A trust is a legal instrument that holds assets for beneficiaries. Trusts are often helpful in handling complex assets because there are advantages for grantors and beneficiaries. There are many reasons why you may want to add a trust to your estate plan. For some, a dynasty trust might be the best option. An experienced estate planning attorney will help you set up a dynasty trust for you and your family.
What is a Dynasty Trust?
A dynasty is a succession of people from the same family. Dynasties are often composed of prominent or successful people. A dynasty trust is a trust that is specifically structured to continue for multiple generations. This type of trust is created to provide stability and protection as well as tax benefits for family wealth through generations. Typically, a dynasty trust is structured in a way that protects assets and provides for continuous wealth transfer.
Difference Between a Trust and a Dynasty Trust
While dynasty trusts are a more specific type of trust with the main difference being the duration. The duration of a dynasty trust is much longer than other trusts. The dynasty trust is designed to span generations. It focuses on the protection of immediate family members over many years and through generations. A standard trust ends on the death of the grantor. Therefore, if you wish to protect family wealth to ensure it is passed down to future generations, you may want to utilize a dynasty trust rather than an individual one.
Advantages of a Dynasty Trust
A dynasty trust offers some advantages to families. The dynasty trust preserves wealth over multiple generations. With proper planning, a dynasty trust will minimize the tax obligations of the estate through transitions from generation to generation. The grantor has the ability to control how assets are managed and distributed. The dynasty trust is a stable option for families and allows for continuity of wealth between generations. It helps to protect the family wealth.
The tax implications for a dynasty trust are one of the main advantages of the dynasty trust. The dynasty trust takes advantage of various federal and state tax laws to preserve wealth. For example, a dynasty trust is structured in a manner that will take advantage of the generation-skipping transfer tax exemption. Generally, assets held in a dynasty trust are not subject to estate tax because the assets are not part of a taxable estate of an individual family member. A knowledgeable estate planning attorney will provide more insight into the specific ways a dynasty trust will impact taxes in your case.
Disadvantages of a Dynasty Trust
There may be some drawbacks to a dynasty trust for some people. A dynasty trust is irrevocable. Irrevocable trusts cannot be changed. Once in place, the dynasty trust might not adequately handle future circumstances. Due to the complexity, a dynasty trust is more costly to set up and maintain. It is also important to note that the laws governing trusts may change over time and could be unpredictable.
A dynasty trust is a specialized type of trust that may be ideal for your family. To learn more, call us today at Moen Sheehan Meyer, Ltd. at (608) 784-8310 or contact us online.