Have you ever heard that when a family accumulates wealth, by the 2 nd generation thereafter it’s gone? A dynasty trust may help protect family wealth against several outside forces. Here’s how a dynasty trust works differently than your living trust.
With your living trust, when you die, your assets are distributed to your heirs. From that moment forward, those assets are subject to eroding forces in the estates of your heirs:
If you make a small change to your living trust, you can avoid these eroding influences. Rather than leave your assets to your heirs, leave the assets in your dynasty trust. Because the assets are in trust, your heirs do not legally own them (even though you can give your heirs high accessibility or you can limit accessibility if you choose). Therefore, your heir’s creditors can’t touch the assets and neither can their spouse. Unspent assets can pass from generation to generation, free of additional estate tax (limited to $1 million estate tax exemption per generation per donee). You gain assurance that assets stay in your bloodline if unspent and pass to your grandchildren.
So if you want to have your inheritance exposed to eroding forces, just leave your inheritance outright to your heirs. If instead you want to protect your inheritance, you can do so. There may also be other estate planning ideas and techniques that can reduce taxes or preserve wealth.
We are happy to explain those that could work in your circumstances and offer a free one-hour advice session to help you with that. If you would like an article about the dynasty trust and desire the advice session, please check off on the attached coupon.