A silent trust is a trust in which the beneficiary is not a participant, or even knowledgeable of, the intent. A silent trust may be a good option for your situation for a number of reasons. Most people create a silent trust so their children are not aware of what’s in store for them and don’t get a sense of entitlement or lose their drive to work. Just like a traditional trust, a quiet trust helps keep the assets out of probate and away from estate tax collection.
So what’s the problem with this kind of trust? Mostly the lack of…trust. When the person finds out about the trust, there may be questions or hurt feelings. It also puts the trustee in a tough position if they are someone who has frequent contact with the beneficiary. Also, if there are separate trusts for several children, once one child gains access, the silent trust will be a secret no more.
If you are considering setting up a silent trust, make sure the secret doesn’t have to be kept for long. Your advisor should know your family and the family dynamics well, as well as your reasons for operating a silent trust. The trustee, grantor, and attorney should also have some pretty deep conversations about how it will work and how to handle it if the beneficiary finds out or starts asking questions.
Over the past 31 years, the Law Offices of Christopher A. Benson has helped more than 800 clients prepare and utilize simple and effective planning techniques to protect them and their families in order to avoid probate, save estate taxes, save money and save added emotional burden that comes from long term illness and/or death of a family member. Give us a call to schedule a free consultation to find out how we can help you and your family.