How Clients Can Use Silent Trusts To Protect Beneficiaries Interests

Clients that have great wealth might want to avoid disclosing the existence of that wealth to heirs and beneficiaries until they are established and mature enough to manage it.  One of the methods that wealth managers can use to keep the existence of family wealth a secret from beneficiaries involves creating a silent trust.  A silent trust would prohibit the trustee from disclosing information about the trust to the beneficiary for a period of time. 

Whether silent trusts are permitted depends on state laws.  State governments have different rules dealing with the treatment of silent trusts.  There are several states that require the disclosure of the existence of the trust to the beneficiary when he or she reaches the age of 25.  This is an area of trust law that is continuing to develop. 

See Jocelyn Margolin Borowsky and Adrienne M. Penta, How Silent Trusts Can Help Your Clients, Financial Planning, October 16, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention.