When legendary musician Lou Reed passed away last year, he left an estate worth an estimated $30 million. However, he did so in a way that exposes his heirs to publicity that he may or may not have anticipated. The story draws attention to an important issue for anyone planning an estate in California — even those of somewhat more modest means.
Lou Reeds estate plan was reportedly set forth in a 34-page will that he signed about a year and a half before his death. In it, he left millions of dollars in assets to be shared between his wife and sister in a 75-25 percent split, as well as another $500,000 to be put toward the care of his mother.
While this may sound ordinary enough to the lay reader — apart perhaps from the size of the sums involved and the generous length of the document itself — many estate lawyers were surprised to learn that Reed used a will rather than a trust to convey his wishes. This is because trusts, when used correctly, can confer a level of privacy that is impossible to achieve through a will alone.
When a person dies and leaves a will, the will must pass through probate court in order to determine who gets what. Importantly, probate is a public process, which means that sensitive financial information about the estate is easily accessible among the heirs and anyone else who may be interested in the familys financial affairs.
In contrast, a properly structured trust can be used to convey assets privately. This is often preferable not only for the privacy itself, but also because it can help minimize conflicts and challenges to the will among heirs who may be unhappy with their lot upon discovering how it stacks up against someone elses.
Source: Forbes, “Lou Reed Walked On The Wild Side With His Estate Planning,” Danielle and Andy Mayoras, July 10, 2014