Delaware is one of the relatively few states where people can establish a true “silent” trust. These are also sometimes known as “quiet” or “confidential” trusts. That’s because the beneficiary doesn’t have to be notified of the existence of the trust until a specific time or event designated by the person who creates the trust (known as the “settlor”).
That may be when the settlor dies, but it doesn’t have to be. The trustee may have instructions not to notify the beneficiary(ies) until they reach a certain age, for example, or until a specified period after the settlor’s or someone else’s death.
A parent may establish a silent trust for a young adult child to help ensure that they will always be financially comfortable. However, they may not want them to know just how much they’re going to eventually inherit because they want them to remain motivated to succeed on their own. Parents may establish silent trusts for children they haven’t publicly acknowledged as their own.
The importance of choosing the right trustee
The choice of a trustee or successor trustee for a silent trust is crucial. That person has to maintain the secrecy of the trust. Further, because the beneficiary doesn’t know about it, they can’t monitor how the assets are being managed. For these reasons, a professional trustee may be the best choice.
There are other reasons why a silent trust may align with someone’s goals for their assets. However, it’s not the best choice for every situation. Those considering establishing a silent trust in Delaware should have sound legal guidance to learn more about them and make the best choice for their loved one and their assets.