Legal Corner: What is the difference between a will and a trust?

LAKE CHARLES, La. (KPLC) - Legal Corner answers viewers’ civil legal questions.

QUESTION: What is a will and what is a trust? What is the difference between them? We have one child and need to know which one to create.

ANSWER: A will is a written legal document that provides instructions for distributing property to beneficiaries after death. A will gives the person writing the will, called the testator, the opportunity to provide for a spouse, children, and other loved ones after death. One can also make a charitable contribution via a will.

A last will and testament is one of the most important legal documents a person can create during his or her lifetime. If a person dies without a will, he is said to have died “intestate” and Louisiana laws will determine how and to whom the person’s assets will be distributed.

A trust is a legal structure that allows an individual (the grantor or trustor) to transfer assets to a trustee for management and distribution according to the grantor’s wishes.

A trustee administers a trust based on the instructions left by the grantor. This can include communicating with beneficiaries, allocating funds to investments, distributing payments according to instructions, and much more.

Trusts can be used both during a person’s lifetime and after death, while wills only take effect after death. Also, a trust is not considered a public document; it is generally considered a private document, meaning the details of a trust are not typically filed with any government agency and are not part of the public record, unlike a will which goes through probate court and becomes public information.

QUESTION: Will my son be taxed on inherited property and estate transfers?

ANSWER: According to the Louisiana Department of Revenue, Louisiana no longer imposes an inheritance tax. Act 822 of the 2008 Regular Legislative Session repealed the inheritance tax law. (La.R.S. 47:2401–2426).

Louisiana does impose an estate transfer or death tax. (La.R.S. 47:2431–2437). Estate transfer tax (death tax) is only imposed on an estate that is subject to federal estate taxation under the Federal Internal Revenue Code.

The amount of state estate tax is equal to the federal estate tax credit allowed for state death taxes.

La.R.S. 47:2436 requires that an estate transfer tax return be filed by or on behalf of the heirs or legatees in every case when an estate transfer tax is due or when the value of the deceased’s net estate is $60,000.00 or more.