When it comes to estate planning in Louisiana, trusts are one of the most powerful tools available. A trust can help you protect assets, reduce estate taxes, avoid probate, and ensure your wishes are carried out smoothly after your death. However, not all trusts are created equal—and understanding the different types available in Louisiana can help you make informed decisions for your future and your family.
What Is a Trust?
A trust is a legal framework where one individual, called the trustee, holds and manages assets for the advantage of another, referred to as the beneficiary. The individual who establishes the trust is known as the grantor or settlor.
Trusts can be created during your lifetime (inter vivos trusts) or through your Last Will and Testament upon your death (testamentary trusts). Louisiana law recognizes various trust types, each serving a unique purpose.
Revocable Living Trust
A revocable living trust is one of the most commonly used estate planning tools. As the name suggests, the grantor can modify or revoke the trust at any time while they are alive and mentally competent.
Benefits:
- Avoids probate
- Allows for privacy (unlike Wills, trusts are not public record)
- Offers continuity of asset management in case of incapacity
Keep in mind that while this type of trust simplifies asset transfer after death, it does not protect assets from creditors or nursing home costs.
Irrevocable Trust
Unlike a revocable trust, an irrevocable trust cannot be altered once it’s established—at least not without court approval or the consent of all beneficiaries. However, this rigidity has some advantages.
Benefits:
- Offers protection from creditors
- Can reduce estate and gift tax liabilities
- May help with Medicaid planning
These trusts are often used for wealth preservation and protecting assets from long-term care expenses.
Testamentary Trust
A testamentary trust is created through a Will and does not take effect until your death. It’s commonly used when you want to leave assets to minor children or beneficiaries who may need help managing an inheritance.
Benefits:
- It lets you control how and when assets are distributed
- Useful for blended families, children from previous marriages, or beneficiaries with special needs
However, because it is tied to your Will, a testamentary trust must go through probate.
Special Needs Trust
If you have a child or loved one with a disability, a special needs trust allows you to leave them funds without affecting their eligibility for government benefits such as SSI or Medicaid.
Benefits:
- Protects benefit eligibility
- Provides long-term financial support
- Managed by a trustee who acts in the beneficiary’s best interest
This type of trust must be carefully drafted to meet state and federal requirements.
Charitable Trust
A charitable trust allows you to support causes you care about while potentially reducing estate or income taxes. It can be structured in several ways, including a charitable remainder trust (CRT) or charitable lead trust (CLT).
Benefits:
- Can provide income for you or your heirs during your lifetime
- Offers tax advantages
- Supports philanthropic goals
Charitable trusts are best suited for individuals with larger estates who are also focused on legacy planning.
Which Trust Is Right for You? Contact Us To Find Out
The right trust depends on your goals, assets, family structure, and long-term planning needs. Whether you’re trying to avoid probate, provide for a loved one with special needs, or reduce estate taxes, there’s likely a trust that fits your needs.
If you’re thinking about establishing a trust in Louisiana, do not leave your future to chance. Reach out to Losavio & DeJean, LLC today for a private consultation. We’re ready to assist you in exploring your options and creating a plan that ensures your peace of mind.