Financial privacy has become a priority in estate planning and other industries. Data breaches and security threats highlight the importance of keeping personal records protected from a wide range of threats.
But many people don’t consider financial privacy when setting up an estate plan. They only focus on outlining how they want their assets managed and distributed at the time of death.
Creating a comprehensive estate plan gives you and your family the financial privacy you need. Consulting with a skilled estate planning attorney is the first step to creating a plan that works for you.
Estate Planning, Probate, and Your Privacy
When it comes to creating an estate plan that preserves your financial privacy, you and your attorney must take a holistic approach that looks at all aspects of your personal and professional wellbeing.
You can identify the strategies and tools that protect your assets while securing your privacy and the financial future of your family.
Probate consists of the activities required to settle and distribute assets in a way that aligns with the terms of your will. But this can be costly and may delay the distribution of assets to beneficiaries.
More importantly, it puts your financial privacy at risk. So knowing how to avoid the probate process is an important step in keeping your personal information safe.
Why You Need to Avoid the Probate Process
Not all assets need to go through probate. Jointly owned property such as benefits from life insurance and retirement accounts, real estate, and bank accounts are protected from probate.
But assets that are solely owned by you may be subject to probate. This can reduce the overall value of your estate while making private financial information available to the public.
By law, probate files are considered to be public record. This allows any individual to have access to information related to your finances and estate properties. They can see the value of your assets and obtain the names of beneficiaries.
The documentation required by the probate process puts your financial privacy at risk. It’s also time-consuming, delaying the distribution of assets for anywhere between a few months to a few years.
Protecting Your Financial Privacy With Your Estate Plan
Your estate planning attorney will help you put the right plan in place to protect your financial privacy.
Every situation is unique. So you’ll need a customized plan that considers all of your needs and personal preferences.
The following are some of the estate planning tools that can protect you and your family’s financial privacy:
- Wills and trusts
- Power of attorney
- Pay-on-death accounts
- Small-estate provisions
Your will outlines how assets will be distributed at the time of your death. But it’s not enough to provide the full protection you need.
A living trust can be used to transfer assets to beneficiaries and avoid probate. A trust lets you efficiently distribute assets according to your needs and wishes.
Power of attorney protects your assets in the event that you are unable to make decisions related to their management or distribution. You secure the value of your estate and appoint the right person to make decisions that protect your families financial privacy.
Pay-on-death accounts can be used to transfer assets related to banking and retirement accounts. This avoids the probate process and allows you to distribute those assets to a beneficiary immediately.
Small-estate provisions help you avoid the probate process depending on the type of assets contained within your estate and its size. Your attorney can help you determine if this strategy is right for your situation.
Joint ownership, donating assets, and other strategies also protect your financial privacy by helping you avoid the probate process.
Understanding how probate makes private financial information available to the public helps you create the right estate plan.
Having the legal resources you need lets you consider all of your options and make the right choices for the financial security of your loved ones.