Keeping Your Estate Plan Private

For some people, keeping financial matters private, even after death, is a high priority.  You can maintain your privacy by using a traditional Will with the proper provisions or by using a revocable trust.

Probate

Probate Court is the court that determines the validity of your Will and oversees distribution of your estate after death.  In the process, your Will is filed with the Probate Court and becomes part of the public record. The Will and all other filings in the Probate Court are available to anyone who asks to see them.

State law requires an Executor of a probated Will to file an inventory and annual accountings showing estate assets and all distributions from the estate account. You can waive these requirements in your Will, which is one way to keep your financial matters private after death.  Another method is to do your estate planning in a revocable living trust.  A revocable trust can give privacy after your death by keeping your estate out of Probate Court.

What is a Revocable Living Trust?

private estate planThere are three parties involved when a trust is created: the Grantor, the Trustee and the Beneficiary.  The Grantor writes up the Trust Agreement and gives his property to the Trustee.  The Trustee agrees to hold and manage the trust property as directed in the Trust Agreement. The Trust Agreement designates the Beneficiaries who can receive distributions of income or principal from the trust and may receive the trust assets after the Grantor dies.

A Trust can be revocable or irrevocable.  A revocable trust is very flexible.  It can be changed by the Grantor at any time during the Grantor’s life. The Grantor can add or remove assets from the trust. The trust includes directions for distribution of the trust assets after the Grantor’s death.

When a revocable trust is drafted for estate planning purposes, the Grantor who creates the trust is usually also the trustee and the beneficiary. If the Grantor becomes disabled, a successor trustee manages the trust for the Grantor’s benefit. On the Grantor’s death, the successor Trustee distributes the trust assets as directed in the Trust Agreement.

Funding the trust

In order for a revocable trust to avoid probate, the Grantor must transfer his assets into the trust during life.  This is what we mean by “funding” the trust. The assets that must be transferred to the trust are those that are in the Grantor’s name alone (not jointly owned) and which do not transfer at death according to a “pay on death” or beneficiary designation. It is important to work with an estate planner to determine when asset transfer is advisable.

What are the benefits of a revocable trust?

Planning for disability. A trust can be used to help someone else manage your assets should you become ill, disabled, or unable to handle your finances.  A revocable trust can be changed as your circumstances change.

Maintaining privacy. If you want to use the trust to avoid probate and maintain privacy, the Grantor must be thorough in transferring all of his assets to the trust during life.  If an asset is overlooked, probate can be required to transfer a single asset.

Out-of-state real property. If you own real property in another state (a vacation home in the mountains of North Carolina or a condo at the beach), you can save the time and expense of a second probate in that other state by transferring the out-of-state real property to a trust during your life.

Avoiding probate. A revocable trust can reduce costs after your death by keeping your estate out of Probate Court.  The successor Trustee is already in place to transfer assets to beneficiaries as directed in the trust agreement.  This allows the estate to be transferred without the court costs and legal fees involved in traditional probate.

Considering Creating a Revocable Trust?

If so, please be sure to give us a call to see if we can help.  We focus on estate planning and creating the legal documents to care for your family and assets in the way that carries out your wishes and gives you peace of mind.

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