Could Louisiana homeowners keep the homestead exemption after transferring naked ownership to a revocable trust?

Plain-English summary

DeSoto Parish's assessor asked whether homeowners could keep a homestead exemption after transferring naked ownership of their home to a revocable trust while retaining a lifetime usufruct. In this 2006 opinion, the Attorney General answered no. The constitutional amendment it analyzed extended the exemption to qualifying property owned by irrevocable trusts and limited the eligible owners to natural persons and those qualifying irrevocable trusts. It did not include revocable trusts.

The AG treated the trust's revocability as decisive even though the former owners retained a usufruct. It noted older opinions that recognized limited beneficial-interest exceptions under prior constitutional wording, then analyzed the 2004 amendments instead. Its holding was that property owned by a revocable trust could not qualify under the provisions then in force. The opinion did not decide whether a particular irrevocable trust met the amendment's additional conditions.

Currency note

This opinion was issued in 2006. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Did a retained lifetime usufruct save the exemption after transfer to a revocable trust?

No. The AG's answer treated revocable trust ownership as disqualifying under the constitutional text it considered.

Why did the opinion distinguish an irrevocable trust?

The 2004 constitutional provisions expressly covered certain irrevocable trusts with natural-person settlors and beneficiaries, subject to stated ownership and occupancy conditions. The AG said they did not cover revocable trusts.

Did the opinion say every irrevocable trust automatically qualified?

No. It quoted additional requirements for qualifying irrevocable-trust property, including the relation of the settlor-beneficiaries to the prior homestead and its occupancy.

Why did older AG opinions discuss beneficial interests in trust property?

The opinion explained in a footnote that those views applied the prior constitutional language. It analyzed the newer wording adopted in 2004 for the assessor's question.

Background and statutory framework

The AG read the 2004 additions to La. Const. Art. 7, Sec. 20, especially the provisions expressly permitting qualifying irrevocable trusts and limiting the eligible ownership classes. It also invoked strict construction of tax exemptions against the claimant. The trust arrangement in the request involved a retained usufruct with revocable-trust ownership; the opinion found no exemption for that arrangement.

Citations

• La. Const. Art.7, Sec.20(A)(3) (qualifying irrevocable trusts).
• La. Const. Art. 7, Sec. 20(A)(5) (eligible owners).
• Attorney General Opinion No. 05-0352 (concordant earlier AG opinion).

Source

• Landing page: https://www.ag.state.la.us/Opinions
• Original PDF: https://www.ag.state.la.us/Opinion/Download/05-0439

Original opinion text

April 20, 2006
Opinion Number 05-0439

4 - Assessors
Honorable Jimmy Stephens
125 Taxation - Homestead Exemption
DeSoto Parish Assessor
Article VII, Section 20 (A)(3), 20(A)(4), and 20(A)(5)
212 Adams Street
of the Louisiana Constitution
Mansfield, LA 71052
Property owned by a revocable trust is not eligible
for the homestead exemption.

Dear Mr. Stephens:
You requested an Attorney General’s opinion regarding the ability of usufructuaries to qualify for the homestead exemption when the naked owner of the property is a revocable trust. Specifically you question whether homeowners can qualify for the homestead exemption if they grant or reserve to themselves a lifetime usufruct over immoveable property and then transfer the naked ownership of the property to a revocable trust.

Louisiana’s homestead exemption is found in Constitution Article 7, Section 20. As you are aware, the homestead exemption was amended in 2004, so we must address your question under the new constitutional provisions.[1]

La. Const. Art.7, Sec.20(A)(3) was added in 2004 and provides as follows:
§ 20 Homestead Exemption.
Section 20. (A) Homeowners.

(3) The homestead exemption shall extend to property owned by an irrevocable trust when the principal beneficiary or beneficiaries of the trust are the settlor or settlors of the trust and were the immediate prior owners of the homestead and the homestead is occupied as such by a principal beneficiary. The provisions of this Subparagraph shall apply only to property which qualified for the homestead exemption immediately prior to transfer, conveyance, or donation in trust, or which would have qualified for the homestead exemption if such property were not owned in trust.

This provision expressly allows property owned by an irrevocable trust to qualify for the homestead exemption. It does not mention property owned by revocable trusts.

Louisiana jurisprudence requires that constitutional grants of tax exemptions be strictly construed in favor of the taxing body, and against the taxpayer seeking the exemption.[2]

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Honorable Jimmy Stephens
OPINION 05-0439
Page 2

Since revocable trusts are not included in this section, we must assume property owned by revocable trusts is not eligible for homestead exemption, the determinative issue being the revocability of the trust instrument.

Moreover, Section 20(A)(5), which was also added in 2004, expressly limits the extension of the homestead exemption to natural persons and irrevocable trusts. La. Const. Art. 7, Sec. 20(A)(5) provides as follows:

(5) The homestead exemption shall extend only to a natural person or persons and to an irrevocable trust created by a natural person or persons, in which the beneficiaries of the trust are a natural person or persons provided that the provisions of this Paragraph are otherwise satisfied. [Emphasis added.]

This section allows only natural persons and irrevocable trusts whose settlors and beneficiaries are natural persons, to qualify for the homestead exemption. In effect it prevents property owned by anything else, such as a revocable trust, from qualifying. Therefore it is the opinion of this office that property owned by revocable trusts do not qualify for the homestead exemption, under any circumstances. In accord is Attorney General Opinion No. 05-0352.

Trusting this adequately responds to your request, we remain

Yours very truly,

CHARLES C. FOTI, JR.
ATTORNEY GENERAL

BY: ______
KENNETH L. ROCHE, III
Assistant Attorney General

CCF, JR/KLR, III/jv

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Honorable Jimmy Stephens
OPINION 05-0439
Page 3

[1]
Under the prior language of La. Const. Article VII, Sec. 20 our office consistently opined that property owned by a trust could not qualify for the homestead exemption because, by its nature, it was not owned and occupied by the person seeking the exemption. We recognized an exception to the general rule when the settlor of a trust was also one of its trustees, or when the settlor or the settlor’s spouse was the principal beneficiary of the trust. It was felt that in these circumstances the settlor retained a “beneficial interest” in the property, even though he transferred legal title to a trust. The ownership of this “beneficial interest” in the property allowed the property to qualify for the exemption. See Attorney General Opinion Nos. 01-055, 01-054, 97-212, 97-19, 95-462. 91-312, 84-857, and 84-133.
[2]
st
Zapata Haynie Corp. v. Larpenter, 583 So. 2d 876 (1 Cir. 1991), writ denied.

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Honorable Jimmy Stephens
OPINION 05-0439
Page 4

Opinion Number 05-0439

4 - Assessors
125 Taxation - Homestead Exemption
Article VII, Section 20 (A)(3), 20(A)(4), and 20(A)(5) of the Louisiana Constitution

Property owned by a revocable trust is not eligible for the homestead exemption.

Honorable Jimmy Stephens
DeSoto Parish Assessor
212 Adams Street
Mansfield, LA 71052

Date Received:

Date Released: April 20, 2006

Kenneth L. Roche, III
Assistant Attorney General