How to Maximize Family Privacy in Your Estate Planning
In this day and age of internet search engines, privacy is at a premium. The lack of privacy is further compounded by the general policy of having court proceedings in public.
Some families may be full of secrets that can turn into scandals.
It would be difficult to impossible to find a family whose history didn’t include sibling rivalries, substance abuse, or any form of indiscretion that could be embarrassing. In addition, many families own investments such as privately held businesses or real estate that shouldn’t be looked at by a competitor or scam artist seeking to fabricate a bogus claim.
As an advisor, my clients depend on my discretion when these issues affect their financial and legal matters. I endeavor to keep their confidences and give them a degree of trust. As such, I would never want to risk betraying their trust by allowing their personal family affairs to be exposed through probate.
Probate court is public. Each pleading and filing in a probate case is a matter of public record that anyone can read.
A Private Family Trust
Creating a Revocable Living Trust (RLT) keeps your assets, instructions and disbursements out of the public’s scrutinizing eye.
The Trust is a private legal document. It’s between you as both the Trustmaker and Trustee, so it doesn’t have to be filed with a court unless your beneficiaries and Successor Trustee don’t agree on disbursements, or someone challenges the Trust’s validity.
As an advisor, my goal is to show my clients how an RLT prevents an estate from going into probate court, protects heirs from creditors, and keeps the family’s private information from becoming public reading material.
Avoid Michael Jackson’s Mistake!
Once you have established an RLT, if your main goal is to protect your privacy, it’s vitally important that the trust is funded to avoid a risk of a probate proceeding. It’s too bad that so many dead celebrities didn’t have a savvy advisor to warn them about the dangers of not securing their personal information with an RLT. Pop icon Michael Jackson created an RLT, but he failed to properly fund it (retitle assets so that the trust is named as the owner), resulting in his estate landing in probate court. Someone even leaked a copy of the Trust to the press.
Peace of Mind
There is no substitution for the peace of mind you gain from knowing that your decisions regarding your last wishes will remain confidential among those involved in administering your Trust after death. Unless you are perfectly OK with publicly airing your total worth and your private wishes, then you should establish an RLT.