As followers of my blog know, I am a proponent of passing property using a Trust instead of a Will. While a Will is a contract between the deceased individual and the State in which it is Probated, Trusts are contacts between the Creator and Trustee of the trust. Wills submitted to the Surrogate’s Court are public knowledge (as are the decedent’s assets), while Trusts are private documents. It is this last point that we are discussing here.
In order to make a Trust “effective” you have to fund the Trust. The owner on the Deed is now “The John Doe Revocable Trust” (not “John Doe”); the beneficiary of the life insurance policy is likewise the Trust. An unfunded Trust is more effective as kindling for your fireplace than it is for your estate plan. As I have said before: You must take the additional steps of funding your Trust.
The problem arises when a financial institution insists on looking at the Trust in its entirety. The privacy and secrecy of your Trust is now opening to a number of individuals, and may pop up in some place where you don’t want it. It has greatly pained my numerous clients when a recent college graduate answers the phone at a financial institution and insists on seeing my client’s confidential document. I want to make this very clear: By law financial institutions are ONLY entitled to the page that has the Article naming the Trust and the signature page, or they are expected to accept a “Certificate of Trust” which paraphrases the terms of the full document but keeps vital steps private. The institution can also ask the account owner to sign some type of hold harmless paperwork, but are NOT entitled to see you entire document.
Some people also use “pour over” Wills, which transfers Probate property to the trust. While this method is effective for transferring funds to your ultimate beneficiary, it also means that the Surrogate’s Court will ask you for a copy of the trust as well, scan it, and have it available to the public for viewing. So if privacy is of primary importance to you, avoid pour over wills.
I am also asked whether a client should share the information in his or her Trust with future beneficiaries. My answer to this is made on a case-by-case basis, though I usually answer “no” as the default answer. A colleague of mine would tell her clients to “leave a treasure map, but hide the treasure,” which I believe makes sense.
This leads to the last issue: Where does one keep his or her Trust? I am a big believer in using a safe at the house instead of a safe deposit box at the bank. When a renter of a safe deposit box dies the items inside are inventoried, the box is locked, and the family has to petition the Court to take out the contents of the box. A safe at home avoids this. A trusted family member will be able to access legal documents at any time (provided the code has been shared) and also have contact information with the attorney. An copy should also be kept with the family attorney.
Your legal life is your own business. Do you best to keep it that way.