Yesterday I attended the monthly San Mateo County Estate Planning and Probate Section lunch presentation. This presentation was on silent trusts, presented by attorneys Paul Barulich and Matthew Matiasevich. An interesting discussion about the planning, although rather limited planning, that parents can do in California to keep an irrevocable trust private from the beneficiaries, i.e., so that the beneficiaries don’t even know the trust exists. When might trustors desire this type of privacy from beneficiaries? One scenario could be when parents want their children to strive and achieve at least into their twenties without the certain knowledge that they will be receiving substantial trust assets. At least based on responses by attendees, not many estate planning attorneys are preparing silent trusts.
One noted tidbit of information: even if the trust is drafted as a silent trust, trustee/trust duties under California Probate Code sections 16060.7, 16061 and 16061.5 are not waivable. Thus, for example, in some situations the trustee must still provide the terms of the trust and report to the beneficiary by providing information relating to the administration of the trust relevant to the beneficiary’s interest, if the beneficiary requests the trustee to do so. Accordingly, even if a prospective beneficiary does not know that a trust exists, i.e., because the trust is silent, a prospective beneficiary should always ask a suspected trustee to provide information about any trust in which the prospective beneficiary is a beneficiary. Upon that request the trustee must provide some information.
Dave Tate, Esq. (San Francisco / California) – Civil and Estate, Trust, Conservatorship and Elder Abuse Litigation – member of the Estate Planning and Probate Section Executive Committee.
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