Is your privacy important to you? Whether you have a huge estate or a more modest one, if you want to protect that privacy both before and after you pass away, you need to take steps now. Why is acting early important when it comes to privacy? And what should you do to ensure financial, legal, and personal privacy? Here are a few answers.
Why Protect Your Privacy Now?
For those who value their privacy, it's never too early to start. In today's world, information about your assets and financial situation — or even your own whereabouts — becomes easier and easier to find out. With a quick internet or public record search, unwanted salespersons, creditors, ex-spouses, or even estranged family members can learn where you live and many of the major assets you own.
If you pass away, unfortunately, your estate will become even more public. During the probate process, a filed will usually becomes public record for all to see. This means that everyone who submits requests through county public records offices can often find out what your assets were and who they may have been left to.
While this information doesn’t usually cause any problems, if you have intentionally left anyone out of your will, left certain sentimental items to particular people, or distributed your assets in an unequal manner, others will be able to find out — and possibly create problems. Your personal decisions are opened up for public debate, or even worse, potential litigation.
Surviving family and heirs are also exposed in this process because public records may indicate who got what and how much. Beneficiaries and family members may then have to deal with their own privacy issues or be subjected to creditor hassling as a result.
What Tools Do You Have Available?
The best way to avoid privacy issues is to use a separate entity to own the assets you wish to keep out of public view. There are two main categories of such entities.
The first choice — and possibly the easiest — is to create a basic business entity such as a limited liability company (LLC). The LLC can be structured like a corporation, taking ownership of designated assets and removing your name from the record. As owner of the LLC, you would still retain control. The biggest potential problems with this method usually involve the timing or gifting of assets.
You might wish to use the second option, an irrevocable trust. An irrevocable trust is one in which you cannot receive ownership of the assets back from the trust. This permanence makes the trust a separate legal entity from yourself. Trusts are separated from the individual both while he or she is alive and after their death. The trust's assets and distribution are not subject to probate and public record.
With both choices, you can decide which assets to transfer to the entity and which to keep on your own. And with an LLC, you can generally get your assets back if you change your plans later on.
How Can You Choose the Right Methods?
The decision on how to maintain your privacy is important. Choosing the wrong vehicle — such as a revocable trust — may not protect your interests in the ways you desire. And certainly, inaction allows certain data sets to become public record, whether or not you want them to.
Start today by learning more about your options as well as the pros and cons of both trusts and business entities. Donald B. Linsky & Associate PA
can help. Our estate planning and business planning pros can aid you in researching, designing, and executing your privacy protection plan. Call today to schedule a consultation.
