Estate privacy in the 21st Century

We are seeing more clients come in for estate planning with concerns about their privacy, especially in probate proceedings.

Any documents admitted in a probate proceeding will be publicly accessible for viewing, including an individual’s last will and testament, inventory of assets, and names and addresses of heirs. While a last will and testament allows an executor to distribute your assets pursuant to your wishes, it must be filed and admitted to probate in order to be valid. In Arkansas, we have a very good public court records system, and almost all documents in a probate proceeding will be easily accessible to the public. The main way to avoid your estate being publicly viewable in a probate proceeding and to protect your privacy is by setting up an estate plan using a revocable or irrevocable trust.

As mentioned above, trusts can be administered outside of court oversight and out of the view of the general public. For example, when the grantor of a trust passes away, under Arkansas law, only the beneficiaries of a trust are entitled to copies of the documents. If all beneficiaries consent to the terms of the trust and sign waivers, we can move forward with distributing the assets pursuant to the terms of the trust. In a probate proceeding, we must wait at least six months before distributing assets so that creditors have time to file claims against the estate. Additionally, in a probate proceeding, we must get approval from the court to distribute assets to beneficiaries, and all of this information will be accessible by the public.

With a trust plan, there may be instances where certain assets were not titled in the name of the trust, and a last will and testament will need to be filed with the probate court to correctly transfer title to these assets to the trust. This type of will is often called a “pour-over will.” For individuals with a trust plan, their last will and testament’s contain a pour-over provision, which states that all assets not in the name of the trust at death are to be transferred to the individual’s trust. While this would be viewable by the public, the public won’t be able to see the bulk of the assets that were already in the trust at the time of a person’s death and the public won’t be able to see who a person’s beneficiaries are. The probated assets are transferred to the trustee of the trust, who can then administer the trust outside of the probate court pursuant to the terms of the trust. This provides privacy for your beneficiaries as the general public won’t see what assets they received nor be able to ascertain the amount a beneficiary inherited.

While a trust plan will not guarantee that all of your assets avoid probate, a correctly drafted and funded trust plan will limit the publicly available information to the public and will shield your beneficiaries and their inheritance from publicly accessible documents.