The Importance of Keeping Your Estate Planning Private

In the age of the internet, nothing we do is private. Our names and images can pop up on the screen with the click of a button, making it easy for prospective employers, customers, or anyone else to learn about us in a frightening amount of detail.

Privacy concerns are essential to the estate planning process. Whether you are protecting your family wealth, passing on a business, or simply want to avoid paying large judgments out of your personal assets, it is vital that your estate plan is structured in a way that will keep your holdings away from prying eyes.

It’s Amazing What a Little Digging Can Turn Up

Any document you sign has the potential to disclose information about you, your family, and your assets. Even the most cursory search can reveal voter registration, news items, website ownership, property deeds, or the inner workings of your business enterprise.

Many people are unaware that their privacy has been compromised, particularly if they have taken steps to avoid it. For example, business owners often attempt to keep their business matters private by forming an LLC. Prospective clients in Florida may be shocked to learn that licensing records are public, meaning anyone can discover the members and managers behind the company name. If the domain name on the company website is not private, a DNS or WHOIS search may reveal the owner’s personal information (such as physical location and IP address). If any property is acquired and held by the LLC, this information can be part of the public record.

There are a number of ways to plug these peepholes into your business concerns. If you have an LLC, you can operate under a company name (Doing Business As) instead of your actual name. This is especially useful for keeping new products hidden until a certain launch date, such as when new films are shipped under generic titles to prevent fans from digging up the story. When Apple files a patent for the new iPhone, for example, it operates under a separate entity in case tech-savvy customers scrape the databases of the patent office to discover what it’s going to look like.

Prospective clients should always ask their chosen attorneys how they will ensure privacy protection. In our offices, privacy concerns have led to some creative solutions.

Case Story 1: The First Rule of Asset Protection…

An investment officer once called me to refer a client who was requesting asset protection. This phrase is often used in estate planning, and it really shouldn’t be. That’s because the words “asset protection” are a red rag to a bull, attracting creditors, lawyers, and financial predators.

Let’s say you’ve recently inherited a million dollars. You’re in a car accident. You’re able to walk away, but the other person is injured. The other person’s attorney is going to go after you, your financial advisors, and your attorney during discovery to find out how wealthy you are. Indeed, your professional advisors will probably be sued in the same lawsuit as the one your’re defending. Now, most information between you and your attorney is privileged, but some documents (such as an engagement letter) are not. If that engagement letter contains the words “asset protection,” the other person’s attorney knows that only wealthy people have assets to protect, giving them an incentive to ask for a lot more in damages.

By the way, another set of documents that are typically not privilege are the billing records and invoices created by your professionals.

Like Fight Club, the first rule of asset protection is that you do not talk about asset protection. That is why my engagement letters and the documents I prepare never contain these words, protecting your interests even before you are officially my client.

Case Story 2: Keeping Customers at the Front End of Your Business

I once had clients who owned a small auto repair shop. The husband owned and operated the business, while his wife did the bookkeeping and acted as business manager. The husband had a will-based estate plan, making the business and the rest of his estate subject to probate. Probate is a public process and can heavily impact the value of the business. Customers can be made privy to ownership interests, debts, and the new owner—any one of which can affect the way they feel about the business.

I was able to change the plan and hold the couple’s business in a revocable trust. Not only does this keep my clients’ ownership interests confidential, but it also allows the business to be passed to successors without the need for probate. When coupled with a strong business continuity plan, the whole operation can be passed to the new operator without anyone knowing that the business has changed hands.

Just Because You Haven’t Tested Something Doesn’t Mean It Will Hold

Your estate plan is not going to be put into practice in your lifetime, so now is your only chance to fill the gaps. At Yolofsky Law, we act as your trusted advisor on all estate planning matters and are always available to answer questions and offer options as your circumstances change. Call our office today to schedule a strategic family planning session.