Virginia and many other states have adopted a version of the Uniform Trust Code. This law establishes certain obligations toward trust beneficiaries, requiring that they get the necessary information about the trust to protect themselves. However, for various reasons, some parents do not want their children to know very much about their trusts. Depending on what kind of information the parents want to conceal or how they want the trust administered, the solution might be to establish the trust in another state. Trusts that conceal a significant amount of information from the beneficiary are called “silent trusts”.
Parents may not want their children to grow up knowing there is a trust waiting for them. They may want to create a trust that does not require the trustee to keep the beneficiary informed. They might want information to go to a third party instead of to the beneficiary.
Although parents may have sound reasons for wanting to keep their children from knowing much about a trust, there are also reasons many states require that a minimum amount of knowledge should be shared. Parents should keep these reasons in mind as well. There needs to be some way to ensure that the trustee is managing the trust and making distributions with the beneficiary’s best interests in mind.
One advantage of creating a trust is the amount of control it can give the creator over the distribution of assets. Some parents might be concerned about protecting the assets in a trust from the irresponsibility of a beneficiary. Sometimes called a “spendthrift trust”, these types of trust can be designed to allow distributions under the supervision of a trustee or at the achievement of milestones, such as when the beneficiary reaches certain ages.