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Reasons you may want a dynasty trust in your estate plan

On Behalf of | Oct 18, 2022 | estate planning | 0 comments

If you have a significant amount of wealth and want to ensure it passes down through generations of your family, you can implement a dynasty trust into your estate plan.

Some assets you may name in a living trust, placing them under the ownership of a beneficiary after you pass. However, a dynasty trust extends plans for your wealth beyond immediate family and as far forward as 90 years.

Protect assets from creditors

Assets named in a dynasty trust are off-limits to creditors. This differs from a revocable trust, in which assets are available to creditors under court order. Therefore, if you have a dynasty trust, you know your descendants will receive your wealth as you intended without disruption.

Avoid hefty taxes

Each time assets of an estate pass down to a new generation, the law requires the family to pay an estate tax. However, that is not the case with a dynasty trust. Instead, you pay an estate tax once and future generations do not need to pay it again.

Bypass beneficiaries’ spouses

An unfortunate reality is that you will not always like the spouses of your loved ones. Additionally, there is a high divorce rate in the U.S., and you would likely prefer to help your children or grandchildren avoid a battle over inheritance in a contested divorce. A dynasty trust keeps your assets from becoming marital property.

Creating an estate plan requires careful consideration of your unique circumstances. There is no universal formula, and you can include multiple forms of asset distribution based on your specific needs.