Can you keep your estate plan totally private and should you want to?

Many families are hesitant to discuss financial affairs together.  Parents do not necessarily want their children to know how much or exactly what they have.  Some do not want their loved ones to know exactly how they plan to dispose of their assets when they die.  However, what we strongly recommend for each and every client we work with is that someone knows where estate planning documents are located and/or how to access those documents when they are needed.  We even provide a service to our clients that makes these documents always easily accessible to them and the person they want to have access.  All too often it is the lack of information and knowledge not disclosed by the decedent that leaves a very trying and difficult estate planning process for their surviving loved ones. 

Furthermore, we think it is valuable that the people who are named to various roles in your planning know that they have been named.  We have a process in our practice to educate individuals who have been named to the various responsibility roles to help them do what is often a demanding task.  In addition, if Child A knows that you would like him to serve as your Executor but after learning what the job entails he/she decides they do not want the job, it is far better to learn that while you are alive and well so that now you can make alternative plans.

While someone is alive, there is little to be gained from sharing the contents of a Will with other family members.  There can easily be resentment caused by plans to give certain items of personal property to specific individuals or to bequeath different portions of one’s estate to different children or other relatives.  Also, once family members know how someone plans to dispose of their assets, there can be additional resentment caused if those plans are changed later on.

But sooner or later a Will can no longer be kept private.  That is because eventually a testator dies and their estate must be formally settled.  In order for the Executor named in the Will to become the Executor, the Will must be filed with the probate court.  Once that Will is filed with the probate court, it is part of the public record.  In many states, including Connecticut, even if a decedent leaves no assets that need to be formally probated, by statute the Will still needs to be submitted to the Probate Court. 

For those who value privacy and wish to keep their estate planning a family affair, prudent estate planning can ensure that the Will is only a fairly small part of the overall picture of one’s estate planning.  In our practice, we usually prepare for our clients what is termed a “pour-over” Will.  A pour-over Will provides that any assets in an individual’s name when they die should be distributed to a trust at the conclusion of the probate process.  If most of the decedent’s assets were already funded into a trust before they died, then there may be very little or nothing left in the probate estate.  If you have been reading our previous blog postings, we have written posts about the deaths and estate settlements of a number of noted musicians and other celebrities.  The reason we can write about those situations is because they did not arrange their affairs to maintain privacy and minimize probate court involvement after death.

For the most part, trust planning can be kept private.  Unlike a Will where the document becomes part of the public record and must be furnished to interested parties, a trust agreement with some exceptions need not be filed with the probate court.  That is one of the many advantages to using trusts in your planning.  A Trustee of course must administer the trust for the benefit of the beneficiaries in adherence to all of the instructions and requirements in the trust.  In Connecticut they do not necessarily have to give all of the beneficiaries a copy of the trust.  Nonetheless, in Connecticut trust administration is always potentially within the jurisdiction of a probate court.  That is because a beneficiary can bring a claim against the Trustee for not following the requirements of the trust.  If a claim is brought, the trust and its contents would become part of the public record.  But a disgruntled beneficiary would need to be willing to assume the significant attorney’s fees and other costs of such a law suit.  In addition, in our opinion it is possible to draft the trust in a manner that will further discourage a beneficiary from filing suit to challenge the terms of the trust.

Please call us at 860-769-6938 if you have any questions about the issues presented above or if you care to discuss any other planning issues with us.

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