Privacy in Estate Planning and the Vaughan Affidavit

People typically have several goals in mind when they are looking to create or tweak an estate plan, and important to some may be the desire for privacy. Estate planning professionals are versed in the various estate planning vehicles that can effectively avoid scrutiny of one’s wealth and the nature of one’s estate plan, during life and after death. For example, while a simple will may require probate at death, with the filing of the will and disclosure of estate assets, trusts are private documents which avoid probate of trust assets at death. There are often work-arounds to disclosing the trust document itself in financial or real estate matters.

When it comes to privacy, individuals often do not want their children to learn the magnitude of their assets or the specifics of the child’s anticipated inheritance. In that case, they certainly would prefer to shield such information from their child’s would-be ex-spouse. However, despite the careful crafting of an estate plan to maintain one’s privacy, a person may be shocked to learn that they are expected to disclose details of their estate if their adult child gets divorced in Massachusetts.

Under Massachusetts law, a divorcing spouse has a right to disclosure of certain information regarding the other spouse’s expected inheritance. When dividing a divorcing couple’s marital assets, a Massachusetts court may take into consideration, among other factors, “the opportunity of each [party] for future acquisition of capital assets and income,” even though such expectancy interests are not subject to equitable division between the parties. Mass. General Laws, c. 208, § 34. Future inheritance also becomes relevant to alimony determinations.

During the 1990 divorce of Allan and Elizabeth Vaughan, Elizabeth’s right to disclosure of Allan’s likelihood of future inheritance came into direct conflict with the right of Allan’s parents to privacy in their assets and estate plan. Allan’s parents were unwilling to provide their estate planning documents, but ultimately had to accept the compromise of the Supreme Judicial Court of Massachusetts by providing sworn affidavits stating (1) their approximate net worth – plus or minus $500,000, (2) a general description of their current estate plan, and (3) the date their estate plan was significantly amended.* What came to be known as the “Vaughan Affidavit” is now ubiquitous in the context of a Massachusetts divorce. Failure to request one, particularly in a long-term marriage where the parents are older, could mean a party is leaving assets on the table.

But it’s not just parents of a divorcing spouse who may be the recipient of a demand for a Vaughan Affidavit. Grandparents, aunts and uncles, and other relatives may also be required to disclose information that they would prefer be kept confidential. Though unpleasant, a Vaughan Affidavit is generally preferable to the alternatives of document production, extensive questioning via deposition, or even jail time for civil contempt. However, the Vaughan Affidavit is a requirement unique to Massachusetts, so if you find yourself on the receiving end of a demand for a Vaughan Affidavit, or if you are getting divorced in Massachusetts yourself, be sure to reach out to an experienced Massachusetts divorce attorney for guidance.

 

*Vaughan v. Vaughan, SJC Single Justice, No. 91-485 (1991) (unpublished).