One of the main benefits of taking the time to put together an estate plan is creating peace of mind for you and your loved ones. But not all estate plans are created equal when it comes to keeping your family and financial matters in the family and away from the public's prying eyes. This is where the difference between a will-based estate plan and a trust-based estate plan becomes apparent.
Will-Based Estate Plans Become Public Court Records
When you decide to make a last will and testament, the questions that you will need to answer include who should get your personal effects (including jewelry, collectibles, and artwork), who should get your cash, investments, real estate, and business interests, and who should be put in charge of making sure that the plan you have put together is actually carried out. But one important thing that is often overlooked is the fact that in order for the written instructions that you have put in your will to be carried out, it will have to be filed with the local probate court.
What's so bad about your will being filed with the local probate court? First and foremost, once your will is filed with the probate court, it becomes a public court record. This means that as soon as the will is filed, anyone can go down to the local probate court and ask to see it.
So what's so bad about anyone being able to see your probate file? Because the file will reveal what you owned, who you owed, and who stands to inherit your estate. This will include each heir's name and address as well as the name and address of your executor.
When a last will and testament is filed for probate, anyone, including your neighbors, disinherited heirs, and bill collectors can read your will and other documents that have been filed with the probate court.
So how can you keep your final wishes private, personal matters that will be hidden from the public's prying eyes? By using a trust-based estate plan instead of a will-based estate plan.
Trust-Based Estate Plans Stay Private
A revocable living trust is a private contract that is made between you as the trust maker and trustee for the benefit of yourself as the beneficiary. While you're alive and well you'll have the unfettered authority to make all of the decisions about the trust property, including how to invest it and how to spend it on behalf of yourself as the beneficiary. If you become mentally incapacitated, then the person you have named as your disability trustee will take over making the investment and spending decisions. After you die, the person you have named as your administrative trustee will be responsible for paying your final bills out of the trust property and then distributing what is left to the beneficiaries you have named in the trust agreement.
How Does a Revocable Trust Keep Your Final Wishes Private?
So how does a revocable living trust keep your final wishes - in fact, all of your wishes - private, personal matters that will be hidden from the public's prying eyes? Because the key difference between a last will and testament and a revocable living trust is that all three phases of the trust described above (alive and well, alive but not so well, and after death) can be carried out without the need to file the trust with the local probate court.
What Should You Do?
If keeping your family and financial matters private is a concern of yours, then you should consider making a revocable living trust the governing document of your estate plan. Of course, revocable living trusts offer other benefits as well, but in some situations, a trust will not be necessary to keep your affairs private. You will need to consult with an estate planning attorney who is familiar with the laws of your state and will be able to look at your specific situation in order to determine if a revocable living trust is right for you.