Thursday, January 24, 2013

Quiet Trusts

Imagined dialogue from late last year:

Top Wealthholder: O.K. Let's put $10 million in trust for our kids and nail down our gift tax exemptions before they disappear. But….

Estate Planner: But what?

TW: I just realized. Once our kids learn about this trust, they'll never work a day in their lives!

EP: Who says they have to know? 

Quiet trusts, also known as silent trusts, gained both fans and foes in the Great 2012 Gifting Stampede. This WSJ column suggests wealthholders will continue to move assets into trusts for unsuspecting beneficiaries.

Is secrecy a good idea? Your answer may show your age:
According to some advisers, whether people favor quiet trusts or not often depends on their age. Older advisers, and older clients, are more likely to think keeping an inheritance secret "is a terrible idea," said Jonathan J. Rikoon, chair of the trust and estates group at law firm Debevoise & Plimpton LLP. Age has given them enough experience to see how secrecy actually plays out, Mr. Rikoon added.

Newer practitioners, especially those working with a new generation of entrepreneurs, may be likelier to see value in keeping things quiet.
This blogger sides with the seniors. (He knows his place.) As a comment to one of the WSJ columns points out, kids who grow up with maids and butlers already expect trust funds. There's nothing to hide.

And there's nothing new about secret inheritances. See Quiet Trusts and Great Expectations.

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