Could Your Heirs Benefit From A Dynasty Trust?

1:59 pm Uncategorized

Dynasty trusts — also known as generation-skipping trusts — are long-term trusts that are created to benefit generations of descendants; in fact, some can last as long as a century.  A dynasty trust allows assets to accumulate for years free from federal gift and estate taxes.

While the dynasty trust is in force, distributions can be made to the benefactor and his or her heirs with no federal taxes due.  Since estate taxes are applied to each generation, the savings can be tremendous over multiple generations.

Another benefit of a dynasty trust is “spendthrift clauses” which can restrict a beneficiary’s access to the trust income or principal.  This is usually put in force by wealthy parents whose children or grandchildren might not be financially responsible or where access to great wealth might be a negative influence on their lives.  Having a spendthrift clause still allows the parent or grandparent to provide for those heirs in a reasonable way.  It can also prevent creditors from attacking trust assets for debts of the beneficiaries, and prevent an heir’s ex-spouse from laying claim to the assets of the trust.

Contact us today for individualized planning strategies to meet your unique needs.

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