Louisiana Living Trust

Info to Gather When Starting "Avoid Probate" Living Trust Based Estate Plan

I'm often asked, "Paul, what information do we need to gather and bring in to get started on our estate planning?" Well, this advice is based on a "typical" (even though there is no such thing as typical because every family's situation is unique and requires customization) person or couple who wants to set up an estate legal program and prevent their family and loved ones from having to go through the court-supervised judicial probate or Succession estate administration process. This typically involves establishing a Living Trust and transferring title to some of your assets into your trust while you are alive in order to make it easy for your Successor Trustee to access and disburse those assets when you die.

In general, there are three groups of information that must be provided: (1) family information; (2) asset information; and (3) substantive legal decisions.

(1) Family Information. This is typically simple. We are going to need the names of all who will participate in your estate planning program either while you are alive or after you die. This typically involves the full names (as you would have them listed in legal documents) of yourself and spouse, children, and sometimes grandchildren or others if they are included. We typically do not need the social security numbers of all of these people. although you may have to provide these numbers to financial institutions on items like IRA and annuity beneficiaries.

(2) Asset Information. When you get started, you should have a good working knowledge of what you own. It is particularly helpful if you gather, up front, all of your real estate legal descriptions. In Louisiana, these real estate legal descriptions can be found on the "Act of Sale" from when you purchased the property, or the "Judgment of Possession" if you inherited the property. We need these up front so that we can prepare the necessary transfer documents that will be signed at the same time that you sign your trust. Documents regarding investments and brokerage accounts don't have to be provided up front (but great if you have them), because you cannot transfer those assets to your trust until after your trust is signed.

(3) Substantive Decisions. All of the "who gets what, how they get it, who will be in charge" decisions are gathered through the dialogue you'll have with your estate planning attorney. These are important decisions and you need an experienced attorney to guide you through this. But it doesn't hurt give some good thought to these things in advance.

Paul Rabalais
Louisiana Estate Planning Attorney
www.RabalaisEstatePlanning.com

Living Trusts and Income Tax

As we discuss an estate planning program with our clients, some of our clients that they would like to arrange their estate to avoid the court-supervised probate estate administration at their death, but they are concerned about how setting up a Revocable Living Trust might affect their income tax situation during their lifetime.

When you create a Revocable Living Trust, you will be what's referred to as the "Grantor" or "Settlor." You can amend or revoke the trust at anytime, and you are entiled to receive all of the income that the trust assets produce during your lifetime.

While there are many different types of trusts, this type is arranged so that you are still taxed on all income earned by the trust assets. You continue to use your Social Security Number on all trust bank and investment accounts. The trust does not need its own Tax Identification Number. As long as you live, all of the income is reported on your own personal income tax return, so you won't need to file a separate trust tax return.

Some people like that their trust does not complicate or change their tax status, but the assets in the trust will avoid the Louisiana court-supervised probate estate administration upon their death.

www.RabalaisEstatePlanning.com

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