Estate Planning

There are numerous myths floating out there about the use of revocable living trusts as estate planning tools in Louisiana.  Due to being oversold in the 80s and 90s, these types of trusts have gotten a bad name. 

1. Myth #1 - If I transfer my property to a living trust I will lose my homestead exemption.  This is incorrect.  Louisiana law was amended to specifically allow settlors of living trusts to claim a homestead exemption on their home.
2. Myth #2 - If I own real estate, a probate proceeding will be required to legally transfer the property to my heirs.  There is no authority for this in any Louisiana statute.  Typically, the most a title examiner would require is an affidavit of death and heirship for the settlor to make sure no forced heirs were disinherited by the living trust.  As long as everything you own is transferred to the trust, there is no need for a probate proceeding.
3. Myth #3 - I have to record the trust in the public records of any parish where the trust owns property.  This is incorrect. What you do have to record is an extract of the trust, which is a one-page document that describes the name of the trust, the immovable property owned by it, and the names of the trustees and beneficiaries. The terms of the trust do not have to be made public.
4. Myth #4 - It will be difficult to administer a living trust during my life.  This is not correct.  Your living trust will use your social security number as its tax identification number, and you are not required to file any additional tax returns.  The only change to how you administer your property is that you will sign your documents as the John Doe, Trustee of the Doe Revocable Living Trust.  If you acquire new assets, they must be acquired in the name of the trust.  If you sell assets, you sell them as trustee of the trust.  Administration of these trusts is really quite simple.
5. Myth #5 - I can do everything a living trust can do with a will.  Not really.  Yes, you can use testamentary trust planning as part of your will to achieve many estate planning goals.  But, a will does not allow for privacy, probate avoidance, or comprehensive management of your assets in the event of a disability.

Living Trusts are a valuable and legitimate estate planning tool and offer some benefits that should not be discounted.  They are not for everyone.  But if you are concerned about avoiding red tape upon your death and maintaining family privacy, a properly written (compliant with Louisiana law) and funded living trust can help you achieve those goals.  A valid and properly funded living trust can:

1. Provide more privacy for your family - a living trust does not have to be filed in a public court record the way a will does.
2. Provide seamless management of your affairs if you become disabled - Upon incapacity, you can allow your successor trustee to take over your affairs without having to rely on a bank or financial institution's acceptance of a power of attorney.
3. Avoid the costs involved in probate proceedings after death.  Although there will be some legal fees involved in administering a living trust, they are likely to be substantially less than those involved in a probate proceeding.
4. Avoiding delays in distribution of assets after death.  Generally, a trust administration will be quicker and more streamlined than a probate proceeding, and is handled privately as opposed to in court.