Louisiana Amends Provisions Regarding Trusts
The state of Louisiana has recently updated its Trust Code, through House Bill No. 286, which is effective August 1, 2016.
One of the revisions applies to the situation where a beneficiary dies before the settlor (the person who created the trust). The update expands the category of parties to whom the settlor may shift the principal upon such an event. It allows the settlor to provide that, if the beneficiary dies but has descendants, the beneficiary’s interest may be passed to one or more of the beneficiary’s descendants. If a beneficiary dies without descendants, as under previous law, the settlor can shift the beneficiary’s interest to any other person the settlor deems appropriate.
There is also an update regarding trust recordation procedures. The revision provides that, if a trust contains a transfer of immovable property, the trustee must file the trust instrument for record in the parish in which the property is located. The revision is specific that the trust instrument itself must be filed, rather than the extract of trust.
Another update is simply an expanded definition of “person” as it pertains to Louisiana trust law. While previously defined as an individual, corporation, partnership, association, joint stock company, business trust, or two or more persons with a joint interest, the definition has been expanded to specifically include limited liability companies as persons.
Zachary Pearlstein, JD, is a Regulatory Compliance Director with CLA's Mortgage Advisory Division. He joined CLA on January 1, 2014, as part of its acquisition of Bankers Advisory, Inc. Zachary oversees Mortgage Advisory's regulatory compliance team, which focuses on federal and state compliance, fair lending, and the Home Mortgage Disclosure Act (HMDA). He is a graduate of Brandeis University and earned his juris doctor at Suffolk University Law School. He is admitted to the Massachusetts Bar.
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