29 May, 2017
If you want control over the distribution of your estate, you need a valid will and a designated executor. Otherwise, your heirs could be in for a difficult, expensive and potentially contentious ride. This article provides a review of the tasks necessary in administering an estate -- tasks that need to be done during a difficult time for many heirs. You may have heard people say that it's wise to avoid probate. But is it true and do you understand why? Probate is the court-supervised process for distributing the assets in your estate. It involves the proposed executor in the will petitioning the court to accept the will as a valid testamentary instrument. The goal is to protect the rights of your heirs, but there are drawbacks. If your estate winds up in a probate proceeding, the details generally become part of the public record. Every asset and debt of your estate, as well as the plan for distributing it to your heirs, could be open to scrutiny.
In general terms, the assets in your estate are divided into two types: 1. Probate assets that pass through your estate if they do have not designated beneficiaries; and 2. Nonprobate assets that are exempt from the process. Assets that are not subject to probate include: 1. Usufruct Property (property subject to a usufruct in favor of the decedent); 2. Bank accounts which have a payable on death (POD) or transfer on death (TOD) designation (Brokerage accounts are not eligible for this designation under Louisiana law (2019.01.01)); 3. Assets Already in Trust (including in a revocable living trust); 4. Life insurance benefits with a designated beneficiary; and 5. IRAs and Qualified Retirement Plans in which a beneficiary is named. It is important to note that assets controlled by the decedent at death, even if not subject to probate, are still subject to the same estate taxes as probate assets.
If you have not left a will or it is declared invalid, the court will appoint an "administrator" of the estate, which is basically the same as an "executor" of an estate with a will. This is usually a family member. The court may order a search of your premises and safety deposit boxes to determine whether you had a will that no one knew about. The administrator, or named executor has to be willing to take on the job. With the help of an attorney, the individual generally must complete the following tasks:
1. Take inventory. The executor sets up an estate accounting system and locates and collects all information relating to the finances of the estate, which can be quite difficult if the information is not known to the executor. The individual must compile a list of all probate and non-probate assets and manage the probate assets until they are distributed. The inventory describes and provides the date of death value of each asset such as bank accounts and investment accounts. The executor must keep records of the estate's financial transactions and provide an accounting to the heirs.
2. Evaluate the estate to minimize The executor and legal counsel should examine the assets of the estate to determine the best way to manage them.
3. Decide on proper proceedings. If assets are scattered across the country or internationally, the executor must determine the nature of the proceedings required in each jurisdiction.
4. Publish notices. Notices generally are placed in newspapers and copies sent to creditors to let them know about deadlines.
5. Pay Debts. The executor pays creditors or challenges them.
6. Pay Taxes. The executor must file proper forms and file federal and state income tax returns. Gift tax, estate tax and fiduciary returns may also be necessary. Consult with a tax adviser for guidance regarding tax issues.
7. Disburse allowances. A surviving spouses and minor children may be given an allowance to provide support while the estate is under administration. However, this allowance will be limited under Louisiana law. If bank accounts are frozen, there are a few provisions of Louisiana law that allow a surviving spouse immediate access to funds, but the amount is limited.
8. Distribute the residue. The court is asked for permission to distribute the remaining estate assets through a "petition for possession." An accounting may be filed with additional information, such as the expenses incurred in handling the probate process. Anyone who has an interest in the estate may object to that accounting.
9. Close the estate. Depending on the specifics of the particular probate process, the estate may be closed informally with a petition to the court signed by the legatees and certain creditors, or it may be closed by the court after approving the asset distribution. If the estate is subject to objections to the account of the executor, or if there are any other disputes, the executor should obtain releases from the heirs or legatees. This provides protection to the executor from future liability.
There are many tasks necessary for the executor or administrator of a Louisiana succession. Consult with an experienced probate attorney and start planning now. If avoiding probate is your goal, a qualified estate planning attorney can help set up a plan, which usually employs a revocable living trust. If you are the executor or administrator of an estate, it may be best to consult with legal counsel prior to beginning the administrative or probate process. There may be techniques that can be employed after death, such as renunciations and disclaimers. Theus Law Offices specializes in a complete range of estate administration services, including probate litigation. If you are facing an estate or trust administration issue, or a will contest and need a Louisiana estate attorney in Alexandria, Lafayette, Lake Charles, Baton Rouge, New Orleans, Shreveport, Monroe, Central Louisiana or elsewhere in Louisiana, let our team of highly experienced and qualified attorneys help you.
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