News & Commentary

Will Power
Craig R. Hersch
Florida Bar Board Certified Wills, Trusts & Estates Attorney; CPA

Privacy is the Battleground of the 21 st Century

Whether or not the estate tax exemption amounts are ever increased, privacy will become the battleground of 21 st century estate planning. A variety of factors are leading us in this direction. First, the increasingly litigious nature of our society has been transforming our courts into a wealth transfer system. If you have deep pockets then you are a target. Ask any physician who can’t purchase adequate malpractice insurance, or a corporate executive who fears a Sarbanes-Oxley claim, or a property owner fearing a tenant injury.

Second, many of our expected “rights of privacy” have been eroded through legislative efforts. Some of those laws are a result of increasing security concerns, while others are a result of our legislatures not thinking through the consequences of their decisions. Ask a banker, for example, about the increased (and unnecessary) costs of complying with the Patriot Act, and how the reporting the banks must provide the federal government might eat away at your privacy.

Add to the above the electronic age and the scary amount of information available to those who wish to spend the time to pursue it. Credit card transaction histories can be analyzed to uncover a wealth of information about you. Electronic banking can be used in much the same manner. While I am guilty of utilizing these conveniences, (frequent flyer miles have paid for many of my excursions) I am nevertheless troubled that there is so much financial information locked into various computer servers that I have no control over.

Am I being paranoid? Perhaps. But I think it is prudent not to fall complacent this information might one day be used to your detriment.

So I have set the stage to explain why privacy is the going to be a keyword in 21 st century estate and wealth preservation planning. Those who have wealth are going to want to structure their affairs so that it is difficult for a financial predator to access information about assets and income. Moreover, those affairs must be structured to not only make accessing that information difficult, but also in making the income and assets less vulnerable once discovered by a financial predator.

I want to be clear that I am not advocating cheating the government on taxes, (although these same structures might be constructed to legally minimize Uncle Sam’s each into our pockets) or to engage in fraudulent transactions. Failing to properly report income is not the ticket to financial freedom and worry free nights.

There are laws and means by which you can legally build a wealth preservation and privacy plan. It goes beyond simple estate planning, and takes a greater deal of effort on the client’s behalf to work with professionals in determining the opportunities and vulnerabilities, pick through the choices and their relative advantages and disadvantages, and then implement the plan. But with the proper thought and time commitment, it can be done.

If you don’t believe that privacy is as large of issue as I make it out to be, go onto the internet and do three things. Google your name, purchase your credit report, and also hire an online investigator for $75, pay for a report detailing your financial history. You might rethink this column once you have accomplished those three tasks.

©2005 Craig R. Hersch. Craig can be reached at hersch@sbshlaw.com

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