Frequently Asked Questions About Estate Planning
Is everything in a marriage considered community?
Answer: In Louisiana, unless there is a premarital agreement or an agreement during marriage, (with the exception of donations and inheritance), all during the marriage will be considered community which means that one-half is his and one-half is hers.
Is everything bought during the marriage community?
Answer: It depends on the funds being used, but there is a presumption that anything bought by the couple during the marriage is community.
What about assets before marriage?
Answer: All assets before marriage and brought into the marriage are considered separate and remain so unless changed by formal document.
If one spouse owns a house prior to marriage and during the marriage the other spouse lives in the house and pays the mortgage, does that other spouse become an owner?
Answer: No. In order to become an owner of real estate in Louisiana, there must be a formal written document of transfer.
Is all property in the marriage considered community?
Answer: No. If you inherit or if an asset is given to only one of the parties directly, those assets are not community.
If I live out of state and move to Louisiana, do I have community property?
Answer: There is a period of time within which you may sign a certain document to opt out of the community property regime.
Is a Will necessary in Louisiana?
Answer: No. In fact, it may actually complicate matters and cost more to the Estate. But, if this is a second marriage or if there are young children, or single parents with young children, a Will might be wise.
What is forced heirship?
Answer: In Louisiana, forced heirship is a legal dictate that certain people (generally children) must receive a certain percent of an estate. If the child or children are younger than 24, or older than 23 and permanently incompetent, they must inherit. However, a Will, with the forced portion being subject to a usufruct, can still be valuable.
May I give away anything that I want in a Will?
Answer: Even if there is forced heirship, the forced heirship is as to percentage, not particular items. Perhaps, a Will could give the house to the spouse and limit the forced portion to cash only.
What is a usufruct?
Answer: This is giving exclusive use and right to fruits (such as interest and dividends) so even if a forced heir must get a certain portion or value of property, it can be subject to a usufruct in favor of the surviving spouse.
Is it necessary to have an Executor or Administrator?
Answer: After death, someone usually contacts an attorney. That person may help the Estate by gathering information for the attorney. However, an Administrator or Executor appointed and confirmed is not always necessary, depending on the circumstances.
What if the Will gives a certain asset but, at death, it no longer exists?
Answer: Then, there is no gift. If a Will leaves a certain item to an individual and, at the Testator’s death, the item no longer exists, there is no bequest. Therefore, it might be useful to put something such as “I give the house that I own at the time of my death . . .” instead of a specific address.
Am I obligated to pay all debts of the person who died?
Answer: A Will could determine how the debts are to be paid. However, generally, each heir will owe a portion based on his inheritance, but this may not be correct if there are only particular or itemized bequests.
What kind of Wills exist in Louisiana?
A. Olographic – these are handwritten by the Testator, dated and signed by the Testator. There are no witnesses.
B. Notarial – these are done by attorneys, typed, signed on each page by the Testator (maker of the Will) and dated.
What type of bequests may I make?
Answer: It is a very varied menu. A Will may give all of the Estate (unless forced heirs). It may give all of a specific type of item. It may give a percentage. It may give a particular item. It may give part or some of the particulars.
Must there always be a filing with the Court?
Answer: In Louisiana, if there is a Will, if there is real estate, and/or if the Estate is over $50,000.00, there must be a filing with the Court.
Must there be an administration?
Answer: Generally not. However, it may depend on what the Will states or what the situation of the Estate presents. (Such as selling property or if there is a missing heir)
What type of Successions may be filed?
Answer: These may be simple, where all filings may be made at one time. There may be a Regular Administration where there is an appointment of an Executor or Administrator, which can be quite expensive and time consuming. There is also an Independent Administration where there is an Administrator appointed, but that Administrator, once appointed, does not need Court authority as would be the case with a Regular Administration.
What about inheritance tax?
Answer: If someone dies after June 30, 2004, there is no inheritance tax, nor must a Louisiana Inheritance Tax form be filed. At this moment, if there is a death prior to July 1, 2004, at least an Inheritance Tax form must be filed. But, over the past ten (10) years or so, the Inheritance Tax has been whittling down. As to federal tax, this is a different issue and federal tax for a total estate value may include annuities and insurance, where the state tax does not.
What do terms, such as “heirs” and “legatees” mean?
Answer: Heirs are generally those who inherit when there is no Will and legatees are those who inherit through a Will. Those who inherit through a Will inherit legacies.
What are my rights as a possible owner in a succession?
Answer: You may accept your inheritance. You may renounce or give up your inheritance. You may renounce in favor of another individual (this is considered a donation). You may accept some of the estate and renounce some of the estate.
POWERS OF ATTORNEY
What type of Powers of Attorney are there?
Answer: Generally, you will find Medical Powers of Attorney and General Powers of Attorney. The Medical gives authority for someone (known as the Agent) to assist in medical situations on behalf of the Principal; and the General Power of Attorney may give authority to handle the affairs of that person under almost any other situation, such as writing checks. Also there may be Limited Powers of Attorney for certain special circumstances, such as giving authority to a spouse (or someone else) to sign a sale of real estate when the other spouse may be out of town.
Must a Power of Attorney be set up for immediate use?
Answer: No. Authority may be given at the present time or it may “spring” into action only upon the other persons incompetence.
What is a “Durable” Power of Attorney?
Answer: This is a Power of Attorney that continues though the Principal becomes incompetent.
What is a Living Will?
Answer: It is basically a document saying do not keep me alive artificially when I am considered terminal.
Are there any terms or conditions?
Answer: Now the Louisiana form allows one to choose not only to be kept off artificial life sustaining measures, but also to either be given hydration and nutrition at that point, or to not have such additional measures.
What is a Trust?
Answer: It is a relationship where there is a transfer of title to a Trustee to be administered by that Trustee as a fiduciary, or trusted person, on behalf of another.
What types of Trusts are there?
Answer: “Inter Vivos Trusts” come into effect during the life of the person setting up the Trust (known as the Settlor). Trust set up through a Will to exist after the death of that person are called “Testamentary Trusts”.
What types of authority goes into a Trust?
Answer: This is very general and may be either limiting or very expansive. One may limit the authority of the Trustee in investing of assets, or may give the Trustee very wide latitude.
Who are the beneficiaries?
Answer: They may be both principal and income beneficiaries. The principal beneficiary has a right to the assets of the Trust that come into the Trust; whereas, the income beneficiary is the one who earns and makes money off of dividends, interest and any other income.
Can I do a Trust for my children?
Answer: Yes, these may be “Class Trusts” where the Trust is set up for “all children born to me”.
What about forced heirship?
Answer: The forced portion may also be put in Trust. This is another way to protect the child or forced heir from himself/herself, but it also may be a way to give some further benefit to a surviving spouse.
Do I have a right to change my Trust?
Answer: Trusts may be revocable (modifiable). They may be irrevocable (non-changeable).
What about distribution of assets from the Trust?
Answer: This may be determined by the initial setting up of the Trust but, again, the Settlor of the Trust may dictate the terms and mode of distribution of principal and/or income to the beneficiaries.
Are there any other benefits to a Trust?
Answer: If one wishes to set up a “Spendthrift Trust”, this may prohibit the beneficiary from voluntarily or involuntarily alienating any of the beneficiaries interest and is intended to protect that interest from creditors.
What does the term “as is” mean in a purchase?
Answer: Generally, this means that a purchaser gets whatever he/she sees and whatever he/she does not see. However, it is important that this terminology and its definition be fully made known to and understood by the purchaser.
What does the term “redhibition” mean?
Answer: This is the legal term in Louisiana for the defective real estate product. But, generally it means that one has purchased a piece of real estate and was not aware of the defect at the time of purchase. That defect must be latent, which means it must not have been discoverable by a simple inspection. Also, the purchaser would be saying that, if he/she had known of the defect, either he/she would not have purchased the property or would not have paid that price.
Does it matter if the Seller knew about problems?
Answer: Yes. A seller who knows of a problem and fails to disclose it may be responsible in fraud and subject to damages and attorney’s fees. But, even a “good faith” seller, being one who did not know of a problem, may still be liable for the defects.
May there be an oral transfer of real estate?
Answer: No. Not only must it be in writing, but it has to be recorded at the Courthouse for proper chain of title.
What type of transfers exist under the law?
Answer: There may be a Cash Sale, Sale with Mortgage, Sale with Assumption of Mortgage, where the first mortgage remains and the new purchaser takes over that outstanding debt. There may be a “Dation” which is an exchange of an asset for nullifying an outstanding debt. There may be a Donation. There may be an Exchange where two people switch ownership of property. There may be a Partition where joint owners divide up assets.
What is the “New Home Warranty Act”?
Answer: It is an act that gives certain rights to a homeowner in relation to the builder.
What are liens, privileges and judgments and how do they affect real estate?
Answer: If recorded, they act as encumbrances upon the property, just like a mortgage does. But, these must be recorded in the Parish where the property exists.
If I own property with another, can I do with it as I wish?
Answer: No. Co-ownership defines that two people or more own property together. There should be some type of contract or management agreement as to who pays what taxes, when and how insurance is paid, and also upkeep. It is best not to rely on verbal assurances.
Do I need a written Lease?
Answer: Generally, yes, so that you are well aware of the terms and obligations of both sides of the agreement.
What is a Corporation? What is a Limited Liability Company (LLC)?
Answer: Both of these are to provide limited liability on behalf of the owners. A separate tax return must be filed for each of these and, though intended to limit liability of the owners, there may be no protection if you, as the owner, commits a grievous act. However, it is important to always have these separate entities be maintained as separate, such as having a checking account for the Corporation or LLC and a separate account for you personally.
What are other forms of businesses?
Ans: As noted above there may be Corporations and LLCs. There may also be a Sole Proprietorship, a Registered Limited Liability Partnership, or a regular Partnership. In any of these, the terms, rights and obligations of the parties should be clearly spelled out and dictated. This means that rights as owners (stockholder in corporation, member in LLC, partner is partnership) should always be spelled out as well as those in charge, which would be Officers and Directors in a corporation, Managers in an LLC, and partners or general partner in a partnership.
Call Me For Answers To Your Questions
My East Baton Rouge Parish office is conveniently located close to I-12. I am available to meet with you from 8 a.m. to 5 p.m., Monday through Friday. For assistance from a knowledgeable lawyer, contact me by email or call 225-754-9864.