REVOCABLE TRUST NO LONGER NECESSARY TO HIDE ASSET VALUES IN LOUISIANA (“Sealed” Inventory Now Required Upon Request)

Mrs. Ethel Merman received an invitation to a free educational seminar about estate planning. At the seminar, the promoter suggested that the probate process in Louisiana is: (1) expensive, (2) protracted / burdensome, (3) often litigious, and (4) a complete invasion of privacy due to the required filing of a public inventory of assets and debts. The promoter even went so far as to provide the audience with a copy of an actual probate inventory pulled from the succession of a real person. The seminar concluded with a strong warning about the need for a revocable trust to avoid an impending calamity in Louisiana.

THE OLD DEAL

A lot of misinformation continues to be circulated about revocable trusts in Louisiana. The expense, burden and timing of the probate process tends to be greatly exaggerated. Litigation over capacity and undue influence cannot be avoided by utilizing a revocable trust and a revocable trust provides zero asset protection or tax benefits. These issues have been addressed previously in the following blog post: The Cost of A Revocable Trust in Louisiana.

Until now, the last issue (lack of privacy) has been a valid concern because the probate process requires the filing of a public inventory of assets and debts of a decedent. The legal term for the inventory is a “detailed descriptive list” or “DDL” for short.

The DDL is basically a personal balance sheet of the deceased that lists all assets and the corresponding values on the date of death, as well as all debts and liabilities. Rightfully so, some individuals prefer not to have their assets and debts available for public inspection. The desire for privacy is a point often raised by promoters of revocable trusts.

THE NEW DEAL

In an unusually progressive move, the Louisiana Legislature has addressed the privacy issue by signing into law Act 2017, No. 198 (House Bill No. 121). The law now provides that the DDL must be filed “under seal” upon request of any proper party, which means the DDL cannot be accessed or viewed by the general public. The DDL is literally sealed from public access or view.

The new law (codified as La. Civ. Code Art. 3396.18) provides that upon the request of an independent administrator, heir or legatee, the DDL shall be sealed. The court is required to seal the DDL. It is not discretionary.

The new law provides that universal successors (heirs of an intestate succession or universal / general legatees of a testate succession) and the surviving spouse shall be provided a copy of the DDL upon request. However, a particular / special legatee is not entitled to a copy of the DDL, nor is any member of the general public.

A creditor of a succession or a special legatee may file a motion to obtain “relevant information” from the DDL. A showing of relevance or need would be required before a court could exercise the discretion to furnish any information about the DDL, which could be limited and redacted. There would be an opportunity to oppose such a request before a court could exercise its discretion. A revocable trust provides no advantages in the event of a creditor, because a creditor would likewise be entitled to obtain relevant information about the assets of a revocable trust in the event of a claim.

GIVE ME ONE GOOD REASON

The general public cannot access a sealed DDL. As such, a revocable trust is not required to provide privacy with respect to the value of assets and debts of a succession in Louisiana. Under current law, only the DDL can be filed under seal, which means that all other pleadings are still available to the general public, including the petition for possession, judgment of possession, affidavits of heirship, names and addresses of legatees, as well as the Will itself. As a practical matter, only the value of the assets listed in the inventory is sealed.

While we do not generally recommend revocable trusts just to save time or money, they can be useful in certain circumstances, such as:

• Preserving the characterization of assets as separate or community property;
• Avoiding ancillary probate in another state;
• Ensuring the entire process is private (not limited to sealing the asset values);
• Avoiding problems with authority under powers of attorney that may be problematic when preparing for long-term care expenses (no one generally questions the power of a trustee);
• Maintaining control and continuity of management in the event of disability or incompetence;
• Avoiding significant delays in the transfer of assets to intended beneficiaries (a trustee can effect a transfer almost immediately, while the court-supervised probate process typically results in delays of 3 to 9 months – and may take years in many cases); and
• Integrating as part of a larger asset protection plan.

Note that revocable trusts provide zero asset protection alone, but in conjunction with other devices, can be useful in toggling control or effecting a relatively quick transition of assets across state lines or into more protective entities.

Revocable trusts are tools, not magic elixirs. Using the right tool for the right job is the art of proper planning.

Theus Law Offices provides a complete range of estate planning and asset protection services for individuals and businesses. If you need a Louisiana estate planning or asset protection attorney in Alexandria, Lafayette, Lake Charles, Baton Rouge, New Orleans, Shreveport, Monroe, Central Louisiana or elsewhere in Louisiana, let our experienced estate attorneys and asset protection lawyers help you.

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