Certain documents – such as wills or powers of attorney – are standard when creating your estate plan. But what about adding a trust?
Including a trust in your estate plan gives you additional protection for yourself and your loved ones. A trust can also protect your legacy – creating a path forward for your wishes after your death.
What is a trust?
A trust is a legally binding agreement between the person creating the trust (the trustor) and the person or entity managing the trust and its assets (the trustee). Trustors may also be referred to as a grantor or settlor.
Like a will, a trust often has beneficiaries, such as your spouse, children, or charities. Under the terms of the trust, the beneficiaries will receive certain assets from the trust, according to your instructions.
Many types of trust exist. Keep reading to learn more about three common types of Louisiana trusts.
1. Revocable Living Trusts
A revocable living trust is a trust into which you can transfer your assets. Essentially, it serves as a legally-protected vessel for various types of assets, including:
- Financial accounts, such as bank or brokerage accounts
Because this type of trust is revocable, you can move assets in and out of this type of trust as necessary while avoiding probate down the road.
2. Irrevocable Trusts
Where you can transfer your assets in and out of a revocable trust, an irrevocable trust is the opposite. For irrevocable trusts, you can’t edit or modify once it’s established unless you have the beneficiary’s permission.
In other words, once you transfer your assets into an irrevocable trust, you lose all ownership of those assets.
So why would you want such a stringent type of trust in your estate plan?
An irrevocable trust can help shield your assets from estate or gift taxes – since they are removed from your estate. Additionally, an irrevocable trust can protect these assets from creditors.
A qualified estate planning attorney can help you determine if an irrevocable trust suits your situation.
3. Joint Trusts
You may prefer a joint trust if you’re creating it with another person, such as your spouse. In a joint trust, all marital assets are kept in a single trust.
Both spouses can legally control the assets held in a joint trust, serving as a revocable trust. When one partner dies, the surviving partner becomes the trustee, and the trust becomes irrevocable.
A joint trust may have less asset protection than a single trust for each spouse since a legal judgment over one spouse could impact all of the marital assets in a joint trust. However, a qualified estate planning attorney can assess your situation to determine if a joint trust is right for you.
Why Hire Losavio & DeJean, LLC?
We know that talking about estate planning issues can be complicated, causing stress and confusion. At Losavio & DeJean, LLC, we are committed to providing empathetic and compassionate legal counsel. When you work with us, your needs come first.
Contact us today to learn more.