November 06, 2019 Category: Will Contests, Trust Disputes & Probate Administration
By Attorney Kenneth F. Silver
A few weeks ago, I posted a blog about how one cannot keep a will secret postmortem. But the same issue also comes up often with respect to trusts. The answer this time is a bit more nuanced. Just like a will, a revocable trust may be kept secret so long as the settlor of the trust is still alive. Once the settlor dies, the document becomes irrevocable and the rules discussed below become effective.
Under Section 7814 of the Michigan Trust Code, after the settlor dies, a trustee has an obligation to provide beneficiaries with certain information about the trust. But this information does not have to be provided to anybody else. Specifically, a trustee has an obligation to provide the beneficiaries with the trustee’s contact information and the existence of the trust. But the trustee does not have to provide a beneficiary with a copy of the entire trust. The information is only required to be given to, what are referred to in the statute as, “qualified beneficiaries”. These are people identified (in very simple terms) as first and second in line in accordance with the terms of the trust. Everyone else can be shut out, even family members.
The provision in the statute that says a trustee only has the obligation to provide “a copy of the terms of the trust that describe or affect the trust beneficiary’s interest and relevant information about trust property” allows the trustee to keep the balance of the document secret. I am not suggesting that the trust document should be kept private, but the statute does provide limitations on required disclosures. It is up to the trustee to decide whether to disclose more than the statute requires. It is very common for family members to threaten litigation just to obtain a full copy of the document. It is also very common for trustees to deny providing full copies of the trust document because “that is what the settlor wanted”. However, it should be noted that 19 times out of 20, the court will require the entire document to be provided anyway.
The bottom line is that you can only keep a trust secret from those who will not benefit from the trust. If one is a family member and has been dis-inherited, then that person has also been dis-inherited from the right to information. None of this applies to a situation where there are allegations of undue influence, lack of capacity to sign the trust or some other allegation that, if true, would cause the document to be set aside. So, the answer to whether you can keep a trust secret is “yes”, but it depends on what information is being withheld and from whom it is being withheld.