Dynasty Trusts
A Dynasty Trust is a long-term trust designed to preserve family wealth across multiple generations while minimizing estate and gift taxes. It allows for the distribution of income and principal to beneficiaries over an extended period, often indefinitely, depending on state laws.
Typically, a Dynasty Trust is established to provide for descendants and can protect assets from creditors, divorce, and irresponsible spending. It can be particularly advantageous in jurisdictions that have abolished the rule against perpetuities, allowing the trust to exist for generations without expiration.
For example, if a wealthy family sets up a Dynasty Trust, the trust can hold investments and properties that generate income for the family’s heirs while ensuring that the assets are managed according to the grantor’s wishes, potentially avoiding significant taxation on transfers between generations.
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