When people in Florida think about planning for the future, they often want to use their wealth to make sure that their children will have a good life. Trusts can be an ideal means to accomplish that goal, as they pass outside of the probate system and they can provide significant tax benefits during the creator’s lifetime. However, some worry about the stereotype of the spoiled child with a trust fund; people may not feel motivated to achieve their own academic or career successes when they know from an early age that a large sum of money is waiting for them.
However, when people create a trust, the trustee has a duty to inform the beneficiary about the trust’s existence and its administration. This is one reason why many people are opting to create silent trusts. The creator of a silent trust explicitly waives the trustee’s duty to inform the beneficiary, allowing the trust to be created without the eventual recipient’s knowledge. Typically, the trust is to be kept silent for a fixed number of years or until the beneficiary reaches a certain age, usually 25. By using silent trusts, people can reap the tax rewards of transferring wealth for years before they are ready to actually pass on the contents of the trust.
In the past, many people used incentive trusts to promote good behavior; these required the beneficiary to meet certain milestones or goals before receiving a disbursement. However, in many cases, silent trusts can feel less manipulative and also be more flexible in case of changing circumstances.
People who are considering how best to leave behind a legacy to their loved ones have multiple options to keep in mind. An estate planning attorney might advise people on how best to create the mechanisms to pass on their wealth and draft the necessary documents.