Digital Advancements and Privacy Concerns

Digital access has become the norm, transforming our daily lives in ways we once only dreamed of. However, as technology advances at an unprecedented pace it brings both unparalleled convenience and significant risks to our privacy and security. Documents that were once on ink and paper are now stored on remote servers. It’s convenient, and accessibility has never been better, but there are some downsides to being digital, and for things to be so readily connected to the internet, and that relates to privacy and security.

Public Records and Accessibility

In the United States, each county has an office that keeps track of deeds that grant land from party to party. In Los Angeles County, this is the Registrar-Recorder/County Clerk. The combined office handles the records of births, elections, real estate transactions, marriages. Much of the information entrusted by this office is public by design, but there is some by-passable gatekeeping that makes it not so readily available. It was always meant to be public, but it was never so readily available. Prior to things being so accessible, anyone who needed to view a record like a deed would have to physically go to the office to search and view the document on microfilm. For a wikipedia article about recording legal documents, check out this article. California started realizing sensitive information on the internet was a problem, and passed a law to protect a certain class of county residents who are elected or appointed officials.

Today, third parties leverage digital technology to access, store, and sell information held by recorders, charging fees for the convenience of providing this data, which is easily accessible to anyone willing to subscribe to their service. Those who subscribe include real estate investors, those with companies offering a quasi service, and others who may have nefarious motives. The information such as how much you owe on your mortgage (this could have been estimated the old fashion way by plugging the balance of the Deed of Trust with an amortization schedule), who you hold joint title with, and where you physically live is much too easy to find.

I used to question why billionaire lottery winner Edwin Castro allowed it to be relatively easy to be discovered using light abstraction through LLCs in the recording, but now I suspect what is relatively easy to discover are just red herring properties to throw nefarious actors off course. In today’s digital age, your personal name has become an increasingly sensitive piece of information (more so if it’s not as common), underscoring the need for greater privacy measures and awareness. Any name search will bring up the results of the properties you own. In the past, you likely had to start with a parcel number, then work backwards to the potential book and page of the actual document you are looking for. Services such as these also include additional information like emails and phone numbers, which may have been publicly available through a variety of sources on the internet, and you may have at one point freely given this information out 20 years ago.

Risks and Exploitation of Public Information

As an estate planning lawyer, one of the things I do is assist clients with the transfer of property from their personal name to themselves as trustees to hold the property in trust. The purpose of doing this is to avoid probate (it’s common belief that having a trust alone avoids probate). When transferring title, in California, one has to use a Grant Deed which gets signed and notarized, then recorded with the county recorder. By making the recording, you are broadcasting and recording the transaction like you would with another modern day public ledger, a blockchain. A well maintained record of titles should allow anyone to trace the transaction from present day to the beginning of landownership. The recording protects innocent buyers and owners from potential fraud or false claims of ownership. It is supposed to prove who owns what.

When it comes to solicitation, clients have received letters as an example, from private companies offering services to provide them with a copy with a deed for example with vague quasi sounding official names like “Property Records CA”. People with less ability to scrutinize can fall for what may seem like an official notice to act and pay a high fee. But, what gets people called and texted the most is when a petition is filed to open up a probate matter.

How Probate Fits Into This

Probate is the legal process of validating a deceased person’s will and administering their estate according to its terms (What’s the Difference Between a Will and a Trust?). This process involves identifying and inventorying the deceased’s assets, paying off debts and taxes, and distributing the remaining assets to beneficiaries. It’s public, time consuming, and costly.

When probate happens, and there are assets such as a house, you are broadcasting that someone has died, you may need money (you may have lots of money coming to you), and that you may be looking to sell. Because of this, investors, real estate agents, and potential bad actors, will call and text to exploit this information. Often, this is to purchase a property prior to hitting the market, or the target may be to the beneficiaries themselves.

When it comes to scams, the calls are always urgent, and it may purport to be from a tax collection agency, the county, or a debt collector. Because the person who had the greatest knowledge of the assets and debts has died, the personal representative or executor, who is now in charge of the probate may be going through grief and be susceptible to fraud or other common scams.

Protecting Your Privacy: Strategies and Solutions

Perhaps the issues presented above have a low tech solution? One way to help add friction from having your public information much too readily available and accessible is through abstraction — not holding assets in your personal name. In an estate planning context, holding assets in a trust helps you avoid probate and allows for the transfer of property without requiring court involvement. It also provides the framework for keeping everything private including what the assets and who the beneficiaries are.

You may also opt to have an LLC own certain assets, and for the LLC to be held in trust. Trusts are often named after the trust creator’s name, but they can be named anything the creator wants. The actual substantive trust document generally stays private, and parties who need to interface and work with the trust relies on certification of the trust to verify that it exists.