FAQ: Can a Trust Protect My Identity?
Before we jump into this FAQ, let's cover a few basics about Trusts.
What is a Trust? A Trust is a legal agreement about the ownership, control, and distribution of assets. The person creating the Trust (Grantor) transfers assets they own into the name of the Trust. A Trustee manages the Trust assets and makes distributions to the Beneficiaries according to the terms of the legal agreement.
What kinds of Trusts are there? Trusts come in three main categories:
Testamentary: A Testamentary Trust is part of a Will that allows for creating a Trust if certain circumstances apply at/after your death.
Revocable: A Revocable Trust (aka "Revocable Living Trust," "Living Trust") allows you, as the Grantor, to consolidate the management and control of your assets during your lifetime. You can be the initial Trustee and have the option to hand off Trustee duties at any point if you wish/need. As the Grantor, you can change or even revoke your Trust during your lifetime. After your death, the backup Trustee carries out the Trust's asset management distribution instructions.
Irrevocable: An Irrevocable Trust, like a Revocable Trust, allows you, as the Grantor, to consolidate the management and control of your assets during your lifetime. However, you give up control of whatever assets you transfer to an Irrevocable Trust; you cannot be the Trustee, and you cannot change the terms of the Trust (with a few exceptions).
Why are Trusts part of estate planning? Trusts have many uses, and estate planning is one of them. Testamentary Trusts ensure that a minor child's inheritance is managed on their behalf and for their benefit until they become an adult. Revocable and Irrevocable Trusts are a tool to avoid Probate (the court process for distributing assets after a person's death). And, Irrevocable Trusts can protect assets from future creditors and help the Grantor qualify sooner for certain government benefits (like Medicaid).
Okay, so now back to the main question - can a Trust protect my identity?
Let's say you win the lottery. Or you're a celebrity or have a high-profile job (like a politician, a judge, and/or a law enforcement officer). Perhaps you've got a lot of debt. Or maybe you're just a really private person. Whatever the reason, you want to disconnect your name from property that you own.
So, can a Trust help you do that? The quick answer is probably not. The longer answer involving three primary considerations. Keep reading. For a Trust to protect your identity:
The Trust name must be something completely disconnected from you. Most Trust names reference the Grantors, the Beneficiaries, or the property owned by the Trust. Examples: Smith Revocable Living Trust, Garcia Family Trust, 123 Main Street Trust. (Side note: there are additional and significant considerations about naming your Trust in a way that doesn't identify or connect to you. That's something to discuss, in detail, with your attorney.)
Neither you nor anyone closely related/connected to you can be the Trustee. The Trustee's name will appear on any asset ownership papers, accounts, and bills related to the Trust.
About those asset ownership papers, you need to think about how public and traceable they are. If you figure out a way to make points 1 & 2 above work, then what will the Trust own? Real estate is the most straightforward example. If you want to transfer any real estate you currently own into the Trust, the deed will (publicly) record the transfer and connect you to the Trust.
*Terms with specific legal meaning for this topic are capitalized in this article: Trust, Grantor, Trustee, Beneficiary, and Probate.
Disclaimer: this article was written by Attorney Heather Hazelwood of Hazelwood Law PLLC dba Ampersand Law. This article does not contain legal advice and is not a substitute for obtaining legal counsel. It is offered for general information purposes only.