Quiet Trusts are used for many different purposes, since they have many different benefits, such as being the cure to "affluenza."
- "Affluenza" is known in the estate planning world as a symptom of large, unstipulated inheritances, in which the beneficiary is careless with their life choices due to the inheritance. This is also known as "Sudden Wealth Syndrom."
- It can keep the size of the inheritance from the beneficiary, or beneficiaries, until the distribution date, or other specified dates written within the terms of the trust.
- Quiet Trusts aren't always needed if proper planning, education, and your financial savvyness has been bestowed upon the beneficiary, but they are a viable resource for grantors who have inheritance inhibitions.
What is a Quiet Trust?
It can be any trust type in which the beneficiary is not informed of its existence until distributions are to be made. The use of quiet trusts has many benefits but primarily they are used to prevent the beneficiary’s knowledge of the trust from creating an obstacle to professional and personal development. These are very similar to sleeping trusts, but add an extra layer of protection against reckless beneficiaries until a safe date.
In many instances, when heirs of an estate are knowledgeable of their inheritance, they may feel that they don’t need to push themselves to excel in their career or simply choose not to pursue a career path. This is often referred to as “Affluenza” or “Sudden Wealth Syndrome.”
Motivation, routine, and a self-identifying career can be keystone to a person’s self-esteem, self-worth, self-confidence, personal identity and overall happiness.
Carnagie's Philosphy on Estate Inheritances
This is nothing new, Andrew Carnegie, the 19th-century steel magnate stated, “The parent who leaves his son enormous wealth generally deadens the talents and energies of the son, and tempts him to lead a less worthy life.” Or as many say today, “Shirt sleeves to shirt sleeves in three generations.”
Quiet Trusts in Today's World
This type of trust can mitigate these concerns when passing down wealth by simply preventing the beneficiary’s knowledge of the assets until their core professional and personal habits have matured. With the rise in wealth transfer due to the aging Baby Boomer generation this strategy has been rapidly growing in popularity.