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Why Silent Trusts are Making Noise with Wealthy Families

Originally posted on 12/22/2016

A piece of parchment paper reads wealth distribution, a big consideration for those planning the future of their estate.Estate planning can induce fear for wealthy parents.

Anyone who has seen the movie “Arthur” (either the Dudley Moore or Russell Brand versions) can understand the frustrations wealthy parents may have with leaving a great deal of money to their heirs. Essentially, they worry that the kids will simply take the money, live like socialites, and blow through their fortunes without any regard for financial responsibility.

However, there are ways to plan for the future of your estate through Silent Trusts. Keep reading to learn more about Silent Trusts and why your family may benefit from having one.

What is a "Silent Trust?"

Perhaps a silent trust is an answer to your worries about the maturity of your children. Otherwise known as a “quiet” trust, a silent trust allows the trustee to manage the trust without the beneficiary’s input or knowledge until a specified date, usually when the beneficiary is older.

Examples of Timelines for Your Silent Trusts

For example, a number of trusts will allow an heir to reap the benefits of the trust at age 18, or even at age 25. However, a silent trust may call for the heir to be informed of their stake in the trust at age 30 or later. A mature adult may be better suited to manage his or her fortune and honor their late parent by doing so.

The Right Time to Plan for Your Future

Indeed, there is traditionally a flurry of activity towards the end of the year. After all, December is an ideal month to do estate planning that will help in tax preparation. Nevertheless, though silent trusts are no longer new options, many people are exploring their estate planning options. This may be the right time for you to consider changes to how your heirs may access money in the future.

Set Up a Silent Trust to Plan for Your Estate with an Experienced Attorney

Planning for the future of your estate can be anxiety-inducing as you are planning for situations you won't be there to correct when the time comes. However, a silent trust can help relieve your fears by gaining greater control over the direction and timing of your trust's disbursement. If you have questions about silent trusts, an experienced estate planning attorney at Aldrich Legal Services can advise you. Give our team a call today.

REAL ESTATE 89: RM had not included any language in the deed providing that the property was a joint tenancy with full rights of survivorship, the property instead became a tenancy in common.

RM drafted the deed without seeking counsel and mistakenly believed that, if either she or FK died, the property would fully pass to the surviving tenant. FK’s will provided that if his wife predeceased him—which she did—the personal representative of his estate should sell any residual property that he owned and divide the cash proceeds equally among his surviving children.

FAMILY LAW 83: A trial court can terminate a parent’s rights and permit a stepparent to adopt a child.

A trial court has discretion to terminate a parent’s rights and permit a stepparent to adopt a child when the conditions of MCL 710.51(6) are met. MCL 710.51(6)(b) requires the petitioner to establish that the other parent had the ability to visit, contact, or communicate with the children, and substantially failed or neglected to do so for a period of two years.

PROBATE 53: The trust agreement included an Incontestability Provision.

A settlor’s intent is to be carried out as nearly as possible. Generally, in terrorem clauses are valid and enforceable. However, a provision in a trust that purports to penalize an interested person for contesting the trust or instituting another proceeding relating to the trust shall not be given effect if probable cause exists for instituting a proceeding contesting the trust or another proceeding relating to the trust.

FAMILY LAW 82: Court stated it would terminate the personal protection order (PPO) after the parties present documentation of the initiation of the divorce proceedings.

However, the trial court concluded that these matters should, in fact, be in the province and the jurisdiction of the Family Division and in that respect, having issued a personal protection order, the Court stated it would terminate the personal protection order after the parties present documentation of the initiation of the divorce proceedings.

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