Dynasty Trusts: Keeping Your Fortune in the Family
With a greater demand to keep wealth in the family, states have cleared the path for dynasty trusts. Dynasty trusts are a way for individuals to ensure that succeeding generations of descendants have access to their wealth with as little tax consequences as possible. In theory, dynasty trusts could potentially last forever.
Among the states that have done away with the rule against perpetuities is Florida, which has even gone a step further by creating legislation that is friendly toward these types of trusts. Trust-makers are offered tax breaks and a great deal of flexibility, including protection in the even of a beneficiary’s divorce or indebtedness.
One of the main incentives for creating a dynasty trust is that it offers your heirs huge tax breaks in managing their money. Whereas money that was continuously bequeathed by future generations would have estate taxes levied on it each time, dynasty trusts are subject to the federal gift/estate tax just once. This means that, even though future generations will have access to this money, it will never be taxed again.
Another potential advantage of dynasty trusts is that it gives the creator a great deal of control over the trust, even well past his or her death. That person has the right to decide who will benefit from the trust and can create specific rules as to how and when the trust can be accessed. The important thing to remember about dynasty trusts is that they are irrevocable. Once you set the terms of one, you can’t change your mind, nor can future generations alter the terms of the trust.
If you have questions about creating a dynasty trust or other type of trust, speak with the experienced estate planning lawyers at the Charles Law Office in Florida.