Louisiana residents hoping to leave assets to their loved ones after their passing luckily have many options for doing so. Of course, all of those options can come with their pros and cons, and if not thoroughly explored, you could pick an option that does not do as much good as you had hoped.
In particular, you may want to create a trust that will allow your loved ones to avoid probate or at least have their intended inheritances kept out of the probate process. While this is often a useful route to take, you may want to consider how the type of trust you create will affect the distribution of assets and possible repercussions your loved ones could still face.
Beneficiary Controlled Trust
In many cases, when individuals create a trust, they appoint a trustee to manage the assets as the grantor, or trust creator, dictates, and the grantor could choose to have the assets distributed immediately after his or her passing. While this option may not pose substantial issues for heirs who are good with their money, do not need government assistance and do not have creditor issues, the inheritance itself or other benefits could end up at risk. Once distributed from the trust, assets no longer have the trust’s protection.
Instead, you may want to consider making your beneficiary the trustee. A Beneficiary Controlled Trust, as the name suggests, allows the beneficiary to have control over the assets while they remain in the trust. Essentially, this option would involve you naming your intended beneficiary as the trustee so that he or she could manage the assets in the trust to his or her benefit. If you have multiple heirs or beneficiaries, creating separate trusts may be a wise option.
Possible protection for beneficiaries
Because the assets would remain in the trust, in addition to not having to go through probate, the assets and your beneficiaries could see the following protections:
- A loved one who receives government benefits would not receive a sudden windfall that makes him or her ineligible for benefits.
- The assets would remain out of the grasp of creditors because they are not technically part of the beneficiary’s estate.
- Assets in the trust may also fall outside the realm of divisible property in the event that the beneficiary gets divorced.
Of course, there are tax matters and other details to consider with a Beneficiary Controlled Trust, so having additional details about this option may help you make the most informed decision possible.