Some people don’t bother to create estate plans. In failing to make these efforts, they ultimately leave their loved ones at the mercy of the Louisiana succession courts and state statutes. Those who do create estate plans are sometimes overly simplistic when doing so. They use a will instead of considering their other options.
A will is a powerful legal instrument that is valuable in its own right. A testator can choose what individual beneficiaries should receive from their estate. However, their beneficiaries have total control over the property they inherit once it transfers to them.
There are some situations in which using a trust to transfer resources is better than using a will because a direct inheritance could cause issues. When is a direct inheritance potentially more problematic than beneficial?
In cases involving addiction
Substance abuse is a serious issue. Even if someone undergoes treatment and regains control over their conduct, they are always at risk of a relapse. Intense stress could lead to an alcoholic heading down to the local bar. A large inheritance could provide someone with resources to acquire their substance of choice and a buffer if they lose their job because of their behavior. A trust helps limit someone’s access to inherited assets and can prevent the misuse of those resources.
When a beneficiary relies on state benefits
Maybe someone has an aging spouse who may come to rely on Medicaid coverage in the near future. Maybe they have an adult child with special needs who receives benefits for housing or other basic needs. A large inheritance can leave someone ineligible for benefits for years in some cases. The separation created by a trust allows someone to receive the support of an inheritance without becoming ineligible for critical benefits.
In situations where testators expect controversy
People planning their legacies sometimes need to make difficult decisions. They might limit what certain family members inherit. Sometimes, parents choose to disinherit one of their children or leave far more resources for one family member than others. In scenarios where disputes are likely because of family circumstances and someone’s estate plan, a trust can be particularly beneficial. Trusts can be more difficult to contest in succession court. The services of a trustee can also be beneficial in scenarios where conflict is likely. Beneficiaries have less reason to worry about theft or coercion from other people seeking to gain control over their resources.
Direct inheritances can be a blessing in some cases, but they can cause conflict and challenges in other situations. Adding a trust to an estate plan can be beneficial for many different people. Those who invest in more thorough estate plans can work to more effectively leave a legacy that reflects their values.