A revocable living trust (RLT) is great for privacy

The best estate planning tool for those who guard their privacy is the revocable living trust (“RLT”). What is it? Why is it so good? How does a RLT differ from a will?

First, a RLT is a written agreement whereby you are the initial legal owner (trustee) and the initial beneficial owner (beneficiary), and you control your trust property for your own benefit and can make changes.
Your SS number attaches to any account titled in the RLT. Your named successor trustee steps in for you if you are disabled or when you pass. They then have the fiduciary responsibility to follow your written instructions.

The Court has jurisdiction over your trustee. If they fail to act appropriately, the Court can become involved if a beneficiary files a claim. Assets in your trust remain private and do not need to go through probate.
Second, real estate, bank accounts, brokerage accounts, CD’s, personal property titled in a RLT do not need to be listed on an inventory and appraisement and available for the world to see.

Assets titled in your RLT, do not go through probate, and are kept private. Title to trust assets vest immediately in your named successor trustee by operation of law. If you have only a will, then all assets (including tangible personal property) in your name alone that are not designated by beneficiary or owned jointly with right of survivorship will have to be listed on the Inventory and Appraisement.

Third, a trust is just like a will in that it directs who will be responsible and it directs what they shall do, who gets what and how? However, unlike a will, a trust can be administered free from the active supervision of any court.

For instance, assume there is a client with $200,000 in total assets, and another client with $5,000,000 in total assets. If they both plan with a RLT (as opposed to a will alone) and their RLT is properly funded, then both of their Inventory and Appraisements will reflect no assets. If you value your privacy, this is great. The estate of the $5,000,000 person will appear the same in the public record as the estate of the $200,000 person.

Don’t be fooled. If you use a will alone, then the legal fees and court costs will be more, and if you own real estate in another state, a probate proceeding will need to occur in the other state along with all the concomitant legal fees, court costs and lack of privacy.

In Beaufort County, if your probate assets are about $1,000,000, then the fee to the Treasurer (not the legal fee) will be nearly $2,000. Based on experience, when we have clients that need to go through probate in other states due to real estate they owned in that state, the costs can easily approach $5,000 or more. All of this cost and lack of privacy can be easily avoided with the proper use and funding of a RLT.

Mark F. Winn, J.D., Master of Laws, LL.M. in Estate Planning, is a local tax, asset protection and estate planning attorney.