Why are Silent Trusts Not Allowed in New York?
If you are starting to become familiar with the estate planning process in New York, you might have come across the term “silent trust.” More specifically, you might have learned that silent trusts are not permitted in the state of New York. Why is this? What are silent trusts, anyway? Why might silent trusts be beneficial, and is New York right to prevent people from getting them?
If you have questions like these, your best bet is to consult with a qualified, experienced estate planning attorney in New York. These legal professionals can guide you through the entire estate planning process, and they will be happy to answer any questions you might have. Skilled attorneys are more than familiar with the concept of a silent trust, and they can explain this system in much greater detail. With that said, gaining a basic understanding of a silent trust will help you make the right decision.
What is a Silent Trust?
As the name suggests, beneficiaries are not made aware of a silent trust’s existence. For every other type of trust, beneficiaries are usually made aware of the trust during the trustor’s lifetime. Alternatively, a beneficiary (such as a child or a spouse) could figure out exactly how much money they stand to inherit by simply making a request to the trustee. A silent trust does not allow this. For all other intents and purposes, a silent trust is exactly the same as a normal trust. The beneficiaries still receive their income in exactly the same way, depending on the wishes of the trustor.
Why Do People Get Silent Trusts?
People tend to get silent trusts out of concern for their beneficiaries. They may believe that if their child discovers how much money they stand to inherit, they will lose the motivation to work and live a productive life. After all, why get a job at McDonald’s if you stand to inherit a seven-figure sum in a few years? Some trustors choose silent trusts simply because they value their own privacy. In certain cases, trustors may be concerned about beneficiaries creating schemes or scams to try and gain access to the trust once they learn about it.
Why Doesn’t New York Allow Silent Trusts?
New York does not allow silent trusts for a number of reasons. First of all, the state sees silent trusts as a violation of fiduciary duty. This means that trustors have a legal obligation to keep their beneficiaries informed about the details of their trusts. In addition, beneficiaries cannot hold the trustee accountable if they are not aware of the trust’s existence. This means that there is a strong potential for the trustee to mismanage a silent trust simply because there is no oversight.
Enlist Help from a Qualified Estate Planning Lawyer in New York
If you need help with the estate planning process, it is always best to consult with a professional. An experienced attorney will sit down with you and help you go over your various options when setting up a trust. They can explain a variety of different concepts, including silent trusts. If you are ready to move forward with your estate planning process, reach out to The Glassman Law Group today.