In this information age where records of your assets can be accessed via computer, fax and even telephone, you have to take active steps to protect your privacy.

A trust is a private contractual arrangement between several parties for holding, managing and investing assets. The parties to the trust are the grantor (the person creating the trust, also known as the "settlor"or "trustor"), the trustee (the person or entity holding title to the assets) and the beneficiaries (for whose benefit the trust is established). A trust created for one's benefit is called a "self-settled" trust, i.e., one in which the creator and beneficiary are the same person.

A trust created during the life of the grantor is called an "intervivos" or "living" trust. An intervivos trust can be either revocable (taken back or modified by the grantor) or irrevocable (once created cannot be revoked).

A "living trust," while technically any trust created during the life of the grantor is a buzzword in the estate planning industry used to describe a revocable, intervivos trust.

The typical living trust is created by an individual for his own benefit. He also names himself as trustee, i.e., "The John Doe Family Living Trust." Upon his death, a successor trustee is named to hold and manage the trust property (typically his spouse, sibling or a bank trust department).

Although he is the beneficiary during his life, the trust will name his family as alternate beneficiary upon his death (known as a "testamentary disposition").

One of the main reasons why living trusts are used is to avoid probate. Upon your demise, the assets remaining in your estate are distributed according to the instructions of a Will, or, if there is no Will, according to the rules set forth by state law.

The Probate court is involved throughout the process, adding time, cost and aggravation. The Will is now public record, for all the world to see. If you own assets in multiple states, an "ancillary" proceeding must be commenced in each state.

If most of your assets are owned in trust, these assets are not subject to probate, nor are they on display for the world to see.

The trustee, according to the instructions of the trust agreement, either distributes the assets outright to your heirs (the alternate beneficiaries), or holds them in trust until they reach a certain age. Your trust can hold assets (such as real estate) in multiple states without the need for ancillary probate.

You wouldn't walk around with a financial statement taped to your forehead would you? So why would you have your most valuable assets exposed to public scrutiny? Owning real estate in your own name is like walking around with a giant kick me sign taped to your back.

In every county in the United States, copies of deeds to real estate are recorded in the public records. Anyone can go down to the courthouse or recorder's office and look up the owner of any property in the county.

A land trust, a modified form of living trust, will hide your name from the public records. The land trust (also known as an Illinois Land Trust, "Title Holding Trust" and "Nominee Trust") differs slightly from a regular living trust in that the trustee is a mere nominee. The beneficiaries have the right to direct the trustee as to the acquisition, management and disposition of trust property.

The main purpose for using land trusts is privacy of ownership. No one will know who owns the property but you, your attorney and the trustee.

If the trustee resides in a different state than the property is located, it will be difficult, if not impossible, for anyone to discover the proverbial "man behind the curtain." If a judgment is entered against you, the lien will not automatically attach to the property, since the title is not in your name.

A personal property trust, like a land trust, is a simple, revocable trust used to hold title to assets. Cars, boats, bank accounts, leases, mortgages, mobile homes, corporate stock - you name it - it can all be held in the name of a nominee.

Anything that can be found on public record is a dead giveaway to potential creditors, contingency-fee attorneys and deadbeat litigants looking to steal your hard-earned fortune. Using a nominee trust to hold title to assets will help keep your financial matters private and discreet in the information age.

A trust, unlike a corporation, is not registered with the state. There are no public records of officers, directors and shareholders.

There are no minutes of directors' and shareholders' meetings. The trustee keeps control of the trust records and the identity of the beneficiaries in his file cabinet. A trustee will not reveal this information without a court order.

Revocable, living trusts are "tax neutral," that is, there is no tax consequence of transferring property into trust. According to sections 671- 678 of the Internal Revenue Code, the property is treated as still being owned by the grantor (the logic is that since the grantor can still revoke the trust, it still belongs to him for tax purposes).

For example, if you owned you rental property in your name and reported on schedule "E" of your federal income tax return, a transfer into a revocable, living trust of which you are the beneficiary would not change your reporting.

Compare this to transferring property into a corporation, which is a separate taxpayer, even if your own all of the stock of the corporation.

As you can see, trusts are simple, yet effective devices for holding title to assets and presrving your privacy.