How to Create a Living Trust in Louisiana

Establishing a living trust in Louisiana can be a smart estate planning move for those looking to protect their assets and provide for loved ones after they’re gone. Unlike a will, a living trust allows your estate to bypass the probate process, potentially saving your beneficiaries time, money, and stress during an already difficult period. Louisiana’s unique legal system, based on the Napoleonic Code rather than common law, creates some distinct considerations when setting up a trust in the Pelican State. Whether you’re planning for retirement, concerned about potential incapacity, or simply want to ensure your wishes are carried out efficiently, understanding how to create a living trust in Louisiana is an important first step.

If you’re thinking of forming a living trust or you just want some more general financial planning help, working with a financial advisor is probably a good idea.

Creating a Living Trust in Louisiana

A living trust in Louisiana offers residents a valuable estate planning tool that helps avoid probate and provides greater control over asset distribution. Unlike wills, these trusts take effect during your lifetime and continue after death, allowing for seamless transfer of property to your beneficiaries. Here are six common steps to make a living trust in the Bayou State:

1. 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 trust to store property that you and your spouse own independently, as well as jointly held property like homes and cars.
2. 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.
3. Choose a trustee: You can name yourself as the 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 choose. Now is also a good time to select those beneficiaries.
4. Create a trust document: You can create your own trust either by yourself using a computer program or with the help of a lawyer.
5. Sign, or execute, the trust: Your signing must take place in front of a notary public.
6. 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 types 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 an 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, some problems 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 several 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 time for potential court challenges to be filed.

Living Trusts vs. Wills

Living trusts offer immediate asset management if you become incapacitated, allowing your successor trustee to step in without court intervention. Wills only take effect after death, requiring a potentially lengthy probate process before assets can be distributed. This distinction makes trusts particularly valuable for those concerned about potential incapacity. 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 the children’s property
• Establish guardianship for children who are minors

Here’s how wills and living trusts measure up:

Living Trusts vs. Wills

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 $13.99 million, or $27.98 million for couples.

Bottom Line

Learning how to create a living trust in Louisiana can provide significant benefits for your estate planning needs. By establishing a trust, you can ensure your assets are distributed according to your wishes while potentially avoiding the lengthy probate process that’s common in Louisiana’s legal system. Remember that Louisiana’s unique civil law system makes certain aspects of trust creation different from other states, so working with an attorney familiar with Louisiana trust law is highly recommended.

Estate Planning Tips

• Everyone needs help sometimes, and estate planning is no different. A financial advisor has the expertise to provide this support and help you protect your financial assets over the long haul. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• 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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