Revocable Trust for Married Individual
(Marital QTIP, Family Trusts, and GST Tax Planning) (LA)

Summary

This template is a revocable trust for use in Louisiana by a married individual. It contains a marital trust as well as a family trust. Use this trust for a married person who will have a taxable estate at death. This template includes practical guidance, drafting notes, and alternate clauses. The trust creates a marital trust and a family trust at the settlor's death. If the trusts are funded and administered properly, there will be no federal estate tax due at the settlor's death. The trust also includes a provision authorizing the executor of the settlor's estate to qualify the marital trust assets as qualified terminable interest property (QTIP) to take advantage of the marital deduction. There are several advantages to including a QTIP trust provision in an estate plan, such as (1) providing the executor with the flexibility to determine the extent of the QTIP election, (2) the possible opportunity to achieve a step up in basis, (3) the ability to control the distribution of assets at the death of the surviving spouse, and (4) the avoidance of estate taxes. A trust that includes a QTIP trust is generally best suited for taxable estates or those likely to file an estate tax return for portability because the executor must affirmatively elect to qualify any or all of the marital trust as a QTIP trust. After the death of the survivor of the settlor and the settlor's spouse, the trustee continues to hold the trust assets in a trust for the benefit of the settlor's children if any child has not reached 25 years of age. The trustee may make distributions of principal and income to the settlor's children and has the flexibility to favor beneficiaries with greater financial needs. Once the settlor's youngest child reaches age 25, the trustee will distribute all remaining trust principal in equal trust shares to each child, with the descendants of a deceased child taking that deceased child's share. A revocable trust (also known as a "living trust" or "inter vivos trust") is typically used as a will substitute to avoid probate. The revocable trust also includes elements of disability planning, as assets can be managed by the successor trustee without an adjudication of incapacity. However, because the settlor retains power over the trust assets, revocable trusts do not provide asset protection. In addition to the creation of the trust, the settlor will need to fund the trust in order to avoid probate. To assist your client with funding, provide them with a checklist to help them understand the additional action required to coordinate the estate plan beyond executing the documents. This includes, for example, recording new deeds for real property, updating beneficiary designations with investment, retirement, checking, and savings accounts, and more. To ensure that the decedent's assets are properly transferred to the intended beneficiaries, a revocable trust should be used together and coordinated with a pour over will. See Will for Individual with Spouse or Partner (Pour Over to Inter Vivos Trust) (LA). Use of such a complex trust template is generally limited to situations in which the value of the couple's aggregate assets exceeds the federal estate tax exclusion amount ($15,000,000 per individual in 2026) and the couple wants to defer any estate tax until the death of the survivor. For a more basic revocable trust, see Revocable Trust for Individual with Spouse or Partner (Basic) (LA). For a full listing of key content on creating an estate plan for an individual with a spouse or partner residing in Louisiana, see Estate Plan for Individual with Spouse or Partner Resource Kit (LA).