• Why Tape Money to a Trust?

    I have always found it interesting that older North Carolina trusts sometimes have a $1 or $10 bill taped to the last page. Before 2007, former N.C. Gen. Stat. § 31-47 allowed a pour-over will to devise property “to the trustee of any trust … if established in writing prior to the execution of such will.” Because a trust still needed a corpus under common law trust principles, practitioners would “fund” the trust with a nominal $1 or $10 bill to be sure the trust “existed” when the will was signed.

    In 2007, the North Carolina General Assembly rewrote N.C.G.S. § 31-47 and added the language that a pour-over is valid “regardless of the existence, size, or character of the corpus of the trust during the testator’s lifetime.” In other words, a will can now pour into a trust that was unfunded during life. It is curious that there was a requirement to begin with if a $1 or $10 bill was an easy workaround.

  • The (Partial) Resurrection of Silent Trusts in North Carolina?

    Historically, trust and estate attorneys in North Carolina have practiced under the assumption that Wilson v. Wilson, 203 N.C. App. 45, 690 S.E.2d 710 (2010), stood for the proposition that silent trusts are not a viable option in North Carolina. It now seems that the current North Carolina Court of Appeals is somewhat stepping away from that position.

    In Wilson, the Court there held that beneficiaries could demand and be entitled to information about the trust to protect their rights, even if the terms of the trust explicitly waived such demand rights. In Wilson, the basis for the belief that a grantor could waive these rights and essentially create a “silent trust” as such trusts are known, arises from the reading of two statutes: N.C.G.S. § 36C-1-105 and N.C.G.S. § 36C-8-813. Under N.C.G.S. § 36C-1-105, there is a list of statutory provisions in the North Carolina Uniform Trust Code that are mandatory, and therefore cannot be waived in a trust. N.C.G.S. § 36C-8-813 provides duties to inform and give adequate information to the beneficiaries of a trust. Important to the argument at issue in Wilson, N.C.G.S. § 36C-8-813 does not appear in the list found in N.C.G.S. § 36C-1-105, so arguably the duties to inform and report can be explicitly overridden and modified by the terms of the trust, or at least the attorney arguing the case before the North Carolina Court of Appeals in Wilson believed.

    The Court in Wilson, however, held that regardless of waiver provisions in a trust of information rights to beneficiaries, the beneficiaries are still entitled to information to be able to enforce their rights. The Court relied on the trustee’s duty of good faith described in N.C.G.S. § 36C-1-105(b)(2) and the Court’s general authority under N.C.G.S. § 36C-1-105(b)(9) which provides “The power of the court to take any action and exercise any jurisdiction as may be necessary in the interests of justice.” Therefore, the Court held the terms of the trust at issue in Wilson could not override the duties to provide information to trust beneficiaries; therefore, the waiver of information rights provisions in the trust were void. So, presumably, silent trusts are prohibited in North Carolina.

    Recently, however, the current North Carolina Court of Appeals, has seemed to distance itself from the underlying rationale in Wilson.  In the recent case of In re: Smith (24-859 – Unpublished) filed August 20, 2025, the beneficiaries of a trust demanded “each and every” financial statement, tax return, check copy, and related documentation for several years. The terms of the trust in the case required only that annual accountings be provided to the beneficiaries and nothing more. It seems the beneficiaries here were relying on their understood rights from Wilson to go beyond the terms of the trust and to request all possible documents relevant to enforcing their rights as a beneficiary. Given the broad language from the Court in Wilson, it seemed reasonable to believe the beneficiaries were not strictly bound by the terms of a trust in what they could request from the Trustee.

    The Court in Smith, however, denied the beneficiaries what they wanted. The Court held instead that the terms of the trust control. The Court pointed out that N.C.G.S. § 36C-8-813 was not a mandatory provision found in N.C.G.S. § 36C-1-105(b) and therefore could be overridden, as the Grantor did here, allowing only annual accounts to be provided to the beneficiaries. Nowhere in Smith did the Court cite arguments about broad fiduciary duties of good faith or beneficiaries protecting their rights as the Court did in Wilson.  Indeed, the Court in Smith seems to limit the holding of Wilson to only scenarios where the beneficiaries have sued for a breach of fiduciary duty are they entitled to demand and receive more information than what the terms of the trust would otherwise require. If there is no lawsuit for breach of fiduciary duty, as was the case in Smith, then the terms of the trust control and the beneficiaries are not entitled to anything beyond what the trust provides. It is doubtful that many practicing attorneys read the original Wilson case to have the “only in cases of lawsuits for breach of fiduciary duty are silent trusts prohibited” limitation.

    Although unpublished cases do not constitute controlling legal authority, it is interesting how the Court in Smith changed its tone on the concept of silent trusts. Unpublished cases may hint at judicial trends. In 2010 in Wilson, silent trusts seemed to be inconceivable in North Carolina given the Court’s broad language. Now it seems that unless someone is suing for a breach of fiduciary duty, the terms of the trust can waive most, if not all, of the informational rights under N.C.G.S. § 36C-8-813, thereby creating a silent trust.

    Perhaps the door for Silent Trusts in North Carolina has been, at least slightly, opened.

  • Recent Article: Uncontested Trusts in Court

    Christopher J. Ryan Jr., David Horton, and Reid Kress Weisbord recently published Uncontested Trusts in Court, Indiana Legal Studies Research Paper No. 564, George Mason Law Review (forthcoming 2025). The authors examined 1,431 trust cases filed in San Francisco Superior Court between 2014 and 2020 and found that 971 (68%) involved no dispute.

    These “uncontested” matters often reached the courts for reasons such as retitling property under California Probate Code § 850 (known as Heggstad petitions), appointing successor trustees, modifying or terminating irrevocable trusts, and interpreting ambiguous terms. The study concludes that, despite the conventional belief that trusts avoid court oversight, many routine administrative and corrective actions still require judicial approval.

    Interesting paper, but context matters. Since the dataset comes from one of the wealthiest counties in the country, and because Heggstad petitions are a California specific petition not available in many other states (including North Carolina), their data may not be representative of the rest of the country.

  • Recent Article: What Should You Owe Your Ex?

    By John Morley and Yair Listokin of Yale Law School. From the abstract: “We find that although married people broadly support the law of divorce and child support as applied to their relationships, cohabiting people are more skeptical. Cohabiting people like the idea of having certain rights against third parties while their relationships remain intact, but they are hesitant about duties.”

    Interesting study of personal preferences as states grapple with more people cohabiting without marriage, and with whether to grant legal status to cohabitants.

  • Family or State?

    The question of whether to turn in one’s family is not new. It goes back at least as far as Sophocles’ Antigone. In the play, Creon, king of Thebes, ordered that Polynices, who had attacked the city, could not be buried. Antigone defied him and buried her brother anyway, saying her duty to her family and the gods outweighed any law of the state. Creon argued that loyalty to the city must come first.

    Modern examples show the same tension. David Kaczynski, brother of the Unabomber, eventually gave information to the FBI that led to his brother’s arrest. Many praised him for putting public safety above family ties.

    Others have gone the opposite way. Whitey Bulger’s brother William “Billy” Bulger, a longtime Massachusetts legislator, refused to cooperate with the authorities when they wanted his help locating Whitey. Billy’s reasoning seemed to be that it was not his duty to solve crimes he was not involved in. That was the job of law enforcement.

    The law itself has sometimes carved out protections for family. As early as the seventeenth century, courts recognized the principle that “husband and wife are one,” leading to spousal testimonial privilege. Even in modern times, the Supreme Court reaffirmed the idea in Trammel v. United States, 445 U.S. 40 (1980), though in limited form. These privileges show that the law, at least at times, has valued family loyalty as much as civic duty.

    No one wants to be in the position of Antigone, or David Kaczynski, or Billy Bulger. These are impossible choices. When duties conflict, we are forced to decide which matters more. In western democracies, many say law and order must come first. Other societies may put family first with equal force. The question remains: would we turn in our closest family member, and more importantly, should we?

Recent Posts