How to Keep Your Estate Plan Private

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A colleague recently had an elderly maiden aunt pass away. Though the aunt had many nieces and nephews nearby, only a few helped her out or visited her on any regular basis, and this had been the case for years. While frail, the older woman had a sharp mind, and she wanted to reward those nieces and nephews who had been there for her over the years. She left the bulk of her estate to the niece who had lived with and cared for her, with generous bequests to a few others who had helped her and made time for her in their lives. The rest of the nieces and nephews received nothing.

All of the financial details were laid out in the older woman's will. Because all of the nieces and nephews would have been heirs at law who were entitled to a copy of the will, the whole family soon knew of Auntie's estate plan. Many were surprised to learn of the size of their aunt's estate, several were upset that they didn't receive anything, and a few were even angry at the niece who received most of the estate, though none went so far to challenge the will or suggest undue influence. However, family relationships were strained.

In order for the estate to be administered, the will had to be filed with the county probate court. That meant that in addition to the whole family knowing of the aunt's estate plan, anyone who cared to go down to the county courthouse and look it up could get a copy of the will.

If reading this makes you uncomfortable as you reflect on the prospect of your own estate plan being public, there are measures you can take in order to keep your estate plan private.

Why You May Want to Keep Your Estate Plan Private

There are many reasons to keep your estate plan private. If, like the aunt in the scenario above, you are leaving different amounts to your heirs, you may not wish to publicize that fact. Perhaps you have significant assets that others in the community do not know about, and you would prefer to keep it that way. Or maybe you reason that it is simply none of anyone else's business how much money you have and to whom you plan to leave it.

Whatever your reason for wanting privacy, if your estate plan consists primarily or exclusively of a last will and testament, that privacy will be difficult to achieve. That is not to say that a will doesn't have a useful place in an overall estate plan, but if your goal is to limit the number of people who are aware of your assets and their intended recipients, a revocable living trust may be a better way to go.

There are many differences between a will and a trust, but the primary one for purposes of privacy is this: a will must be filed with the probate court; a trust need not.

There are many differences between a will and a trust, but the primary one for purposes of privacy is this: a will must be filed with the probate court in which the deceased lived in order to open and administer an estate. A trust need not be filed with the probate court. It does not become part of the public record and people who are not beneficiaries of the trust are not entitled to a copy of it.

How a Living Trust Protects Your Privacy

During your lifetime, you are the creator (grantor) of the trust, the trustee who manages the trust's assets, and the beneficiary, for whose benefit trust assets are distributed. You retain complete control over trust assets, and can revoke the trust at any time until you die or become legally incapacitated. In practice, it's not much different from simply owning the assets. The only difference is that the assets are in the name of the trust, not in your own name.

The trust is created by a trust document. That document also names a successor trustee. When you die, the successor trustee you've chosen assumes management of trust assets. Many people who have a living trust intend only for the trustee to distribute the assets to beneficiaries after their death, not to manage them for an extended period.

The trust document tells the successor trustee what to distribute, to whom, and when. Only the trustee, the beneficiaries, and the law firm that created the trust need to know what is in it. (If you don't want one beneficiary to know about what another beneficiary is receiving, you could create separate trusts; speak to your estate planning attorney about what this would entail.)

In addition to privacy, of course, living trusts provide other benefits. The biggest benefit, for most people, is that it avoids the probate process. Assets in the trust can be distributed by the trustee almost immediately after your death if you wish, as opposed to being tied up in the probate process for months.

To learn more about options for keeping your personal and financial affairs private, contact your estate planning attorney to make or update your estate plan with this goal in mind.

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Categories: Estate Planning

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