Debts And Successions

Estate Debts

• Include both the debts of the decedent and administration expenses.

Debts of the Decedent: 

• Those debts incurred by the decedent or arising as a result of their debt.

Pay the debts at the time due of the deceased through the administration of the estate. 

• Done by making, assigning, drawing, endorsing, discounting, guaranteeing, negotiating promissory notes, checks, drafts.

Each heir is liable to their share of the succession for estate debts. To ensure shares are equal an heir with a larger share may also share a larger amount of the debt.

• A creditor of a successor may, with judicial authorization, accept succession rights. 

• The creditor accepts the rights in the successor's name if the successor. 

• The successor must not renounce the succession rights in whole or part. 

• They may not renounce their rights to the prejudice of their creditor's rights.

The creditor must prove that:

• The renunciation caused injury to them; and

• The successor renounced their inheritance by fraudulent means. The successor cannot show an intent to deprive the creditor of his claim on the debtor's property.

• Secured creditors first - by preference and priority of their security right.

• Unsecured creditors paid next - all share pro-rata.

• The LA Code provides default rules for the liability of successors amongst themselves.

• The testator may make specific provisions for the payment of debt(s) in their will.

• The successors may agree on allocation of payment of debts.

• The testator's will or successor's agreement cannot impair rights of creditors.

• Value of inheritance to each heir and allotment with the value of the portion of the debt 

• Rule of thumb is that ¼ of the gross value of the succession is allotted to the heir(s) liability for succession debts. 

• Universal successors

  • Liable to creditors for the estate debts in proportion to the part each has in the succession.

  • Only to the extent of the value of the property received by them, valued at the time of receipt.

• The court distributes the estate to successors and makes payment(s) to the creditor(s).

A successor who is a creditor of the decedent gets paid in the same order.

When a new creditor asserts rights, after the estate was already distributed.

The new creditor's claim may paid in this order:

• From under the assets remaining under the administration;

• From the successors who received distribution;

• From the unsecured creditors who received distribution.

• Art. 717. Partition in kind
• Art. 898. Reversion of property subject to encumbrances and succession debts
• Art. 956. Claims of successor who is a creditor of the estate
• Art. 967. Acceptance of succession by creditor
• Art. 1188. Unpaid new creditors' action against paid creditors; prescription
• Art. 1264. Creditors' rights on immovable collated in kind
• Art. 1415. Estate debts; administrative expenses
• Art. 1616. Legacy to creditor
• Art. 2901. Contradictory trial required; time to file opposition
• Art. 2902. Opposition to petition for probate
• Art. 3034. Creditor may demand security when legatees sent into possession; administration in default of security
• Art. 3155. Creditor may compel executor to furnish security
• Art. 3241. Presenting claim against succession
• Art. 3242. Acknowledgment or rejection of claim by representative
• Art. 3243. Effect of acknowledgment of claim by representative