PROBATE AVOIDANCE WITH A LIVING TRUST

What is Louisiana Probate?

Office Locations:  Madisonville (985) 792-5220; Ponchatoula, Louisiana (985) 845-3414

Although most clients or potential clients coming into my office to discuss creating a Living Trust to avoid Probate, many do not really understand what Probate involves.  For our discussion, Probate can be thought of as the presentment to the Court of a Will whereby the Court confirms its authenticity and validity then proceeds towards the formal process of gathering a list of all assets and liabilities.  The ultimate goal is to distribute assets to heirs after payment of the estate debts.  If there is no will a similar procedure takes place based on the states inheritance laws under a Succession.  A person dying with a will dies “testate” whereas a person without a will dies “intestate”.  The terms “Probate” and “Succession” are used somewhat interchangeably in Louisiana.  Court records will always be titled something like “Succession of John Doe”.

Why avoid Probate?

The Probate or Succession process can be lengthy and expensive.  Unless a very simple Estate is involved, this usually means getting a complete list of all assets and liabilities and all of their values, having a person confirmed as executor (if a last will appoints someone) or administrator to the estate.  This person has substantial obligations and authority, but generally must request court approval on most actions.  For example, if the executor wants to sell a piece of real estate, he or she must petition the court for authority with all information as to the specific property, the anticipated sale price, possibly appraisals justifying the price, publish notice of the request and leave time for potential objections by other heirs or legatees etc.  Then there is a waiting period before the sale can take place.  All of this is very cumbersome and costly.  It could also have the practical effect of causing a loss of the sale.  I think you get the point as to why people wish to avoid Probate and this is but one example.

Why not always use a Living Trust?

With all of these reasons to avoid probate why not always use a Living Trust to accomplish Probate Avoidance?  There are a number of reasons, but ultimately a Living Trust may be the best solution.  In 2001 the Louisiana legislature provided for independent administration of estates.  This streamlined the Probate or Succession process dramatically for most estates.  The independent administrator (male) or administratrix (female) {for simplicity the more generic term will be used} now has the authority to sell real estate without going to the court for permission and without publication in the newspaper and all of the associated delays and expenses.  This can drastically reduce the cost of Probate.  Additionally, some small estates (under $75,000) can be closed out by affidavit under streamlined procedures.  Other estates not meeting the small estate criteria that are clearly solvent with little or no debt can also be closed out quickly and inexpensively as long as all heirs and/or legatees are in agreement that an administration is unnecessary.

Does a Living Trust Avoid Probate in Louisiana?

To the extent ALL assets are placed in a Living Trust, then in theory it will avoid probate.  It is not practical to think that all assets will be placed in the trust.  Thus, a “pour over” will is used for those assets not in trust.  For example, furniture and fixtures, jewelry, a vehicle etc. may not have been placed in trust and the pour over will then leaves all property not already in the Living Trust to the Trust to be controlled by the Trust instrument.  That Will must be submitted to the court for Probate in a succession proceeding opened for the decedent.  This does not have to be an expensive or drawn out proceeding, but certainly it will require probate on the assets left out.  The decision on whether to use a Living Trust or a traditional Last Will and Testament must consider this factor and those issues previously discussed. Remember, Louisiana law governs the probate procedures which must be followed.  However, Louisiana law also has streamlined provisions as discussed above that make probate less onerous than it used to be.  This has created somewhat of a shift back towards traditional planning.

Out of State Real Estate

One excellent use of a Living Trust is for Probate of Property outside of your state of residence.  If you are a Louisiana resident and have property in Mississippi (or vice versa) use of a Living Trust to avoid out of state (Ancillary) Probate is a good way to accomplish this and save time, attorney’s fees and inconvenience.

 

In conclusion, implementation of a living trust involves numerous legal and tax issues as while as your personal situation e.g. your age, health, marital status, children (if any) and their ages, the types of assets you own, family harmony (or lack thereof) as only a few of the considerations to be examined.

Disclaimer: The statements made herein are general in nature and do not constitute legal advice and should not be relied upon.  They provide a general discussion on the law in this area as it relates to Louisiana Living Trusts and do not constitute legal advice.  If you feel you need an attorney you should see a licensed attorney and establish an attorney/client relationship and give your legal representative all facts needed to evaluate your situation.  Provided by A. David Aymond, LLC, Attorney at Law, LL.M. in Taxation.  Please visit the main firm website at www.aymondlaw.com for information on our legal services provided in Estate Planning, Wills & Trusts, Business Law, IRS Liens and Levies, Medicaid Long Term Care Planning and Asset Protection.

Tags:  Avoid Probate, Louisiana Living Trusts, Trusts to Avoid Probate, Will and Trust Lawyer, Will and Trust Attorney, Louisiana Trust Attorney

 

2 thoughts on “PROBATE AVOIDANCE WITH A LIVING TRUST

  1. Hello,

    I just want to clarify to make sure I am understanding correctly.

    So if a person has ALL of their assets listed in a Living Trust then they can avoid Probate all together.

    But Since this highly unlikely it is recommended to along with the Living Trust to have a pour over will. The pour over will and the Living Trust will be presented to the court of Probate and will most likely speed the process of Probate up.

    So the main difference from having your assets placed in a Living Trust and a Pour Over Will is to expedite the process?

    What is the effect of creditors? Do creditors have excess to assets placed inside of the Living Trust? In finance we can place monies in an annuity to avoid probate and protects the monies from creditors. The only draw back is, there are some fee to pay and surrender charges for the first few years (it varies).

    Christopher Downs
    Financial Advisor

    • Placing the assets in a Living Trust as described in the article would have give no protection against creditors. This type of trust is revocable by the settlors and as such they continue to have control over all of its assets until it becomes irrevocable (usually at the death of a settlor). The assets placed in the Living Trust could avoid probate proceedings. The Pour Over Will must go through probate, but at least the assets end up in the trust for administration by a trustee subject to the terms and conditions of the trust instrument. I hope this helps. Thanks for visiting.

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