Anyone who has seen the movie "Arthur" (either the Dudley Moore or Russell Brand version) can understand the frustrations wealthy parents may have with leaving a great deal of money to their children. Essentially, they worry that the kids will simply take the money, live like socialites and blow through their fortunes without any regard for financial responsibility.
According to a recent Wall Street Journal report, this is a chief concern of wealthy clients of Bank of America's private wealth management unit. The issue is once again a prominent concern after Congress avoided the fiscal cliff, which allowed wealthy individuals to leave up to $5.25 million ($10.5 for couples) to their heirs while avoiding estate taxes.
Perhaps a silent trust is the answer. Otherwise known as a "quiet" trust, this type of trust allows the trustee to manage the trust without the beneficiary's input (or knowledge) until a specified date, usually when the beneficiary is older. For example, a number of trusts will allow an heir to reap the benefits at age 18 (or even at age 25). A silent trust may call for the heir to be informed at age 30 or later. A mature adult will be better suited to manage his or her fortune and honor their late parent by doing so.
Indeed, there was a flurry of activity in December due to the uncertainty of the fiscal cliff, but there are opportunities to make changes to your trusts. Silent trusts are relatively new, and many people are exploring changes to how their heirs may access money in the future.
If you have questions about silent trusts, an experienced estate planning attorney can advise you.
Source: Wall Street Journal.com, Can you trust your kid with $5.25 million, January 18, 2013