Ezell Law Firm, LLC
Call for a free phone consultation
Local 225-763-2272 Toll free 888-511-8717
A Louisiana Full-Service Law Firm, Dedicated to Your Needs

Tax rates could influence how a trust is designed

Louisiana residents who receive money from a trust must generally account for it on their tax return. If money held in a trust generates revenue that remains inside of it, the trust will be responsible for paying taxes on those funds. As a general rule, the tax bracket for individuals is lower than the tax bracket occupied for a trust. Trusts pay a 37% tax rate if they generate annual income exceeding $12,950.

Therefore, it can often be beneficial to distribute funds to an individual who is likely to be in a lower income tax bracket. However, the trustee is obligated to follow the trust's instructions when determining how to allocate assets. In some cases, he or she may be compelled to keep income in a trust until a beneficiary reaches a certain age. In others, the trustee may only be able to distribute funds to pay for a child's education or for other limited reasons.

If a trustee ignores the trust's instructions, it could be in violation of its fiduciary responsibility to the beneficiaries. Ultimately, the trustee could be personally liable for damages if a beneficiary or other party with standing pursues legal action. trustees are encouraged to seek the advice of legal counsel prior to making decisions about distributing trust assets.

Ideally, individuals will take tax rates into consideration when drafting estate planning documents. This may help to guide certain decisions such as when money should be distributed from a trust. It may also help guide decisions such as whether to gift or sell assets prior to passing on as that could reduce the value of an estate.

No Comments

Leave a comment
Comment Information

Contact Our Law Firm Today

Ezell Law Firm, LLC
10761 Perkins Road
Suite A
Baton Rouge, LA 70810

Toll Free: 888-511-8717
Phone: 225-763-2272
Map & Directions


Free phone consultation Contact our office to set up your appointment

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy