In my travels around the country working with family owned companies, I am always amazed at the significant and very public role these entrepreneurs play in their communities. Because of this we often recommend the use of revocable living trusts as a part of their succession planning environment. I’m also frequently amazed at the pushback on this powerful planning tool that we get from local attorneys. In one recent situation, our client’s attorney told our client that we did not understand this particular state’s laws and that probate in this state is not a big deal.

It just so happened that our client’s mother had passed away just last year.  So, to prove our point, my partner and I took a trip to the county courthouse and paid a visit to the probate court. There was no line at the window, so we were assisted immediately. We simply requested a copy of the inventory of our client’s mother’s estate.  Nine minutes and $35 later, we had in our hand a detailed inventory of her estate, the value of each of her assets, including household items and specific pieces of jewelry, and how the assets were owned. Since this happens to be a community property state, this also gave us a lot of information regarding what our client’s father still owns.

 When we presented this to our client, he suggested that we not reveal this to his father because he would feel like we violated his privacy. This was our point! Probate is public.

This is a primary reason for owners of family businesses to utilize revocable trusts in their planning – to avoid the publicity of the probate environment. There are other reasons family business owners should consider the use of a revocable trust, which I will cover in future posts.

  Sign up for our monthly e-newsletter to stay informed on how to overcome related succession planning issues.