Often, clients approach us because a friend or relative shared the supposed wonders a Living Trust offers for “avoiding probate” and “tax savings.”  Of course, our clients want in on the good deal.  But, if your main goals are probate avoidance and cost savings, the Living Trust is likely not your best estate planning tool.  In practice, a Living Trust often costs more than a simple estate plan, it does not always avoid probate, and it provides no tax savings.  We clarify how an Estate Plan may better accomplish your goals.

For example, establishing a living trust cannot guarantee probate avoidance.  Rather, if you forget to correctly title an asset, or any future asset purchase in the name of the trust, then, the associated “pour over will” requires that probate still occur.  And, most living trust documents are neither simple nor inexpensive.  Rather, you pay not only for drafting the trust document, but also for re-titling all your assets. 

However, Louisiana law provides very streamlined methods for probate and Louisiana no longer imposes an inheritance tax (v. when an estate involves multi-state properties).  Further, because most living trusts are revocable, the federal tax code includes the trust assets as part of your Federal gross estate.  Still, with the federal estate tax exemption at $5.49M, estate tax avoidance is not an issue for the majority of estates.

On the other hand, a well drafted Will and Power of Attorney document can provide effective planning tools that also hedge heir disputes and the potential need for an interdiction.  And, a simple estate plan and the future probate with placement of heirs in possession is often the more cost-effective route.

Christie Tournet & Associates offers a "Legacies for All" Estate planning day on June 23 and 30, 2017.  Call to schedule your appointment.  Servicing Mandeville, Covington, Greater St. Tammany Parish, and Greater New Orleans Metropolitan areas.