To avoid probate, they didn’t use a revocable living trust or any other trust planning—they just relied on a will. If they had used some type of trust planning, they could have completely avoided that.
One of the things I love most about trust planning is the aspect of privacy. However, it’s important to keep in mind that all states have different laws around trust privacy, and not all states are created equal. Some provide excellent privacy, while others offer little to no protection for the family or their assets, leaving family dynamics and details potentially exposed to the public.
Let’s start with the simplest aspect of trust planning and its benefit of privacy: a revocable living trust, or even an irrevocable trust, allows you to avoid probate. Probate is the legal process your assets go through once you pass away, where you have to submit inventories, and if you have a will, you submit the will. Even if you don’t have a will, you still have to submit information about the deceased person, their family, and their assets, bringing those details into the public eye. Anyone can access that information.
Often, when we see details about a famous person who has passed away—like their net worth or who they left everything to—it’s because they didn’t plan to avoid probate. They didn’t use a revocable living trust or other trust planning; they just used a will. If they had used some form of trust planning, they could have avoided that exposure entirely.
Another important aspect is that in most states, there are laws requiring the beneficiary of a trust to be notified about the trust and their benefits once they reach a certain age—sometimes 18, 21, or 25, depending on the state’s regulations. However, some states, like South Dakota, have what are known as “quiet trust” laws. These laws allow the person setting up the trust to completely withhold details about the trust from the beneficiary, which can be particularly important depending on the family dynamic and the nature of the children involved.
Lastly, another critical component of trust planning related to privacy is what happens if there’s a lawsuit involving the trust. Whether it’s a dispute within the family or a lawsuit by a third party, some states like South Dakota, Nevada, and Delaware have limitations on the information regarding the trust that can be made public. In South Dakota, for example, there’s a complete seal on trust-related judicial proceedings, meaning no details of the trust will be exposed to the public.
There are many things to consider regarding privacy, and not all states offer the same protections. Whether you have a modest estate or a significant one, privacy could be one of your best allies and should be a key consideration in your trust planning.