Determined to keep the fruits of your hard work in your family forever? Then dynasty trust planning might be worth exploring.
Without proper guidance and planning, estate taxes, generation-skipping taxes and gift taxes can significantly decrease the inheritance of children and grandchildren of high net worth individuals. Instead of leaving money directly to heirs, a dynasty trust functions as a holding tank for generations.
With dynasty trusts, unlike other types of trusts, outright distributions may not go to beneficiaries; rather, each generation of beneficiaries will receive a lifetime right to use the assets. Dynasty trusts protect assets from generation-skipping taxes, estate taxes and gift taxes. The generation-skipping tax kicks in when a person transfers assets to beneficiaries two or more generations below the grantor, such as grandchildren or great grandchildren. As long as the dynasty trust exists, the family assets are protected from any transfer tax. Any appreciation on the assets during the existence of the trust is also protected from taxes.By avoiding unnecessary transfer taxes, high net worth individuals can maximize the amount of money that stays in their family.
Not high net worth? You still could benefit greatly from dynasty trust planning. Why? Dynasty trusts protect family assets from poor decision-making by beneficiaries, as well as protection from being claimed by divorcing spouses and creditors of beneficiaries. Dynasty trusts are also useful instruments to control how the assets are to be used throughout the trust’s existence, such as limiting the use to health and education costs.
Call an experienced attorney at AlerStallings today to discuss whether a dynasty trust is an option for your estate planning goals.