When celebrity chef Anthony Bourdain tragically passed away last June, the New York Court record revealed he left the majority of his $1.2M estate to his minor daughter. Many were surprised to learn that Bourdain’s estate – comprised of personal
property, residuals, and accounts – was only valued at $1.2M given that his estimated net worth for 2017 was upwards of $16M. What most likely happened is that Bourdain planned to protect the majority of his wealth by using trusts and other estate planning methods with an eye on avoiding unnecessary tax and perhaps more importantly, keeping his private life private.
When you die your executor will usually be required to apply for probate which involves a submission of your Will to the Court in order to prove its validity. As part of that application, your executor must also disclose the
specific details and values of the assets in your estate and which are governed by your Will. All of this very private information becomes public record and anyone can enter the Court house and request a copy of the probate file relating to your estate.
A trust, however, is not subject to probate and the trustee does not need to disclose the existence of the trust deed or what assets are in the trust.
Aside from the privacy and confidentiality a trust offers, trust assets are not subject to probate, meaning that your estate will also avoid paying any estate administration tax (i.e. probate tax) on the assets held by the
trust. For instance, a $1.2M estate would attract $17,500 in probate tax but a $16M estate would attract nearly $240,000!
Although our American cousins seemed to have embraced this powerful tool more than Canadians, trust planning before death is not just reserved for celebrities and the very wealthy. While trusts are often used to reduce
probate tax and maintain privacy, they can also be used to hold US vacation property to eliminate exorbitant US estate taxes and are popular planning tools in “blended families” to allow certain assets to be used for the benefit of a second spouse’s lifetime while at the same time preserving an inheritance for children of the first marriage. Speak to one of our estate planning lawyers to understand how a trust might work for you.
