Keeping Trusts a Secret

Bigstock-Girl-Hand-With-Silence-Sign--106308902Sometimes it might be beneficial for a trust beneficiary to not know the details of a trust or even know that the trust exists. Some states do make that possible.

A major concern for wealthy people is that their heirs will not establish their own professional lives or even go to school. Instead, the heirs might rely on their inheritances and not be motivated to establish themselves.

One way to help avoid this is to create a trust that does not give anything to the beneficiaries until they reach an age where they will have settled into their adult lives. However, there still might be a fear that if a beneficiary knows that a large inheritance is eventually coming through the trust, they will not be as motivated to earn their own money as they otherwise would be.

A recent article by Financial Planning, "How Silent Trusts Can Help Your Clients," discusses a type of trust that can be used to keep beneficiaries in the dark about their trusts.

The basic idea is that in a "silent trust," the terms of the trust prohibit the trustee from telling the beneficiaries about the trust or the assets in the trust. You should know that these trusts are legally controversial and are not allowed in all states.

Some states mandate that the trust beneficiaries must be told about the trust upon reaching a certain age. Delaware, however, is one state that does allow silent trusts in almost all circumstances.

If you are interested in such a trust, then contact an experienced estate planning attorney to explore your options.

For more information about estate planning, please visit my estate planning website.

Reference: Financial Planning (October 16, 2015) "How Silent Trusts Can Help Your Clients"

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