Trust for Child

The Amendable But Irrevocable Trust

Is it possible to amend, modify, or change the provisions of an irrevocable trust?

All trusts can be classified as either revocable or irrevocable. The #1 reason people create revocable trusts is to hold title to assets in a way that you keep total control but eliminate the attorney and court-involved probate process when you pass away. Quite a bit is written about using revocable living trusts to avoid probate, so that is not the topic of this post.

Irrevocable trusts, however, are created for many different reasons: avoid taxes, lawsuit protection, and nursing home protection, just to name a few.

The word "irrevocable" scares many consumers, but it may not need to. Someone can establish an "irrevocable" trust, yet reserve the right to modify certain terms of the trust after the trust is created.

Here's an example: Parent sets up a trust. Parent is referred to as the "Settlor." In the trust instrument, it states that "X" is the trustee of the trust. It further states that "Y" and "Z" are the principal beneficiaries of the trust. The trust states that the trustee may distribute principal to the principal beneficiaries during the lifetime of the Settlor. The trust instrument further provides that when the Settlor dies, the trustee shall terminate the trust and distribute the principal to the principal beneficiaries.

Then, the trust instrument further provides that the Settlor can replace the trustee, and the trust instrument also provides that the trustee can replace the principal beneficiaries. Now you have an irrevocable trust where the Settlor has expressly reserved the right to modify certain provisions of the trust, yet there are some provisions of the trust that the Settlor cannot, under any circumstances, modify.

Fueling this concern over the inflexibility of irrevocable trusts is the fact that back in the 1990's, most irrevocable trusts were set up to avoid the 55% estate tax on assets that exceeded $600,000 in value at death. Settlors of those irrevocable trusts almost never reserved the right to modify those trust provisions for fear that the "right to modify" would cause the trust assets to revert back to the estate of the Settlor.

But since we now have an $11.4 million estate tax exemption, and portability between spouses, married couples can exempt $22.8 million in assets from the estate tax. Moving assets out of the estate to avoid estate tax just isn't a concern any more.

Now, irrevocable trusts are established for a variety of reasons: yes, tax avoidance is one. But so is lawsuit protection, nursing home protection, and many other reasons. But you need to be very careful when you are attempting to take advantage of trusts and other legal strategies to gain these protections because the slightest alterations of wording can have adverse tax, creditor protection, and Medicaid eligibility consequences.

So, in summary, an irrevocable trust does not need to be as scary as it first sounds, due to the fact that you can reserve the right to modify certain provisions, but you will want to tread carefully.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais

Louisiana Estate Planning Attorney

Phone: (225) 329-2450

Under What Circumstances Should You Give a Trustee the Discretion to Make Distributions to a Trust Beneficiary?

How much discretion should you give a trustee when you establish a trust for the benefit of one or more beneficiaries?

Trusts are set up for many different reasons. Sometimes people want to leave assets at their death to others, but they don't want the inheritors to receive the inheritance in one lump sum. Some people who leave an inheritance want to dictate what the inheritance is to be used for, and under what conditions they can receive it.

For example, let's say a grandparent wants to leave $150,000 to his grandchild. At the time that the grandparent is establishing his estate legal program through a Last Will or Living Trust, the grandchild is only six years old. So the grandparents is advised to leave the bequest in a trust for the benefit of the grandchild.

One decision the grandparent must make is who should be the trustee of this trust after the grandparent dies. Let's say the grandparent selects grandparent's child as the trustee.

And now the decision comes regarding when distributions can be made to or for the grandchild, from the trust, by the trustee.

When you establish a trust like this, you will make a decision regarding whether you want the trustee to have discretion or no discretion in making trust decisions.

If you choose to allow the trustee to exercise discretion in making distributions, you might include trust language that permits the trustee to make distributions to or for a beneficiary for the "health, education, maintenance, and support," of the beneficiary. This can work well when you have a trustee that you know will exercise that discretion in the best interests of the beneficiary. When you choose this option, you may believe that you don't know what future circumstances may bring, and you trust that the trustee will exercise their discretion in a manner consistent with your overall objectives. Perhaps you even communicate to your trustee during your lifetime how you would want the trustee to exercise their discretion.

On the other hand, you may wish to remove all discretion from the trustee, by providing something like, "I direct the trustee to distribute $1,500 monthly to the beneficiary until trust principal is gone."

Or, you might even get more restrictive by stating that the beneficiary must meet certain standards (GPA, no criminal activity, no drug use, etc.) before distributions can be made. However, the more restrictions you place in the trust, the more difficult it will be for a trustee to adapt to circumstances that may not have been able to have been contemplated at the time of the creation of the trust.

So, granting lots of trustee discretion allows a trustee to use their discretion in a manner that is consistent with your overall objectives, but it may create a situation where a beneficiary is badgering the trustee to exercise their discretion, so you'd need to designate a trustee that has the ability to say, "NO" to a beneficiary when appropriate.

Or, you may choose to eliminate trustee discretion by imposing specific restrictions in the trust that must be met for distributions to be made.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais

Louisiana Estate Planning Attorney

Phone: (225) 329-2450

Estate Planning For Parents With Minor Kids

The following is an overview of what will happen when Louisiana parents of minor children pass away, and what they can do to protect themselves, their children, and their assets.

It is not often when parents with minor children pass away, but when it does, it can be a legal nightmare. If the parents have no legal program in place, then typically other family members must scramble to hire lawyers, petition courts to appoint guardians (known in Louisiana as "tutors") for the minor children, and deal with frozen accounts and other frozen assets. If multiple people want to raise kids, then there will likely be a multi-year court battle where it will ultimately be up to a judge to determine who has the parental rights over your kids.

And then, if the parents with minor children had no legal program in place, a judge must oversee and approve every expenditure of your estate for your kids until they are 18 (the age of majority in Louisiana), and then, on your child's 18th birthday, a pile of money will be dumped in their lap with no supervision. 

Parents with minor children can avoid these concerns by putting the right legal programs in place. Parents can designate who will raise their children, handle the children's inheritance, and the parents can prolong when the children can get their hands on the inheritance. Parents can even arrange their legal affairs to keep everything out of the courts and give the right people immediate access after death to accounts so there is little disruption to children's financial needs.

All parents with minor kids need to have all of the "incapacity legal plans" in place, so that if the parents become incapacitated (due to illness, injury, or otherwise), other trusted family or friends can immediately step in to make important financial or medicaid decisions for you.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais
Louisiana Estate Planning Attorney
Phone: (225) 329-2450

When a Corporate Trustee May Be Appropriate

People create trusts for lots of different reasons. A few reasons include putting assets in a living trust to avoid probate, providing that assets after death remain in trust to be doled out to children or grandchildren over time as opposed to in a lump sum, or leaving assets to a trust for a 2nd spouse and having those assets revert back to your children after the death of your surviving 2nd spouse.

Often, people who create trusts designate an individual to be the trustee, Successor trustee, or co-trustee. These individuals are often family members. But sometimes, people who set up trusts are more comfortable naming a corporate trustee because naming an individual or family member as trustee is simply not appropriate.

Perhaps you do not want to show bias toward one of your children by naming them as a trustee. Or perhaps because of the potential conflict between children and a 2nd spouse, you don't want to name one of them as a trustee. 

Some of the reasons that people have designated a corporate trustee are as follows:

(1) Experience. Corporate trustees often better understand trust provisions and trust law - more so than an individual that has never served as a trustee.

(2) Unbiased. An individual who is also a beneficiary of a trust may find it difficult to be biased in the administration of their duties as trustee. Corporate trustees can act with more bias.

(3) Accounting. Corporate trustees are capable of preparing and providing the necessary trust accounting, and, if necessary, the trust tax return preparation.

Note that corporate trustees typically require that the trust assets must meet or exceed certain values. If the trust assets are minimal, then an individual trustee who is willing to serve with little or no compensation may be your best or only option.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais
Louisiana Estate Planning Attorney
Phone: (225) 329-2450

How To Leave Inheritance To Minor Child or Young Adult

It never makes sense to leave an inheritance to a minor child in their own name, and it almost never makes sense to leave a lump sum inheritance to a young adult - say in their late teens or early 20's.

There are different vehicles to leave assets to a minor or young adult. Some people leave assets to others through a testamentary trust - a trust that is part of their last will and testament. Others create an "avoid probate" living trust and provide that the trust will continue after the parents pass away. Others set up life insurance trusts so that life insurance won't be dumped into the lap of a minor child or immature young adult.

One of the decisions you will make when you arrange an estate planning legal program for minors or young adults is: Who will be the trustee of the trust? Perhaps you have trusted family members or friends that you can designate as a trustee when you are gone - to oversee the inheritance for your minor children or young adult children. These would be what's referred to as an "individual trustee." Others of you may name a corporate trustee - a large bank or other financial institution that is set up to serve as a corporate trustee.

What often requires a great deal of discussion revolves around when your children can have access to the trust principal that is being held for them. There are unlimited options, but you could designate that your children receive their inheritance when they reach a certain age, say 25. Or, you could say that they get their inheritance in stages, say 1/3 at 25; 1/2 of what's left at 30; the rest at 35. Or, you could say that the trustee has discretion to determine the appropriate time to make principal distributions to your principal beneficiaries.

Note that even if you designate that the children cannot demand principal until a later date (let's say 30, for example), you can provide that distributions can be made earlier for the health, education, maintenance, and support of the principal beneficiary. This allows, for example, educational and health care expenses to be paid from the trust, even though the remaining principal will not be distributed until later.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Leaving Assets To A Louisiana Special Needs Trust

Special Needs Trusts enable people, typically parents, to provide for another (typically, their child), without jeopardizing the government benefits that the special needs child is receiving.

There is typically a problem when parents bequeath assets to their special needs children. When the child inherits in his or her own name, the child could lose valuable government benefits that the child is receiving. In order to originally qualify for these benefits, the child had to be "means-tested." Often, the child must have and maintain no more than $2,000 in their name to receive these benefits. If the child receives an inheritance, the child may lose these valuable benefits.

So many parents leave assets for the special needs child in a third-party Special Needs Trust. When done properly, the trust can enhance and enrich the child's life while preserving the government benefits that are means-tested.

In general, there are certain provisions that should not be included in a trust that you leave behind for your special needs child.  The trust should not authorize the trustee to make broad distributions to or for the health, education, maintenance, or support of the child (known as the "HEMS" standard). 

In addition, the trust must not allow the child/beneficiary to compel distributions to himself or herself.

However, there are a number of permissible distributions to or for the benefit of the special needs child, including distributions for medical needs, travel, recreation, home improvements, auto expenses, and cleaning, to name a few.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Seven Common Uses For Trusts

People often mistakenly believe that trusts are for rich people. But you're about to find out that the trusts are used these days by all classes of people, and in some scenarios, trusts can benefit the middle class more than they can benefit the wealthy.

The following are seven common reasons people in Louisiana use trusts:

(1) Avoid Probate. Probably the most common reason nationwide why people use trusts. When you die with assets in your name, whether you have a last will or not, your assets are frozen. Your executor and your heirs will hire attorneys who will guide the family through the government-supervised probate (also called "Succession") process. Most people believe that this proceeding is too burdensome, costly, time-consuming, and just an overall pain in the behind. In some cases, it tears families apart. You can establish your revocable living trust and name trustees and beneficiaries of your trust, re-title assets into your trust while you are alive, so that when you die, your trustee disburses your trust assets to your beneficiaries, all outside of the government and legal system interference.

(2)  Avoid Nursing Home Poverty. The biggest threat to many people's life savings these days is not taxes or probate, but long term care expenses. With people living longer, if you own assets and need long term skilled care, you will be forced to pay for all of your own care out of your own savings until you have less than $2,000 remaining. If you work with the right people and set things up the right way, at the right time, and you get it right the first time, then you can protect your home and life savings from a forced spend-down in the event you need long term care in the future.

(3) Protect Irresponsible Heirs. Many people we work with want to leave an inheritance to their children or grandchildren, but they fear or they know that leaving a lump sum to certain individuals will enable them to squander the inheritance and spend it on the wrong things. You can establish a trust so that when you die, the inheritance for the financially immature heir can be doled out to him or her over time, or perhaps provide for a monthly stipend, or provide that someone else would have the discretion to determine when the heir is financially responsible enough to handle an inheritance. 

(4) Blended Family Situation. The biggest worry about blended families and estate planning is that when the first spouse dies, the worry is that all of the assets will go the surviving spouse. And then when the surviving spouse dies, all assets will go to the surviving spouse's children. The children of the first spouse to die won't get a penny. If you are a spouse in a blended family situation, you can establish a trust so that when you die, your assets are available for your spouse, but when your surviving spouse later dies, remaining trust assets go back to your children. This helps blended families protect assets for the right people.

(5)  Special Needs Trust. If you leave assets outright to someone who is getting government benefits, then the inheritance you leave them may get them kicked off of their benefits. By leaving the inheritance to what is commonly referred to as a "Special Needs Trust," you can arrange things in a way so that your heir continues to receive the valuable benefits, but also benefits from the inheritance that you left them the right way in a trust.

(6) Minors. Don't ever leave anything outright to a minor. When you leave life insurance or part of an estate to a minor, then that inheritance, while the child is a minor, must be directly supervised by a judge, and a judge must approve every expenditure of the inheritance on behalf of the minor, and then when the child turns 18, the remainder of the inheritance gets dumped in the child's lap. You can set up a trust so that you name a trusted friend or relative, or perhaps a company, to be the "Trustee" of a trust for the benefit of your minor child or grandchild. This will further make sure that what you leave to the minor is used for the right reasons outside of government interference, and is doled out the right way as the minor gradually turns into an adult.

(7) Avoid Taxes. Some people set up trusts to avoid taxes. The wealthy often establish trusts to move money from their "taxable estate" to an arrangement whereby assets are "out of the estate." It is important to note, however, that this estate tax affects only a small number of families. When an individual dies with an estate of less than $5.5 million, the estate is not required to file a federal estate tax return. Married couples can double the amount they can protect.

How To Leave Assets to a Minor

If you want to benefit a young person with your Estate Legal Program, don't ever allow them to inherit in their own name.

For example, let's say you have life insurance and a 401(k), and you live in Louisiana. On the beneficiary designation forms, you name your spouse as your primary beneficiary (if you are married), and you name your minor children as your contingent (or secondary) beneficiaries.

If an account owner dies and proceeds are to go a minor, then the financial institution will refuse to pay the minor. So, someone will have to petition the court to be appointed as the guardian (known in Louisiana as the "tutor") of the minor.

Then, once those court orders are issued, the financial institution will pay the funds to the tutor on behalf of the minor. The tutor must report to the court an accounting annually of how the tutor handled the minor's funds. If the tutor wants or needs to spend any of the minor's funds on behalf of the minor, the tutor must get a judge to approve the expenditure.

Then, on the minor's 18th birthday, the tutor must dump all of the funds into the lap of the 18 year old.

Folks who want to avoid all of this bureaucracy and preserve what they leave to young children or grandchildren will make sure they leave the assets in a trust for the young folks. You would name a trustee of the trust and you would dictate when and under what terms your child or grandchild may get or use the funds.

For example, divorced Dad names a trust for his minor children to receive his life insurance when he dies. Dad names his sister as the trustee. Dad says in his trust instrument that the trustee may use the trust assets for the health, education, maintenance, and support of the child, and Dad further provided that the child can get 1/3 of the trust assets when the child reaches the age of 25; one-half of what's left at 30; and the remainder at 35.

By setting all of this up correctly, Dad further ensures that any inheritance he leaves for his family will be used at the right times for the right reasons with the right people in charge.

Protecting Children and Estate Planning

You have worked hard over your lifetime raising your children and providing financial security for yourself and, if you are married, for your spouse. You may be thinking that you would like to be able to provide one final gift to your children by leaving them an inheritance. How nice would that be to allow your children to have peace of mind in their remaining years because you were able to leave them an inheritance? 

Or maybe you ride around in your car with one of those bumper stickers that reads, “I’m spending my children’s inheritance.” While that may be true, I will bet that you would rather have your children (or some other loved ones) inherit from you as opposed to your assets going to the government, the lawyers, or the courts. 

Leaving assets to your children can be complex. Whether your children are young or old, rich or poor, married or single, you need to be aware of some important legal concepts that could jeopardize your children’s inheritance.

If You Have Young Children

If your children are young, you better have an estate plan. If you die before your children reach the age of majority and you have not properly designated legal guardians for your minor children, a judge will determine who will raise your children until they reach the age of majority. In addition, a judge will determine who will control any financial assets that your children inherit, and if any of those assets need to be spent on your children before they reach the age of majority (for school expenses, living expenses, etc.), a judge will have to approve each expenditure. This procedure is complicated and expensive. 

Your Children are Grown

If your children are married, have been married, or even if they might get married in the future, you need to take action to protect their inheritance from their past or future divorces. You already know that many marriages these days end in divorce. What you may not know, however, is that if your children inherit from you and then get divorced, your child may have to share that inheritance with their ex-spouse. 

You can also protect your children by arranging to minimize the tax they pay at your death. A federal estate tax exists that could require your children to pay up to half of their inheritance to the IRS. Capital gains tax and income tax can also be minimized or avoided through proper estate planning. 

Blended Family

If you have children from a prior marriage, estate planning is a must. It is common for children to get nothing because their step-parent receives all the assets. 

Example. James had three children from his first marriage to First Wife. James and First Wife divorced. James later married Second Wife. When James died, all of his assets went to Second Wife. James’ three children from his marriage to First Wife received nothing. When Second Wife later died, Second Wife left all of her assets (including the assets she received from James) to Second Wife’s children. 

Proper estate planning can avoid these problems. James could have arranged his estate plan to provide for Second Wife but also provided that at Second Wife’s subsequent death, assets would revert back to James’ children. 

Seven New Louisiana Estate Matters That Walked Into Rabalais Estate Planning During The Last Two Days

I have been fortunate to have seven different families, from Metairie, Baton Rouge, Shreveport, Gonzales, and Zachary. ask me to help them with various estate matters over the last two days. Each family has a different situation and a different concern, so I thought I'd give you a general overview of their problems and how we are solving them so that if you have a similar problem you will know that you are not alone and there is someone that can help who has helped others in similar situations.

Here are the seven different situations that families have retained me in the last two days to help them:

  1. Mom's Investment Account Frozen. A gentleman came and met with me two days ago. His mother had passed away and, as a result, her investment account was frozen. Mom and the son had the same investment advisor. The investment advisor suggested that the son come see me so that we could complete the probate (also known in Louisiana as "Succession") to obtain the necessary court orders which will allow the family to have access to Mom's currently frozen investment account.
  2. Want To Protect Each Other and Teenage Child. A couple came in that had been referred by another financial advisor. The couple had a teenage child and wanted to make sure that their "legal affairs were in order" because they had done no estate legal planning in the past. We will be setting up an estate legal program for this couple to make legal matters easy or nonexistent when one spouse dies, and then making sure that guardians and trustees are named for their minor child should something happen to the parents before the child is an adult.
  3. Couple With No Children. Working with a couple that has been married for decades with no children. They have some pets that are important to them. We will be setting up an estate legal program so that when one of them dies, matters will be under the continued control of the surviving spouse, and that after they both pass away, funds will be set aside for the care of their pets, with the remainder of their estate being divided among four charitable causes that they care deeply about. Nice and fun couple - organized too!
  4. Blended Family. Working with a couple each of whom was in their second marriage. They each had one child. The children lived geographically far apart and had not spent much time together. The couple wanted to make sure that protections were in place for each other so that when one dies, there is no interruption from the children, and then when both spouses die, things are in place for the two children to inherit outside of probate and other court legal proceedings being necessary. Another really nice couple.
  5. Protect Mom's Money From Nursing Homes. Working with a family where Mom is currently residing in an assisted living facility. The family realized that all assisted living facilities in Louisiana are private-pay, but they are worried that if Mom's conditions worsens, Mom will have to move to a skilled nursing facility and be forced to spend $6,000 monthly or more on her care.  We are setting up a legal plan for the family so that Mom's money will be protected if she has to reside in a nursing home in the future. Plus, probate will be avoided when Mom dies.
  6. Execute Will. I wrote a Will for a woman many years ago. She passed away recently. I met with the family and they retained us to execute Mom's Will and complete Mom's Succession so that the home and Mom's CDs, and the vehicle, could be transferred 100% into Dad's name. We are also updating all of Dad's estate planning legal documents because he wanted to change how things would be disbursed upon his death.
  7. Plan For Two Children. Now working with a gentleman who contact me after "watching some of my videos and reading some of my blog posts online." He has a rather large estate, much of it in real estate, and he wants to make sure that it goes to his two children the right way and he wants it to be easy for his two children to inherit the property. We also had some discussions about capital gains tax and estate tax to make sure that his children would avoid as much tax as possible as this property gets transitioned to the next generation.

While many people think that estate planning is the same for everyone, you can see from reading these seven examples that every family and every individual has a unique situation that requires unique solutions. If you have an estate that you want to protect for your family, feel free to give my office a call at 866-491-3884 to start a conversation about the easiest ways to protect what you have for your loved ones.

Paul Rabalais


Do You Treat All Children the Same or Do You Differentiate When You Establish Your Louisiana Estate Planning Program

I was working with a couple recently out of our Baton Rouge office regarding their estate legal program for their family. They have five grown children. As every parent knows, each child is different. They had three children that were successful professional and had the financial maturity and responsibility to manage an inheritance well. But they had two children that, as the couple says, would, “blow their inheritance as soon as they get it. Both of these daughters were unmarried, and the couple was worried that a future boyfriend or husband may want to latch on to the daughters for the wrong reasons in order to “get to their inheritance.”

Children Can't Inherit in a Lump Sum

The couple decided that it would be best for these two daughters, after the couple dies, to receive a monthly distribution from a trust so that these daughters would be “protected from themselves.”  So we discussed the arrangements where two of the “responsible children” would serve as “co-trustees” after the couple passes away, and then the co-trustees would dole out the inheritance to the two daughters monthly instead of in a lump sum. The couple felt really good about how they were protecting their daughters.

But then the question came up, “Do you want to treat all of your children the same way from an inheritance standpoint? Or do you want to treat your two daughters (who will get their inheritance over many years) different from the way you leave the inheritance to the

Treat Children Same or Different?

After much discussion, the couple decided that they did not want to have an estate legal program that treats each child differently, even though the children have different needs and are at different financial maturity levels. The wife stated, “You know Mr. Rabalais, it’s just not right to restrict certain children from getting their inheritance all at once while leaving other children the freedom to have their inheritance immediately. Let’s treat all of our five children the same way so that they all get an income stream over their lifetime. That’s the right thing to do for OUR family.”

When you have certain children who would benefit from having their inheritance set up a “special” way, you have a decision to make. Do you treat all of your children exactly the same way from an inheritance standpoint, or do you restrict certain children from receiving their inheritance at once, but allow others to have theirs. There is no right or wrong decision here – it’s a personal decision on your part based on your background, relationships, observations, and personal feelings that you have toward your family.

Establish Your Louisiana Estate Planning Program

Our job at Rabalais Estate Planning is to take our decades of experience helping Louisiana families provide for the right kind of disposition to their family while avoiding difficulty, taxes, and family conflict. When you are ready to have a conversation about how to leave what you have to your family the right way, give us a call at 866-491-3884. Look forward to speaking with you.


What Happens If I Set Up a Trust For My 30 Year Old Child - and Then My Child Dies?

I was working with a couple from Lake Charles, Louisiana, on their estate planning legal program. For estate tax avoidance purposes, they wanted to set up a trust for their 30 year old child, who lives in Baton Rouge. Assets in this trust will not be part of the couple's estate when they die.

Their 30 year old child was not responsible with money, but he was getting more mature by the years. But the parents did not just want to dump a big sum of money in their child's lap - for him to blow. They decided that the trust should stay in effect until their son is 55 years old, at which time he can have the trust assets put into his own name. When we were discussing other terms of this irrevocable trust, they asked me a question.: "Paul, what if our son happens to die unexpectedly while this trust is in existence for him?"

I told them, "It depends. Does your son have children?" Why did I ask them if their son had children? Because the Louisiana Trust Code provides guidance on your right to re-direct the trust assets of the trust if the beneficiary dies prior to the termination of the trust.

The couple told me that their son did not presently have children, but that he had a serious girlfriend and would likely get married in the next couple of children.

So, I told them, "If your son dies while this Louisiana Trust is in existence for him, and he does not have children (or grandchildren), then you can determine where the trust assets go if he dies before he turns 55 years old. The couple indicated to me that if their son dies with no children, the couple would then want the trust to be for the benefit of four nieces and nephews they had.

But then I said, "If your son dies while this trust is in existence for him, and he DOES have descendants, then his interest in the trust will be in his estate and will be for his heirs. Although you do have the authority to shift the trust principal to one or more of his descendants, under these circumstances where he dies with descendants.

I verified all of this by double-checking the relevant provisions of the Louisiana Trust Code, in this case it was Title 9, Section 1973, which was revised by the Louisiana legislature in 2016.

If all of this sounds confusing, don't be alarmed. It is confusing. So if you want to set up a Louisiana estate planning legal program so that what you own goes to your family, the right way, the first time, and protected from government interference, then you may want to call our estate planning law firm at 866-491-3884 and ask to set up a time to start a conversation about how to leave your estate to your family.


Couple From Alexandria, Louisiana Has Estate Plan To Protect Youngest Child

I've been working on an estate legal program for a couple from central Louisiana. It's a "his, hers, and ours" scenario. The wife has several children from prior marriages. The husband has one child of his own. After they married, they had another child.  They mentioned several times that they were not very close with the older children, and that many of the older children had a larger estate than this couple had.

Their main concern was for their youngest child - that they had together. The wife was concerned that they may be forced to leave an inheritance to the older children due to Louisiana's forced heirship laws, but we discussed that since the older children were older than 23 years of age, she was not forced to leave the older children an inheritance. They realized that the youngest child was a forced heir, but the fact that the youngest child was a forced heir was not an issue because they would leave the bulk of their estate for the benefit of this youngest child.

They wanted an arrangement where the surviving spouse would completely control everything. But after both the husband and the wife pass away, they want their estate to be for the benefit of their youngest child. This child, a daughter, while responsible, would not be prepared to inherit an estate in a lump sum. But the couple had no family member or no one else that they could "trust" enough to be the Trustee of their daughter's trust after the couple passes.

After discussing the pros and cons of naming a corporate trustee to handle things for the young child (if the child happens to still be young when the couple dies). They selected the trust department of one of the national banks that they use to be the trustee.

Now the couple knows that if they pass away before their child completes all of her graduate and post-graduate education, then their estate will be managed by professionals and used for the right reasons until the child is an adult and has the maturity to handle the inheritance prudently.

The couple now knows that they have taken the necessary legal action to set up an estate legal program to protect the surviving of them from children or other who may want to cause a fuss, and they've provided for the financial well-being of their child who will need a head start on life if her elderly parents pass away unexpectedly in the next several years.

Divorced Monroe Father Now Has Children's Inheritance Protected From Ex-Wife

I'm working with a gentleman who lives in Monroe, Louisiana. He is divorced. He has three children - two are in their early 20's, and one is a teen-ager. He is not fond of his ex-wife - she took him to the cleaners in the divorce. He has a "significant other" that he may marry someday but no time soon. He stated that his main estate planning worries were:

  • He wanted to make sure his ex-wife did not control his money and his business interests if he died;
  • He wanted to make sure his children's inheritance would not be "blown," rather, he wanted to make sure his children would benefit for their lifetimes from the legacy he leaves them; and
  • He did not want his ex-wife, his "significant other," and his children to have to go through a probate proceeding in the courts after he died.

He owned a nice home in Monroe, and he wanted to make sure that his "significant other" (whether he married her or not) would have a right to continue living in the home for as long as she wanted to after he died.

He knew that if he had no estate legal plan in place, that his ex-wife would control his teen-age daughter's inheritance, which means she would also have indirect control over the adult children's inheritance because the three children would be inheriting together and co-owning assets.

So we are establishing a trust so that when he dies, his business partner (as the Successor Trustee) can manage his estate for the three children and dole it out to them at different stages in their lives. The children will not get a large inheritance in a lump sum, and will not have an opportunity to "blow it all" with one big mistake. Setting things up this way will keep the ex-wife out of this father's financial affairs when he dies. The family will avoid what would have been an ugly probate proceeding with each party being represented by different bulldog attorneys (further draining estate assets), and the father can rest assured knowing that his significant other will be protected with a home, and his children's inheritance will be protected.

If you are divorced and you want to make sure that your ex-spouse does not control all of your money when you die, you may want to give me a call at 866-491-3884 to start a simple conversation about how easy it is to put an estate legal program in place, whether you live in Monroe, Shreveport, Alexandria, New Orleans, Lake Charles, Lafayette, or Baton Rouge.

What Does an Estate Plan for Louisiana Parents with Minor Children Look Like?

Twice in the past week I took care of friends of mine who wanted and needed to get their estate plan in order for the first time. Both friends have minor children and have never done any estate planning before.

Estate planning for parents with minor children usually looks something like this:

1. Lifetime Usufruct to Spouse. Parents with minor children in Louisiana usually leave their spouse the lifetime usufruct of their estate. In Louisiana, you really can't leave your estate in full ownership to your spouse because forced heirship laws require you to leave part of your estate to your kids 23 or younger. The usufruct satisfied these forced heirship rules because you are not leaving out your children - you are leaving them "naked ownership" which permits them to inherit from you after you AND YOUR SPOUSE die.

2. Children's Inheritance In Trust. If you and your spouse die, you don't want your minor/young child(ren) to inherit it all in a lump sum. So, we often create a "testamentary trust" in your will whereby you name a trustee for your kids to manage their inheritance until they are older, and you designate a term (age 25 perhaps) when your kids can have their inheritance.

3. Tutors. If you have minor children, you will name their guardian who will play the role of parents if you die before your children are 18.

4. Powers of Attorney. You will likely designate your spouse as your Agent on your Durable Property Power of Attoreny and your Health Care Power of Attorney. If your children are young, you will likely name a trusted relative or friend as the alternate agent, if your spouse is unable to act as your agent.

5. Living Will Declaration. You will likely document your wishes regarding life support machines.

These are typical items that parents with minor children address when they are setting up their estate planning legal documents. There are other issues that often come into play but these are the basics. If you live in Louisiana and want to protect your minor children (of course you do!), let us know.