Updated June 01, 2022
The Louisiana living trust form is a document that dictates how a person’s assets are to be managed during their lifetime and after death. What is most beneficial about this particular arrangement is that a Living Trust bypasses the court-administered probate process (delegation of a deceased person’s property, real estate, and other assets). The creator of the trust, referred to as the “Grantor”, may choose to establish a Revocable Trust if he or she would like to maintain control over the property designated to the trust. An Irrevocable Trust works slightly differently in that the Grantor cannot modify the trust or terminate its existence after its creation. However, an Irrevocable Trust benefits the Grantor in other ways, such as transferring ownership his/her assets to the trust thus avoiding estate taxes.
Definition – § 1731
Laws – Title 9, Chapter 1, § 9:1721 et seq. (Louisiana Trust Code)
Will (Last Will and Testament) – For the use of directing assets not mentioned in the Living Trust to all Heirs and Descendants. Unlike a Living Trust, all property in a Will is subject to probate.
Types
Irrevocable Living Trust – The Grantor of an Irrevocable Trust retains no control over their assets and therefore he/she cannot modify the trust or benefit from any income it may generate. Additionally, the Grantor will not be liable to pay income or estate tax on the items placed in the trust.
Revocable Living Trust – A Revocable Trust permits the Grantor to act as Trustee and retain control over their assets. This trust can be terminated or altered by the Grantor during their lifetime.
Individual Roles
Both Irrevocable and Revocable trusts operate with the following four (4) roles:
Grantor (or “Settlor”) – Individual creating the trust and owner of the trust’s assets.
Trustee – Nominated by the Grantor to manage the trust during the Grantor’s lifetime. After the Grantor’s death, the Trustee is required to distribute the Grantor’s assets to the Beneficiaries. The Grantor of a Revocable Trust may also act as their own Trustee.
Successor Trustee – Will assume control of the trust should the initial Trustee become ill, incapacitated, or die.
Beneficiaries – Inheritor(s) of the assets designated to the trust.
How to Make a Living Trust in Louisiana
In order to create a living trust, the Grantor must be of sound mind and express their desire to transfer ownership of their assets and property into a separate entity. The drafting of a living trust document, be it Revocable or Irrevocable, must include the signatures of each designated role (Grantor, Beneficiary, and Trustee(s)). In accordance with § 1755, the Trustee must accept their position with an understanding that they will have an active role in the everyday affairs of the property and assets mentioned. Although not required, it is highly recommended that a living trust signed in the presence of a Notary Public and/or two (2) witnesses not involved in the document. The trust is considered active and legally binding once it has been signed.
It is essential that the Grantor “funds” the trust; the following can be transferred under the ownership of the trust using the described instructions:
Motor Vehicles – The vehicle must be titled in the trust’s name and filed with the Office of Motor Vehicles. A Louisiana Bill of Sale should also be completed to show evidence of the ownership change.
Real Estate – When transferring real estate to a Living Trust, a Louisiana Deed must be filed with the Clerk of Court’s Office.
Websites – Change the ownership information currently registered with ICANN (WHOIS). You can do this by contacting your domain provider and altering your administration details.
Do I Need a Living Trust?
Deciding on whether you need a living trust depends on your desire to bypass the probate process. With a Will (Last Will and Testament), you are not able to avoid probate but will still be able to designate your property and assets to the Heirs of your choosing.
In Louisiana, if an individual has less than $75,000 in personal assets, they automatically qualify to avoid probate as long as their Heirs file the Small Estate Affidavit. However, the property of the person that has died will be spread evenly to all the Heirs, unlike a living trust where an individual can distribute their property with exact specifications.
To conclude, if a resident of Louisiana has more than $75,000 in gross value or wants to give their property and assets to certain individuals without probate getting involved, a Living Trust is the only solution.