While most think of distributing wealth when they hear about estate planning, those with high-net-worth seek to distribute their wealth discreetly. Indeed, estate planning involves sensitive information concerning assets, family, and final wishes as a will lawyer knows well. Such information, if made public, could lead to unwanted attention and publicity, family disputes, and attacks from frivolous lawsuits. This article will explore the various aspects of privacy and confidentiality in high-net-worth estate planning.
Publicity Of Probate
Many people are surprised to learn that the probate process is a public process. This is particularly concerning for high-net-worth and high-profile individuals. Because probate filings are public records, anyone can access details about wealth, debts, and heirs. This can make your family and heirs targets. Worse, publicity in newspapers or gossip magazines.
Protecting Privacy Through Trusts
Trusts are an effective method of preserving privacy as our friends at Aptt Law LLC can attest. Indeed, trusts are not public documents. Depending on the state, the only people permitted to see the full trust document are the beneficiaries or heirs at law that may not be beneficiaries. In most states there is no requirement to record trusts. When trusts are required to be recorded, often, only a certificate of trust is required. A certificate of trust identifies the trust, trustees, and the powers of the trustees, but does not typically require information regarding assets or beneficiaries.
When using trusts, it is important to properly title assets in the name of the trust. Failure to properly title assets can result in those assets being subject to the probate process.
Some states permit what are called “silent trusts”. Silent trusts are not only protected from the probate process, but are also kept secret from the beneficiaries for a period of time. Sometimes they are not disclosed to beneficiaries for up to twenty-five (25) years. Some reasons for silent trusts are to prevent beneficiaries from being unproductive, if the beneficiary has substance abuse, behavioral, or mental health issues, or is in a troubled marriage or other relationship.
Appointing an independent professional trustee to the trust can further reduce the chance of disclosure. States like Nevada or Delaware offer robust privacy protections along with no state income tax on trusts.
Layering Privacy With LLCs
In most states, limited liability companies (LLCs) are not required to disclose the identity of its members. By transferring assets such as real estate, investments, or intellectual property into an LLC, high-net-worth individuals can keep their identity as owners off of public records. This privacy protection is further strengthened when the member of an LLC is a trust.
Learning More About Privacy
For high-net-worth and high-profile individuals and families, privacy is of utmost importance. Public exposure can create lawsuits, unwanted media attention, or safety and security risks. There are many ways in addition to those discussed for high-net-worth and high-profile individuals and families to protect their privacy. A lawyer can help you determine how best to protect your sensitive family and financial information through these and other estate planning techniques. Contact an attorney near you today for help.