During transferring their wealth to the next generation, many people set up trusts rather than gifting the assets to their children/grandchildren right away. This method is chosen because of its various advantages, including asset protection, tax planning, and maintaining control over the assets.

What is a dynasty trust?

A dynasty trust is a wealth transfer tool that holds much popularity because it allows the transfer of wealth from generation to generation without triggering transfer taxation tax such as gift, estate, or generation-skipping tax. It is an irrevocable trust with no specific termination date and lasts as long as there are assets in it.

Why use a dynasty trust?

By allocating generation-skipping transfer tax exemption to the assets transferred to the dynasty trust and drafting the trusts so that the assets are not included in the estate of the beneficiaries at the time of their death, the trust assets can avoid taxation. The dynasty trust is used to keep the wealth available for each generation without being reduced by transfer taxes.

Who can benefit from this trust?

Individuals with taxable estates can benefit from this trust as it protects their assets against transfer taxes. Family business owners are great candidates for dynasty trust planning.

How does it help the beneficiary?

A properly drafted dynasty trust provides asset protection to the beneficiary so that assets in the trust are outside the scope of the beneficiary’s creditors and not subject to division upon divorce. The trusts are available for the beneficiary to use but controlling the protection is not permitted. These trusts are a lot better than any insurance policy.

When can a dynasty trust be created?

It can be created at the time of life or death. Individuals who have enough core capital to sustain their lifestyle throughout their lifetime are the candidates who get to enjoy transferable tax exemptions during life.

For more information visit: https://www.councilfinancial.com/