What is a dynasty trust
A dynasty trust is a trust structure adopted by many high net worth individuals who wish to leave a large sum of money to their future generations and place no ‘lifetime’ on the trust. A dynasty trust can in many cases last forever, thus enabling the settlor to leave a legacy and provide for his/her future generations for many years to come. When deciding to set up a dynasty trust it may be advised to seek guidance from a professional consultancy firm as each jurisdiction that offers the creation of dynasty trusts will vary according to processes, benefits and restrictions.
For more information on the different types of trusts available, or to find out how DeltaQuest can assist you with your trust requirements, please Contact Us.
Dynasty trusts explained
A dynasty trust essentially allows the settlor of the trust to provide for several future generations as it is permitted with the rule against perpetuities. In some states, a dynasty trust is also referred to as a generation skipping trust or a perpetual trust due to the length of time it can survive for.
Many set up dynasty trusts where they have extreme levels of wealth and wish to leave this to their future generations without the restrictions of estate taxes. A dynasty trust will also allow the avoidance of gift taxes.
It should be noted that a dynasty trust can be established under a revocable or irrevocable living trust and in some states, under a testamentary trust. One of the most significant features of a dynasty trust is that the settlor looses all control of the assets he/she inputs into the trust and once the assets are under the title of the trust, the assets cannot be reached. In addition the trust terms (trust deed) cannot be amended once the assets are placed in the dynasty trust. However, the settlor retains control in other aspects.
If you wish to leave your inheritance for your family and future generations with the avoidance of taxes and creditor claims a dynasty trust may be the best trust to create. In addition, if you set up a dynasty trust in a favorable jurisdiction you can request that the trust live forever.
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