Compliments of Sterling & Tucker, LLP
By: The American Academy of Estate Planning Attorneys
We all have areas of our lives that we prefer to keep out of the public eye. At the same time, each of us experiences intrusions into our privacy, both large and small, during our lifetime and even after death. For instance, those telemarketing calls that always seem to come just as you’re sitting down to dinner are not just a nuisance; they are also an invasion of your family’s privacy. On a larger scale, the charitable contributions you choose to make aren’t necessarily private; a charity must reveal the sources of direct contributions made to it. And, to the surprise of many people, if you’re not careful, the details of your financial affairs may be revealed through a public probate process and may become public knowledge at your death.
Fortunately, there are steps you can take to protect your privacy from these invasions, small and large alike. One of the most common, and surprising, violations of privacy comes with the probate process. A living trust is a great way to ensure that you avoid probate and maintain privacy. However, when you pass away without a trust, leaving behind a Will – or without any estate plan at all – your property has to go through a court-supervised probate before it can be distributed to your loved ones. Since probate is overseen by the court, all of the papers that are filed in conjunction with the process are accessible by the public. These court filings contain a wealth of information, including your net worth, the types of property you own, and the names and addresses of the people to whom your assets are distributed. So, if you disinherit a child, or leave all your property to a same-sex partner, this information is open to the public, whether you want it to be or not. An effective and flexible tool for avoiding the probate process is the revocable living trust. With a properly established trust, your property passes directly to your named beneficiaries. Your trust generally does not have to be filed anywhere. The process of administering your trust after you pass away is overseen by a trustee named by you, instead of by the probate court. This keeps your private affairs private, and shields you and your loved ones from prying eyes.
What about charitable contributions? For some people, there’s no concern about keeping the details of their benevolence under wraps. However, for others, privacy is of the utmost importance. For example, what if you are employed by a conservative corporation, but you want to contribute to a liberal cause? Or, what if you simply want to make sure your contribution is absolutely anonymous? One way to maintain your privacy when you make a charitable donation is to give to a donor advised fund. One such fund is the Fidelity Investments Charitable Gift Fund, http://www.charitablegift.org. A donation to this type of fund has the dual advantage of ensuring your privacy while still providing you with a charitable deduction.
Your estate planning attorney has a variety of strategies for helping you protect your privacy. He or she can help you tailor a plan to keep your personal business out of the public eye, both during your lifetime and after your death.