Balance secrecy with trust beneficiaries’ right to know

Trusts provide vehicles for people in North Carolina to pass on assets to heirs. Benefactors sometimes want to keep these trusts secret, at least for a time, so that younger heirs will not grow up with the expectation of receiving a large inheritance. Concerns about young people developing a spoiled attitude or wasting their lives prompt benefactors to withhold information from their heirs. The law, however, could likely require some form of disclosure eventually.

The laws favor the notion that beneficiaries have a right to know that a trust is being managed responsibly. Benefactors typically can delay informing beneficiaries until they reach age 25. Some methods exist that allow benefactors to limit adult beneficiaries’ access to information. State law determines how the terms of a trust can restrict disclosure to beneficiaries.

Although logical reasons might motivate some people to keep heirs in the dark about trusts, secrecy could introduce opportunities for a trustee to abuse power. Without proper oversight, assets might cease to be handled in the best interest of the beneficiaries. Trustees who exercise discretionary authority over distributions might fail to recognize the needs or circumstances of beneficiaries when communications are not open.

Consultations with an attorney could help a person make informed choices when designing a trust. Legal advice could allow someone to balance their desire to control access to money and information with a beneficiary’s legal rights. An attorney could strive to write the terms of a trust so that they comply with the law while still supporting the protective goals of the benefactor.