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Estate Frequently Asked Questions
WHAT DO THESE LEGAL TERMS MEAN IN LOUISIANA? These terms and their meanings vary from state to state.
ABOUT AN ESTATE PLAN
Everyone has one. The State of Louisiana has one prepared for you in the Louisiana Civil
Code, or you may make your own in a Last Will & Testament or Trust.
Your estate plan decides what your care will be and where you live upon disability and
possible incompetency. Your plan decides which people receive your assets at your death. The
plan decides which causes or charities you wish to support and how much. An estate plan may
include some or all of the following documents: Business Power of Attorney, Medical Power of
Attorney, Declaration often called a Living Will, Revocable or Irrevocable Trust, Last Will &
Testament, and a Business Entity choice such as an L.L.C. These documents when combined correctly address disability and death. A Trust
may also control assets after death, sometimes for several generations.
If a person dies without a will, he is said to die INTESTATE. One who dies with a will,
dies TESTATE.
ABOUT POWERS OF ATTORNEY
An AGENT/MANDATARY is the person appointed by the PRINCIPAL, who is the
person making the Power of Attorney and deciding which powers to grant. The Agent acts for
the principal in the principal’s Power of Attorney. The Agent or mandatary acts according to the
terms set out in the Power of Attorney by the Principal. The agent may act immediately upon the
signing of the Power of Attorney or only upon disability of the principal. This decision is made
by the person making the Power of Attorney and is stated in the Power of Attorney. If the Power
of Attorney is effective only upon disability the power is said to be “springing.” The Power of
Attorney is durable because it withstands disability.
There are a broad range of powers which may be included in a Power of Attorney. The
Louisiana Civil Code states that some powers must be listed specifically or the agent is without
power to do these specific types of things.
If the Power of Attorney is not drafted properly and the person making the Power of
Attorney becomes mentally incompetent, a new Power of Attorney may not be signed.
Therefore, it is important to sign a proper Power of Attorney early.
The principal may revoke the Power of Attorney as long as he or she remains competent
to do so.
The Power of Attorney, although it survives disability and continues to be effective, does
not survive death of the principal. It terminates upon the principal’s death.
ABOUT A SUCCESSION
ADMINISTRATOR: This is a person who asks the court to appoint them to administer a
deceased’s person property and pay debts when there is no will naming a person to be in charge.
If more than one person wants this position, the court will decide who receives this appointment
after a hearing.
EXECUTOR/EXECUTRIX: These are the male/female counterparts. This person is
appointed by the deceased in his or her Last Will & Testament to be the person in charge of the
estate. Like an administrator, the Executor or Executrix will gather, protect, and maintain
assets, maintain insurance on assets and pay debts. Payment of debts will require court approval unless the
Executor/Executrix is independent. If the Will provides for an Independent Executor/Executrix then no court approval is necessary because the Executor/Executrix is independent of
the court. The TESTATOR/TESTATRIX is the male/female counterpart and is the person who
makes the Last Will & Testament.
PROBATE means the short process at the beginning of a succession where the Last Will
& Testament is presented to the court, is supposed to be examined by the court for proper form
and to make certain that it complies with the laws of Louisiana, and an Order is rendered by the
court finding all to be in order, ordering the will filed in the Clerk of Court’s office and ordering
that the terms of the will be carried out. This is demonstrated on the continuum below.
SUCCESSION
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Probate
If the deceased died intestate, without a will, there is no probate. There is simply a
SUCCESSION, which means a determination of who succeeds the deceased as owner and
possessor of assets and the assets will be listed with particularity.
A succession is the process of taking the title to property out of the name of the deceased
and placing the title into the names of the proper living persons, either heirs or legatees. An
HEIR is one who inherits when there is no will and the law states that he or she inherits from the
deceased. A LEGATEE is the person who you and I name in our will when we decide that we
are going to make our estate plan. A LEGATEE receives property under the terms of the Last Will & Testament.
For important information on Property Valuation, Click Here
ABOUT TRUSTS
La. R.S. 9:1731 A TRUST, as the term is used in this Code, is the relationship resulting
from the transfer of title to property to a person to be administered by him as a fiduciary for the
benefit of another.
In simpler terms, a TRUST is a book of instructions which state who the trust will take
care of, who will receive income from the trust and who will receive the remaining corpus at the
end of the trust. The CORPUS is whatever assets are in the trust.
The SETTLOR is the trust maker who has the opportunity to decide the terms of the trust
and establish its goals, the people provided for in the trust and who will receive the property at
the end of the trust. The Settlor writes or arranges for an attorney to write the Trust or
instructions. The Settlor is sometimes referred to as Trust maker or Grantor. Grantor is a term of
art and should only be used when the trust is a Grantor’s Trust, that is it meets certain criteria that
make it qualify to have the income taxed to the Grantor/Settlor instead of to the Trust. However,
the terms are widely used interchangeably.
A trust may be revocable or irrevocable. REVOCABLE means that the trust may be
revoked or changed at any time prior to the Settlor’s death. If the trust is IRREVOCABLE it
may not be revoked. One may wonder why one would ever want to make an Irrevocable Trust.
There are purposes that one may wish to accomplish that cannot be accomplished with the use of
a Revocable Trust. Each type of trust has a purpose.
An INTER VIVOS Trust takes effect immediately at its signing, so while the Settlor is
living. A MORTIS CAUSA Trust is one that is contained in a Last Will & Testament and does
not take effect until after the Settlor’s death.
The TRUSTEE is the person appointed by the Settlor in the trust to administer the trust,
take care of and invest the assets, and pay out distributions to beneficiaries according to the trust
terms. A successor Trustee is the person who serves as trustee when the original Trustee no
longer can serve or chooses not to serve.
The BENEFICIARY receives something from the trust, either income, principal or the
corpus at the termination of the trust. Thus he is called either the Income Beneficiary or the
Principal Beneficiary.
A Trust can do almost anything that you could do with assets; buy and sell real estate, pay
bills, make investments, etc.
Most often with regards to the Revocable Inter Vivos Trust, initially the Settlor, Trustee,
and income and principal Beneficiary will be the same persons. This will change upon their
disability when the successor trustee will step in to manage the trust. A couple may place their
assets into trust so they are the trust makers or Settlors. They may manage their Trust, so they
are the Trustees and they may also continue to spend money from the trust, or sell the home that
they placed into trust and buy another home within the trust. |
