Basics of Estate Planning: Privacy and Estate Planning

This is another in a series of blogs on the basics of estate planning.

From the dawn of time, humans have been concerned with privacy. In the biblical story of Adam and Eve, the couple sought the privacy provided by fig leaves as they left the Garden of Eden. When species Homo sapiens emerged, privacy was essential to protect against predators. In today’s world, privacy is more important than ever to protect ourselves from the seemingly ever-increasing number and types of predators.

Privacy may be enhanced with something as simple as the primary estate planning tool used. Some people choose a trust and others choose a will as their primary estate planning tool. A trust may have many advantages over a will, such as the ability to provide incapacity planning during life. But, perhaps one of the greatest benefits of a trust is that it can help protect privacy, both at death and during life.

A trust is a private document. By contrast, the other primary estate planning tool, a will, is a public document. If a will is used, it’s like publishing your wishes in the newspaper…or online. In fact, the wills of many public figures can be found online and the wills of countless others are available with a simple visit to your local courthouse. For example, if you want to see the will of Paul Newman, John Kennedy, Marilyn Monroe, Richard Nixon, Whitney Houston, Frank Sinatra, or James Gandolfini, among others, you can simply go here.

A will is subject to probate, which is a public proceeding. Thus, whatever is in the will, including the identity of the beneficiaries, whether the assets were left in further trust, the amounts bequeathed to each beneficiary, etc., are all public knowledge. The public would also have access to the value of the assets left to each beneficiary. It is exceedingly rare for a court to seal a will from public scrutiny. By contrast, a trust is a private document. While it might be released to beneficiaries, it is not released to the general public.

A trust might be useful in protecting privacy for property owned by the trust during life, as well. For example, let’s say you want to buy a piece of property, but you don’t want others to know you own it. If you were to buy it in your individual capacity, your name would appear in the property tax records at the county assessor’s office. Also, your name would appear in the chain of title and could be searched in the “grantor/grantee index” of deeds. However, if you were to contribute money to a trust, the trust would be able to purchase the property. That way, only the trustee’s name and the name of the trust would appear in the chain of title and the property tax records. You could hire someone other than you to serve as the trustee and you could name the trust something that would not disclose your identity, such as the “Main Street Trust.”

If privacy is important, consider utilizing a trust as a way of enhancing privacy and achieving other estate planning goals, as well.

Stephen C. Hartnett, J.D., LL.M.
Director of Education
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128
www.aaepa.com