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ACTEC Law Journal

Abstract

A common intuition is that easy money creates a disincentive to efforts for personal success. Many trust settlors seem to embrace this view but still wish to provide generously for their families. Enter the so-called “silent trust,” which seeks to moderate the disincentive effect by way of trust provisions that limit or waive notice and disclosure requirements to beneficiaries.

But a fundamental tension plagues these trusts. Beneficiaries need basic information about a trust in order to hold trustees to account. Consequently, traditional trust law provides limits on the degree to which trustees can be silent as respects a beneficiary’s right to know. The Uniform Trust Code (“UTC”) broadly adopts the traditional view, while (perhaps grudgingly) conceding adopting states’ preferences for allowing trust settlors to opt out of certain information and accounting provisions. So the outer boundaries of silent trusts remain unsettled, even across those jurisdictions that have adopted the UTC.

This article first summarizes the status of the mandatory information and reporting rules under the UTC, and then looks at the legal principles on which cases interpreting silent trust provisions stand. In so doing, it situates the silent trust in the context of the larger academic debate about mandatory versus default provisions in trust law. It finds that mandatory UTC provisions requiring a trustee to act in good faith and giving courts the power to act in the interest of justice can serve as sufficient safeguards to beneficiaries of silent trusts. Nonetheless, courts must interpret these provisions to permit beneficiaries, upon request, to obtain from the trustee any information reasonably required to determine whether trustee wrongdoing has occurred.

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