A new kind of trust is beginning to gain traction in the estate planning community. These trusts are known by the moniker “quiet trusts.” These trusts earn this moniker because their terms permit trustees not to disclose their existence to trust beneficiaries. By permitting nondisclosure, trust settlors seek to achieve a simple objective, namely, to keep trust beneficiaries motivated, unaware of their future financial fortunes.
Quiet trusts have not come about by accident. To the contrary, estate planners have had to make a concerted effort to have state legislatures adopt enabling legislation that legalizes quiet trusts. The reason for this legislative push is because there is a long history in common law regarding communication between trustees and trust beneficiaries. More specifically, for reasons pertaining to public policy and oversight, common law has historically required trustees to notify trust beneficiaries of their rights and regularly update them as to the administration of the trust.