Trusts: Your Best Bet for Confidentiality – One of the first questions many people ask when they start planning for the ultimate distribution of their assets is whether to use a will, a living trust or a combination of both. There are sound reasons for choosing any of those solutions.
If you do decide on a trust, you can avoid a lengthy probate process and possibly gain tax efficiencies. Another frequently underrated reason is the added privacy a trust offers.
A will, by contrast, must be filed with the county court where the testator resides, where it becomes a public record. Before the assets can be distributed, it is probated, a process that exposes the contents of the will itself and any associated documents to the world at large. That means anybody with a computer and internet access will be able to see details of the testator’s finances, including the value of assets, real estate and debts. Who might be poking around such a personal matter, you might wonder? It could be inquisitive neighbors, determined bill collectors or the local newspaper, not to mention wider press if the deceased is a more public figure.
The problems of high visibility
Sometimes, judges will seal the wills of famous people to protect their families from public scrutiny, but not always. When TV chef Anthony Bourdain died in 2018, his assets, left to his daughter, were disclosed in detail: $425,000 in cash, $35,000 in a brokerage account, $250,000 of personal property and $500,000 in royalties and other intangibles. Even his frequent flier miles were revealed. Do you want those details to come out about you?
Who can penetrate the details of a trust?
The public may not be able to pry into the details of a trust, but beneficiaries and heirs can. After the testator’s death, they are entitled to receive copies of relevant trusts and wills. It is most significant that they can obtain information about the estate’s assets, liabilities, receipts and disbursements, normally through an inventory and accounting prepared by a trustee or executor. Typically, beneficiaries are allowed to examine the trust documents, the trust deed, trust accounts and any deeds of trustees’ appointment or retirement. However, they still have no right to examine any documents, such as minutes, that relate to the trustees’ decision making.
Many people assume their estates are not large enough to warrant the expense and administrative effort of setting up a trust. Nevertheless, as internet searches these days have made information so readily available and accessible, it may be worth considering whether you are ready to make your personal finances an open book. The disposition of your assets can reveal a great deal about your family, your relationships, your life history, your charitable giving, your beliefs and your concerns. Your heirs and estate may also become more vulnerable to fraudsters, fortune hunters or family squabbles. The privacy requisites of a trust can go a long way toward discouraging such an undesirable legacy.
To learn more about how your estate planning documents may impact your privacy, discuss the benefits of a living trust with your attorney or financial advisers.
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