate authority to sell the trust property and divide remaining assets between the two of them - all without the necessity of a probate or Succession proceeding.

Another issue that came up was whether they would put their Metairie property in their trust now. He mentioned they would sell this property in the next few months. They ultimately decided to keep their Metairie property in their name and they will expedite the sale of the property. Just to be safe though, we could have transferred their Metairie property to their trust (just in case they pass away before the property is sold). and then it would be easy for them to sell their property as trustees of their trust.

Finally, we talked about how easy it would be to sell their home (that will be in their trust) if they decide later in life that they want to sell their home and move to another location. We discussed how they could sell their existing home, and then acquire a new home in the name of the trust - all easy to do.

Their decision to keep their property out of their revocable living trust may have been different if they were trying to protect the property form nursing home expenses. If we were setting up the kind of trust that would protect their assets from future nursing home expenses, then it would be important to transfer all of the property now - to start the five year look-back period. Then, if they sell the property in trust in a few months, the sale proceeds would be deposited in a trust account, but the 5 year penalty period would have started when they initially transferred the property to the trust, not later when the property is sold.

Who Should Sell The Home: The Executor or the Heirs?

We've been dealing with a probate matter In East Baton Rouge Parish for a few months now. Dad died. Dad owned a home, some bank accounts, some investments, and a vehicle - pretty normal stuff. Accounts were frozen immediately when Dad. Dad had a Last Will and Testament naming Daughter as the independent executor. The Will leaves Dad's estate to eight different heirs.

Dad's house now needs to be sold. People are asking me what's the easiest way to get Dad's house sold. I told them that they have two options:

  1. Keep the estate open and have the one Independent Executor sell the home on behalf of the estate. When the Independent Executor sells the house, the check will be payable to "Estate of Dad," and Daughter, as Independent Executor, will deposit the check into an Estate account that she establishes. Then, we prepare the necessary accounting and get the proper court judgments to allow those estate funds to be disbursed to the eight different heirs in the proper proportions.
  2. Close out the estate, get the final judgment transferring the house to the eight heirs, and then having the eight heirs list and sell the house. This process settles the estate quicker and transfers Dad's assets to his heirs, but all of the eight heirs, as the new co-owners o the home, will have to participate and sign off on the listing of the home, the negotiation, and all eight heirs will have to participate in the closing of the home when those documents are prepared and need to be executed.

In this instance, it was a pretty obvious choice. The decision made, and the one we are moving forward on, is to keep the estate open, have the independent executor sell the home by herself, and then go through the process in a few months (or perhaps even years - depends on how long it takes to complete the sale) go through the final probate process of preparing the necessary accountings for the court, and petitioning the judge to sign off on the final court orders so that the executor and the financial institutions are ordered to release remaining funds to the heirs in the proper proportions.