» Avoiding Probate with Trusts and Transfer on Death
Steering Clear of Probate with Trusts
It’s a good day at Field Law when we can help a client get peace of mind they didn’t know was possible because they know after their death, their loved ones will have an easy asset transfer process without having to go through probate.
A probate avoiding trust is not just for the rich anymore. A trust can be a simple yet very flexible estate planning tool that we often use to avoid the tedious and costly probate process.
A Will is designed for one thing – to be probated. Probate in Louisiana is when we file your Will with the courts after you pass away.Even a well written Louisiana Will from Field Law cannot avoid probate. Our court system continues to be underfunded and each Judge has a full docket, so sometimes it can take time to move your succession through the probate process. If an issue arises during probate, it can take months to get in front of the Judge to fix it.
With a probate avoiding trust from Field Law, we can remove the probate process from your estate plan – meaning your wishes will be carried out privately among your loved-ones with only minimal attorney work and no Judge involved.
No Tax Issues
Trusts don’t mean you will owe more taxes or have to file separate returns. Louisiana law makes clear that you can keep your homestead exemption when using a Probate Avoidance Trust.
The Probate Avoidance Trust is also setup as a grantor trust, meaning no separate income tax return and you still get your important step up in basis for capital gains.
Of course, if you have tax questions, it is always best to speak to your CPA. We will happily work with your CPA to ensure no issues down the road.
Protection Starts Immediately for Incapacity
Probate Avoidance Trusts have benefits that start immediately. A major concern for many of our elderly clients is that they may be taken advantage of during moments of limited capacity or duress.
With a Probate Avoidance Trust, you can require that a trusted loved one sign off on certain types of actions – such as donating property.
You can also, when the time comes, transfer full control to a trusted loved one so that you cannot be taken advantage of during moments of limited capacity or incapacity. If you regain capacity, that trust loved one can transfer full control back to you.
Asset Transfer on Death
With a well written trust, your Field Law estate attorney can quickly implement your wishes upon your death. Typically, minimal paperwork is needed by your banks, investment advisors, the Office of Motor Vehicles, and the clerk of court to transfer your accounts, cars and house to your chosen beneficiaries. This paperwork is usually only the type of paperwork you would need to transfer the same to your beneficiaries if you were alive, nothing more and with no costly court orders.
When crafting a probate avoiding estate plan with a trust, we work with you, your bank, your HR professionals and your financial advisors to setup and transfer your assets now versus waiting until you pass away to have your executor do the work after filing your Will with the courts.
Start with the same Choices as a Will
Just like a Last Will and Testament, you will be able to choose who will inherit your property, who will be tasked with handling the responsibilities of managing and transferring your property, and who will manage any assets left to your minor children.
Continued Protection After Death
A trust continues for as long as you provide and can be setup to last a few generations. Here are some reasons to keep the trust going after your death:
Protecting Young Beneficiaries. While we sometimes have a loved one who is wise beyond their years, we often have one that is not. Ensuring that that a beneficiary matures in the handling of their affairs before giving them full control of an inheritance is often a silver lining of a trust. An inheritance is not a lottery winning – it is something you have worked your whole life to build and it should not all be spent in six months.
Creditor Protection. You can ensure a loved-one’s inheritance is protected from their creditors and from those that might manipulate them by holding everything in your spendthrift trust until they reach a certain age or for their life. This can be critical if your beneficiary has high-risk financial investments or has difficulty keeping up with their bills.
Mental Health. A trust also protects a loved-one from themselves if they have proven to have immature financial skills or addiction issues. While it is never easy to recognize a loved one’s short comings, you can take the prudent and responsible step to ensure that the support you provide them now continues after you are gone.
Generational Gifts. One of the benefits of a trust is you can give property to a loved one for their life, then give it to someone else when they pass. Want to ensure your grandchildren inherit from you? You can leave property to your children, but then everything can transfer to only your grandchildren when your children pass away. You cannot do this with a Will itself.
Keeping it in the Family. With a trust you can ensure that family property is kept in the family for generations to come – preventing it from being splintered or lost to a non-relative. Your trust can also provide a funding source to ensure the bills are paid and your family can enjoy their shared property without worry and without having to come out of pocket.
Long Term Savings with a Trust
A probate avoiding trust plan typically costs more upfront than a Will only plan. This is largely due to the combination of planning and executing the plan. You are making the plan by drafting up the trust to meet your goals, but then you are transferring your assets into the trust – something that would have to be done in probate otherwise. But this means you are saving all of the attorney’s fees and court costs of a probate succession.
While this can be daunting, consider that if you are married, your probate avoiding trust avoids two successions herein in Louisiana! If you also jointly own a condo at the beach in another state, your probate avoiding trust plan avoids four probate proceedings! The savings can quickly add up.
Contact Us For A Free Initial Consultation
Field Law is based in Baton Rouge, but we serve clients throughout Louisiana. We are also pleased to work with clients outside the state on matters related to Louisiana estate law and successions. To arrange a free consultation, call us at 225-341-8221, or send us an email.