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When most people think of Estate Planning, they think of creating a Will to direct how their assets are disbursed after their death. However, another powerful tool that individuals in Louisiana can utilize is a Living Trust. Living Trusts and Wills are not mutually exclusive, and it is often wise to have both documents to best disburse your estate. At Liriano Law Firm, we can help you decide exactly which documents you need to ensure your estate is disbursed exactly how you see fit.

A Living Trust allows for an individual to place certain items into the trust while they are still alive, unlike a Will that takes effect only after the death of an individual. The creator of the Trust is called Grantor. A Trustee handles managing the trust (can be the grantor) and Beneficiaries are the individuals that will receive the trust assets.

There are two types of Living Trusts in Louisiana.

Revocable Living Trusts are the most common type of Trusts in Louisiana. They allow the Grantor to maintain control of the trust while they are alive. The Grantor has the authority to create, change or revoke the trust, as they see fit. A Revocable Living Trust allows for flexibility and control, but do not provide direct tax benefits because the items in the Trust are still under the control of the Grantor.

Irrevocable Living Trusts are less common but provide certain benefits that Revocable Living Trusts do not. Unlike a Revocable Living Trust, an Irrevocable Living Trust cannot be changed once they are created. The benefit to an Irrevocable Living Trust is that by transferring assets into the trust, they are no longer considered part of the grantor’s estate. This can be a strategy to minimize overall tax liability and possibly shield the assets from creditors. However, it is essential to understand that once assets are transferred into an Irrevocable Trust, the Grantor relinquished control and ownership. Therefor an Irrevocable Living Trust should be given careful consideration.

Benefits to Living Trusts:

  • Avoiding probate. Unlike a Will, items that have been placed in a trust do not have to go through the probate process after the creator of the trust dies. The assets in the trust pass directly to the beneficiaries. This can save significant time, money, and headache.
  • Wills become a public record during the probate process. Unlike a Will, a Trust remains private.
  • Incapacity Planning. A living trust can include provisions for managing assets and healthcare decisions in the event of your incapacity.

Drawbacks to Living Trusts

  • Complexity and Cost. While a Trust can be a great tool for many individuals, it is more complex than a basic will. The complexity and cost associated with a Trust may outweigh the benefits for smaller, less complicated estates.
  • Need for a Pour-Over Will. The only assets that are covered by a Trust, are the assets that are placed into the trust. Any items that are not included will need to be processed through Probate. It is common that a Pour-Over Will is necessary to cover the remainder of the estate.
  • In Louisiana you cannot name a guardian for your children in a living trust alone. Louisiana law requires the appointment of a guardian for minor children to be done through a last will and testament.

There are many ways to tackle Estate Planning. Wills and Living Trusts both have significant pros and cons and, in many cases, can work together to cover all situations that may arise. Each estate is different, so it is important to speak with a knowledgeable attorney to discuss all of your options to create a comprehensive plan for you and your loved ones. Call us at the Liriano Law Firm for all of your Estate Planning needs.