When devising an estate plan, many different types of trusts can be used to achieve an individual's goals to provide for his or her family both before and after death. For a variety of reasons, many Washington, DC residents decide to keep the fact that they set up a trust for a beneficiary or beneficiaries quiet. However, keeping these so-called "silent trusts" quiet may not be easy.
When a trust lists multiple beneficiaries, all of them may discover the existence of the trust once the first beneficiary becomes eligible for distributions. Further, the trustee may not have any contact with the beneficiaries. This could be a problem when distributions are made since the trustee is unaware of the beneficiary's financial situation or proclivities.
For these reasons and others, silent trusts should likely be used as infrequently as possible. When considering using one of these trusts, the many potential issues involved need to be taken into consideration. It can be difficult to prepare for every eventuality, but taking care of as many as possible before executing such a trust could prevent most, if not all, potential complications in the future.
Trusts are useful estate planning tools for many Washington, DC residents. Depending on what an individual intends to achieve, one or more trusts may be needed. These documents are created for any number of reasons such as avoiding income and estate taxes, protecting the trust assets and possibly even protecting beneficiaries from themselves. However, certain language needs to be included in the trust and certain execution requirements must be followed. It may be beneficial to ensure a thorough understanding of all applicable laws to ensure the trust is valid.
Source: fa-mag.com, Silent Trusts Can Often Get 'Noisy', Karen Demasters, Jan. 24, 2014