Louisiana Estate Planning Considerations
Community Property State
There are nine community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Alaska is an opt-in community property state that gives both parties the option to make their property community property.
Domicile is a person’s legal permanent residence and may not be where they currently live. For those in the military, people who have homes in several states, or those who have moved frequently, figuring out which state is their proper domicile is critical.
IRS Publication 555 provides guidance and states that generally, community property is property:
- That you, your spouse, or both acquire during your marriage while you and your spouse are domiciled in a community property state.
- That you and your spouse agreed to convert from separate to community property.
- That cannot be identified as separate property.
Guidance is also given regarding what is considered separate property:
- Property that you or your spouse owned separately before your marriage.
- Money earned while domiciled in a noncommunity property state.
- Property that you or your spouse received separately as a gift or inheritance during your marriage.
- Property that you or your spouse bought with separate funds or acquired in exchange for the separate property during your marriage.
- Property that you and your spouse converted from community property to separate property through an agreement valid under state law.
- The part of property bought with separate funds was purchased with community funds and amount with separate funds.
A premarital agreement is an agreement that may change the result of the property division.
Last Will and Testament and Trusts
The minimum age of a person competent to make a will is 16.
The number of witnesses necessary to execute a will depends on the type of will:
- Notarial: 2
- Holographic: 0
Uniform Transfers to Minors Act (UTMA)
The original custodial gift may be a life insurance policy or annuity contract.
Custodial property may be invested in or used to pay premiums on (1) a policy on the minor’s life if the minor’s estate is the sole beneficiary, or (2) a policy on a third party in whom the child has an insurable interest if the minor or the custodian is the irrevocable beneficiary.
The custodial arrangement terminates when:
- The minor child reaches age 18.
- The minor child becomes emancipated.
- The minor child dies.
Dying without a Last Will, the Louisiana laws of Intestacy.
Community property goes to the spouse as follows:
- If there are no descendants, —100% of the decedent’s share
- If there are descendants—a “usufruct” in the decedent’s share (See La. Civ. Code art. 890). “Usufruct” is the right to use or profit from the deceased spouse’s share of community property throughout life. When the surviving spouse dies or remarries, the usufruct terminates, and the community property passes to surviving descendants, who then fully own the property.
Separate property is distributed as follows:*
- If there are no descendants but the parent(s) and siblings survive (or descendants of siblings)—to siblings or their descendants subject to a usufruct in favor of the surviving parent(s). If both parents survive, the usufruct is joint and successive.
- If there are no descendants or parents, but siblings or their descendants survive—100% to siblings and their descendants (See La. Civ. Code art. 888)
- If there are no descendants or siblings (or descendants of siblings), but the parent(s) survive—100% to the parent(s)
- If there are no descendants, parents, or siblings (or descendants of siblings)—100% to the spouse in the absence of judicial separation
If none of the above:
- Intestacy laws outline further distribution steps to the level of grandparents, “collaterals,” and their descendants. See La. Civ. Code art. 895, 896.
- If no legally described recipient can be found, estate assets go to the state of Louisiana.
- *Ascendants inherit the immovables given by them to their children (or their descendants of a more remote degree) when these objects are found in succession. If these objects have been alienated, ascendants have the right to receive the price. They also have the privilege of reversion on the happening of any event which the child or descendant may have inserted as a condition at the time of disposition. See La. Civ. Code art. 897.
Personal representatives may access online accounts of the decedent upon providing letters testamentary, letters of administration, or letters of independent administration evidencing their appointment.
Louisiana does not impose an inheritance tax.
Credit Estate Tax
Louisiana imposes an estate tax equal to the maximum credit allowed under IRC Sec. 2011 for paid state estate and inheritance taxes. However, the current federal tax code does not permit a credit for paid state estate or inheritance taxes. Therefore, there is no credit estate tax in effect at this time.
Generation-Skipping Transfer Tax (GST Tax)
Louisiana does not impose a GST tax.
Louisiana does not impose a gift tax.