Not all estates have more assets than debts. Some decedents leave estates encumbered by large debts that exceed the value of their assets. We call these estates as being insolvent.
So often heirs or legatees rush to get assets and leave the debts of the estate unpaid. Under Louisiana law, you cannot just take the good parts of the estate and leave the bad parts of the estate that you don’t like.
Before rushing to take and expend assets, heirs and legatees should make sure that a complete accounting or listing of all assets and debts are made to determine whether they want their part of the estate or not.
If the estate is insolvent and the heir or legatee does not want their portion, they must execute a written Act of Renunciation. This act must be in writing. It cannot just be given verbally and it must take place after death.
If heirs or legatees are unsure, they need to make sure that they do not informally accept the succession. Other than just preserving storing or administering, an heir or legatee should avoid expending or using any assets in a way that indicates that they have accepted the insolvent succession. It is important to remember that an acceptance of a succession can be in writing but, it also can be accepted by the acts of the heir or legatee.
Accepting a succession can have serious financial implications for the heir and legatee. They can be personally and financially responsible for the debts up to the amount that they have received.
To resolve debt issues of an estate, it may be necessary to administer an estate by appointing an executor or administrator before the heirs and legatees are placed into possession of any assets.
If you have questions or concerns regarding succession, you should consult an experienced estate attorney.