INHERITANCE RIGHTS WITHOUT A WILL
Once a determination is made as to what is included in your estate you need to examine how the State of Louisiana will distribute your property if you do not write a testament or otherwise validly dispose of your property in some other manner. When you have not written a Last Will, the succession is considered "intestate". If you have written a Will, your succession is "testate".
The following discussion concerns how your separate property would be distributed in an intestate succession, i.e., without a Last Will. The second part of this article discusses community property inheritance rights.
Separate Property Inheritance Rights
The order of inheritance of separate property provides for each classification of heirs to inherit to the exclusion of all others. The rules for separate property are as follows. If you die with descendants, then they will inherit all separate property to the exclusion of all others. If you do not have any descendants, then your separate property (even if you are married) will be inherited by your siblings (or their children i.e. your nieces and nephews if the sibling predeceased you), subject to a usufruct in favor of the decedent's surviving parent or parents. If you have no surviving parents, then your siblings or their child or children by representation would inherit in full ownership. This order of inheritance is to the exclusion of any rights in the surviving spouse.
Undivided Ownership of Property
It must be born in mind that each of your heirs will receive an undivided ownership in the same piece of property. This can often lead to family problems and you should consider whether your testament should provide for a different distribution. For example, perhaps stock in a closely held family business should be left in a will to the child that helped to make the business a success and different assets left to your other child or children. Alternatively, a corporate stock purchase agreement (Buy-Sell Agreement) could also accomplish this goal.
Surviving Spouse Inheritance Rights (lack thereof) in Louisiana Separate Property
The most striking realization is that where separate property is involved your spouse has absolutely no rights in the property or any of it's income, unless you have no children, grandchildren, brothers, sisters, nieces, nephews or parents surviving. This can sometimes cause an unfortunate and unanticipated result. Of course, this method of distribution by the state is used where you have not written a Last Will to provide a different distribution method. Depending upon the application of forced heirship, often a substantial amount of flexibility is available in crafting an estate plan.
Louisiana Community Property Inheritance Rights
We will now examine how the State of Louisiana would distribute your undivided one-half(1/2) share of community property in the absence of a testament, which would be as follows:
If you die with descendants your surviving spouse would inherit a usufruct (right to use, enjoyment and income) over your share community property, which would terminate upon the earlier of death or remarriage. There are several important points to consider here. First, is it your desire that the usufruct terminate upon remarriage or would you like your spouse to have these rights for life? Second, in a second or third marriage situation where the survivor is not the mother or father of your children, he or she would still have this usufruct. This can often create tension between your children and your spouse. Third, in this situation the children would have the right to demand that your spouse put up security for the usufruct. This can create additional tension in their relationship, but if the children do not take advantage of the right to demand security, then their right to ultimately receive the property may suffer. Fourth, the Louisiana usufruct (unless confirmed for life) does not qualify for the federal marital deduction, discussed in later chapters on the federal estate tax. This failure to qualify for the marital deduction could result in unnecessary federal estate tax liability. All of the above can be changed in your Last Will or Testament to provide as you desire. For example, the usufruct to the surviving spouse could be confirmed for life. This lifetime usufruct may qualify for the federal martial deduction and will protect the surviving spouse.
Numerous other possibilities exist for planning in a Will. Personal preference and tax ramifications must be examined prior to a decision being made. For example, if forced heirship has no application, you may leave all property to the surviving spouse. Doing so could have adverse tax consequences under some circumstances, but this is usually the case only in large estates. As with all planning, each individual situation must be examined prior to making a decision. Only then can an informed decision be made.
Minors and the Infirm
A very important aspect of Louisiana's inheritance laws is the receipt of property by minors and physically or mentally handicapped persons. Because of their legal incapacity, these persons may not be able to represent themselves and a tutor or curator will have to be appointed for this purpose. Often, this is a costly and cumbersome proceeding which requires court intervention. Court intervention and its associated costs can be avoided or diminished by the establishment of a trust on behalf of the child or incompetent person. Such a trust could be a testamentary trust established in a Will or a trust created during lifetime. In any event, a trustee would manage the trust property without the problems of court delays, court approvals of the trustees actions and the associated costs could be avoided or reduced.
Establishment of such trusts are highly recommended under the appropriate circumstances. It is common in Wills to have certain pieces of property left to certain specified individuals such as family members or friends. This can sometimes avoid disputes between family members or accomplish other goals such as passing on a family business to those that have worked to help build it. Special circumstances may also make it desirable or even necessary to leave a greater amount of property to one person or another, for example an incapacitated child. All of this can usually be accomplished by a property drafted Last Will & Testament.
Assets usually not controlled in your Last Will
Certain assets are not controlled by Louisiana's method of distribution. The most typical are life insurance, qualified retirement plan proceeds and IRAs. The beneficiary designations which you execute will usually control their disposition. As with most legal matters, each individual situation must be examined to make these types of determinations.