Louisiana Trust

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.

Secrets Every Louisiana Couple Should Know - Is It Best to Have One Living Trust or Two?

We work with many married couples throughout Louisiana. Every once in a while we work with a married couple and their goal is to avoid probate and sometimes they ask the question, "Should we have one trust or should we have two trusts?"

Quite frankly, the answer is that most married couples, particularly the traditional families (a married couple that have children together), typically have one trust. They have the same beneficiaries so after both spouses pass away typically their children are going to share in the trust assets.

However, there are many married couples that meet later in life, they already have children, and perhaps they even signed a marriage contract prior to their marriage.  They do this because they wanted to make sure that all of the assets remain separate and each spouse has different heirs. Perhaps they want to provide for their spouse but ultimately each spouse wants to provide for and leave their assets to their perspective child or children. Often times in those cases we'll do two trusts, one for each spouse. Each spouse will get their own portfolio with all of the trusts, and the wills, and powers of attorney, and all of the other supporting documents that are included, all of the instructions for the people who are going to be in charge when you pass away. All that information goes in one place.

So be aware, married couples, if your intent is to avoid probate with a trust, you have a decision to make, whether you want to have one trust or two. Typically it's one, but when things are kept separate, it's often two. Give me a call if you would like to gain peace of mind by taking the first step to get your estate plan in order.

Use Trust To Keep Property In The Family For Children and Grandchildren

I met with recently with a woman who owned quite a bit of acreage near Jennings, Louisiana. It was important to her that the property stay in the family for at least the next couple of generations. She was in her early 80's, and she did not want one of the seven children to be able to sell of the property after she died. She stated that the children and grandchildren all enjoyed hunting, fishing, and spending time on the property.

She discussed whether it would be appropriate to get the property surveyed so that the big piece of property could be divided up into seven smaller tracts - one for each child. But she and some of her children were concerned that the family could never agree on which child should get which tract - but they felt that given some time, the kids could come to an agreement regarding who would get each tract.

On top of that, the woman was concerned that if she went into the nursing home, she would be forced to sell the property and use all of the money on her nursing home expenses. She realized that if she gave the property outright to her kids, that the kids would get a "carry-over basis" in the property causing there to be considerable taxes to be paid when the property would be disposed of in the future.

The woman ultimately came to the conclusion that it would be best for her to put that property in a trust now. The trust would be initially for her seven children, and it would continue to exist after the woman died. By setting up the right kind of trust, the woman will not be forced to sell the property if she goes in a nursing home in the future. Also, by setting up the right kind of trust, the family will enjoy the benefits of a step-up in basis when the woman dies.

The woman has one child in particular that the woman know will carry out the woman's intentions after the woman dies. This child, a son, will be named the Successor Trustee of the trust to handle matters after the woman dies. The child will have the ability to keep the property in tact, preventing a child from demanding their share, or the son could allocate tracts to each of the seven children in the event they all come to an agreement regarding who should get which tract.

Many parents and grandparents own land and they wish to keep the land in the family for use and enjoyment by children, grandchildren, or others. Louisiana and federal law limit your ability to do certain things. Anything you establish may have to comply the right way with property law, trust law, tax law, Long Term Care Medicaid law, and inheritance law. Make sure you work with the right person - and get it done right the first time - so that you keep the property in the family the right way for enjoyment by your descendants and other loved ones.