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What is a beneficiary silent trust?

| Aug 11, 2016 | Estate Planning

A beneficiary silent trust is a type of trust that allows for the creator of the trust to dictate that the beneficiaries of the trust not be given notice of the trust’s creation or the assets held within. There are many reasons why a trust creator may want to designate a trust as quiet or “silent,” but for it to be legally recognized, the trust may need to have several specific features.

The creator should include or at least reference the specific statutory language within the body of the trust instrument that expresses clearly the desire to withhold certain information from beneficiaries. This will protect the trustee from accusations of bad faith. It may be particularly useful to include a letter from the creator of the trust expressing why it is in the best interests of the relevant beneficiaries for the trust to be kept silent to them.

It is sometimes desirable for a trust creator to keep a trust silent to only one of several beneficiaries. In such cases, it is wise to indicate in the trust the specific non-disclosure responsibilities of other beneficiaries, including any specific associated benefits or penalties associated with keeping or breaking this silence toward the silent beneficiary. In these cases, the interest of the silent beneficiary is typically represented by a trust protector.

In addition to standard trust features such as the identities of the relevant parties to the trust, the mechanisms for modifying the trust and the rights of the beneficiaries to trust-related information, a beneficiary silent trust will include some language that references the relevant state statutes that allow for the creation of such trusts. The assistance of an experienced trust and estate planning attorney can help ensure that the trust creator’s wishes are kept.

Source: wealthmanagement.com, “Should You Keep a Trust Quiet (Silent) From Beneficiaries,” Al W. King III, accessed Aug. 11, 2016

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