Covenant CPA

  • About CCG
  • Our Team
    • Raiford “Ray” Dyer Jr.
    • Susan Harper
    • Meredith Baxter
    • Candice Bridgeman
    • Leigh Cummings
    • Kellen Tucker
    • Cindy Hayes
    • Khialee Boyles
  • Services
    • Accounting & Assurance
    • Tax Advisory
    • Litigation Support
  • Press
    • Business Management
    • College Saving & Spending
    • Estate Planning
    • Fraud Prevention
    • Gift Tax
    • Household
    • Individual
    • Investing
    • Owning a Small Business
    • Retirement
    • Tax Returns
    • Vehicle
  • Events
  • Contact CCG
(205) 345-9898

Concealing a trust could run afoul of state law

Concealing a trust could run afoul of state law

by CCG / Monday, 22 June 2020 / Published in Estate Planning

You may have good intentions in keeping a trust a secret from its beneficiaries. Perhaps you have concerns that, if your children or other beneficiaries know about the trust, they might set aside educational or career pursuits. Be aware, however, that the law in many states forbids this practice by requiring a trust’s trustee to disclose a certain amount of information about the trust to the beneficiaries.

More states enforce the Uniform Trust Code

The Uniform Trust Code (UTC), which now 34 states (and the District of Columbia) have adopted, requires a trustee to provide trust details to any qualified beneficiary who makes a request. The UTC also requires the trustee to notify all qualified beneficiaries of their rights to information about the trust.

Qualified beneficiaries include primary beneficiaries, such as your children or others designated to receive distributions from the trust, as well as contingent beneficiaries, such as your grandchildren or others who would receive trust funds in the event a primary beneficiary’s interest terminates.

Consider a power of appointment

One way to avoid UTC disclosure requirements is by not naming your children as beneficiaries and, instead, granting your spouse or someone else a power of appointment over the trust. The power holder can direct trust funds to your children as needed, but because they’re not beneficiaries, the trustee isn’t required to inform them about the trust’s terms — or even its existence. The disadvantage of this approach is that the power holder is under no legal obligation to provide for your children.

Turn to us for help

Before taking action, it’s important to check the law in your state. Some states allow you to waive the trustee’s duty to disclose, while others allow you to name a third party to receive disclosures and look out for beneficiaries’ interests. In states where disclosure is unavoidable, you may want to explore alternative strategies. If you have questions regarding trusts in your estate plan, please contact us.

© 2020 Covenant CPA

Tagged under: beneficiary, law, trust

Recent Posts

  • Is your business tracking website metrics?

    In today’s data-driven world, business owners a...
  • Get your piece of the depreciation pie now with a cost segregation study

    If your business is depreciating over a 30-year...
  • Protect your company from cyberattacks by adopting zero trust

    Some organizations struggle to prevent cyberatt...
  • Thinking about participating in your employer’s 401(k) plan? Here’s how it works

    Employers offer 401(k) plans for many reasons, ...
  • What goes into a fraud damages calculation?

    At first glance, calculating restitution for fr...

ABOUT CCG

Covenant Consulting Group LLC (CCG) was founded in 2007 when our partners decided that clients deserved a holistic approach to better service and attention. CCG takes the best parts of a consulting firm and combines them with the best parts of a traditional CPA firm.

CONTACT CCG

(205) 345-9898

info@covenantcpa.com

TEAM NEAR YOU

Tuscaloosa: (205) 345-9898
Northport: (205) 345-9898
Birmingham: (205) 757-8308
Atlanta, GA: (404) 348-0593
Starkville, MS: (662) 268-6128

  • About
  • Press
  • Accounting & Assurance
  • Tax Advisory
  • Litigation Support

Copyright © 2018 Covenant CPA LLC. All rights reserved.

Webite by J. Ferragut

TOP