Privacy in Estate Planning…

In the era of digital assets, digital record keeping, and, apparently, rampant NSA surveillance, many clients are understandably concerned about privacy when executing their estate plans.  Depending on the plan itself, more or less information may be publicly available.  If your family’s privacy is a concern for you, proper estate planning can achieve that end.

During life, when long-term care is necessary or in the event of a personal catastrophe, it is possible that someone will be needed to manage your finances and your healthcare decisions.  With a financial power of attorney, you may designate an individual to manage your finances and apply for necessary benefits, such as Medi-Cal orVA Aid & Attendance Non Service Connected Disability Benefits.  Additionally, with a trust, your successor trustee may take control over trust assets, which should include your home and your bank accounts.  In both instances, your the holder of your power of attorney and trustee only have the powers granted to them in the controlling documents.  Carefully reviewing their powers to ensure that they can take care of your needs is vital to preventing a conservatorship of the estate, a public court proceeding.

Similarly, an advance health care directive can prevent conservatorship of the person, a public proceeding to allow an agent to make health care decisions and otherwise take care of you.  In both types of conservatorships, detailed information about your health, bathing and eating habits, personal communications, and more is revealed to the court and is part of the public record.  However, by preparing documents in advance, you can prevent this invasion of your personal privacy.

After life, during the administration of your estate, it is necessary to file your original Will with the court.  However, a trust is a private document.  If you have a trust, then your Will will name your trust as its beneficiary; it won’t reveal very anything about your family members or your family dynamics.  If your trust is properly funded, meaning you have changed title to all your assets into the name of the trust, then it will be the only document likely to be filed with the court.  Without a properly funded trust, your estate will go through the probate process, which is a public proceeding.
In probate, your debts and assets will all be revealed to the public. 

Additionally, sometimes heirs are be contacted by real estate investors and estate sale professionals hoping to purchase assets of the estate, even as your family is still reeling from your death.  The same may be true when dealing with a poorly drafted trust or a trust that is not funded.  If the trust inspires litigation over ambiguous terms or provisions, it will become part of the public record.  If it is unfunded, all assets will be distributed to the trust through probate, according to the terms of the Will.

Although even the best-laid plans may be subject to litigation and become part of the public record, considering all the potential issues and carefully drafting for them may protect your family’s privacy during times of failing health or after death.

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