Dynasty Trust Attorney

Dynasty Trust | Legacy Trust Attorney

HESS-VERDON IS YOUR #1 SOUTHERN CALIFORNIA TRUST & ESTATE LAW FIRM

What is a dynasty trust? 

Recently in 2018 GST tax exemptions got doubled from $5,490,000 to $11,180,000 per person and $22,360,000 for married couples. The exemption is scheduled to end in 2026.

Many wealthy people channel their wealth into dynasty trusts to guard their wealth against future estate transfer taxes. A dynasty trust is an irrevocable trust designed to live beyond the grantor’s lifetime (you) and the primary beneficiaries that were alive when the trust was created. California laws allow the legacy trust to live for 90 years, but it’s a thousand years for Wyoming. The primary beneficiaries in a dynasty trust are your children and grandchildren.

Taking care of grandchildren

If you have money and foresight, planning your estate for the benefit of your coming generation is easy. A trust lawyer and accountant are the people you need to make your current blessings mean something to your family line’s future people.

In many ways, even when you are long gone, your wealth gets responsibly managed per the rules you created when you were still alive.

Tax-free estate transfer

When setting up a dynasty trust, the immediate beneficiaries are your children. After your last child passes away, your grandchildren become the beneficiaries. After that, it’s your grandchildren, and it goes on and on, tax-free.

For the case of traditional trusts, the whole arrangement sunsets 21 years after the death of your child or grandchild. The old rule against perpetuities meant that Trusts could not live long after the last beneficiary’s death, who was alive when it was created.

You create your rules. The trustee executes them.

After you set up a dynasty trust and appoint a trustee, you can set specific rules for how you want the money to be managed. However, once the funding period ends, the assets in the trust are not counted as part of your estate. Neither you nor your beneficiaries will be able to change the trust’s terms.

Tax exemptions

The assets transferred to your children and their children’s children are exempt from the gift, GSST, and estate taxes. However, if the transferred value is more than a set limit at a given time, that may trigger taxes. In 2020 , the limit is $11,180,000 per person and $22,360,000 for married couples. This tax exemption limit may be lowered or raised in future years by an act of Congress.

Dynasty trust pros and cons 

There are many benefits of a dynasty trust without many caveats.

Asset management

A dynasty trust manages your wealth for many years to come, exactly how you would have done it in person because you create specific rules for that. This can be very helpful if your children are young or if you doubt their financial shrewdness.

Financial wellness for future generations

You can use this as a vehicle to financially provide for the needs of your future generation. A dynasty trust will ensure that a grandson gets the best education, healthcare, and nutrition, come recession or boom.

Spend money wisely

The beneficiaries are not in charge of the money; the trustee is. The trustee invests it so that it grows throughout the years. Plus, you can instruct the trustee to consider the stated beneficiaries’ financial wellness during distribution to save money for needy beneficiaries down your family line.

Asset protection from creditors and litigators

Assets in a dynasty trust are not considered part of your estate. They cannot be touched by your creditors or your beneficiaries’ creditors. They cannot be touched during lawsuits that affect you or your heirs, whether it’s a divorce case or a personal injury lawsuit.

Lower estate taxes

Once you move funds and assets into a dynasty trust, it reduces the size of your estate. This is a smart money move that drastically reduces or eliminates the estate taxes you owe Uncle Sam when you die. All future transfers will benefit from the same. If a hundred years from now, the same exemption rules apply, your unmarried grandchild can get $11.8 million from your estate without paying any taxes.

The major caveat to dynasty trust is the income tax. A dynasty trust starts as a grantor’s trust, so you should pay income tax at your current tax rate. To limit this tax burden, you can set up a dynasty trust that doesn’t pay a taxable income.

Setting up a dynasty trust is putting your stamp on the future, leaving a legacy, and taking care of your children’s families and their families’ families. A trust attorney in California can help to set up a trust that accomplishes your true intentions many years from now. Search out a Dynasty Trust Attorney, i.e., an estate planning attorney right away to protect your financial legacy.