Frequently Asked Questions
Inheritance and Estate Transfer Taxes
The estate transfer tax is only imposed on estates that are subject to federal estate taxation under the Federal Internal Revenue Code. The amount of the state estate tax is equal to the federal estate tax credit allowed for state death taxes. The intent of the estate transfer tax is to obtain a benefit for the state in the form of an estate tax credit allowed under Internal Revenue Code (see R.S. 47:2434). The estate transfer tax, therefore, is not intended to impose any additional tax burden on the decedent's estate, but to shift payment from the federal government to the state.
The inheritance tax is imposed on the heirs or legatees of a decedent for the privilege of receiving property from the deceased. Effective January 1, 2008, inheritance tax shall not apply to deaths occurring after June 30, 2004. See Act 822 of the 2008 Regular Legislative Session.
Revised Statute 47:2436 requires that an estate transfer tax return be filed by or on behalf of the heirs or legatees in every case when an estate transfer tax is due or when the value of the deceased's net estate is $60,000.00 or more.
For deaths that occurred before July 1, R.S. 47:2425, requires that an inheritance tax return be filed by or on behalf of the heirs and legatees of a decedent in any case when inheritance tax is due or when the gross value of the deceased's estate is $15,000 or more.
For deaths that occurred after June 30, 2004, R.S. 47:2426 had provided that if a judgment of possession is rendered or the succession is judicially opened no later than the last day of the ninth month following the death of the decedent, no inheritance tax return was required to be filed. However, Act 822 of the 2008 Regular Legislative Session repealed the inheritance tax law, R.S. 47:2401–2426.
Revised Statute 47:2425 provides that a duplicate original of the return be filed accompanied with copies of:
- the affidavit of death and heirship;
- the inventory or sworn descriptive list;
- the federal estate tax return, when required;
- the will of the deceased, if any; and
- the petition for possession, or court order authorizing the succession representative to file a tax return by providing a preliminary listing of the distribution of possession.
In addition,a Louisiana Code of Civil Procedure Article 2951 provides that:
- A tableau of distribution may be filed in lieu of a petition for possession when the inheritance taxes are being paid by the heirs or legatees, or both, of a succession under administration; or
- A revocable inter vivos trust may be filed in lieu of a petition for possession when the entire estate is being distributed pursuant to the trust instrument.
Revised Statute 47:2425(B) requires that the inheritance return is filed within nine months after death of a decedent. However, inheritance taxes owed for deaths occurring before July 1, 2004, and for which an inheritance tax return has not been filed before January 1, 2008, are due on January 1, 2008.
Revised Statute 47:2420(B) allows a six-month extension to be granted for reasonable cause and no interest or penalties assessed as long as the return is filed and the tax paid within 15 months after the date of death of the decedent. Subsection C also authorizes the secretary to accept an extension of time to file a federal Estate Tax Return as an extension of time to file a Louisiana inheritance tax return.
No interest or penalty is assessed on delinquent estate transfer taxes.
For inheritance tax, Revised Statute 47:2420(A) provides that interest will be assessed at ½ percent per month, beginning nine months after the death of the decedent, and one percent per month, beginning 12 months after the death of the decedent until the inheritance tax is paid. If the settlement of the succession is bona fide contested or it is proved that the beneficiary was ignorant of the inheritance, the interest will not be imposed.
If a succession is opened judicially within nine months following the death of the decedent or the taxes owed by a descendant or ascendant on an inheritance valued at less than $100,000, no interest will be assessed on delinquent inheritance tax.
Inheritance tax is repealed effective January 1, 2010. However, Act 822 of the Regular Legislative Session provides that, effective January 1, 2008, inheritance taxes shall prescribe within three years from December 31st of the year in which the taxes become due. For deaths before July 1, 2004, the date the taxes become due is determined by whether an inheritance tax return has been filed. If a return has been filed, the taxes become due nine months following death. But, under Act 822, if a return was not filed, taxes became due January 1, 2008, and will prescribe January 1, 2011.
For Louisiana residents, the Louisiana inheritance tax is imposed on all immovable property located in Louisiana and movable tangible and intangible property wherever situated. For nonresidents, the Louisiana inheritance tax is imposed on all immovable property and tangible movable property located in Louisiana. See R.S. 47:2404(A).
Revised Statute 47:2404(C) excludes proceeds received by any beneficiary, other than the decedent's estate, from a life insurance policy or a retirement or pension plan, trust, system, or policy. Retirement or pension plan, trust, system, or policy means any contract, agreement, or arrangement qualified under Internal Revenue Code Sections 401 and 408 under which an annuity or other payment was payable to the decedent or which the decedent possessed the right to receive, either alone or in conjunction with another, for his life.
For inheritance tax purposes, heirs and legatees are classified according to their relationship to the decedent as follows:
- Direct descendants or ascendants, by blood, adoption, or affinity, or surviving spouse of a decedent.
- Collaterals, including brothers or sisters by affinity and their descendants.
Forced heirship is a provision of law that guarantees certain heirs a portion of a decedent's estate. The "forced portion" is reserved for those stipulated heirs, whether the decedent leaves a will or not.
A ‘forced heir’ is any person who cannot be deprived of the portion of the decedent’s estate that is reserved for them by law, except in cases where the law allows the decedent to disinherit the forced heir. For more information, see LA. CIV. CODE art. 1493.
How does the amendment to the constitution approved by the voters on October 21, 1995, change the forced heirship law?
The constitutional amendment approved by the voters on October 21, 1995, redefined ‘forced heir’ to be "descendants of the first degree twenty-three years of age or younger, or descendants of any age who, because of mental incapacity or physical infirmity, are incapable of taking care of their persons or administering their estates."
To take advantage of these provisions, one must execute a will. Otherwise, in an intestate succession all property will be inherited by the decedent's children, subject to any usufruct in favor of the surviving spouse over any community property being inherited by the children. For more information, see LA. CIV. CODE art. 1493.
If a resident transfers all property to a revocable living trust that is not subject to probate, is the property exempt from inheritance tax?
No. If the resident has the right to revoke the trust prior to death, all property in the trust must be included in the estate and is subject to the inheritance tax. However, for deaths that occurred after June 30, 2004, no inheritance tax is due even if in a trust.
Revised Statute 47:2404(B) allows only real estate owned by the decedent that is mortgaged for more than 50 percent of its appraised value to be deducted by reducing the decedent's equity in the real estate by 20 percent of the outstanding mortgage. However, the court ruled in the Succession of Henderson, 211 La 707, 30 So 2d 889 that all other debts of a decedent are deductible and that only the net estate transferred at a decedent's death should be taxed.
Louisiana Civil Code Article 535defines usufruct as "...a real right of limited duration on the property of another." Black's Law Dictionary defines usufruct in part as: "...The right of using and enjoying and receiving the profits of property that belongs to another,..."
Usufruct of a surviving spouse is provided for by Louisiana Civil Code Article 890, which states “If the deceased spouse is survived by descendants, the surviving spouse shall have a usufruct over the decedent's share of the community property to the extent that the decedent has not disposed of it by testament. This usufruct terminates when the surviving spouse dies or remarries, whichever occurs first.
Usufruct of a parent is provided for by Louisiana Civil Code, which states “If the deceased leaves no descendants but is survived by a father, mother, or both, and by a brother or sister, or both, or descendants from them, the brothers and sisters or their descendants succeed to the separate property of the deceased subject to a usufruct in favor of the surviving parent or parents. If both parents survive the deceased, the usufruct shall be joint and successive.”
Usufruct is a right acquired by operation of law and not by inheritance. Succession of Marsal, 118 La 212, 42 So 778. Also, a surviving spouse or parent receives legal usufruct over any community property being inherited by the deceased spouse's descendants, provided testamentary disposition is not adverse to the usufruct. Succession o f Waldron, Sup. 1975, 323 So 2d 434.
The value of a legal usufruct established by operation of law is not subject to inheritance tax. The value of a nonlegal usufruct is subject to tax. The value of either usufruct is deducted from the value of the property on which it rests in arriving at the value of that property for the purpose of determining the inheritance taxes owed by the persons inheriting the property.
For answers to other questions, call the Inheritance Tax Section at: (225) 219-0067, or write to:
Louisiana Department of Revenue
Special Programs Division
P O Box 201
Baton Rouge, LA 70821-0201
The estate transfer tax is calculated by determining a ratio of assets included in the federal gross estate attributable to Louisiana to the total federal gross estate. This ratio is applied to the state death tax credit allowable under Internal Revenue Code Section 2011. The portion of the state death tax credit allowable to Louisiana that exceeds the inheritance tax due is the state estate transfer tax.
The Economic Growth and Tax Relief Reconciliation Act of 2001 phased out the state estate tax credit between 2002 and 2005 and replaced the credit with a deduction for state estate taxes for deaths that occur after December 31, 2004. Because R.S. 47:2432 only imposes the estate transfer tax if a state death tax credit is allow against the federal estate tax, no state estate transfer tax is due for deaths after December 31, 2004. However, the Economic Growth and Tax Relief Reconciliation Act of 2001 provisions will sunset on January 1, 2011, and the Internal Revenue Code will revert to the provisions that were in effect before it was passed unless further legislation is enacted to make its changes permanent. If Congress fails to make the Act’s changes permanent and the state estate tax credit is restored, the state estate transfer tax will again be due.
No. The inheritance tax exemptions do not apply to estate transfer tax.
An Inheritance & Estate Transfer Tax Receipt, Form IETT-20 is prepared after the inheritance tax return is filed with LDR, Special Programs Division, P O Box 4998, Baton Rouge, LA 70821-4998. The receipt, issued from LDR’s main office verifies the receipt of the return, its supporting documentation, and tax due, if any, when the death occurred before July 1, 2004. Inheritance tax returns should not be sent to any of our Regional Offices, and those offices cannot issue the required receipts.
For deaths that occurred after June 30, 2004, an inheritance tax return is not required to be filed and Form IETT-20, Inheritance and Estate Transfer Tax Receipt will not be issued.
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