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One of the biggest concerns in estate planning is how to effectively and responsibly pass on wealth to the next generation. Many people are concerned that if their loved ones know what kind of wealth they will be inheriting it would discourage them from being successful on their own. As a result, many states have passed laws known a beneficiary quiet trust statutes that waive the notice requirement for beneficiaries of a trust.


Beneficiary Quiet Trust Statutes

Most states have laws that require the trustee of a trust to disclose information regarding the trust assets, performance, distributions, and taxes to the beneficiaries of the trust. However, new laws have been enacted in some states, such as Ohio, that allow the trust creator to waive the notice requirements and disclosure of trust information to the beneficiaries. This is known as a “quiet trust.”


In order to enact a quiet trust, there must be language in the trust document that specifically waives the right of notice and information distribution to one or more beneficiaries. This keeps the information about the trust quiet and protects the trustee from lawsuits alleging bad faith. A quiet trust can also be modified to release the information to the beneficiaries at a later date, such as when they reach a certain age or achieve some type of milestone.


Enacting a quiet trust does not affect the other duties of a trustee, and the trustee is still held to the same fiduciary duties to the settlor and beneficiaries of the trust. However, it can be more difficult to catch the mismanagement of a quiet trust, so it is vitally important that you choose a trustee you know will be responsible with the funds.


Reasons to Enact a Quiet Trust

Trust creators have many reasons why they enact a quiet trust in favor of telling their loved ones about being beneficiaries to a trust. Some feel like their children are unprepared to handle the responsibility, while others have more of a concern for their privacy and do not wish to share that information. Moreover, with the estate tax and gift exemption at $5.43 million for 2015, incredibly large sums of money are being placed in trusts today.


Trust creators might not want their beneficiaries knowing how much they will be receiving because it might influence their life decisions or work ethic. Promoting traits like fiscal and social responsibility may become more difficult if a beneficiary knows that they will be inheriting a large sum of money in the future.


Call an Ohio Estate Planning Attorney

Quiet trusts can be incredibly useful during the estate planning process. If you have questions about creating a quiet trust or other estate planning needs in Akron, Youngstown, Aurora, or Warren, let The Law Office of John C. Grundy help. Call the office or contact us today for a private and free review of your estate planning needs.