The Elder and Disability Law Firm, APC
Silent trusts can help people plan discreetly
Many people in California consider how they can best protect their assets now and provide for their families in the future. Trusts provide important mechanisms not only to pass on wealth between generations without relying on the probate system but also to realize significant tax savings during a person's life. Therefore, many people wish to create trusts to provide for their children or other loved ones in the future. However, some people are concerned that if their children grow up knowing that a substantial trust fund is waiting for them, they may feel less incentive to succeed academically and in their careers.
As a result of these concerns and other fears about privacy, many people opt to create silent trusts. When a trust is created, the trustees responsible for its administration have a duty to notify the beneficiary and provide information about its management. However, this requirement may frustrate people's desires to plan more discreetly for the future. While some people may delay creating these trust funds, others don't want to miss out on years of tax benefits. Silent trusts can provide a solution: During the trust's creation, the creator explicitly waives the trustee's duty to provide information to the beneficiaries.
In general, this silent period lasts for a set number of years or until the beneficiary has reached a certain age, usually 25. Many people are now opting for silent trusts rather than incentive trusts, options in which a beneficiary must reach certain milestones or follow certain behavior rules in order to receive the proceeds of the trust.
There are a number of different instruments that people can use to safeguard their assets and plan successfully for the future. A trust administration attorney may work with people to plan and create these important documents and to find the best possible solution to achieve their goals.