For some people, privacy is a top concern when creating or updating their estate plan. You may wish to keep your financial affairs confidential, protect the identities of your beneficiaries, or even prevent heirs from learning how you chose to distribute your estate assets. Regardless of why privacy matters to you, there are several estate planning tools and strategies that can help. To help you get started, the Los Angeles attorneys at Schomer Estate & Wealth Advisors discuss common estate planning tools and strategies that can help ensure privacy.
Privacy and Your Estate Plan
Your estate plan will likely be the most important collection of legal documents you will create during the course of your life. The average estate plan includes extremely personal and highly sensitive information relating both to your finances and your relationships. For some people, keeping that information private is crucial. If you rely predominantly on a Last Will and Testament to distribute your estate assets, however, your privacy will be lost because your Will becomes a matter of public record when it is filed during the probate of your estate. Not only will your heirs and beneficiaries be able to read the details contained in your Will, but anyone can request a copy of the document. Fortunately, there are numerous estate planning tools and strategies that can help you maintain your privacy.
How Can I Keep My Estate Plan Private?
Whether you release the details of your estate plan to heirs, loved ones, or the public should be a decision you make. To maintain your privacy, talk to your estate planning attorney about using common tools and strategies, such as:
- Revocable Living Trust: A revocable living trust is an effective tool for maintaining privacy because unlike a Last Will and Testament a revocable living trust does not go through probate. Trust assets are distributed according to the terms of the trust outside of probate. Not only does this keep the details of gifts made in the trust private, but a revocable living trust can also be used to effortlessly transition management of the trust assets to your designated successor Trustee if you become incapacitated. If you choose to use a revocable living trust to distribute your estate assets, be sure to retain a Pour-Over Will in your estate plan. This is a simple Will that acts as a back-up to the trust by directing assets not yet transferred into the trust at the time of your death be “poured over” into the trust after your death.
- Beneficiary Designations: Using beneficiary designations on accounts such as life insurance policies, retirement accounts, and payable-on-death (POD) or transfer-on-death (TOD) accounts can help maintain privacy because assets held in these accounts also bypass probate. Unlike joint ownership, however, a POD or TOD account does not give the designated beneficiary any legal interest in the assets while you are alive. Instead, the beneficiary automatically becomes the owner after you pass away.
- Lifetime Gifting: Making gifts during your lifetime ensures that the details of the gift remain private. You can even make gifts to a trust, providing yet another layer of privacy and potentially taking advantage of tax avoidance strategies. Be sure to discuss the federal (and state) gift and estate tax implications of making significant gifts before making the gift.
- LLCs and Corporations: For real estate or business interests, consider holding these assets in a Limited Liability Company (LLC) or corporation instead of holding them in your name. Naming a trust you created as an owner of the LLC or corporation can add yet another layer to the privacy protection you gain from taking assets out of your personal name.
- Private Family Foundation: If philanthropy is important to you, establishing a private family foundation can be an excellent way to maintain privacy while fulfilling your philanthropic goals. A private foundation allows you to control the distribution of funds to charitable causes without revealing the specific details of your donations or the total value of your estate.
- Confidentiality Clauses: Including confidentiality clauses in your estate planning documents can further ensure privacy. These clauses can obligate Trustees, Executors, and even beneficiaries to keep the details of your estate confidential. Keep in mind that while a confidentiality clause can provide legal recourse if an individual subject to the clause breaches confidentiality, you must still avoid relying on your Will to distribute assets if you want to keep details of your estate plan private.
Can We Help You with Estate Planning Privacy?
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about how to keep the details of your estate plan private, contact the experienced Los Angeles estate planning attorneys at Schomer Estate & Wealth Advisorsby calling (310) 337-7696 to schedule an appointment.
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