A secret trust is a type of trust that is not revealed to the beneficiaries until after the settlor’s death. It is often used to protect the interests of young children or grandchildren, as they may not be mature enough to handle a large inheritance.
A secret trust can be either fully secret or half-secret. A fully secret trust is one where the settlor (the person who creates the trust) does not reveal the existence of the trust to the beneficiaries. A half-secret trust is one where the settlor tells the beneficiaries about the trust but does not reveal the terms of the trust.
A secret trust is created when the settlor transfers property into a trust and instructs the trustee to hold onto the property until a certain event occurs, such as when the beneficiary reaches a certain age. The trustee must keep the existence of the trust secret from the beneficiary until that event occurs.
Once the event occurs, the trustee can then reveal the existence of the trust to the beneficiary and transfer ownership of the property. The trustee will also provide information on how to manage and use the inheritance.
There are several reasons why someone would create a secret trust. The most common reason is to protect young children or grandchildren from inheriting a large sum of money before they are old enough to handle it responsibly.
Another reason for creating a secret trust is to keep family members from fighting over an inheritance. If all beneficiaries are aware of the terms of a will, they may try to contest it in court in order to get a larger share of the estate. However, if only some beneficiaries are aware of a secret trust, they may be less likely to contest it since they will not know what they are fighting for.
Lastly, secret trusts can also be used to protect assets from creditors or ex-spouses. If someone owes money or is going through a divorce, their creditors or ex-spouse may try to claim their inheritance in order to satisfy debts or settle property division. However, if that inheritance is in a secret trust, it will be protected from creditors and ex-spouses
Secret trusts can be used for many different purposes, but they are most commonly used in order to protect young children or grandchildren from inheriting a large sum of money before they are old enough to handle it responsibly. If you are considering creating a secret trust, it is important to speak with an experienced attorney who can help you draft one that meets your specific needs and objectives.
If you have any other questions about secret trusts, please contact us and we will do our best to help you.