It's natural to have concerns when creating your first estate plan. You want to get everything right, but you're also stressed out over all the decisions you have to make.
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.
There are a number of ways people in Louisiana can structure their estate to protect assets from a divorce. Parents may want to place assets intended for their children in a revocable trust with a protector. The child can be named as the trustee, but the protector takes over if there is a lawsuit or other issues that could cause the assets to be seized.
Louisiana residents and others may choose to wait until later in life to create an estate plan. They may also feel confident that a will is adequate to meet their needs. However, it can be a good idea to start building an estate plan as early in life as possible, and it can include trusts, life insurance policies and a power of attorney. Ideally, individuals will draft both financial and medical power of attorney documents as soon as they graduate from college.
It isn't uncommon for Louisiana residents to procrastinate when it comes to estate planning. However, being proactive can give individuals a sense of control over what will happen to them and their assets if they get sick, become incapacitated or pass on. Common estate plan tools include a will, a trust, and powers of attorney. Living trusts may be preferable to wills as they don't need to go through the probate process.
Many families in Louisiana have a hard time discussing financial issues with each other. When families gather together, adult children may want to take the opportunity to talk about estate planning with their aging parents. It's important to broach the topic in a respectful way and let aging family members know that planning ahead is in their best interest.
Ideally, all adults living in Louisiana will have a health care directive. A health care directive allows an individual to have greater control over the treatment that he or she receives after becoming ill or mentally incapacitated. It can also provide instructions as to how a person should be handled after passing on. Although living wills are legal in all 50 states as well as the District of Columbia, roughly two-thirds of Americans do not have one.
Those who are creating an estate plan in Louisiana or any other state may want to create more than one trust. While this isn't always necessary, it is possible to have two or more trusts in effect at the same time. However, if the second trust is designed to rescind the first one, it is likely that the original document will no longer be considered valid. It is also possible that the second trust will be considered an amendment to the original document.
Louisiana residents should ensure that they review their estate plans regularly. Director John Singleton, who died suddenly of a stroke in April, had a will from 1993 that had never been updated. Instead of a trust that would keep his estate plan private, make his wishes clear and appoint one or more people to handle his intellectual property, the will names the only one of his five children who had been born at that point as the heir.
Many Louisiana families are different from the traditional model of a mother, a father and their children living in one house together. They are far more likely to include stepchildren or adopted children, an unmarried cohabiting couple, single parents or to differ in some other way. This has implications for estate planning.