An elderly gentleman comes into my estate planning law firm office and says, "Paul, I've bee fortunate accumulating an estate. My kids are well off and my ten grandchildren are all doing great financially. I'd like to leave $1 million for my great grandchildren, but the problem is I only have one great grandchild right now, but I know I will have many more because I have 10 grandchildren. Can I do this?"
Normally you cannot leave assets to a trust for the benefit of people who are not born at the time of the creation of the trust. But there is an exception for Class Trusts.
A person may create a trust in favor of a class consisting of some or all of the children, grandchildren, great grandchildren, nieces, nephews, grandnieces, grandnephews, and great grandnieces and great grandnephews of the settlor or the settlor's current, former, or predeceased spouse, or any combination thereof, although some members of the class are not yet in being at the time of the creation of the trust, provided that at least one member of the class is then in being.
Since Great Grandpa wants to leave $1 million for the benefit of all of his great grandchildren, even though many are not born when the trust is created, this is permissible since great grandchildren are one of the permitted classes under the class trust provisions.
Since this trust may last for many decades, and since it is irrevocable after Great Grandpa dies, the trust must be carefully prepared. Provisions regarding how income and principal can be used become important. When the class closes, and when the trust ends are important items to address when creating a Louisiana class trust.
In addition, our Louisiana Trust Code provides what happens to a class member's interest if he or she dies prior to the creation of the trust, or after the trust is created.
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Louisiana Estate Planning Attorney
Phone: (225) 329-2450