Louisiana Estate Planning and Trusts

Your Estate Plan will likely include a Will, Medical Power of Attorney and/or Living Wills.  It will also likely include one or more trusts. As discussed in Wills and Successions, Louisiana law in this area of law practice is very different from other states. It is very important that you contact a Louisiana Attorney to perform this estate planning for you. It is also necessary to examine non probate assets such as life insurance, a retirement plan or IRA, long term care and tax planning.  If you own a family business, an examination of a retirement strategy and the future operations of the company should be made.  Who will run the company when you retire or at your death? Consider a business buy-sell agreement. Below are types of Louisiana trusts that may be part of your estate planning. Do you have a high value estate that needs to remove otherwise taxable  life insurance proceeds from the taxable estate with a Life Insurance Trust?

  A. David Aymond, Attorney at Law, LL.M. in Taxation        
209 Highway 22, Ste. G, Madisonville, Louisiana (985) 845-3414            27455 Hwy. 22, Ponchatoula, Louisiana (985) 845-3414

Trusts, Wills and Trusts, Living Trusts, Insurance Trusts

Louisiana Trusts
Louisiana Trusts are governed by Louisiana law under concepts and rules set out in the Louisiana Trust Code. Trusts normally have a settlor, a beneficiary or and a Trustee. The Trustee is the "person" who administers the trust and owes a fiduciary duty to the Trust beneficiary. Louisiana Trusts can be revocable or irrevocable trusts. They can pay out income currently or accumulate it. The Louisiana Trust can have only one trust beneficiary or multiple trust beneficiaries and the beneficiaries may have different interests in the trust. If you establish a Louisiana Trust, its terms are controlled by Louisiana law or by the Trust document.  The trusts can be set up during the lifetime of the settlor or in a Will i.e. a Testamentary Trust. If this isn't confusing enough, the federal income tax, gift tax and estate tax treatment of these trusts will be determined by the type of trust and its specific provisions.  In other words, these are wonderful estate planning tools if property drafted, but attention to detail is critical.  One size does not fit all. Louisiana trusts are very powerful tools that can be very beneficial when properly drafted by a Louisiana attorney with knowledge of Louisiana Trust laws and Federal Estate Tax laws. Here are but a few examples of typical trust types that are used.

Testamentary Trusts in Louisiana

The use of a Testamentary Trust was briefly mentioned in the discussion on the Wills and Successions page.  If you have minor children or any person with an incapacity, it may be advisable to set up a testamentary trust in your Will to care for these persons.  Similarly, even grown children may not be ready to assume control over money or property that is left to them. It is fairly common for parents leaving property to their children to set up a testamentary trust and stagger distributions to the children at various ages. Trusts for grandchildren for their college education or other future needs are also common.  

Living Trusts to Avoid Probate
Living Trusts are usually revocable trusts. They have been the subject of a hard sale by many national companies and some local attorneys.  Living Trusts certainly are part of the estate planning arsenal, however, they should be implemented only after some of the misinformation about them is discussed. Living Trusts are often advertised as a vehicle that can avoid probate, save estate tax, save legal fees, maintain more privacy etc.  If property drafted, they can be used for estate tax planning, but to no greater extent that more traditional estate planning with Wills and Trusts. Generally, all property placed in Living Trusts will normally be brought back into the estate for estate tax purposes.  Saying they avoid federal estate tax is at best misleading, but they can be used for federal estate tax planning.  Due to some limitations in the Louisiana Trust Code, it is important that your attorney be familiar with the special drafting features required and Federal Estate Tax and Gift tax laws.

    The much touted savings of legal fees may never result, as the initial set up costs, costs to transfer property, trust administration etc. is usually much higher than traditional estate planning. To avoid probate entirely, all assets must be placed in the living trust, even your  personal checking account and your residence. These documents may need to be filed in the public records, thus losing the advertised privacy benefit. Planning with Living Trusts can still be beneficial
in avoiding probate on real estate you own outside of Louisiana. NOTE: For a more detailed discussion of Living Trusts please see our blog at http://www.louisianalivingtrusts.com.

Life Insurance Trust

    Although life insurance proceeds normally avoid probate, many people incorrectly assume that the proceeds are not subject to federal estate tax. This is absolutely not true i.e. the life insurance proceeds are normally included for federal estate tax purposes. With a life insurance trust, the proceeds can be removed for estate tax purposes, making them an excellent estate planning tool for large estates potentially subject to federal estate tax. Life insurance trusts require careful drafting so you need to see
 a Louisiana attorney with tax planning experience.

Using a Medicaid Trust for Asset Protection, Medicaid Planning, Disabled individuals etc.

    Trusts are commonly established to preserve or protect assets.  There are many reasons to do this, among them for the benefit of persons that are disabled and receiving Medicaid. Similarly, planning ahead for long term care can be accomplished with a variety of strategies that usually incorporate a Medicaid Trust. Without medicaid planning you may have to exhaust assets before finally qualifying for Medicaid assistance. The result is everything a person worked for is used up on nursing home care. The Medicaid qualification rules are very strict and very few assets can be kept.  There are a few important exceptions and a Louisiana Medicaid trust can be established to protect property and still qualify for Medicaid. The rules are technical and planning in advance is imperative since qualification rules have look back provisions on gifts.

    A Medicaid Trust could also be beneficial where a disabled person gets an inheritance or a personal injury settlement.  If a properly drafted Medicaid Trust or Special Needs Trust is not used, the disabled person will lose Louisiana Medicaid benefits and be required to spend down assets for basic needs.

GRITs, GRATs, Qualified Personal Residence Trusts etc.

These are specialized estate planning tools that we can discuss with you if you have a large estate for estate tax planning issues.  Their use is intended to reduce or eliminate Federal Estate Tax.

For more information call A. David  Aymond, Attorney, at (985) 845-3414, or use the contact us form.    

Practice:  Successions, Louisiana Probate, Living Trust Attorney, Living Trust Lawyer, Louisiana Trust Lawyer, Louisiana Wills Lawyer, Estate Planning Attorney, Medicaid Trust Attorney, Succession lawyer, Probate a Will, Probate Lawyer.     
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The information on this website is for general information purposes only and should not be relied upon for your individual legal or tax situation. Each individual situation has its distinctive facts and you should seek the advice of a licensed attorney for your specific questions and legal needs Nor does visiting this site constitute an attorney/client relationship..
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