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Lou Reed's Estate-Planning Decisions Draw Scrutiny

For those people who care about the details of late rock-and-roll icon Lou Reed's estate plan, there is a lot of public information available.

Reed, the long-time venerated singer of the avant-garde pop group Velvet Underground, died in October of last year. Owing to the singer's musical royalties and other wealth, he had a sizable estate to convey to heirs.

The details of his estate plan are steadily leaking out in the press, a fact that financial commentators are noting and pointing out could have been avoided through the implementation of alternative planning strategies and processes.

Reportedly, Reed eschewed trusts in his estate plan, with his estate passing to heirs -- his wife and sister -- via a lengthy Will that he executed in 2012.

That Will is now in probate court in New York, where myriad details concerning its provisions are emerging. Although that is not necessarily a bad thing, estate planning writers for Forbes note that because Wills are dealt with through the public process of probate, there is very little that is confidential about them.

To contrast, trusts may offer far more privacy to their creators and beneficiaries; if done correctly, they may negate the need for probate entirely. Moreover, they offer myriad other advantages.

The advantages include the fact that the creator of a trust can establish such an instrument during his or her lifetime, change its terms and dictate who will manage the assets in the event of incapacity. Additionally, trusts are tremendously flexible instruments that can address everything from the special needs of a relative to less-than-frugal heirs.

Estate planning is a fluid and creative process and tailored documents are critically important. An experienced planning attorney can answer questions and help an individual or family optimally prepare for the future.

Source: Forbes, "Lou Reed walked on the wild side wih his estate planning," Danielle and Andy Mayoras, July 10, 2014

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