What to Think About When Making a Trust Silent

July 12, 2023

Trusts are powerful tools for managing and distributing assets, ensuring the smooth transfer of wealth from one generation to the next. While traditional trusts operate transparently, there is another option available: the silent trust. Delaware law offers a favorable framework for silent trusts, providing flexibility and a robust legal foundation for their implementation. In this article, we will explore the concept of a silent trust, highlight important considerations for setting up a silent trust, and outline the requirements for establishing a silent trust in Delaware. 

Why Choose to Make a Trust Silent?

Silent trusts offer a level of privacy and confidentiality not found in traditional trusts. Unlike non-silent trusts, which typically involve active communication and disclosure of information to beneficiaries, silent trusts used in combination with a directed trust can allow the grantor to maintain a level of discretion and control over the trust’s operations, keeping beneficiaries unaware of the trust until specific conditions are met. Simply put: the silent trust ensures that the beneficiaries do not know about the existence of the trust, its terms, or its assets for a period of time.

Silent trusts are useful in multiple scenarios, and are generally used to protect the beneficiaries of the trust in one way or another. They are often used to shield young children from the potential pitfalls of inherited wealth until they reach a certain age or level of maturity. Silent trusts can also safeguard beneficiaries struggling with addiction or other issues by preventing direct access to funds that may exacerbate their challenges. It also allows a grantor to limit access to confidential financial information during his or her lifetime.

Important Considerations for Making a Trust Silent

When establishing a silent trust, several crucial considerations come into play. Since the beneficiary will not be aware of the trust for some time, a representative must be chosen to represent their interests and communicate with the trustee. Additionally, there are other factors to consider when making a decision to create a silent trust such as the trust’s conditions, how it will work if there are multiple beneficiaries, and how to prepare the beneficiaries for the eventual inheritance. 

Choosing a Designated Representative

The first and most important task is appointing a designated representative whom you trust. This could be the grantor of the trust, or a trusted family friend or relative. This person works to ensure that the beneficiaries’ interests are protected and that the terms of the trust are upheld, playing a pivotal role in overseeing the actions of the trustee by reviewing accountings, and handling any distribution of funds, such as for school tuition, summer camps, or travel opportunities for the beneficiary. One of the primary responsibilities of the designated representative is to fill out a Schedule K-1 and work with the parent to file a tax return on behalf of the beneficiary. 

In Delaware, the designated representative has fiduciary duties outlined in statutory law, providing legal protection for the beneficiary. Even though they have a fiduciary duty, there are no qualifications needed for the designated representative, however, it is crucial to choose a designated representative whom you fully trust and who can responsibly carry out their obligations. As a fiduciary, their priority is to ensure that the beneficiary’s interests are put first in all decisions.

Determining the Conditions of the Trust

Another important consideration when setting up a silent trust is deciding the timing and conditions of the trust’s disclosure to the beneficiary — that is, when it will become known by the beneficiaries and in what manner. The most common approach for setting a trigger in a silent trust is to use a time-based condition, such as when the beneficiary reaches a specific age. This approach ensures compliance with Delaware law, which requires a guaranteed and definite condition. For instance, you can’t use a trigger like “upon marriage,” as there is no certainty that the beneficiary will marry. Another common trigger is the death of the grantor, as that is an eventual certainty.

Challenges with Multiple Beneficiaries

In cases where multiple beneficiaries are involved, complexities can arise, particularly when the oldest beneficiary becomes aware of the trust before the others. It is crucial to consider the potential psychological impact and family dynamics that may arise when one beneficiary discovers their entitlement to the trust’s assets. Open communication, transparency, and fairness are key to maintaining family harmony and minimizing potential conflicts.

The Importance of Financial Literacy

Another key consideration factor to discuss or have a plan for is how to prepare the beneficiaries for the inevitable disclosure of the trust and direct access to requesting the funds. They will need to be prepared in order to manage expectations for access to the trust’s funds responsibly. Educating beneficiaries about money management, investments, and long-term financial planning empowers them to make informed decisions and ensures the longevity of the trust’s benefits. In addition, understanding a trust and how it is intended to work is important to the on-going success or its administration.

Providing resources, guidance, and educational opportunities can equip beneficiaries with the necessary skills to navigate their financial responsibilities and make prudent choices. This could range from casual discussions about what trusts are and how they work, to teaching them how to budget and spend money responsibly, to enrolling them in a personal finance course when they are the appropriate age. 


Silent trusts provide a unique solution for individuals looking to protect vulnerable beneficiaries or maintain privacy in their estate planning. By choosing the right representative and setting up the trust with the proper considerations in place, a silent trust can help you create a legacy that safeguards assets, preserves family dynamics, and promotes financial well-being for future generations.

Commonwealth Trust Company is pleased to provide this article as a guide. Commonwealth Trust Company is not engaged in the practice of law and is not providing legal advice by the provision of these materials. Commonwealth Trust Company recommends that clients seek the opinion of their attorney regarding the specific legal and tax issues addressed in this article.