What Is A Quiet Trust?
When you are considering estate planning in Putnam County and you are thinking about putting assets in a trust, you will likely come across information about a wide range of trusts in New York. There are various types of trusts that a person can establish, and they have different purposes. Certain trusts are designed to leave assets to loved ones without the complications of probate, while other trusts allow a person to provide for a disabled adult loved one without jeopardizing their ability to receive Medicaid coverage. Some trusts can be used to protect assets in order for the trustor to qualify for Medicaid coverage, such as an asset protection trust. You might also already know that trusts can be revocable or irrevocable, with the latter meaning that a trustor cannot make changes to the trust once it is established.
One term you might come across is a “quiet trust.” What is a quiet trust, and when and how is this type of trust used? Further, is a quiet trust lawful in New York? Our Mahopac trusts lawyers have more information for you.
Defining a Quiet Trust
A quiet trust, which may sometimes be described as a “silent trust,” is a type of trust where the trustor keeps information about the trust from beneficiaries, or does not want the beneficiaries to know about the trust at all. In other words, once a quiet trust is created, the idea is that the trustee will not disclose information about the trust’s assets to the beneficiaries, or will not even inform the beneficiaries that the trust exists.
Why would someone want to create a quiet trust? There are many different reasons. For example, the trustor might want to avoid having beneficiaries question the decisions of a trustee concerning the assets in the trust. Or, for instance, a trustor might want to avoid a situation in which one or more beneficiaries avoids making professional or educational plans because they know about specific assets in a trust. However, there are also significant limitations of quiet trusts. Most notably, when beneficiaries do not have information about a trust, they are unable to ensure that the trustee is upholding their fiduciary duty.
Are Quiet Trusts Lawful?
In general, New York trusts and estates laws favor disclosure of information about trusts. For example, New York law requires trustees to furnish annual statements to beneficiaries who request such statements. There is no specific statute in New York that prohibits quiet trusts, but the law does not favor them, either.
If you have specific reasons for wanting to establish a quiet or silent trust in New York, you should seek advice from a trusts and estates attorney in Putnam County who can discuss your circumstances with you.
Contact a Trusts Lawyer in Mahopac, New York
Do you have questions about establishing a trust in Putnam County, or learning more about types of trusts that could be important to your estate plan? You should get in touch with one of the experienced Mahopac trusts attorneys at Meyer & Spencer, PC to learn more about how we can assist you.
Sources:
codes.findlaw.com/ny/surrogates-court-procedure-act/scp-sect-2205.html
nysenate.gov/legislation/laws/SCP/2306
