My spouse and I are contemplating the use of a revocable (aka: living) trust for our estate planning needs. I’ve noted that many people name their trusts something like: “The Smith Family Trust.” Is there any legal requirement to follow this naming convention or is doing so more just an accepted custom? If this naming convention is not required by law, is there any advantage to using a different naming format?
Revocable Trusts used for estate planning (as well as other types of Trusts) are commonly named after the person(s) who creates the Trust (known as the “Settlor” of a Trust). For example, a typical Trust might be named something like, “The 2014 John Doe Revocable Trust.” Often, if not usually, the process of naming a Trust is given little, if any, real thought. For purposes of “Privacy Planning,” and sometimes also for purposes of “Asset Protection Planning,” this common practice makes little, if any sense, whatsoever.
From a Privacy Protection standpoint, anyone who might want to know how many parcels of real property that John Doe owns in a particular county – and the assessed value of those properties – needs to do nothing more than check that county’s real property and/or property tax records.
If the desire for privacy, in a digital world where privacy, in the traditional sense, is becoming (or perhaps has already become) virtually nonexistent, is not a significant concern, one might still want to consider the Asset Protection benefits of not including the Settlor(s) real name in the name of a Trust.
Consider this: Plaintiffs attorneys – personal injury, a.k.a., slip-and-fall lawyers; employees’ employment lawyers; etc. – usually (almost always) work on a pure commission basis, that is, in legal jargon, on a contingency fee basis. In other words, the Plaintiff’s lawyer gets paid if, and only if, the Plaintiff’s lawyer resolves the case by obtaining money from the defendant(s). Furthermore, Plaintiffs’ lawyers, in addition to working on a pure commission basis, also routinely advance – out of their own pocket! – the costs of litigation. Those costs often include not just filing fees, but much bigger-ticket items such as depositions, various types of examinations, investigations, and the like.
Since a Plaintiff’s lawyer will have ended up working for free – not to mention receiving no reimbursement for the out-of-pocket litigation expenses they advanced – if the lawyer is unable to extract money from the defendant (or from the defendant’s insurance carrier), the Plaintiff’s lawyer has significant economic self-interest in ascertaining – before a lawsuit is filed – whether the intended defendant(s) has the financial means – that is, assets – to pay the Judgment or settlement that will, in turn, become the source of the Plaintiff’s lawyer’s paycheck and reimbursement check.
Plaintiffs’ lawyers know that the overwhelming majority of Settlors of Trusts own real property. Any Plaintiffs’ lawyer worth his salt also knows that the value of a Judgment or settlement is absolutely worthless unless the defendant can pay the amount of the Judgment or settlement.
With all this in mind, it would be hard to imagine that a Plaintiffs’ lawyer, especially in cases where insurance coverage is in question, would not at least perform a cursory check to determine what assets a defendant might own, with an eye toward being able to convert those assets into cash at the end of the litigation.
If the Plaintiffs’ lawyer searches local property ownership and tax records for John Doe, the lawyer will be able to very easily identify all parcels of real property that John Doe owns, or in which John Doe has a title interest, in his own name. However, if, for example, such property is titled in the name of the 1234 Main Street Trust, the results of the Plaintiffs’ lawyers public records search is likely to be quite different.
Quite obviously, the failure to locate or identify real property assets from which the Plaintiffs’ lawyer can satisfy a Judgment or settlement against John Doe might just be enough to persuade the Plaintiffs’ lawyer to abandon a questionable case before it is even filed with the court, and to move on to another client, thereby leaving John Doe unmolested by the legal system.
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Lapin Law Offices, P.C.
5001 Spring Valley Road, Suite 400 East
Post Office Box 802401
Dallas, Texas 75380
Disclaimer: The information contained in this publication is provided by Lapin Law Offices, P.C., for informational purposes only and, shall not constitute legal advice or create an attorney-client relationship. The laws and interpretation of laws discussed herein may not accurately reflect the law in the reader’s jurisdiction. Do not rely on the information contained in this publication for any purpose. If you have a specific legal question, please consult with an attorney in your jurisdiction who is competent to assist you.