Using Dynasty Trusts To Preserve Family Wealth

The outright gifting of an asset can be a simple and efficient way to distribute an asset, but if a person’s goal is the long-term preservation of wealth they might want to make the gift to a family member in trust rather than outright. If a donor makes a gift to any person that is two or more generations below them they will need to consider the generation-skipping transfer (GST) tax. A dynasty trust is a trust that lasts longer than one generation below the grantor, and takes “advantage of the GST tax exemption to remove family wealth from the transfer tax system for as long as the trust is in existence.” This article provides a list of some of the advantages and disadvantages of dynasty trusts. There are certain regulations that can vary in each state so it is a good idea to meet with an estate planning professional to talk about setting up a dynasty trust.

See Dynasty Trusts: Keeping It in the Family, Wealth Management, January 15, 2016.

Special thanks to Jim Hillhouse for bringing this article to my attention.