It’s Nobody’s Business: Benefits of the RLT

November 21, 2013

by Michael G. Goldstein, EVP Corporate Strategies

Anyone can avoid the press intrusions by utilizing one simple document - the Revocable Living Trust (‘RLT”).

With the recent revelations concerning the breach of clients’ confidential information at Morgan Stanley which lead to a discourse on privacy, I thought revisiting one of my articles originally posted at directorship.com on November 21,2013 was in order.

I am always amazed as to how celebrities and well known business personalities carefully guard their privacy … but ignore it at death. To illustrate my point, the recent demises of James Gandolfini and Norah Ephron have brought to light their respective estates, estate planning techniques, and asset holdings. When a celebrity dies the business press has fodder to speculate as to the decedent’s investment acumen (Ephron buying Apple and Google stock) and missed opportunities to avoid estate taxes (Gandolfini). But why should these celebrities, or for that matter well known corporate executives and directors’ families, be subject to the press reviews? They should not.

Anyone can avoid the press intrusions by utilizing one simple document: the Revocable Living Trust (‘RLT”).

The RLT avoids the need to have estate assets subject to public disclosure and probate. Basically the owner of the assets as the grantor transfers them to an RLT while continuing to retain full interest over the assets as the trustee of the RLT. The beneficiary of the RLT is the grantor/trustee. The grantor/trustee has control of the assets and the power to terminate the trust at will. The trust contains provisions that address the distribution of the assets just like a will and at death the trust becomes irrevocable. Usually in tandem with the trust you will have a “pour-over will” which gathers assets at death that had not been transferred to the trust during the grantor’s lifetime. Those assets will be subject to probate and public disclosure.

In most corporate organizations senior management and directors are well recognized in the local and national business communities. Like a celebrity, why should the families of those officers and directors be required to expose the wishes of a decedent and experience press accounts discussing the investment knowledge, or lack thereof, by the decedent?

Today many corporations provide some form of estate planning services to key management and the board of directors. A company will be doing a great service to those individuals if through this estate planning benefit, it educates the company’s key personnel about the merits of an RLT. You would be surprised as to how many sophisticated business people are sometimes unaware of how the trust functions, and its underlying benefits. By providing access to this estate planning technique, the families of your management and directors are saved from an unwelcome article about investments and tax structures. Your management and board will thank you.

Published on LinkedIn January 21, 2015