A living trust in Louisiana is an important option to consider in estate planning. A revocable living trust (sometimes called an inter vivos trust) provides control over and privacy for your assets during life and after death in a way no other legal vehicle can provide.
Living Trusts in Louisiana
When you create a living trust in Louisiana, you are the settlor. The settlor establishes the terms of the trust and places assets into the trust. A trustee must be named to manage the assets. It is common to name yourself, with a successor trustee in place to take over after your death. As trustee, you are in charge of managing the assets for your own benefit during your lifetime. Once you die, the successor trustee then follows the directions you include in the trust for how the assets are passed to the beneficiaries. Your revocable trust can be changed by you or even cancelled while you are alive. An irrevocable living trust is different and cannot be altered once it is created.
A Louisiana living trust passes the assets in the trust to your beneficiaries without going through probate, the process in which a will is verified and enacted by a court. Probate can take many months and incurs the expense of an executor and attorney as well as court fees. Louisiana has not adopted the Uniform Probate Code, so its procedures are not simplified. Estates worth less than $75,000 can use a small estate procedure that is faster and less expensive. If your estate is under this limit, it may be less expensive to plan on this than to create a trust.
Do I Need a Living Trust in Louisiana?
A living trust Louisiana offers you great control over your assets both during your life and after your death. During life, you, as the trustee can do anything with your assets as you wish. You can use them, give them away, or spend them. You may live in your house and drive your car. You can move assets into and out of the trust as you wish. After you pass, your successor trustee manages your assets and distributes them to your beneficiaries according to the terms you have created in the trust. You can set dates, conditions, and events for the disbursement of the assets, unlike with a will where the assets it covers are distributed as soon as probate is finished. A living trust is also more difficult to contest than a will, giving you the security that your wishes will be carried out.
Another primary benefit of a living trust is that it creates a veil of privacy. The trust need not be approved by any court and never becomes public record. No one knows what’s in it, what assets it passes, or to whom. This is contrast to a will which must be approved by a probate court and made public.
A revocable living trust also protects you should you become mentally incapacitated. All of your assets are already controlled, owned, and managed by the trust and a conservatorship proceeding is likely unnecessary for you to have your financial life managed for your benefit.
Living Trusts and Estate Taxes in Louisiana
Your revocable living trust does not avoid estate taxes. There is no inheritance or estate tax in Louisiana, but there is a federal estate tax applied to estates over $5 million. This tax can be avoided by creating a marital or AB trust (sometimes known as a QTIP trust) which passes assets from one spouse to the surviving spouse. You should be aware that a revocable living trust cannot protect assets from Medicaid.
How to Create a Living Trust in Louisiana
Creating a living trust in Louisiana occurs when you sign the trust document in front of a notary public and then fund the trust by the transfer of assets into its ownership. A living trust offers important benefits that many people find useful as they create a plan for the future and for their estate. Weigh the options and choose what works best for you.
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