When Matthew Perry, the beloved star of Friends, passed away last year, the world mourned the loss of a comedic icon. However, as details of his estate began to emerge, a curious puzzle presented itself: despite his reported net worth of $120 million, his bank account held (only) $1.5 million. Admittedly, this seems like a whopping sum to most of us, but this amount appears off for a man who earned millions of dollars for just one episode of the show. Shouldn’t he have had much more money than that? The answer lies in the details of estate planning and using trusts as part of your plan.

In this article, we’ll look at Perry’s estate plan and pull out some valuable lessons. These lessons pertain to all of us, not just the rich and famous. To find out how trusts can benefit you, read on.

What is a Trust?

A trust is simply a legal arrangement where a person (sometimes called a “settlor”) transfers assets to someone ( a “trustee”) who manages those assets for the benefit of someone else (the “beneficiaries”). Many types of trusts can be used for various purposes, including estate planning, asset protection, and providing for loved ones.

The trustees appointed to manage a trust play a crucial role in fulfilling the settlor’s wishes. Choosing the right trustees is essential for the effective management of a trust. Trustees should be trustworthy, financially responsible, and knowledgeable about estate planning. They should also be willing to devote the time and effort required to manage the trust’s assets.

In Perry’s case, it appears he established a trust during his lifetime. This trust, which seems to be named the Alvy Singer Living Trust—Woody Allen’s character in Annie Hall—presumably holds a significant portion of his wealth. In Perry’s case, the trustees were likely responsible for managing his investments, paying bills, and distributing money to the beneficiaries.

Why would Perry have chosen to establish a trust? There are many benefits, which I’ll break down in greater detail now.

The Power and Benefits of Trusts

There are many advantages to using a trust for estate planning. Here are some of the most common.

Protection from creditors and lawsuits. If a beneficiary faced financial difficulties, their creditors would generally not have access to assets held in a trust.

Ongoing support during life, incapacity, and after death. Trusts can provide for loved ones more flexibly than a will. A will is a legal document that outlines how your assets will be distributed after your death. However, a trust can be structured to provide support during your life and for your beneficiaries over time, ensuring their needs are met. If you have a will, your assets will usually be transferred to your beneficiaries – even if they are young or financially irresponsible.

Minimization of estate taxes. Depending on the size of an estate, there may be significant federal and state estate taxes. A trust can reduce or eliminate these taxes.

Court avoidance. A court process called probate takes place after someone dies, and it can be expensive, lengthy, and conflict-laden. If you have a will or no estate plan, court is mandatory. However, the court process may be avoided if you have a trust. This results in less expense, less time, and a decreased probability of conflict. It’s also a public proceeding, and court filings contain personal and financial information you may not want others to see.

Conflict avoidance. The court process is set up to give all heirs and creditors a claim to your assets. They are invited to file a claim and get to see information about your assets.

Greater control over what happens to your assets and your family. When you have to go to court, someone other than you – a judge who’s a stranger to you and your family – will make all final decisions about your money, property, and family. But with a trust, you can make those decisions and exercise control over the outcomes.

Preserving assets when there’s a substance abuse issue. It’s no secret that Perry struggled with substance abuse for much of his life, and it’s possible that because of that, he was advised to create a trust to hold his assets. This was a wise decision. Substance abuse can have a significant impact on financial stability, and it is possible that Perry sought to protect his assets from loss, either by his actions or potential creditors and legal issues related to his addiction. You can do the same for a friend or relative if you want to support them and know they struggle to manage their finances responsibly.

These advantages apply to you, too! You do not need to be wealthy to want a trust. You do not have to be charitable or famous to take advantage of the benefits.

The Appeal of Privacy

Remember when I mentioned above that the court process is public? I also noted that a trust can help you and your family avoid court and its very public nature. If you were wondering, “If it’s true Matthew Perry had a trust, then how come it’s public knowledge that he had $1.5 million in his bank account?” Then kudos! You caught on to something important.

Matthew Perry also had a will, and wills go through probate. Any assets not placed into a trust must be dealt with via your will and, thus, are subject to the court process. Remember when I mentioned that court filings must contain your personal and financial information? That’s how we know about Matthew Perry’s bank account. The funds in his bank account were ostensibly not placed into his trust and are subject to the public probate process. You can look up the court records and read his will – or any will – for yourself.

His will mentioned that he had trust, which is also common. It doesn’t mention the terms of the trust, who the beneficiaries are, what his other assets are, and who gets what. Our public knowledge is limited to what’s in his will. And if his bank account had been placed into his trust, it would have been kept private, too.

In short, assets placed into a trust are kept private, as is your personal and financial information. Assets left out of a trust are public knowledge. So, when you create a trust, you mustn’t just draft and sign the document and call it a day. You must take the next step and correctly place your assets into the trust. If you don’t do that, you lose all the benefits the trust offers.

How We Help You Protect What Matters Most

As more details about Perry’s estate emerge (and sadly, his death), we may better understand his intentions and the legacy he will leave behind. While his untimely passing is a tragic loss, his estate planning offers a fascinating look at the advantages of trusts and how you can also take advantage of them.

We help you create a comprehensive Life & Legacy Plan that may include tools like trusts to protect your assets, maintain your privacy, and ensure your loved ones are cared for—without the headaches of court or the increased chances of conflict. By planning today, you can have peace of mind knowing your wishes will be honored, your family’s future will be safeguarded, and your legacy will be kept private.

Schedule a complimentary 15-minute consultation to learn more. Contact us today!

This article is a service of Res Nova Law, a Personal Family Lawyer® Firm. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning™ Session, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life & Legacy Planning™ Session.

The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Being a business owner can be incredibly rewarding. It feels great to see an idea become a reality, increase your revenue, and create a job for someone who needs one. But, as all business owners know, with reward comes risk. There’s not much you can do to eliminate risk from your business, but you can get pretty close with the right systems.

A complete insurance system is one of the most essential systems your business can have. With the right policies and guidance, you can safeguard your personal and business assets against unexpected threats like lawsuits, property damage, and employee injuries, providing you with a sense of security and peace of mind.

In this article, we’ll look at the different types of business insurance, what’s legally required, and how to choose the best coverage for your needs. Read to the end, and I’ll show you how to get the proper support to protect your business.

Understanding Your Legal Obligations

Before you start exploring the different types of business insurance, understanding what’s required by law can provide a sense of relief. Depending on where you live and the nature of your business, you may be legally obligated to carry certain types of insurance. 

Federal law mandates that employers carry workers’ compensation, unemployment insurance, and disability insurance. These coverages are essential in protecting your employees and ensuring they receive the necessary support if they’re injured or unable to work due to a job-related issue.

Workers’ Compensation. This insurance covers medical expenses and lost wages for employees who get injured or sick due to their work. It’s a must-have if you employ three or more workers, whether they’re full-time or part-time.

Unemployment Insurance. This coverage provides financial support to employees who lose their jobs through no fault of their own. It helps them bridge the gap while they search for new employment.

Disability Insurance. Disability insurance protects employees who can’t work due to a non-work-related injury or illness. It’s another layer of protection that’s crucial for both you and your employees.

Beyond federal requirements, each state has its own rules regarding business insurance. For example, if you use vehicles for business purposes, you may be required to carry commercial auto insurance. This is only one example; state laws can vary widely and be complicated. So, working with a lawyer is essential to ensure you comply with the law. As your Business Advisor, I can help. Keep reading, and I’ll show you how to book a call with me to learn more.

Exploring Common Types of Business Insurance

Once you’ve covered the basics of what’s required by law, it’s time to think about additional insurance that can help protect your business from unexpected risks. As a general rule, you should consider insuring against risks that you wouldn’t be able to cover out of pocket. Here are some of the most common types of business insurance:

General Liability Insurance. General liability insurance is a must for any business. It covers many potential risks, including bodily injury, property damage, medical expenses, and legal costs if someone sues your business. For example, if a customer slips and falls in your store, general liability insurance can help cover their medical bills and legal fees if they sue.

This insurance also covers claims of libel, slander, and other personal injuries that might arise from your business operations. General liability insurance acts as a safety net, protecting you from financial loss due to unforeseen accidents and legal challenges.

Product Liability Insurance. You’ll want to consider product liability insurance if your business involves manufacturing, wholesaling, distributing, or selling products. This coverage protects you from financial loss if a product you sell causes injury or harm. For example, if you sell a toy that ends up being a choking hazard, product liability insurance can cover the costs of a lawsuit or any settlements that arise.

Even with the best quality control, defects can happen. Product liability insurance ensures that one mistake doesn’t financially ruin your business.

Professional Liability Insurance. Professional liability insurance is vital for businesses that provide services rather than products. Also known as errors and omissions insurance, this coverage protects you from financial loss due to malpractice, errors, or negligence in your services.

For instance, if you’re an accountant and make a mistake on a client’s tax return, leading to penalties from the IRS, professional liability insurance can help cover the cost of any legal action or settlements. This insurance is essential for service-based businesses where even a tiny error can have significant financial consequences.

Choosing the Right Insurance

Now that you know about the different types of business insurance, how do you choose the right one for your business? Here are four steps you can take:

Step 1: Assess Your Risks

The first step in choosing the right insurance is assessing your business’s risks. Consider the accidents, natural disasters, or lawsuits that could impact your business. For example, if your business is in an area prone to flooding, you’ll want to consider commercial property insurance covering flood damage.

Step 2: Find a Reputable Licensed Agent

Once you’ve assessed your risks, it’s time to find a reputable commercial insurance agent. A good agent will take the time to understand your business and recommend coverage that fits your needs. They will guide you through the complex world of insurance, ensuring you make informed decisions.

Step 3: Understand the Policy Terms

Insurance policies can contain complicated language, but understanding the terms can empower you. Don’t be afraid to ask questions and take the time to understand the terms of each policy, so you’re clear on how coverage works in different scenarios. 

Step 4: Reassess Your Coverage Every Year. As your business evolves, so do your risks. It’s important to review your insurance coverage annually to ensure it still adequately protects your business.

As your business grows and evolves, so will your insurance needs. Each year, review your coverage to ensure it will work when you need it to. For instance, if you’ve purchased new equipment, expanded your operations, or hired more employees, it’s time to update your insurance. Regularly reassessing your coverage with a trusted advisor ensures that you’re always protected, no matter how your business changes. And as your Business Advisor, I’m here to help. 

Business insurance is an investment in the future of your company. By understanding your legal obligations, exploring the various types of insurance available, and following the steps to choose the right coverage, you can protect your business from unexpected risks. Whether it’s a slip-and-fall accident, a product defect, or a professional error, the right insurance policy can be the difference between weathering a storm and facing financial disaster.

Secure Your Business’s Future with the Right Guidance

As your Business Advisor, I know how crucial it is to shield your business from these unexpected risks. That’s why I offer a comprehensive Business Breakthrough Session, where we’ll evaluate your current coverage, identify gaps, and create a strategy to ensure your business is fully protected. Together, we’ll build a safety net that allows you to grow your business confidently, knowing you’re well-equipped to handle anything that comes your way.

Book a call to get started and secure the future of your business. Contact us today!

This article is a service of Res Nova Law, a Personal Family Lawyer® Firm. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning™ Session, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life & Legacy Planning™ Session.

The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.