Privacy is quickly becoming a scarce commodity in today’s digital world. While maintaining your privacy could prove challenging, California state law provides residents with an assortment of strategies to keep information about their most sensitive assets and investments confidential.
Why Privacy Is Becoming a Premium Commodity
If you ever run your name through a search engine, you might be surprised at how much information is available online. Voter databases, public records aggregators, and other companies routinely publish consumer information on the internet, including someone’s:
- Full name
- Political party affiliation
- Residential address
While some companies are willing to remove consumer information on request, getting anything deleted from the internet can be incredibly difficult.
For those Californians with a high net worth or those with well-known names, privacy is often more than a matter of personal concern—it could be a matter of safety, both for themselves and their loved ones.
How a Trust Can Protect Your Privacy
The Golden State’s probate code affords most California residents the right to establish a trust.
Put simply, a trust is a legal entity that can receive and manage a variety of assets, including:
- Real property
- Bank accounts
- Investment portfolios
- Motor vehicles
Certain types of trusts, including revocable living trusts, allow the trustor to retain significant control over the trust’s assets. However, when assets are transferred to a trust’s control, they become the legal property of the trust and its appointed trustee or trustees.
If the trustee is an attorney or a law firm, any public records search for an individual’s assets will likely exclude the trust’s assets.
Since trusts are discrete legal entities, a public records search seeking information about an individual’s assets will likely exclude those under the trust’s control, preserving the trustor’s privacy and distancing themselves from their assets.
Californians seeking to safeguard their privacy could benefit from the establishment of the following types of trusts:
Revocable Living Trusts
A revocable living trust allows its creator, the trustor, to serve as the trustee when they are still alive. Since these trusts are “revocable,” their terms, holdings, and beneficiaries can be changed at any time up until the trustor’s death. However, a revocable living trust only offers a single layer of protection for privacy-conscious estate planners since the trustee’s information will still be listed in public records. Appointing a fiduciary, such as an estate planning attorney, as trustee could provide an additional layer of insulation from scrutiny.
Blind trusts restrict the trustor’s role in trust management and administration. While the trustor can transfer assets into the trust’s control, a designated third-party trustee must manage them. Blind trusts are typically comprised of financial accounts and investments; they are frequently used both to avoid conflicts of interest and to maintain the trustor’s absolute privacy.
Golden State residents can also protect their real properties from prying eyes by establishing an anonymous limited liability company or LLC. If an LLC owns a real property, the grant deed provides a title to the LLC rather than to its individual owners or members.
What to Ask an Attorney About Anonymous Trusts
Establishing a revocable living trust, blind trust, or an anonymous LLC can present unexpected challenges. Since trusts may be subject to state and federal reporting requirements, trustors who inadvertently violate the law could face harsh penalties, including civil fines and criminal prosecution.
If you are considering a trust to protect your privacy, contact an experienced California estate planning attorney. During your initial consultation, you will have the opportunity to ask important questions about your trust, its privacy-protection benefits, and after-death administration.
Here are five questions you should ask your attorney before making a commitment:
- Will you help me administer the trust when I’m still alive?
- How many years have you practiced estate planning?
- Do revocable living trusts offer any tax benefits?
- Do trusts offer inheritance benefits beyond an ordinary last will and testament?
- Could a trust or anonymous LLC reduce my estate’s liability in the event of an estate contest or creditor dispute?
Do You Need to Speak With an Attorney About Estate Planning?
If you need to speak with an experienced estate planning lawyer, please contact us online or call us directly at 800.756.5596 to first register for one of our free, informative seminars. Your attendance will qualify you for a special discount for our estate planning services should you choose to proceed with us. We proudly serve clients throughout California with offices in Torrance, Newport Beach, Orange, Woodland Hills, and Pasadena.