Succession is the Louisiana version of probate in other states; the legal process of transferring your property to your heirs or legatees after you die. But what interactions are there between taxes and succession? The best way to find out how to protect your property and assets is from a specialist succession lawyer in Metairie, LA
What Are the Tax Implications of Louisiana Succession Laws?
Louisiana law is unique among the states because of its civil law tradition and its roots in the historical French and Spanish legal systems. While that is certainly true of succession law, it’s actually Louisiana’s more recent legal developments that have the most impact on taxation and succession, and the tax consequences are primarily determined by federal tax law and by Louisiana’s income and property tax systems.
Louisiana Inheritance and Estate Taxes
Louisiana Inheritance Tax
Louisiana used to impose an inheritance tax, which meant that beneficiaries had to pay tax on their share of an inheritance, with more distant relatives and non-related beneficiaries paying a higher rate of tax and closer relatives paying less or sometimes none. For example, if someone who died in 2002 left $100,000 each to a friend, a sibling, and a child, the friend might owe $15,000, the sibling $7,500, and the child nothing at all.
However, since 2004, heirs of all kinds receive their share free of any state-level inheritance tax burden.
Louisiana Estate Tax
Louisiana also had an estate tax tied to the federal credit for state death taxes. This was different from inheritance tax (paid by the inheritors), as it came out of the estate before any division happened. Because the federal credit was phased out in 2005, Louisiana’s estate transfer tax no longer applies. This means Louisiana does not currently levy any estate tax.
Federal Estate Tax
While Louisiana imposes no estate or inheritance tax, the federal estate tax may apply if the estate exceeds certain thresholds. For 2025, the federal estate tax exemption is scheduled to be approximately $13.61 million per individual. Amounts above that level may be taxed at rates up to 40%. So, while concern about federal estate tax may not be a priority for the average Louisiana resident, it can be a significant issue for those with larger estates.
Step-Up in Basis and Capital Gains Tax
One major tax implication of succession is the step-up in basis rule. This rule applies when someone inherits property (like a house, land, or stocks). Instead of keeping the original owner’s purchase price (the “basis”), the heir’s basis is “stepped up” to the property’s fair market value on the date of death. They are not required to pay capital gains tax on appreciation that happened during the decedent’s lifetime
This means that if you bought stocks for $20,000, but they are worth $100,000 by the time of your death, this becomes the new basis. If your heirs sell the stocks for $100,000, they will pay no capital gains tax, and if they sell them later on, they will only pay tax on the gained amount.
Community Property and Basis Adjustments
In many states, surviving spouses receive a step-up in basis on only half of the community property. However, this is not the case in Louisiana. At the death of a spouse, the entirety of the community property receives a step-up in basis, not just the “half” belonging to the deceased. This is sometimes referred to as a “double step-up.”
Income Tax Considerations for Estates
Depending on the types of property and assets included in the estate, the estate itself may generate income during the succession process before assets are distributed. Federal income tax applies to estates as separate entities. For example, if an estate in Lafayette includes $200,000 in investment accounts that earn $5,000 in interest and dividends while the succession is being settled, a federal fiduciary income tax return must be filed reporting this income. If the income is distributed to heirs, they may report it on their individual returns; if retained, the estate pays tax at compressed rates.
Louisiana also imposes an income tax on estates and trusts based on income sourced to Louisiana. Thus, executors must consider both federal and state fiduciary income tax filing requirements during succession.
Property Taxes After Succession
Property taxes, in Louisiana called ad valorem taxes, continue to apply to real estate regardless of succession. The timing of succession can affect assessments and exemptions.
If you were to leave your primary residence to a child, the homestead exemption (protecting the first $75,000 of your home’s value from parish property taxes) would continue to apply until the end of the tax year in which you died. If your heir moved into the property after succession, they could apply for a new homestead exemption. However, if the property is left vacant into the new tax year, the exemption would lapse and the tax bill could go up significantly.
Gift Tax and Succession Planning
It’s not always the best idea to transfer assets before death to reduce succession costs. Federal gift tax applies to transfers above the annual exclusion amount (this amount was $18,000 per donee in 2024, indexed for inflation). Lifetime gifts also reduce your available federal estate tax exemption.
For example, imagine a grandfather in Baton Rouge gifted $200,000 to each of his three grandchildren in 2025. This exceeds the annual exclusion, so he will need to file a gift tax return. While no tax is due immediately, the gifts reduce his federal lifetime exemption. If he dies later with a large estate, less exemption will remain to shield it from federal estate tax. By contrast, if the grandfather left the same amounts through succession, the heirs would receive the property with a stepped-up basis, and no Louisiana inheritance tax would apply.
Special Assets: Oil, Gas, and Timber Interests
Louisiana is rich in natural resources, meaning that we often deal with successions involving mineral rights or timberland. These assets raise unique tax questions. For example, let’s say a family in Lafayette inherits mineral rights producing oil royalties. While the succession is open, the estate reports the royalty income on its fiduciary return. After distribution, heirs report their share individually and may claim depletion deductions.
Get Help from a Succession Lawyer in Metairie, LA
If you are making arrangements for your estate, it is natural to want to maximize the amount that you can pass down to your heirs. A skilled lawyer can make sure that all your documents make the best use of the law to minimize taxes and other losses, and keep you up to date with any prospective changes in the law. Equally, if you are an executor, you may want to call us in to help as you fulfil your legal duties. We can ensure that nothing has been forgotten, no matter how large or complex the estate.
For most Louisiana families, the most significant tax benefits come from the step-up in basis and community property rules, while the main obligations involve federal and state income tax reporting for estates.
Contact Our Louisiana Estate Planning Law Firm For Help Today
If you are planning for the future or need guidance with wills, trusts, or probate in Metairie, Louisiana, contact the experienced estate planning attorneys at WJ Blanchard Law to schedule a consultation and protect your family’s legacy today.
We proudly serve New Orleans, Jefferson Parish, and the surrounding areas:
WJ Blanchard Law
2800 Veterans Blvd Suite 257
Metairie, LA 70002
Phone: (504) 313-7478
Hours: Mon-Fri 09:00-17:00
Our firm is located near you. We have an office in Metairie
Find us with our GeoCoordinates: 30.0014913,-90.1498979,893
