Keeping Your Most Personal Finances Private

Physician's Money Digest, May 2007, Volume 14, Issue 5

Most of us put a high price onour privacy, especially whenit comes to our finances.Often, we're not even willing to sharethe details of our financial informationwith our closest family members,including adult children or our spouses.It's all a big secret.

But, in fact, once we die, it's nolonger a big secret. Upon your death,your financial information is open andavailable to the public. Your last willand testament is filed at the court aspart of the probate process. Probate isa public process, meaning anyone cango to the court and look up your will.

Avoiding a Public Display

If you would prefer that your financialinformation is not available to thepublic, you may want to consider settingup a revocable living trust. You setup this trust while you're alive, and itremains in effect after your death. Youwould need to transfer title to all ofyour assets into the name of the trust.

During your lifetime, you can beyour own trustee, and since the trust isrevocable, you can also make changesin the trust provisions. You wouldname a successor trustee to take overupon your death or if you becomeincompetent. You will still need a will,which will transfer to your trust anyassets you failed to retitle during yourlifetime. Assets held in your trust arenot subject to probate at your death.Since probate costs in Alabama aretypically low, you may not save muchmoney with this strategy, but you willpreserve your privacy. You will havethe immediate costs associated withwriting your trust and the transfer oftitle of property to your trust.

Minimal Upkeep

A revocable living trust does notrequire a tax return, so your ongoingcosts to manage your trust will be minimal.If you own real estate in morethan one state, as many Alabamians do,then there are even more benefits to arevocable living trust. For more information,consult with your attorney, taxplanner, or financial advisor.

Stewart H.Welch III, CFP®, AEP, is the founderof the Welch Group, LLC, which specializes inproviding fee-only wealth managementservices to affluent retirees and health careprofessionals throughout the United States.He is the coauthor of J.K. Lasser's New Rules for Estate andTax Planning (Wiley; 2005). He welcomes questions or commentsat 800-709-7100 or visit www.welchgroup.com. Thisarticle was reprinted with permission from the BirminghamPost-Herald.