Usufruct and Naked Ownership
Ownership of a thing consists of two distinct sets of rights, and those sets of rights can be separated from each other. One set of rights, usufruct, is the right to use the thing and to the fruits of the thing.
Usufruct includes, for example, the right to live on a piece of property, the right to drive a car, the right to tell other people they can’t use the property, the right to the apples from an apple tree, and to take the interest earned on an investment.
The other set of rights include the right to sell or give away the thing, or the right to use it as collateral for a loan. This is called naked ownership. It is “naked” because it has been stripped of all of the normal rights of ownership except the very “bare fact” of owning a thing.
The most common example of these two rights being separated is in a succession for a married couple with children after the death of one of the spouses when there is no will. The surviving spouse would get their share of the community property outright and also usufruct over the deceased spouse’s share. The children get naked ownership of the deceased spouse’s share, and they receive full ownership after the surviving spouse remarries or passes away.
The intent behind this rule is to keep adult children from kicking their widowed mother out of the family house. Without this rule, the children would be regular co-owners with their mother and, as co-owners, could force the sale of the house.
Inheritance of Community Property
In an intestate succession, the community property is divided in half. One half belongs to the surviving spouse as that spouse’s share of the community. The other half is the deceased’s share of the community. That share is inherited by the descendants of the couple. If there are no descendants, then the surviving spouse gets that share.
If the descendants inherit the half of the community property, it is, as mentioned above, subject to the usufruct of the surviving spouse. This usufruct terminates when the surviving spouse dies or remarries. The usufruct then rejoins with the naked ownership making the descendants the full owners of the property.
Inheritance of Separate Property
In an intestate succession, the separate property of the deceased goes entirely to the descendants. If the deceased did not have children, then it would go to siblings or their descendants, with a usufruct in favor of a parent or parents if they are surviving. If there are no siblings, but there is a parent or both parents surviving, then the parents inherit in full.
If there are no descendants, no siblings, no descendants of siblings, and no parents, but there is a spouse, then the spouse gets the separate property. If there is no spouse, then we start searching the family tree up the line of ascendants, and out to other “collaterals,” which would mean cousins, aunts and uncles, and so on. If nobody else can be found, the State of Louisiana receives the estate.
Louisiana is probably the only state remaining that has the concept in the law of forced heirship, and this is one of the biggest reasons why documents from other states don’t really work too well here. It is also one of the biggest reasons why you need an appropriate Estate Plan.
Forced heirship means that there may be heirs of yours that you can not write out of your will. Your special needs child will be a forced heir. They have to receive a certain portion of your estate when you pass away. You can’t try to protect their benefits by leaving them out of your will.
The technical definition of a forced heir in Louisiana is: Any heir that you have that is the age of twenty-three or younger at the time you pass away; or any children of theirs if the heir passed away but would have been twenty-three years or younger if they were still alive; or any heir who, because of some mental or physical disability, is unable to provide for themselves. The last part includes adult children over the age of 23.
Note that a child can become a forced heir even though they were not a forced heir for years. You may have grown children who are all working and perfectly capable at the time that you create the plan and a year later somebody is in a car accident and is permanently disabled. They may be unable to work or unable to take care of their basic daily needs. They become a forced heir.
The Forced Portion
The forced portion is the part of the estate that you are required to leave to a forced heir. The part that is not forced, that you can do with as you want, is called the disposable portion. If there is one forced heir, the forced portion is one forth of the estate. If there are two or more forced heirs, the forced portion is half. In any case, the forced heir is not entitled to more than they would have received if the decedent died without a will.
So, for example, if there is one child and the child is a forced heir, he or she must be left at least one quarter of the estate. But, if the one forced heir has five brothers and sisters who are not forced heirs, he is entitled to one sixth, because that is what the forced heir would have received if there was no will.
Life insurance and most retirement benefits do not count towards calculating the forced portion amount, but can be used to satisfy the forced portion. For example, let’s say there is a single descendant who is a forced heir, a $100,000 estate, and a life insurance policy worth $20,000 to the forced heir.
The forced portion is one quarter of the $100,000 estate. The insurance is not counted, so the forced portion is $25,000. The heir gets the insurance worth $20,000. Only $5,000 would have to come out of the estate to satisfy the forced portion. Life insurance can be a useful tool to keep from having to break up assets in the estate.
Collation is the return of property to the estate of things an heir received in advance so that it can be fairly divided. The assumption is that you want to treat your children equally, so if you give one of them something you don’t give another, then in the succession, an effort is made to even things out. The return of property can be an actual return of property or an imaginary one that is used in calculations of shares. If the deceased gave anything to any heir before the deceased passed away, that heir has to return it, unless the donation was explicitly made as an advantage over their co-heirs.
There is a presumption in favor of collation. If your will is silent on it, then collation will be expected. You can explicitly declare something to be an extra part that does not have to be collated, unless it exceeds the disposable portion. You can also explicitly waive the rules of collation entirely.