Succession

What Are Probate Costs In Louisiana?

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Another tough question to answer accurately is "What does a Succession cost in Louisiana?"

Succession or probate costs can vary significantly from matter to matter. One of the reasons probate costs in Louisiana can vary so much is that, as far as the attorney fees go, Louisiana is a "reasonable fee" state. In many other states, probate attorney fees are based on a percentage of the total assets in the estate.

Costs typically included in every Louisiana Succession matter include court filing fees, attorney fees, and real estate recording fees. Costs that are not always incurred but can add to the total cost of the Louisiana probate matter include accounting fees for executor accounting and tax accounting, bonding costs paid to an insurance company, and appraisal costs to value real estate or other Succession assets.

There are at least three different ways that attorneys and law firm charge to complete a probate in Louisiana. First, there is the traditional "bill for the attorney's time." Consumers complain about the unknown and inefficient aspects of hourly billing. You get charged for every discussion, phone call, email, car ride, error, and anything else that has to do with your matter. There are countless stories of consumers getting bills from their attorneys and the consumer cannot believe that the attorney spent as much time on their matter as indicated. In addition, in billable hour matters, the client is often reluctant to call or email the attorney to get questions answered for fear that the client will be "on the clock" and it will cost hundreds or thousands of dollars simply to get a question answered, particularly if the question requires some attorney research.

Other attorneys charge for their legal services in a Louisiana Succession based on a percentage of the value of the assets in the estate. Like I said earlier, this method is required in some states outside of Louisiana. So, if an estate is worth $1.5 million, and the attorney says he charges 2.5% of the estate for his or her legal services, then the attorney fees alone will be $37,500.

Note that married couples will go through the Louisiana probate process twice - once at each death. So if the family can avoid these probate costs which must be incurred at each death, the family can likely incur some significant costs.

Other attorneys who provide legal services to the survivors of a deceased in a Succession will charge based on a "fixed amount." Consumers like this because there is certainty, regardless of how many phone calls, discussions, or emails take place.

While I can't give a definite cost to expect, I can tell you there will not be a Succession matter handled that costs less than four figures (thousands). Many Successions in Louisiana cost the estate five figures (tens of thousands). And some Louisiana probate matters will cost the estate six figures (hundreds of thousands). 

Yes, there are ways that you can pre-plan to avoid probate. It simply requires that you get educated and take the right action. 

What Are the Steps Involved in a Louisiana Probate?

It's always a tough question for me to answer when someone asks, "What are the steps involved in a Louisiana probate?"

Every probate in Louisiana is different, based on the procedure and the complexity and the assets and debts that are involved.  The way a probate evolves can vary based on the parties that are involved and the relationships of those parties. The probate can vary based on whether a last will and testament exists, and, if so, the relevant terms of the last will and testament. So, again, there is going to be a probate "no matter what" if assets are in the name of the person who died, but the Will or lack of a Will often dictates the direction that the probate must take.

The following is a "typical" scenario that we see in many Louisiana Successions, but realize that your particular situation can be very different. 

(1) Hire Attorney and Develop a Plan. This is where all of the parties retain an attorney to guide the family through the court proceeding. It's a good idea at this point to have an initial plan that gets communicated to everyone regarding all of the steps that are necessary to complete the Louisiana probate.

(2) Get the Executor Confirmed. Court petitions get prepared and executed whereby the executor petitions a court to "probate the Will" and confirm the executor. The term "probate" is often misused. Most people prefer to use the term "probate" as the entire court-supervised proceeding from start to finish. But technically, when a judge "probates" a Will, the judge is confirming that the Will is a valid will under Louisiana law. Nonetheless, a judge typically signs a court order after this confirming the executor's status, and then the court order is processed so that the clerk of court of the proper parish issues "Letters of Independent Executorship," which lets banks, title examiners, and other third parties know that the executor may now act on behalf of the estate.


(3) Estate Account(s). Now that the executor has the authority to act on behalf of the estate - because he or she has been confirmed by the court as the executor (or, in many cases referred to as the "independent executor"), the executor may open an estate account or multiple estate accounts so that funds and other investments and financial accounts can be collected into the estate account.

(4) Accountings. The executor, the family, the participants, and the attorneys work together to prepare a Detailed List of Assets and Debts that the deceased has when he or she died. In addition, the executor may be required to have the attorneys prepare an accounting showing the court and heirs how the executor handled estate funds after the death of the deceased.

(5) Judgment of Possession. Once the estate has been administered and all of the above has been accomplished, the attorney will prepare a final petition to the court ( all of the heirs must sign off on this), requesting that the proper judge sign a court order (referred to as a "Judgment of Possession"), whereby the judge orders the executor and third parties to disburse assets to the heirs in the proper proportions, after all taxes, costs, and other administrative expenses have been paid.

(6) Distribution. Once the judge signs this Judgment, there is a process whereby each asset must be transferred to disbursed to the heirs. Copies of these Judgements are often filed in the real estate records of the parish where the deceased owned real estate - this is what conveys ownership of the real estate to the heirs. 

Again, the emphasis here that needs to be made is that each Louisiana probate is different, and even the best of plans that are made at the beginning often change due to the fact that new information gets discovered, or relationships turn sour, during the course of this court-supervised probate process. 

Also know that by planning ahead the right way with an estate legal program, you can arrange your legal affairs so that your family and heirs can completely avoid having to go through this.

Why Is Probate Necessary In Louisiana?

Many people ask me after  a loved one dies, "Do we really have to go through a court process just to get access to may parent's account?" 

Sometimes children think that because their parent had a Will, or because their affairs are simple and everyone is in agreement, that a probate is not necessary. But those children are often wrong. 

Why is probate necessary?

It doesn't make sense to some people that the government must oversee the management and distribution of an estate after someone dies, even if the person laid out their wishes clearly in a last will and testament. And whenever the government gets involved with anything, it can get complicated and burdensome and inefficient.

Can't I Just Show Dad's Will to the Banker and the Broker - And They Will Transfer Everything To Me? 

Can't I Just Take Dad's Will To The Clerk of Court and They Will Put Dad's Property In My Name?

There are very specific probate procedures that must take place between attorneys, judges, heirs, clerks of court, and others, that must take place when someone dies with assets in their name. Of course the banks and brokerage firms understand all of these probate rules and they realize they could be liable for handing over funds to the wrong people, so the banks and brokerage firms won't "unfreeze" and account and hand it over to the heirs without the proper court orders ordering them to do so. 

To get these court orders, procedures that the Louisiana Legislature has created must be followed. There's no getting around it and there's no simpler way. 

Bottom line: If you have things in your name (a home or accounts, for example), when you die, there is no getting around the court proceedings. And your loved ones will be forced to hire an attorney like myself to guide the family through the court proceedings the right way.  

Are there legal strategies that you can implement ahead of time to help your family avoid this probate trap? Yes, but you have to have a legal program put in place the right way at the right time in order to simplify your estate settlement and avoid probate.

What is a Probate or Succession in Louisiana?

What's the Difference Between a Probate and a Succession?

In Louisiana, the court proceeding that is required when someone dies with assets in their name is called a "Succession." In other states, this procedure is commonly referred to as "Probate." Since lay people and consumers typically to refer to the court proceeding as "probate," I'll use that term throughout.

When you pass away, if assets are titled in your name, whether you have a Last Will or not, the court is responsible for seeing that those assets are managed correctly and ultimately disbursed to the right people (also referred to as "heirs" or "legatees"). These assets may include your home, any other real estate or rental property you own or co-own, any stocks, bonds, or mutual funds, you own, and bank accounts in your name, and business interest such as a membership interest in a limited liability company (LLC) or partnership or privately held corporation, any mineral interests or United States Savings Bonds.

When you die with these types of assets in your name, then those assets are what is commonly referred to as "frozen." They cannot be sold or put into anyone else's name . The probate is the court-supervised procedure that is necessary to transfer assets out of the name of the person who died into the names of the heirs.

As you might imagine, there are many rules and procedures that must be followed in order to complete a Succession. The government thinks that whenever someone dies and there are hundreds of thousands or millions of dollars to be divided, then the government is the best entity to make sure things and funds go the right people in the right proportion. The public, however, often prefers that the government stay out of their estate settlement. The public often wants their estate settlement to be simpler, less costly, and with less delay. 

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.

What is "The Court?", an Executor Asks?

I was talking to a colleague recently. He is the executor of his father's probate/Succession. His father had died years ago and there was still an account in the father's name that needed to be accessed and distributed to the children.

So the executor took it upon himself to gather up some paperwork (a copy of the Will and a death certificate), and he trucked on down to the place that had his father's account.

As I knew he would, he quickly ran into a dead end. He was told, "In order to access these funds, we need legal documents certified by the court within the last 90 days." 

He got frustrated because he did not know what "the court" meant. Should he go to the Supreme Court, should he go to the Clerk of Court? Should he just walk into a courthouse downtown? He was given no direction as to where or what "the court" was.

He spend two long days going to 12 different offices before he finally got what he needed. He was told that he needed certified "Letters Testamentary." But that was the wrong instructions. Letters Testamentary pretty much went away 15 years ago. Really what he needed were copies of the "Letters of Independent Executorship," certified by the parish clerk of court within the previous 90 days. 

The Louisiana Succession procedure is typically frustrating to the lay person, particularly when they try to do things themselves or even when they try to make sense of the archaic and inefficient probate rules.

Louisiana Family Supportive After Parent Dies Intestate Requiring Probate

I was contacted by a family recently that had a number of estate planning and administration issues that needed to be addressed.

Mom had died unexpectedly a few years ago. Mom died intestate - which means she had no Will or other estate planning legal documents in place when she died. Mom and Dad had accumulated a fairly significant estate by the time she passed away - including homes, mutual funds, stock, bank accounts, vehicles, and other assets.

Dad is planning on getting married again. Normally, this causes problems between the children of the first marriage and the new step-mom - but not here.

The children were super-supportive of their father. They said, "Look Dad, you raised us, bought us cars, paid for our college education, and you've been a great father. You and Mom don't owe us anything. We want you to have it."

Now that's support from children back to their father! The children realized that they could kick Dad out of his house on the day that he marries Step-Mom - but the kids are better than that.

But we still have legal work to take care of. We will complete Mom's Succession. And then after that, the kids will sign legal documents donating their share of their inheritance from Mom back to Dad. Dad will wind up being the 100% owner of everything. 

Dad is now establishing a new legal plan to support his new wife and his children the right way, and making things easy for them to inherit in the future.

If you live in Louisiana, and are in a situation like this, and would like to find out how easy it is to get all of this straight (and how much of a mess it will be if you don't address it), give my office a call at 866-491-3884, and we'll have a discussion about the easiest way to get all of it straight.

Louisiana Succession With Land, a Mobile Home, and Bond Mutual Funds

Working with a really nice family getting their parents' Successions completed. Met with all of the children a couple of times as we developed an efficient plan for getting everything done. The parents' had Wills essentially leaving everything to the children equally. The Wills named two of the children as the co-executor. After going through quite a bit of information and discussion, our firm will be leading them through the Succession process that will look something like this:

  1. Step One - Confirmation of independent executor. We have already prepared, and all of the heirs have already signed, the initial court paperwork to get the executor "confirmed." Since the Will was written prior to 2001, we had to get all of the heirs to sign this paperwork. As an independent executor, the executor can take certain actions without having to get a judge's approval first.
  2. Step Two - Estate account. Once the executor is confirmed by the court as the independent executor, the clerk of court will issue "Letters of Independent Executorship." The executor will then take these "Letters" to the brokerage firm and establish an estate account at the brokerage firm. The parents' brokerage account is currently frozen. But with the Letters, the brokerage firm will be required to establish an estate account and move the investments from the frozen brokerage account into the new estate account.
  3. Step Three - Managing the estate account. Expenses of the estate will be paid from the estate account. The family decided to sell the investments in the estate account so that cash will be readily available to pay expenses and ultimately, distribute to heirs. The refund check from the nursing home that is payable to "Estate of....." will be deposited into the estate account. The proceeds of the sale of the mobile home will be deposited into the estate account.
  4. Step Four - Detailed Descriptive List of Assets and Debts. Our office will prepare the required Detailed Descriptive List of Assets and Debts that the court must have before assets can be distributed to heirs.
  5. Step Five - Judgment of Possession. Our office will obtain the necessary court Judgment which orders third parties to transfer assets to the four heirs. A certified copy of this judgment will be recorded in the parish where the family owns land - this makes the heirs the new owners of the property. After expenses of the Succession are paid, the executor will distribute remaining funds in the estate account to the heirs, equally, in accordance with the Last Will of the parents.

There you have it. Often glitches appear when settling an estate and it's likely that "stuff" will pop out of the woodwork as we work on this, but wanted to give you an idea of a few of the steps that are involved in completing a Succession.

Let me know if a loved one has passed away, and the heirs want a simple and expedited process for getting all matters settled.

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.

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.

Handling a Louisiana Succession When Surviving Wife is Bequeathed Usufruct

I was working with a family over the last few years. The surviving wife called me after he husband died about two years ago. She wanted to get his "estate settled." She said he had a Last Will and Testament leaving her everything.

Ownership or Usufruct?

When she came in and showed me the Will, I realized that he had not left her "ownership" of everything, rather, he left her "usufruct", a form of ownership recognized only in Louisiana.
The husband left two daughters, and I told the surviving wife that we would have to get her two step-daughters involved in the Succession since they were the "naked owners" and needed to be part of the settling of her husband's estate.

Well, two years later after the daughters and their husbands prolonged court proceedings because they demanded accountings of all of bank accounts, CDs, investment accounts, IRAs, annuities, and Savings Bonds, the relationships are now strained and the surviving wife is now saying, "How can I make sure that MY CHILDREN don't have to go through all of this when I die?"

Easier Access When Wife Passes Away

So, we're setting things up now so that when she dies, her children will immediately inherit from her, and her husband's children will immediately get what they are entitled to from their father's Louisiana Succession. Certain things will be held in trust so there will be easy and immediate access to heirs when she dies, without having to go through the complexities, delays, and costs of probate.

If you live in Louisiana, whether in Baton Rouge or New Orleans or Monroe or Lake Charles or Shreveport, and you want to make your estate settlement easy, give us a call at 866-491-3884, and we'll start a discussion about how easy it is to get all of this straight.

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.

A Situation Where Life Insurance DOES Go Through Probate

Example. Kirk and Lisa wanted to make their estate settlement simple for each other and for their three children. Knowing that assets in a revocable trust avoid probate, they created a trust and transferred their stock, home, LLCs into their trust. Kirk and Lisa "heard" that life insurance avoid probate because it's paid to the beneficiary. Kirk died. The insurance company immediately tells Lisa that the insurance company needs a probate court order. Why?

Many years ago, insurance agents would sell life insurance to a married couple. Because the insurance agent believed there would be some estate tax savings, the insurance agent wrote the insurance applications in a way that the husband would "own" the life insurance policy on the life of the wife, and the wife would "own" the policy on the life of the husband.

So, when Kirk died, it was determined that Kirk "owned" the policy on Lisa's life. When Lisa dies, the death benefit will be payable to Kirk (or Kirk's estate). In either case, Kirk's probate is necessary to collect the death benefit when Lisa dies. In addition, if the policy that Kirk owns has cash value, Lisa will not be able to access this cash value into the policy ownership gets transferred in a court proceeding.

Had they transferred their life insurance policy to their trust during Kirk's lifetime, the probate would not have been necessary. After Kirk died, Lisa, as the sole trustee, would be able to access cash value or change the beneficiary. But since they "assumed" that life insurance avoided probate, they ended up being required to complete Kirk's probate to "fix" the life insurance problem, even though all of their remaining assets avoided probate.

What is an Executor or Administrator of a Louisiana Succession: 7 Questions and Answers

What is an executor?

An executor is the person named in someone's Last Will and Testament whose job it is to work with the court system to have the assets of a deceased person transferred to their heirs.

Example. Pete wrote a Will leaving his entire estate to his three children. In Pete's Will, he named his oldest child, James, as the executor his Will. When Pete dies, it's James' job to hire an attorney and oversee the Succession or Probate court proceeding to make sure that Pete's estate gets managed correctly and that, ultimately, Pete's three children inherit Pete's estate at the conclusion of the Succession proceedings.

What is an administrator of an estate?

Sometimes people die without ever having written a Will, and a Succession is necessary to transfer the assets that are in their names, to their heirs. Often, the proper Louisiana court will appoint an Administrator to manage the assets of someone who died without a Will. The Administrator's job will also be to follow all of the court rules and see to it that the assets of the deceased ultimately get transferred to the heirs. When someone dies without a Will, state law dictate who inherits, so the Administrator must work with those people throughout the Succession court proceedings.

Example. Seymour died without a Will. Seymour had three children, but one of his children predeceased Seymour. Seymour's predeceased child had five children. After Seymour dies, one of the grandchildren quickly hires an attorney and petitions the court to appoint her as the Administrator of Seymour's Succession. The court appoints the 19 year old grandchild to be the Administrator of Seymour's Succession. The grandchild then will gain access to all of her grandfather's assets while she works with attorneys and the rest of the heirs to manage the estate and ultimately, have a judge order that assets be transferred to the heirs that state law provide that the estate must be transferred to.

What is the difference between an Executor and an Administrator?

Actually, the roles are similar. When someone dies with a Will, the person who wrote the Will named an executor, and the executor must work with heirs and attorneys to manage the estate as it goes through the court process. When someone dies without a Will, then obviously, an executor of a Will was not named, so the proper court must appoint an Administrator to manage the estate under similar rules that an executor would manage an estate.

What is an Independent Executor?

If the Will stated that the executor may act as an "independent executor," then the executor will be permitted to take certain actions that are involved in completing a Succession without having to get a judge's approval in advance.

Example. Jeff's Will stated, "I appoint my daughter, Margaret, as executor of my Will. My executor may act as an independent executor." If Margaret were simply an executor - and not an independent executor - she would need to formally petition a judge to get express written permission from a judge to sell Jeff's house, stock, car, or even his personal items, after Jeff died. This can be a real nuisance and a financial burden when Margaret tries to settle Jeff's estate. But since Margaret is an independent executor, a Succession is still required, but Margaret can take certain actions (like selling estate assets) without first having to petition the court to take that action.

Virtually every Will written in Louisiana these days should authorize the executor to act as an independent executor. If a Will written in Louisiana does not have these express provisions authorizing the executor to serve as an independent executor, then either:

  • the Will was written prior to 2001 when the "Independent Executor" position was created by state law; or
  • the attorney who prepared the Will is shamelessly ill-informed.

What if the Will does not authorize the executor to be independent?

There's hope. If the Louisiana Will does not authorize the executor to be an independent executor, then, generally speaking, all of the heirs can sign an Agreement authorizing the executor to serve as an independent executor. But it must be unanimous. A few other details exist that must be complied with but your Succession Attorney can help you verify whether the Succession you are working with can operate under the independent administration rules.

What is an independent administrator?

If the person who died had no Will, then the court will appoint an Administrator of the Succession. An Administrator must get every action approved by the judge. However, if all of the heirs sign an Agreement allowing the Administrator to be an Independent Administrator, then the administrator can act under the simpler "independent administrator" court proceedings. Every court-appointed Administrator should seek to be appointed as an Independent Administrator.

Does having an Independent Executor avoid probate?

No. Even if there is an independent executor or an independent administrator involved in a Succession, the Succession is still required. There must be court proceedings to get the independent executor or administrator appointed or confirmed. The assets, liabilities, and estate expenses must be documented and valued, the heirs must sign off on the plan for distribution, and accountings are necessary. Judges will still need to get involved to sign various court orders, and court orders will have to be distributed to various heirs, financial institutions and other third parties to "un-freeze" the estate assets to have them managed and ultimately distributed to the heirs.

Completing a Succession When a Child Is Already a Co-Owner of Property?

     Hey, I was working with a family recently, the parents had both recently passed away and the four children were getting together and they retained us to handle all the succession, or probate, matters. They had a question about a particular piece of property that their parents had owned.

     During the parent’s lifetime, the parents had donated a 10% share in that property to one of the children. Now that the parents have died, and all the parent’s assets are going to the children equally, the children were asking me who ends up with this piece of property? Well, as you might imagine, the child who owned the 10% will continue to own the 10% and then the parents 90% would wind up being transferred equally to the four children. If you do the math, the child with the 10% would continue with the 10% and each of four children would inherit 22.5%, which is one-fourth of the parents 90%. The child that already had 10% winds up with 32.5% of the property and the other three children each own 22.5%.

     You might figure how does that work because it is a house. How can you own a 22.5% interest in a house? Well, people can have an undivided interest, which means that each child, at least those three, own a 22.5% undivided interest in the whole house.  There is not particular tracks or rooms for each child. Each child has an undivided interest in the whole home. I

     If you have a situation like that and you want to get it all straight, feel free to reach out to us and we can have a conversation together.