The New Jersey Uniform Trust Code – Part 13: Secret Trusts

So-called “secret trusts” – also called “silent” or “quiet” trusts — are controversial in other jurisdictions.  The NJ UTC provides a compromise as to this concept, although the statute does not expressly provide for this kind of trust like statutes in other states do, such as Delaware.  12 Del. C. §§ 3303, 3339.

In particular, N.J.S.A. § 3B: 31-67 leaves room for secret trusts, by defining when and what the trustee is to disclose, and thereby preserving some ability for the settlor and trustee not to disclose information about the trust – even its existence – to certain beneficiaries.  This is largely a foreign concept under New Jersey law.

On the one hand, N.J.S.A. § 3B:31-67 spells out the trustee’s duty to disclose information regarding the trust.  On the other hand, N.J.S.A. § 3B:31-5 allows the terms of the trust to override most provisions of the act.

The interplay of these statutes opens the door to secret trusts.  More specifically, under N.J.S.A. § 3B:31-5(b)(7), the duty under subsection (a) and (b) of § 3B:31-67 cannot be changed by the terms of the trust, in that a duty is imposed on the trustee in any event “to respond to the request of a qualified beneficiary of an irrevocable trust who has attained the age of 35 years for a copy of the trust instrument or for other information reasonably related to the administration of the trust.”  With this exception, room appears to exist for secret trusts.