If you’re starting to think about estate planning, there are a lot of options out there for you. One method of protecting your assets for your family is to form a living trust. This article will take you through the steps it takes to create a living trust in Louisiana, plus look at the pros and cons of using a living trust in your estate plan. If you’re thinking of forming a living trust or you just want some more general financial planning help, getting a financial advisor is probably a good idea. You can find one who suits your needs using SmartAsset’s free financial advisor matching service.
How to Create a Living Trust in Louisiana
Here’s how to make a living trust in the Bayou State:
- Decide which type of trust you want. If you’re unmarried, you’ll probably want to go with a single trust. If you’re married, a joint trust might be best for you. You and your spouse can use a joint trusts to store property that you and your spouse own independently, as well as jointly held property like homes and cars.
- Take stock of your property. You can store most of what you own, including stocks, bonds, jewelry and other family heirlooms, inside the trust. Now is also the time to gather corresponding documents for this property, like certificates of stock ownership or car titles.
- Pick a trustee. You can name yourself as trustee or someone else. However, if you name yourself, you’ll also need to choose a successor trustee to take over when you die. This person will be responsible for managing your trust and doling out its property to the beneficiaries you chose. Now is also a good time to select those beneficiaries.
- Create a trust document, either by yourself using a computer program or with the help of a lawyer.
- Sign the trust in front of a notary public.
- Put your assets inside the trust. This is called funding the trust. While you can do it yourself, it might make sense to hire a lawyer to help with the paperwork.
What Is a Living Trust?
A living trust is a legal framework into which property and assets can be transferred. It is established by a document and has a trustee who is in charge of managing it and distributing the property placed in it to beneficiaries. The trust creator, also known as the grantor or settlor, can serve as trustee or that person can pick someone else, likely a child or trusted relative.
Two basic type of living trusts exist: irrevocable living trusts and revocable living trusts. Irrevocable living trusts are permanent. The grantor can’t modify the trust or remove assets from it without permission from everyone named in the trust. The trust fully takes ownership of the property placed in it. Taxes are paid on the trust property via the trust.
Revocable living trusts are easier to modify after the fact. The grantor can alter the trust as needed and remove property when he or she wants. Additionally, the grantor maintains ownership of the property in the trust and pays any relevant taxes on it as normal.
How Much Does It Cost to Create a Living Trust in Louisiana?
The price of making a living trust depends on the method you use to form it. One way is to use a online program and create the trust document yourself. This will cost you a few hundred dollars or so. You can also use the services of a lawyer, for which you’ll probably pay more than $1,000.
Though it is cheaper to make your trust document yourself, there are problems that can arise with DIY estate planning. If you’re not comfortable doing the research and paying attention to all of the details that come with properly establishing a living trust, you should strongly consider hiring a lawyer. Make sure the lawyer is a trust expert, not just an estate planner. Also look closely at the attorney’s fees before you start working together so you know exactly how much you’ll pay.
Why Get a Living Trust in Louisiana?
Most people get a living trust in order to avoid probate, a process that most estates go through to prove the will. The process can be time-consuming, costly and an invasion of privacy as private matters become public record. One important thing to note about this process in Louisiana: Because Louisiana’s legal development was tied to French and Spanish colonization before it became part of the United States, the state uses the term “succession” instead of probate.
While many states have adopted the Uniform Probate Code to simplify the probate or succession process, Louisiana is not one of them. This means that a living trust may be especially helpful in the Bayou State.
There are other reasons to get a living trust, too. Living trusts allow you to specify when you want to leave property to a minor. Until the child reaches a certain age, the property the child will someday inherit will remain in the living trust under the trustee’s management. A living trust is also useful in the event you become incapacitated. Because you’ve already named a trustee, you’ll avoid conservatorship.
Who Should Get a Living Trust in Louisiana?
Living trusts are not just for the wealthy. With the Uniform Probate Code not in place in Louisiana, a living trust can be useful even for estates that are relatively small. If your estate is worth less than $75,000 though, the state offers a simplified probate process. Estates below this threshold may not need a living trust.
Though there are a number of upsides to creating a living trust, there are downsides to consider as you weigh your estate planning options. A living trust is more costly and difficult to create than a will. It can also increase the potential of problems arising after you die because it provides a longer period of time for potential court challenges to be filed.
Living Trusts vs. Wills
If you make a living trust, you’ll still need a will. Wills can direct property that’s not in the trust and are needed to do the following:
- Name an executor
- Provide instructions on how to pay taxes and debts
- Select managers for children’s property
- Establish guardianship for children who are minors
Here’s how wills and living trusts measure up:
|Living Trusts vs. Wills|
|Names a property beneficiary||Yes||Yes|
|Allows revisions to be made||Depends on type||Yes|
|Avoids probate court||Yes||No|
|Requires a notary||Yes||No|
|Names guardians for children||No||Yes|
|Names an executor||No||Yes|
Living Trusts and Taxes in Louisiana
Your living trust is unlikely to impact your taxes. Still, if you’re in the middle of planning your estate, it probably makes sense to get a basic idea of the Louisiana estate tax and the Louisiana inheritance tax to see how they might impact you.
Luckily, there is no estate tax or inheritance tax in Louisiana. The federal estate tax only applies to estates that are worth $11.18 million, or $22.36 million for couples.
The Bottom Line
A living trust is one way of planning your estate, and it is a useful option if you don’t want your estate to go through the probate process once you’ve died. You can make a living trust yourself or you can hire a lawyer to guide you through some of the more difficult aspects of creating your living trust and planning your estate. Regardless of which route you take, remember that everyone needs an estate plan.
Estate Planning Tips
- Everyone needs help sometimes, and estate planning is no different. Finding a financial advisor who can walk you through the sometimes difficult process is key. SmartAsset can help you find a suitable financial advisor with our free financial advisor matching service. After you answer just a few questions about your finances, we will match you with up to three financial advisors — whether you’re in Louisiana, Maryland or New Mexico We have fully vetted all of the advisors on our platform and ensured they don’t have any relevant disclosures. Each of your matches will then reach out to you about working together.
- One asset you can’t store in a living trust is a 401(k) plan. You can name the trust as a beneficiary though, so make sure to take that step if you want the money in your account to pay out to your trust once you die.
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