The name Matthew Perry might immediately bring to mind Chandler Bing from the wildly successful sitcom Friends. Off-screen, however, Perry’s life has been a testament to smart financial planning and strategic estate management, particularly his choice to utilize a trust for his estate planning. As the tabloids dug around for information about his estate, it was discovered that all he had was $1.5 million in a bank account that ended up in probate. A small amount compared to the vast fortune Perry built during his lifetime.
The reason? All of Perry’s other assets were in a trust, meaning the media had no idea what Perry really had because a trust is private. By leveraging a trust rather than a traditional will, Perry not only secured his financial legacy, but also demonstrated the substantial benefits of such a strategic move.
Understanding Trusts and Wills
Before delving into Perry’s financial choices, it’s essential to understand the basic differences between a trust and a will. A will is a legal document that outlines how a person’s assets will be distributed after their death. Although it’s a common estate planning tool, a will often goes through probate – a legal process that can be time-consuming, costly, and public.
On the other hand, a trust is a fiduciary arrangement that allows a third party, or trustee, to manage assets on behalf of beneficiaries. Trusts offer several advantages over wills, such as avoiding probate, providing privacy, and allowing for more complex arrangements regarding the distribution of assets.
Matthew Perry’s Financial Wisdom
Matthew Perry, having amassed significant wealth through his acting career and other ventures, needed a reliable and private method to ensure his assets were protected and efficiently distributed according to his wishes. To achieve this, Perry chose to establish a trust as part of his estate plan. This decision is a sterling example of financial acumen, showcasing the benefits of utilizing a trust.
Avoiding Probate
One of the most significant advantages of Perry’s trust-based estate plan is the avoidance of probate. Probate can be a lengthy and expensive process, often taking months or even years to settle an estate. For someone with high-value assets, such as Perry, avoiding probate saves not only time and money but also keeps private matters private.
Ensuring Privacy
Matthew Perry has always been a public figure, and the transparency required in probate would mean that intimate details of his estate would become public record. By using a trust, Perry ensured that his estate plan remained private, safeguarding his and his beneficiaries’ confidentiality.
Flexibility and Control
Trusts also offer unparalleled flexibility and control over asset distribution. Perry could set specific terms and conditions regarding how and when his assets would be distributed, catering to the unique needs and circumstances of his beneficiaries. This level of customization is hardly possible with a standard will.
Protecting Beneficiaries
Through his trust, Perry could protect his beneficiaries from potential creditors and legal challenges. Trusts can incorporate protective measures to ensure that assets are transferred securely and shielded from possible disputes, providing peace of mind that his estate would be used as he intended.
Philanthropic Goals
A well-structured trust also allows for philanthropic endeavors. Perry was known for his charitable activities, and through his trust, he could ensure that a portion of his estate would continue to support the causes he cared about most. This is a profound way to leave a lasting legacy and make a positive impact on the world.
Tax Efficiency
Finally, trusts can be more tax-efficient than wills. Properly managed, they can reduce estate taxes, ensuring that a larger portion of the estate is preserved for beneficiaries. Perry’s financial advisors likely considered these tax advantages, further showcasing the benefit of comprehensive estate planning.
Nicely Done, Mr. Bing
Matthew Perry’s choice to establish a trust as part of his estate plan means we are likely to never know how financially successful he really was. Perry’s planning serves as an exemplary model for the benefits of employing trusts rather than relying solely on wills. His decision to avoid probate, ensure privacy, maintain control, protect beneficiaries, pursue philanthropic goals, and enhance tax efficiency underscores the substantial advantages that trusts offer in estate planning.
Kent Phelps, TRAJAN ESTATE COFOUNDER AND ATTORNEY
As a second-generation estate planning attorney with over 25 years of experience, Kent Phelps appreciates the positive impact a customized estate plan can have on his clients and the generations that follow. Kent has been admitted to the State Bar of Arizona. He received his Bachelor’s degree from Arizona State University and his J.D. from the University of the Pacific. Additionally, he is a member of the Wealth Counsel and the Arizona State Bar Probate & Trust Section.
