Succession of Kathryn Lambert

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

CA 08-1550

SUCCESSION OF KATHRYN LAMBERT

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APPEAL FROM THE
TENTH JUDICIAL DISTRICT COURT
PARISH OF NATCHITOCHES, NO. 11849 PD DIV. A
HONORABLE ERIC ROGER HARRINGTON, DISTRICT JUDGE

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SHANNON J. GREMILLION
JUDGE

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Court composed of Oswald A. Decuir, Jimmie C. Peters, and Shannon J. Gremillion,
Judges.

Peters, J., dissents and assigns written reasons.

AFFIRMED.

John Edward Fitz-Gerald
Attorney at Law
One Lakeshore Dr., Suite 1230
Lake Charles, LA 70629
(337) 494-1200
Counsel for Appellee:
Michael Glenn Lambert

C. R. Whitehead, Jr.
Whitehead Law Offices
P. O. Box 697
Natchitoches, LA 71458-0697
(318) 352-6481
Counsel for Appellant:
Julie Boudreaux

Jeffrey Howerton Thomas
Thomas Law Firm
P. O. Drawer 548
Natchitoches, LA 71458-0548
(318) 352-6455
Counsel for Appellee:
Jerry Glenn Lambert

William Alan Pesnell
The Pesnell Law Firm
P. O. Box 1794
Shreveport, LA 71166-1794
(318) 226-5577
Counsel for Appellee:
Jerry Glenn Lambert

Michael Glenn Lambert
In Proper Person
P. O. Box 78
Montalba, TX 75853

GREMILLION, Judge.

Julie Lambert Boudreaux, daughter of the deceased Kathryn Lucille Andrews

Lambert, appeals the trial court’s judgment in favor of her father, Jerry Lambert,

finding that Julie was not entitled to receive a 1/4 share of retirement funds upon

Jerry’s remarriage. For the following reasons, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Kathryn died May 1, 1994, leaving behind a Last Will and Testament which

provided:

At my death, I leave all of the property I die possessed of to my
two children, Julie Ann Boudreaux and Michael Glenn Lambert, in the
proportions of an undivided one-half (½) interest to each, subject to the
statutory usufruct which I hereby confirm in favor of my husband, Jerry
Glenn Lambert, to last until his death or remarriage.

Since her death, litigation concerning Jerry’s IRA, which was community

property, has been ongoing. A judgment of possession recognized Julie and her

brother as naked owners of their mother’s one-half interest in the IRA account.

Following Jerry’s remarriage in 1997, his children demanded their one-half interest

in the account. Jerry responded by seeking to have the IRA account removed from

the list of community assets. The trial court found that the IRA account was

community property and that La.R.S. 9:1426 applied to it to create a continuing

usufruct in favor of Jerry.

In an unpublished opinion rendered in November 2007, we affirmed the

finding of the trial court that the IRA account was community property, but remanded

the case for a determination of whether the IRA was in pay status at the time of

Kathryn’s death.1 We stated, “the legal usufruct created by La.R.S. 9:1426 would

1
Succession of Kathryn Andrews Lambert, 07-630 (La.App. 3 Cir. 11/07/2007) (an
unpublished opinion).

1

unquestionably exist if a recurring payment was being made from the Main Stay IRA

at the time of Kathryn’s death.” Following a hearing in April 2008, the trial court

found that the IRA was in a pay status prior to Kathryn’s death and that the legal

usufruct provided by La.R.S. 9:1426 applied to the IRA and “to all funds and

proceeds from that account.”

Julie now appeals and asserts as error the trial court’s failure to address the

applicability of La.R.S. 9:1426 to “lump sum payments” or “mandatory withdrawals”

as required by federal law.

DISCUSSION

Appellate review of a question of law is simply a decision as to whether the

trial court's decision is legally correct or incorrect. Jim Walter Homes, Inc. v. Jessen,

98-1685 (La.App. 3 Cir. 3/31/99), 732 So.2d 699. If the trial court's decision was

based on its erroneous application of law, its decision is not entitled to deference by

the reviewing court. Kem Search, Inc. v. Sheffield, 434 So.2d 1067 (La.1983). When

an appellate court finds that a reversible error of law was made in the lower court, it

must redetermine the facts de novo from the entire record and render a judgment on

the merits. Lasha v. Olin Corp., 625 So.2d 1002 (La.1993).

Louisiana Revised Statute 9:1426 discusses a surviving spouse’s usufruct of

a retirement plan (emphasis added):

A.(1) If a recurring payment is being made from a public or private
pension or retirement plan, an annuity policy or plan, an individual
retirement account, a Keogh plan, a simplified employee plan, or any
other similar retirement plan, to one partner or to both partners of a
marriage, and the payment constitutes community property, and one
spouse dies, the surviving spouse shall enjoy a legal usufruct over any
portion of the continuing recurring payment which was the deceased
spouse’s share of their community property, provided the source of the
benefit is due to payments made by or on behalf of the survivor.

2

(2) This usufruct shall exist despite any provision to the contrary
contained in a testament of the deceased spouse.

B. The usufruct granted by this Section shall be treated as a legal
usufruct and is not an impingement upon the legitime and a naked owner
shall not have a right to demand security.

The issues in this case are whether La.R.S. 9:1426 applies to a “lump sum

periodic payment” or to a “mandatory withdrawal” as required by federal law.2 Julie

argues that the usufruct attaches to “the periodic payments but not to the principle.”

Julie goes on to state:

There is nothing in this statutory provision which allows [Jerry]
to withdraw either voluntarily or by any mandatory provision of federal
tax law without having to pay over to [Julie] her 25% share of the
principle of the retirement funds.

It is respectfully submitted that the judgment of the trial court be
modified to require [Jerry] to pay over to [Julie] 25% of the principle of
any periodic or mandatory withdrawals from retirement funds required
by federal law.

This issue appears to be res novo in Louisiana law and one that is not addressed

by La.R.S. 9:1426. However, in examining the purpose behind La.R.S. 9:1426, we

find that the legislature intended to protect the surviving spouse’s usufruct of

community retirement funds until his death in priority over the claims of naked

ownership of the heirs’ portion of the funds. The article does not distinguish between

types of payments, only calling them “recurring payments.” It does not distinguish

between recurring payments comprised of principle versus interest, or a combination

of both, although we note that the usufruct applies to any portion of the continuing

“recurring payments.” The overall policy of protecting a surviving spouse’s ability

to provide for himself during retirement appears to outweigh the heirs’ right to the

2
In order to avoid tax liabilities, federal law requires minimum mandatory distributions
from a traditional IRA after the age of 70 ½.

3

community portion. Spaht and Moreno, 16 La.Civ. L. Treatise, Matrimonial Regimes

§ 3.44 (3 ed.) recently addressed some of the issues surrounding IRA accounts in

relation to La.R.S. 9:1426 (emphasis added) (footnotes omitted):3

A narrow Louisiana statute adopted in 1990 protects the covered
spouse who is collecting IRA or other pension benefits when the other
spouse dies. It was originally added to the Louisiana Civil Code as
Article 890, redesignated as La.Civ. Code art. 890.1 and provided that
the covered spouse will continue to receive the cash flow coming from
the IRA until death even if the heirs of the deceased spouse might have
claims to part of the asset under community property principles. In
1997, Article 890.1 was redesignated as La.R.S. 9:1426.

R.S. 9:1426 applies to “a public or private pension or retirement
plan, an annuity policy or plan, an individual retirement account, a
Keogh plan, simplified employee plan, or any other similar retirement
plan.” If a spouse dies while the surviving spouse is receiving “a
recurring payment” from the plan, the survivor enjoys a legal usufruct
over the continuing recurring payment which was the deceased spouse’s
share of their community if the source of the benefit is traced to
payments made by or on behalf of the survivor. The usufruct is
mandatory and applies even if a testament provides otherwise.

Although R.S. 9:1426 calls this a “legal usufruct,” it is not
provided that the usufruct terminates upon remarriage, as Civil Code
Article 890 provides with respect to the regular legal usufruct of the
surviving spouse. As a legal usufruct, it would be free of the normal
requirements of security, but R.S. 9:1426 goes further and so specifies
in the third paragraph. It also provides that such a usufruct is not an
impingement on the legitime of forced heirs.

The basic policy behind R.S. 9:1426—protecting the rights of the
living spouse to a retirement benefit at the expense of the heirs of the
deceased spouse—would seem to apply also in the case of a death of the
other spouse before regular distributions are begun. However, R.S.
9:1426 strictly construed seems to apply if the “recurring payment is
being made . . . and one spouse dies.” As suggested in the next section,
the underlying policy seems broader, and the provision might well be
construed to apply more broadly by analogy.

Since the right of the living spouse is a usufruct of money that
would otherwise go to the heirs, the usufructuary has the right to spend

3
We note that throughout the discussion in the article La.R.S. 9:1426 is mistakenly
referred to as La.R.S. 9:1246. We have taken the liberty to correct the typographical error
throughout the quoted material.

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those funds. In so doing, the usufructuary incurs the obligation to
compensate the naked owners for those sums at the termination of the
usufruct, which would normally be upon the death of the usufructuary.

Spaht and Moreno go on to discuss the case where recurring payments have not

yet begun when the spouse dies. In addressing the issue of principle versus interest

and forcing a surviving spouse to distribute a “lump sum” amount to the naked

owners upon the death of a spouse, these authors note the unresolved complexities

created by the statute, but suggest that public policy in favor of the surviving spouse

outweighs the naked owners’ rights (emphasis added):

This apparent conclusion under the general law and R.S. 9:1426
is obviously a messy, complicated one. For example, the continuing
IRA payment could be partly return of principal and partly investment
income. The latter would presumably be a fruit owned by the
usufructuary and the former would have to be accounted for to the naked
owners at the termination of the usufruct over the recurring benefit.

In any event, the IRA fund could well be considered as any other
community asset in the absence of special rules, and there appear to be
no special state law rules to govern the situation other than Article 890
by its terms and R.S. 9:1426 by analogy. Perhaps the trust law might be
invoked, with the result that the heir’s interest is not in the underlying
IRA assets but in the beneficial rights under the trust. And, like life
insurance ownership by the non-covered spouse, it is a right that is
virtually worthless. Also, it could be a disastrous tax situation if a state
court in such a situation would order half the account paid to the heirs.
This would probably be a distribution of the IRA subject to taxation and
penalty, to be paid by the initial contracting spouse.

Despite its complexity, however, this approach does balance the
rights of the parties so as to give substantial protection to the surviving
spouse’s interests and does fulfill the policy of providing retirement
income to spouses no longer able to work, rather than benefitting what
would normally be the next generation.
....

It would diminish [the surviving spouse’s] interests to give half of [his
IRA fund] up to the heirs of the deceased. Even under state policies,
where a statutory usufruct would allow the survivor to enjoy the benefits
of the fund until death or remarriage, there is a similar policy which may
militate against recognition of the heirs’ claims.

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Id.

Spaht & Moreno suggest that the public policy in favor of the surviving spouse

is so strong, that a fortiori, La.R.S. 9:1426 would probably apply even if recurring

payments had not yet begun. Thus, any mandatory federal withdrawals are “recurring

payments” within the meaning of the statute. The law provides us with nothing to

restrict a broad reading of La.R.S. 9:1426. Accordingly, we find that federally

mandated withdrawals fall within its ambit. Accordingly, we affirm the trial court’s

finding that any mandatory federal withdrawals of principle and/or interest are

“recurring payments” subject to Jerry’s usufruct.

The situation of voluntary lump sum withdrawals presents a more difficult

issue. Although it is clear that the policy is to protect the retirement funds of the

surviving spouse, one can envision a situation in which the surviving spouse

withdraws a large portion of the funds pursuant to his legal usufruct and disposes of

all of the money leaving nothing to reimburse the naked owner at his death.

However, there is no present issue regarding lump sum withdrawals and this court

does not issue advisory opinions. Accordingly, we leave this issue for another day.

CONCLUSION

The judgment of the trial court finding that Jerry’s IRA account was in pay

status, and that his usufruct applies to recurring payments from his IRA account, is

affirmed. Additionally, we find that federally mandated withdrawals are “recurring

payments” within the meaning of La.R.S. 9:1426. All costs of this appeal are

assessed against Julie Lambert Boudreaux.

AFFIRMED.

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NUMBER 08-1550

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

SUCCESSION OF KATHRYN ANDREWS LAMBERT

PETERS, J., dissenting.

I respectfully disagree with the majority both in its determination that any

future federally-mandated withdrawal of principal or interest is subject to Jerry

Lambert’s usufruct and in its conclusion that the issue of voluntary lump-sum

withdrawals from the retirement plan is not now before us. I would hold that the

usufruct mandated by La.R.S. 9:1426 applies only to recurring payments being made

at the time Kathryn Lambert died, not to future federally-mandated increased or

additional withdrawals of principal or interest nor to voluntary lump-sum withdrawals

by Mr. Lambert.

The salient facts in this case were set forth in this court’s prior unpublished

opinion, Succession of Kathryn Andrews Lambert, 07-630, pp. 1-2 (La.App. 3 Cir.

11/7/07):

Jerry and Kathryn Lambert were married and had two children,
Julie and Michael. During the marriage, Jerry worked at Texaco and
accumulated a substantial retirement pension. There is no dispute that
the pension was a community asset. In June of 1989, Jerry and Kathryn
elected to receive a lump sum payment of $320,851.76 from the pension
in lieu of an annuity. This money was rolled over into an IRA with
Main Stay mutual funds. The record is devoid of any evidence as to the
pay status of the IRA at that time. In 1992, Kathryn executed a last will
and testament, leaving all her property to Julie and Michael, subject to
a usufruct in favor of Jerry until his death or remarriage. Kathryn died
in May of 1994. At the time of Kathryn’s death, the IRA had a value of
$560,229.11.
After her death, but prior to the opening of Kathryn’s succession,
Jerry rolled the Main Stay funds over to yet another IRA, run by Edward
D. Jones. When the succession of Kathryn Lambert was opened in April
of 1995, the detailed descriptive list included the account as community
property. A subsequent judgment of possession recognized Julie and

Michael as naked owners of Kathryn’s one-half interest in the account,
subject to the usufruct defined by Kathryn’s will.
Jerry remarried in 1997, prompting Julie and Michael to demand
their mother’s one-half interest in the account. Jerry responded by
seeking to re-open the succession and have the IRA removed from the
list of community assets. After much legal wrangling, the trial court
ultimately decided that the IRA was derived from community funds and
was, therefore, a community asset to be included in the succession.
However, he found that La.R.S. 9:1426 applied, creating a legal usufruct
in favor of Jerry to run until his death, despite the terms of Kathryn’s
will. From this decision, all parties appeal.

In the prior decision, this court affirmed the trial court’s decision in part, but

held that there was insufficient evidence in the record to determine whether recurring

payments were being received from the Main Stay IRA during Mrs. Lambert’s life

and remanded the case, instructing the trial court to supplement the record on that

narrow issue. In doing so, this court noted that “the legal usufruct created by La.R.S.

9:1426 would unquestionably exist if a recurring payment was being made from the

Main Stay IRA at the time of Kathryn’s [Mrs. Lambert’s] death.” Id. at p.4

(emphasis added).

On remand, the trial court factually concluded that at the time of Mrs.

Lambert’s death, the Main Stay IRA was making distributions of $3,497.06 per

month and, thus, was “in pay status.” Based on this conclusion, it entered a judgment

that “the legal usufruct of La.R.S. 9:1426 attaches to all funds and proceeds from that

account [the Main Stay IRA].” The trial court’s factual finding that the IRA was “in

pay status” at Mrs. Lambert’s death is not the issue before us. Instead, we are called

upon to determine the extent, if any, that Mr. Lambert’s usufruct applies to future

additional or increased distributions that are mandated by federal rules, as well as any

attempt by Mr. Lambert to receive lump-sum payments of either the principal or

accumulated interest. The trial court’s judgment applies the usufruct to both. The

majority agrees with the trial court on the first issue, but declines to address the

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second.

The majority finds that any future distributions caused by federally-mandated

withdrawal rules would be subject to the usufruct established by La.R.S. 9:1426. In

reaching this conclusion, the majority relies solely on the discussion of La.R.S.

9:1426 in Spaht and Moreno, 16 La.Civ.L.Treatise, Matrimonial Regimes § 3.44 (3

ed.).

I do not find that this authority stands for the proposition espoused by the

majority. At best, it recognizes that the specific language of the statute does not

address all the situations involving pension plans that may arise at the death of a

spouse. While acknowledging that the basic policy behind La.R.S. 9:1426 is

“protecting the rights of the living spouse to a retirement benefit at the expense of the

heirs of the deceased spouse,” the authors attempt to expand its application based on

suggestions that “the underlying policy seems broader, and the provision might well

be construed to apply more broadly by analogy.” Id. (emphasis added). The

conclusion of the authors is not, as the majority suggests, that La.R.S. 9:1426 is

applicable to all situations of pension distribution, but that the approach suggested

by the authors would fulfill an unstated legislative policy. In fact, the authors even

suggest that La.R.S. 9:1426 “would seem to apply also in the case of a death of the

other spouse before regular distributions are begun.” Id. (emphasis added).

In interpreting a statute, we must start with the mandate that “[w]hen a law is

clear and unambiguous and its application does not lead to absurd consequences, the

law shall be applied as written and no further interpretation may be made in search

of the intent of the legislature.” La.Civ.Code art. 9 (emphasis added). Louisiana

Revised Statutes 9:1426 is clear and unambiguous and its strict application will lead

to no absurd consequences. The usufruct provided to the surviving spouse is

3

triggered by a recurring payment that is already being made at the time of the other

spouse’s death, and the usufruct over the amount being paid at that time is maintained

as a legal usufruct. This language satisfies the basic policy behind the statute—that

the retirement benefit being enjoyed by the surviving spouse at the time of the death

of the other spouse is protected at the expense of the heirs. As I read the statute, the

legislature obviously concluded that this specific language was sufficient to protect

the surviving spouse. That is to say, if a couple is receiving a retirement benefit that

is sufficient for their needs, one can assume that it will be sufficient for the survivor’s

needs. To extend the usufruct to any increases, mandated or otherwise, or any lump

sum withdrawals would defeat the ownership rights of the legal heirs. The authors

of the Treatise, and in following their logic, the majority in this matter, attempt to

substitute their own policy conclusions for the clear letter of the law.

Given the clear language of the statute, I would not extend Mr. Lambert’s

usufruct to any distributions over and above the monthly amount being paid at the

time of Mrs. Lambert’s death. At the same time, I would address Ms. Boudreaux’s

argument that the trial court erred in not holding that Mr. Lambert’s usufruct does not

extend to any lump sum payments, and would rule in her favor for the reasons

previously stated. The majority declines to address this issue, finding that “there is

no present issue regarding lump sum withdrawals.” However, the trial court’s

judgment is not limited to recurring payments; it attaches the usufruct to “all funds

and proceeds” from the Main Stay IRA, which would include any lump-sum

withdrawals from that account. If this court refuses to address that issue, then in the

future the issue of lump-sum withdrawals would be res judicata. Thus, a decision

from this court addressing the issue of lump-sum withdrawals is not an advisory

opinion.

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Accordingly, I would reverse the trial court’s judgment in part and amend it to

hold that the legal usufruct of La.R.S. 9:1426 attaches only to the recurring payments

of $3,497.06 per month that were being made at the time of Kathryn Lambert’s death.

5