Living Trusts in Louisiana Probate

A common question we hear from clients planning their estate: “If I set up a living trust, can I avoid probate entirely in Louisiana?” The short answer is: yes, for property properly placed in the trust, but with important caveats specific to Louisiana’s civil-law tradition. Living trusts work in Louisiana, but they work differently than in most other states, and using them correctly requires understanding those differences.

This page explains what a living trust is, how Louisiana treats trusts differently from common-law states, what a trust can and can’t accomplish for avoiding probate (succession), and when a trust is (and isn’t) the right choice for Louisiana residents.

What a living trust is

A living trust (also called an inter vivos trust) is a legal arrangement created during the settlor’s lifetime in which:

• The settlor (the person creating the trust) transfers property into the trust
• A trustee holds legal title to the trust property and manages it according to the trust document
• One or more beneficiaries receive the benefit of the trust property, either immediately or on specified conditions
• Upon the settlor’s death (or another triggering event), the trust property passes to the beneficiaries according to the trust’s terms, without going through succession

The key advantage: property held in a valid trust at the settlor’s death passes under the trust’s terms, not under succession law. This avoids probate, can provide privacy (trust documents aren’t public records like probated wills), and can create more flexible distribution structures.

Louisiana is different from common-law states

Living trusts are ubiquitous in common-law states like Texas, California, and Florida. Louisiana’s civil-law system treats trusts somewhat differently:

Louisiana’s Trust Code

Louisiana has its own Trust Code (La. R.S. 9:1721 and following) that governs trusts created under Louisiana law. Louisiana trusts are generally valid and useful, but they operate under specific statutory rules that differ from the Uniform Trust Code adopted by many common-law states.

Some common-state trust structures don’t work in Louisiana

Certain trust structures that work elsewhere — particularly certain arrangements involving forced heirs — have specific Louisiana rules. For example:

• Trusts that try to dispossess a forced heir of their legitime face Louisiana-specific challenges
• “Spendthrift trusts” have Louisiana-specific rules about creditors’ rights
• Revocable trusts work but with specific formalities

Real estate in a trust works differently

In common-law states, transferring a house into a trust is a routine deed transaction. In Louisiana, real estate is also transferable to a trust, but Louisiana’s public records requirements mean the trust must be recorded properly to be effective against third parties.

What a living trust can accomplish in Louisiana

Avoid succession for trust property

Property titled in the name of a valid Louisiana trust at the settlor’s death passes under the trust document, not through succession. This means:

• No need to open a full succession for trust property
• No court filings, no descriptive list, no Judgment of Possession for that property
• The successor trustee simply takes over per the trust terms
• Real estate titled in the trust doesn’t need succession-based recording

This can dramatically speed up asset transfer and reduce costs.

Maintain privacy

Probated wills become public court records. Trust documents generally don’t. A trust can keep the details of family wealth transfer out of public view.

Provide for continued management during incapacity

A revocable living trust can continue operating through the settlor’s incapacity. The successor trustee takes over automatically, without needing a court to appoint a guardian or interdiction proceeding.

Enable conditional or staggered distributions

Wills can only create certain kinds of conditional distributions. Trusts can create more flexible structures — distributions tied to age, education, marriage, or specific life events. This is particularly useful for young beneficiaries or beneficiaries with spending or addiction issues.

Protect beneficiaries’ eligibility for government benefits

A properly-drafted special needs trust can allow a disabled beneficiary to inherit without losing Medicaid, SSI, or other means-tested benefits. This requires specific Louisiana-compliant trust provisions.

Provide liability protection

Certain irrevocable trust structures can protect trust assets from the beneficiaries’ future creditors, including potential divorce settlements or lawsuit judgments.

What a living trust cannot do in Louisiana

Avoid forced heirship

A Louisiana resident cannot use a trust to fully disinherit a forced heir (under 24 or permanently incapacitated). Louisiana’s forced heirship rules (La. C.C. art. 1493) reach into trust planning. Complex trust structures may address forced heir interests in specific ways, but a simple “all to my new spouse in trust” doesn’t work if a forced heir exists.

Avoid Louisiana estate tax

Louisiana has no estate tax, so this isn’t really an issue in Louisiana (unlike some states with state estate or inheritance taxes). Federal estate tax applies only to large estates (over ~$13M in current law) regardless of whether property is in a trust.

Replace a will entirely

Even with a comprehensive living trust, you still need a “pour-over will” to handle:

• Property that never got transferred into the trust
• Property you acquire after the trust is created but don’t move into the trust
• Naming guardians for minor children
• Directives for disposition of property not in the trust

Automatically avoid probate for all your property

A trust only avoids probate for property titled in the trust’s name. If you create a trust but never transfer your house, bank accounts, or investments into it, those assets still pass through succession. “Funding” the trust — actually moving assets into it — is often overlooked.

Automatically protect against creditors

Revocable trusts (which you can change or undo) generally don’t protect assets from the settlor’s creditors. Only certain irrevocable trust structures provide creditor protection, and even those have Louisiana-specific limitations.

Revocable vs. irrevocable trusts

Revocable trusts

The settlor retains the right to modify or terminate the trust. The settlor typically acts as their own trustee during life. Advantages: flexibility, ability to change plans. Disadvantages: no creditor protection, no tax benefits. Most Louisiana living trusts are revocable during the settlor’s life and become irrevocable at death.

Irrevocable trusts

Cannot be changed (or only under narrow circumstances). Used for: creditor protection, Medicaid planning, specific tax benefits, long-term family wealth planning. Disadvantages: loss of control, tax complexity, can’t “unwind” if circumstances change.

Most Louisiana residents doing basic estate planning start with a revocable trust.

The funding problem

The biggest real-world problem with living trusts is funding — actually transferring assets into the trust. Common funding failures:

• House is owned in the settlor’s name, not the trust’s name at death
• Bank accounts are in the settlor’s name, not the trust’s name
• Investment accounts are titled to the settlor, not the trust
• Vehicle titles are never changed
• New assets acquired after the trust is created aren’t retitled

When assets aren’t properly funded into the trust, they pass through succession at death — completely defeating the purpose of the trust. The “pour-over will” can address this, but the pour-over requires succession, which negates the probate-avoidance benefit.

Proper funding is an active, ongoing process, not a one-time setup.

When a living trust is a good idea

• Substantial real estate holdings, especially multiple parcels or out-of-state property
• Privacy concerns about what’s in your estate
• Desire to continue managing assets through incapacity without court proceedings
• Blended family needing specific, non-default distribution
• Special-needs beneficiary whose inheritance must be structured for government benefits eligibility
• Substantial wealth where the cost of the trust is outweighed by the cost of full successions across multiple properties and jurisdictions
• Business interests where continuity of management is critical

When a living trust may not be needed

• Simple estate with a single primary asset (a house and a bank account)
• All significant assets transfer by beneficiary designation (retirement accounts, life insurance)
• Standard married-with-children family where default rules work fine
• Budget constraint: a proper trust typically costs $1,500–$4,000 to set up, far more than a basic will
• Young family where circumstances will change significantly and rigidity isn’t helpful

For many Louisiana families, a well-drafted notarial testament plus proper use of POD/TOD designations, retirement beneficiaries, and life insurance beneficiaries accomplishes most of what a trust would without the complexity and funding burden.

Typical Louisiana living trust structures

Basic revocable living trust

Settlor is trustee during life. Successor trustee takes over at death or incapacity. Property passes to named beneficiaries per the trust. Common for married couples with straightforward wishes.

Joint revocable living trust

Married couple creates one trust together. Simplifies administration but has specific Louisiana community-property implications. Less common than separate trusts for each spouse.

A/B trust (bypass trust)

Splits into two trusts at first spouse’s death: a marital trust for the surviving spouse and a credit-shelter trust for the children. Used to maximize federal estate tax exemption for ultra-high-net-worth couples. Less common now that the federal exemption is high.

Special needs trust

Protects a disabled beneficiary’s government benefits. Must be drafted to specific federal and Louisiana requirements.

Irrevocable life insurance trust (ILIT)

Holds life insurance policies to remove them from the insured’s taxable estate. Useful for large estates where federal estate tax is a concern.

Testamentary trust (created by will)

Not technically a living trust, but worth mentioning: a will can create a trust that springs into existence at the testator’s death. Useful for specific situations but doesn’t avoid probate.

Frequently asked questions

Will a living trust avoid probate in Louisiana?

For property properly titled in the trust, yes. For property not titled in the trust, no — that property still goes through succession. Proper funding is critical.

Do I still need a will if I have a living trust?

Yes. A pour-over will handles property that isn’t in the trust, names guardians for minor children, and provides backup for things the trust doesn’t cover.

Can I be my own trustee?

For a revocable living trust, yes — most settlors serve as their own trustee during life. A successor trustee takes over at death or incapacity.

What does it cost to set up a Louisiana living trust?

Basic revocable trusts typically cost $1,500–$4,000 to establish. Complex trusts with tax planning or irrevocable features can cost $5,000–$15,000. Ongoing funding takes additional time and sometimes fees (retitling deeds, updating account registrations).

Can a trust override my spouse’s rights?

Only partially. Louisiana’s community property rules and surviving spouse protections still apply to some extent. A trust can direct where property goes after death, but can’t fully eliminate spousal rights without specific planning and (sometimes) spousal consent.

Can a trust protect my assets from creditors?

Revocable trusts generally cannot. Irrevocable trusts can provide some creditor protection with proper structuring, but Louisiana’s rules are specific and should be reviewed by an attorney.

What happens if I set up a trust but don’t fund it?

The trust exists but is largely useless. Assets not titled in the trust’s name pass through succession at death. The trust’s purpose — avoiding probate — is defeated.

Can I move out-of-state property into a Louisiana trust?

Yes, but the transfer must follow the rules of the state where the property is located. Out-of-state real estate in particular has its own deed and recording requirements.

Is a trust recorded publicly?

The trust document itself typically isn’t recorded. But deeds transferring real estate into or out of the trust do get recorded in the parish land records. Trust existence can be inferred from those records, though the trust’s terms usually aren’t public.

How often should a trust be reviewed?

Every 3–5 years, or more often after major life events (marriage, divorce, birth, death, significant asset changes, move to another state).

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Living trusts can be powerful estate planning tools for the right Louisiana residents — but they’re not right for everyone, and they require ongoing maintenance to work properly. If you’re considering whether a living trust makes sense for you, or if you already have one and want to make sure it’s properly set up, contact Scott Law Group – Estate Counsel or call us at (504) 264-1057. A short consultation can often identify whether a trust is worth the investment in your specific situation.

This article provides general information about Louisiana trusts and is not legal advice. Trust planning is highly fact-specific and requires review by a qualified Louisiana attorney.

How to Fund a Louisiana Living Trust (and Why Most Families Get This Wrong)

A living trust only avoids Louisiana succession for assets that are actually transferred into it — a step called “funding.” An unfunded or partially funded trust is one of the most common and costly estate planning mistakes Louisiana families make. Creating the trust document is just the beginning.

Assets That Must Be Re-Titled into the Trust

To fund your Louisiana living trust, you must formally transfer ownership of each asset to the trustee. For real property, that means recording a new act of donation or act of sale naming the trust as owner at the parish courthouse — your attorney must prepare this document. For bank and investment accounts, you contact each financial institution directly and re-title the account in the trustee’s name. For Louisiana LLC or business interests, the operating agreement and membership records must be updated. Vehicles are generally not transferred because Louisiana’s titling process makes it impractical; a pour-over will handles vehicles instead.

Assets with named beneficiary designations — life insurance policies, IRAs, and 401(k) plans — pass outside of both your trust and your will by contract, so they do not need to be titled into the trust. Review those beneficiary designations separately to ensure they align with your overall plan.

Living Trust vs. Will in Louisiana: Side-by-Side Comparison

Both documents serve different functions, and most Louisiana estate plans use both together. Here is how they compare on the issues that matter most:

Factor	Revocable Living Trust	Last Will and Testament
Avoids succession court?	Yes, for titled assets	No — triggers succession
Becomes public record?	No — remains private	Yes, once filed with court
Takes effect	Immediately upon funding	Only at death
Covers incapacity?	Yes — successor trustee steps in	No
Covers after-acquired property?	Only if re-titled into trust	Yes, automatically
Can override forced heirship?	No	No
Cost to establish	$2,500–$5,000+ (attorney fees)	$500–$1,500 (attorney fees)
Cost to settle at death	Low — no court process	Succession fees: 3–5% of estate

The key takeaway: a living trust costs more to create but significantly less to administer after death. For estates with substantial Louisiana real estate or a desire for privacy, the long-term savings typically justify the upfront investment.

Revocable vs. Irrevocable Living Trusts in Louisiana

Louisiana’s Trust Code (La. R.S. 9:1721 et seq.) recognizes both revocable and irrevocable trusts, and they serve very different purposes.

Revocable Trusts: Flexibility During Your Lifetime

A revocable living trust can be amended or revoked at any time while you are alive and competent. You typically serve as your own trustee, retain full control over the assets, and name a successor trustee to take over if you become incapacitated or die. Because you retain control, the IRS treats the assets as yours for income and estate tax purposes, and Louisiana creditors can reach trust assets during your lifetime. Revocable trusts are appropriate for most Louisiana families whose primary goal is avoiding succession and maintaining continuity during incapacity.

Irrevocable Trusts: Asset Protection and Tax Planning

An irrevocable trust generally cannot be modified once established. Because you surrender control over the assets, they are typically protected from your future creditors and may be excluded from your taxable estate. Irrevocable trusts are used for Medicaid planning (protecting assets while qualifying for long-term care benefits), special-needs planning (preserving a disabled beneficiary’s government benefit eligibility), and large estates seeking to reduce federal estate tax exposure. The trade-off is loss of flexibility — the terms are largely permanent.

What Does a Louisiana Living Trust Cost — and How Does It Compare to Succession?

A properly drafted revocable living trust package in Louisiana — including the trust agreement, pour-over will, durable power of attorney, and healthcare directive — typically runs $2,500 to $5,000 in attorney fees, depending on complexity. Add recording fees for real estate transfers and bank paperwork time, and the total out-of-pocket cost at setup is usually $3,000 to $6,000 for most families.

Compare that to Louisiana succession: court costs, attorney fees, publication fees, and executor compensation typically total 3 to 5 percent of the gross estate value. On a $500,000 estate, that is $15,000 to $25,000 in succession costs — plus 6 to 18 months of court processing time during which heirs cannot freely access or sell assets. For families with significant real estate or a desire to spare their heirs the succession process, a living trust frequently pays for itself many times over.

Living Trusts and Louisiana’s Forced Heirship Rules

This is one of the most misunderstood areas of Louisiana estate planning, and it is critical to get it right.

Under Louisiana Civil Code Article 1493, forced heirs — children under age 24, or children of any age who are permanently incapacitated — are entitled to a “forced portion” of a parent’s estate regardless of what any document says. For one forced heir, the forced portion is one-fourth of the estate. For two or more, it is one-half. A revocable living trust does not defeat this right. Because the settlor retained control of the assets during life, Louisiana courts treat those assets as part of the estate for forced heirship calculation purposes.

Irrevocable trusts funded well in advance of death are more complicated and require careful legal planning. If you have children who qualify as forced heirs, any trust plan must be designed with forced heirship compliance built in — not treated as an afterthought.

Common Mistakes Louisiana Families Make with Living Trusts

After years of handling Louisiana succession matters, the following errors come up repeatedly:

• Creating the trust but never funding it. A trust document sitting in a drawer with no assets titled in its name accomplishes nothing. The estate still goes through succession.
• Forgetting after-acquired property. Real estate purchased, inherited, or otherwise acquired after the trust is created must be deliberately titled into the trust. It does not flow in automatically.
• Assuming a trust replaces a will. You still need a pour-over will to catch assets outside the trust — and to name a guardian for minor children, which a trust cannot do.
• Using an out-of-state trust form. Louisiana’s civil law system has specific trust code requirements that differ from common law states. A trust drafted under Texas or California law may not function correctly for Louisiana real property.
• Believing a trust defeats forced heirship. A revocable trust does not override the rights of forced heirs under Louisiana Civil Code Article 1493. Families who rely on this strategy may face litigation from forced heirs after the settlor’s death.
• Not updating the trust after major life changes. Marriage, divorce, the birth of children, or the death of a named trustee or beneficiary all require trust review and often amendment.

Can a living trust own Louisiana community property?

Yes. Married couples in Louisiana can transfer community property into a jointly-held revocable trust. Both spouses typically serve as co-trustees and co-beneficiaries during their lifetimes. The community property character of the assets is generally preserved inside the trust, which matters for step-up in tax basis calculations at death. Your attorney should draft the trust with Louisiana community property rules in mind.

Does Louisiana recognize trusts from other states?

Louisiana will generally recognize a valid out-of-state trust, but if the trust holds Louisiana real property, Louisiana law governs that property regardless of where the trust was created. An out-of-state trust may need to be reviewed and potentially amended to comply with Louisiana’s Trust Code before it can be used effectively here.

What happens to my living trust if I move to Louisiana from another state?

If you move to Louisiana with an existing revocable trust, you should have a Louisiana estate planning attorney review it. Louisiana’s forced heirship rules, community property system, and Trust Code requirements are different enough from common law states that your existing document may need amendments — particularly if you own or plan to acquire real property in Louisiana.

Can a living trust protect assets from Medicaid in Louisiana?

A revocable living trust does not protect assets from Medicaid because the state treats those assets as available to you (the settlor) since you retain control. Medicaid asset protection requires an irrevocable trust structured specifically for that purpose, funded at least five years before a Medicaid application is filed — a strategy that requires specialized elder law planning well in advance of any nursing home need.

Is there a simpler way to avoid succession for a single asset?

Sometimes. Louisiana allows a usufruct arrangement where a surviving spouse receives the right to use property during their lifetime, with the naked ownership passing to children. For bank accounts, a payable-on-death (POD) designation passes funds directly to named beneficiaries without succession. For a single piece of real estate, a transfer-on-death deed is not available in Louisiana — real property typically requires either succession, a trust, or an inter vivos donation.

Do I need a living trust if my estate is small?

Not necessarily. Louisiana’s small succession affidavit procedure allows heirs to transfer certain assets without court proceedings if the estate’s gross value is $125,000 or less and does not include immovable property (real estate). If your estate exceeds that threshold, or includes real property, a trust may be worth the investment. An estate planning attorney can help you weigh the costs of trust creation against the likely cost of succession for your specific situation.

How a Revocable Living Trust Interacts With the Louisiana Succession Proceeding

The most important thing to understand about a revocable living trust in Louisiana is what it actually does — and what it does not do. A trust controls only the assets that were properly transferred into it during the grantor’s lifetime. Those trust assets pass directly to beneficiaries after the grantor’s death according to the trust document, without any court involvement. Assets that were never transferred to the trust, however, remain titled in the grantor’s individual name at death and must pass through the formal Louisiana succession proceeding before they can be distributed to heirs. This is a fundamental distinction that shapes every trust-based estate plan in Louisiana.

Succession is required for any assets that were not properly transferred to the trust before the grantor’s death — a common situation that means even trust-based Louisiana estate plans frequently involve a partial succession proceeding alongside the trust administration. This happens more often than most families anticipate. People sign trust documents with the best intentions and then continue living their financial lives — opening new bank accounts, acquiring additional real estate, inheriting property from others — without taking the necessary steps to transfer those assets into the trust. The result is an estate that is partially trust-administered and partially subject to the succession court, requiring coordination between two separate legal processes running simultaneously.

When an estate includes both trust and non-trust assets, the succession representative and the successor trustee must work in close coordination. The succession representative handles the court proceeding for individually owned assets — filing the petition, inventorying estate property, notifying creditors, and ultimately obtaining a Judgment of Possession that transfers the non-trust assets to the appropriate heirs. The successor trustee manages the trust assets outside of court — notifying beneficiaries, inventorying trust holdings, paying the trust’s share of debts and expenses, and making distributions according to the trust terms. These two roles are legally distinct but practically intertwined, and in many cases both roles are held by the same person, which requires careful record-keeping to keep the two administrations separate.

Many trust-based estate plans include a pour-over will specifically designed to address unfunded assets. A pour-over will operates as a safety net: it directs that any assets the grantor owned individually at death — assets that were never transferred to the trust — should pass through the succession and then be “poured over” into the trust at the conclusion of the succession proceeding. This approach allows the trustee to ultimately receive all assets and make a single, consolidated distribution to beneficiaries according to the trust terms, rather than having some assets distributed through the succession and others distributed by the trustee. The pour-over will is an important tool, but it does not eliminate the succession proceeding — it simply routes the succession’s output into the trust.

Louisiana community property rules require careful attention when funding a revocable trust — the community property regime gives each spouse equal rights in community assets, and transferring community property into a trust without both spouses’ informed consent and proper documentation can create title complications that surface during the succession or trust administration. Beyond community property concerns, the practical reality is that a revocable living trust does not completely eliminate succession costs for most Louisiana families. If assets remain outside the trust at death — which is extremely common — the family will incur both the attorney fees and court costs of the succession proceeding and the administrative costs of the trust administration. The goal of a well-funded trust is to minimize the assets passing through succession, not necessarily to eliminate succession entirely, and achieving that goal requires ongoing attention to trust funding throughout the grantor’s lifetime.

Administering a Louisiana Revocable Trust After the Grantor’s Death

When a revocable living trust grantor dies, the trust becomes irrevocable and the successor trustee named in the trust document steps into authority over the trust assets. Unlike a succession representative, the successor trustee does not need court appointment and does not operate under court supervision. The successor trustee’s authority derives entirely from the trust document itself, and the administration of trust assets proceeds outside the court system entirely. This is one of the primary practical advantages of a properly funded trust — the successor trustee can begin managing and distributing trust assets relatively quickly, without waiting for court filings, hearings, or judicial approval.

The successor trustee’s responsibilities after the grantor’s death include notifying beneficiaries of the trust’s existence and their interests, inventorying all assets held in the trust, determining the trust’s share of the decedent’s debts and taxes, paying those obligations from trust assets, and ultimately distributing the trust’s remaining assets to beneficiaries as specified in the trust document. In Louisiana, the successor trustee must also obtain the grantor’s death certificate, notify financial institutions of the change in trustee status, and file any required tax returns for the trust. These administrative steps take time, but they proceed on the trustee’s own timeline without court deadlines driving the process.

When the estate includes both trust and non-trust assets — which, as discussed above, is the common situation — the successor trustee and the succession representative must coordinate on several overlapping issues: which assets belong to which administration, how debts and expenses are to be allocated between the trust and the succession estate, and how the pour-over will’s direction to route succession assets into the trust will actually be accomplished. A Judgment of Possession is not required for assets held in the trust at the time of the grantor’s death — but if the pour-over will routes additional assets through the succession into the trust, those assets do require a completed succession and recorded Judgment of Possession before the successor trustee can receive and distribute them. This means the trust distribution cannot be fully completed until the succession is concluded for the poured-over assets.

Louisiana’s Trust Code, found in Title IX of the Civil Code Ancillaries, governs the administration of all Louisiana trusts. The Trust Code imposes duties of loyalty and prudence on the trustee, requires the trustee to keep beneficiaries reasonably informed about trust administration, and establishes the trustee’s obligation to account for trust assets and transactions. While trust administration is far less formal than the succession proceeding, it is not without legal structure and accountability. Beneficiaries have legal rights under the Trust Code to demand information and accountings, and a trustee who fails to meet the Code’s standards can be removed and held liable for resulting losses.

Louisiana’s intestate succession laws govern any assets that fall outside both the trust and the will — property that was never transferred to the trust and is not covered by the pour-over will or a beneficiary designation passes by intestate succession, potentially to heirs different from those the grantor named as trust beneficiaries. Beyond this concern, one of the most meaningful advantages of trust administration over succession is speed. A well-organized successor trustee with a properly funded trust can complete the trust administration and make distributions to beneficiaries within a matter of weeks after the grantor’s death. A Louisiana succession, by contrast, takes a minimum of two to three months even in uncomplicated estates, and can extend to a year or more when the estate is complex, assets are difficult to value, or heirs are in disagreement. For families with immediate financial needs after a loved one’s death, this timeline difference is significant.

Common Trust Funding Mistakes That Force Louisiana Families Into Succession

The single most common trust funding mistake in Louisiana is signing the trust document without recording an act of donation or deed transferring real property into the trust. Louisiana law requires a notarized act — typically called a deed or an act of donation — to transfer ownership of immovable property. Signing the trust agreement itself does not transfer real estate into the trust. Many families believe their home or other property is “in the trust” because the trust document describes it, only to discover at the grantor’s death that the property was never re-titled and therefore remains in the grantor’s individual name, subject to the succession proceeding. This is the mistake that causes the most frustration because it is entirely preventable and is often not discovered until after the death, when it is too late to correct without a full succession.

A second common mistake is opening new bank accounts, investment accounts, or certificates of deposit after the trust is created without titling those accounts to the trust. The trust holds only what has been affirmatively transferred to it. When families open new financial accounts — whether after a windfall, after consolidating accounts at a new institution, or simply as new savings vehicles — those accounts default to individual ownership unless the account holder specifically designates the trust as owner or beneficiary. Over time, a trust created years earlier may hold only a fraction of the grantor’s total financial assets, with the remainder scattered across individually owned accounts that will require succession to transfer.

Purchasing real estate after the trust is created and failing to title it to the trust at closing is the third major funding mistake. When a grantor buys a new home, a vacation property, or an investment property after the trust is established, the closing attorney or title company will title the property to the buyer as an individual unless specifically instructed otherwise. The grantor must affirmatively direct, at closing, that the property be titled to the trust — and must provide the closing attorney with the trust name, the trustee’s name, and documentation of the trust’s existence. If this step is missed at closing, a corrective deed must be executed afterward to transfer the property to the trust, which requires a separate notarized act and recording in the parish conveyance records.

Refinancing an existing property is the fourth funding problem Louisiana families regularly encounter. When a grantor refinances a mortgage on property held in a revocable trust, most lenders require the property to be temporarily transferred out of the trust and into the grantor’s individual name as a condition of the refinancing. This is a standard lender requirement, and it is not inherently problematic — but it becomes a serious problem when the property is never transferred back into the trust after the refinancing closes. In many cases, the grantor assumes the closing attorney or lender handled the re-transfer, or simply forgets that the property was taken out of the trust. The result is that a property the grantor believed was trust-owned is actually individually owned at the time of death, requiring succession.

The fifth and most systematic mistake is failing to review and update trust funding on a regular basis. A revocable living trust is not a one-time event — it requires ongoing maintenance throughout the grantor’s lifetime. Assets are acquired and disposed of continuously; beneficiary designations change; new accounts are opened; properties are bought and sold. Without an annual review of what the trust holds versus what the grantor owns individually, the gap between “trust assets” and “total estate” tends to grow over time. Estate planning attorneys experienced with Louisiana trust administration typically recommend an annual funding review — comparing the trust’s schedule of assets against the grantor’s complete asset inventory — to catch and correct funding gaps before they force the family through a succession proceeding that proper planning was meant to avoid.

Step-Up in Tax Basis: A Key Reason Not to Gift Property Before Death

One of the most consequential — and most overlooked — tax planning considerations for Louisiana families involves the step-up in cost basis that applies to assets transferred at death. Understanding how a living trust interacts with this rule can mean the difference between a large capital gains tax bill and none at all for your beneficiaries.

Under federal tax law (IRC § 1014), when someone inherits property through a succession or receives it from a trust after the owner’s death, the beneficiary’s starting cost basis is generally the fair market value of the property on the date of the owner’s death — not what the original owner paid for it. This “step-up in basis” means that if a parent paid $100,000 for a home in 1990 and it was worth $400,000 at their death, the child who inherits it starts with a $400,000 basis. If the child sells the property for $400,000 shortly after receiving it, there is no capital gains tax — all the appreciation that occurred during the parent’s lifetime passes to the child free of income tax.

A properly structured revocable living trust preserves this step-up in basis for trust assets. Because the settlor retains control of a revocable trust and the assets are treated as the settlor’s for income and estate tax purposes during life, the beneficiaries receive a stepped-up basis in trust assets at the settlor’s death — just as they would for assets passing through succession. The step-up in basis is available whether property passes through a trust or through succession.

However, the step-up in basis is NOT available for property given away as a gift during the donor’s lifetime. If a parent transfers their home to a child as a gift while they are living, the child takes the parent’s original cost basis (called a “carryover basis”). In our example, the child who receives a $400,000 home as a gift holds a basis of $100,000. If the child later sells for $400,000, the child owes capital gains tax on $300,000 of gain. Gifting appreciated property to avoid succession costs frequently creates a larger income tax bill for the recipient than the succession costs it avoided.

This basis analysis is one reason Louisiana estate planning attorneys advise clients against deeding their homes to their children during life to “avoid succession.” Succession costs are real, but a well-funded living trust achieves the same succession-avoidance goal while preserving the step-up in basis that a lifetime gift destroys. For Louisiana families with significantly appreciated property — real estate, farmland, mineral interests, closely held business interests — the step-up in basis analysis should be part of every estate planning conversation before any asset transfer occurs.

Choosing a Successor Trustee in Louisiana: Who Should Serve and What the Law Requires

The successor trustee is the person or institution who takes over management of your living trust when you can no longer serve — whether because of incapacity during your lifetime or death. The choice of successor trustee is one of the most important decisions in the trust drafting process, and it is one that Louisiana families frequently get wrong by defaulting to the most obvious family member without thinking through the practical and legal implications.

Under Louisiana’s Trust Code (La. R.S. 9:2082 et seq.), a trustee owes statutory duties to the trust beneficiaries, including the duty of loyalty (acting in the beneficiaries’ best interests, not the trustee’s own), the duty of prudence (managing trust assets with the care of a reasonably skilled trustee), the duty to keep trust assets separate from personal assets, the duty to provide regular accountings, and the duty to treat all beneficiaries impartially unless the trust specifically directs otherwise. These are legal obligations, not suggestions — a trustee who breaches them can be removed and held personally liable for resulting losses. When you name a family member as successor trustee, they assume these legal obligations whether or not they fully understand them at the time.

Individual family members make good successor trustees when they have the organizational skills, financial knowledge, and temperament to manage assets impartially among beneficiaries who may have competing interests. The most common problem with family trustees is not dishonesty but rather the difficulty of treating siblings impartially when the trustee is one of those siblings. A family trustee who is also a beneficiary faces inherent conflicts between their own interest and their legal obligation to administer the trust for all beneficiaries equally. In a trust with a single remaining beneficiary, this conflict is minimal. In a trust with multiple beneficiaries receiving distributions over time, it can become a significant source of dispute.

Corporate trustees — trust companies and bank trust departments — offer professional management, institutional continuity, and impartiality among beneficiaries. The tradeoffs are cost (typically 0.5% to 1.5% of trust assets annually), less personal attention, and sometimes a conservative investment approach that family members find frustrating. For larger trusts — generally above $500,000 in assets — corporate trustee fees can be worth it for the reduced family conflict and professional accountability. For smaller trusts, the fees may consume a disproportionate share of assets over time.

Louisiana families often split the difference by naming a family member as co-trustee with a corporate trustee, or by naming an individual as primary trustee with a corporate trustee as the mandatory backup. Your trust document should always name at least one alternate successor trustee in case your primary choice is unavailable — a trust without a viable trustee creates exactly the court involvement the trust was designed to avoid, because a court must then appoint a trustee under La. R.S. 9:2091.

Trusts and Louisiana’s Usufruct: Two Different Tools for Surviving Spouse Planning

Louisiana offers two distinct legal structures that can serve similar goals in surviving spouse planning: the usufruct and the living trust. Many Louisiana families default to the usufruct because it arises automatically under state law in many situations. But the living trust offers advantages that the usufruct does not, and understanding the differences helps you choose — or combine — these tools effectively.

Under Louisiana Civil Code Article 890, a surviving spouse who was not judicially separated at the decedent’s death is entitled to a legal usufruct over the decedent’s share of the community property until remarriage or death, with the children holding naked ownership of that share. This default usufruct applies automatically — no trust is needed. The surviving spouse can use and enjoy the community property (including living in the family home) without court proceedings, and the children’s naked ownership interests consolidate into full ownership when the usufruct ends. For many standard married-with-children Louisiana families, the statutory usufruct accomplishes the primary goal of protecting the surviving spouse without any additional planning documents.

A living trust can replace or supplement the usufruct in situations where the default rules don’t work well. Consider a blended family where the surviving spouse has children from a prior relationship and the decedent’s children are from that prior marriage — the automatic usufruct in favor of the surviving spouse gives the spouse control over community property while the decedent’s children hold naked ownership, which can create conflict. A trust can direct that the surviving spouse receives distributions from a marital trust for life, with the trust assets passing to the decedent’s children at the spouse’s death — a more structured outcome than the usufruct provides in complex family situations.

The usufruct has one practical disadvantage the trust solves: the usufructuary (the surviving spouse) generally cannot sell, mortgage, or donate immovable property without the naked owners’ consent. This can cause real problems when the surviving spouse wants to sell the family home and downsize, but adult children either cannot be reached or withhold consent. A trust, by contrast, gives the trustee authority to manage, sell, and reinvest assets without requiring beneficiary consent for routine decisions, provided the trust document grants this authority. For surviving spouses who may need flexibility to manage their living situation as they age, a trust can provide more practical control than a usufruct arrangement.

The tax implications of the usufruct versus the trust also differ at the surviving spouse’s death. When a usufruct ends at the surviving spouse’s death, the naked owners’ interests consolidate into full ownership — generally not a taxable event for Louisiana purposes. With a trust, the distribution of trust assets to remainder beneficiaries at the surviving spouse’s death follows the trust terms and may have different income tax consequences depending on how the trust is structured. The choice between usufruct and trust planning should be made deliberately with an estate planning attorney — not by default — because the two tools produce meaningfully different outcomes for complex families or significant estates.