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Understanding Potential Pros and Cons of Using Dynasty Trusts - Smith Debnam https://t.co/j9fJDDQiMe https://t.co/sTLv9n2FrQ
Understanding Potential Pros and Cons of Using Dynasty Trusts https://t.co/Jn0S7WZBMd
Wealthy individuals and families have long used different types of trusts to pass on their assets at death. Properly-structured trust instruments can eliminate the need for probate court and the publicity that comes with it while offering tax planning opportunities and a mechanism for the trust creator to exercise some control from beyond the grave. In states that allow for “dynasty” trusts, grantors have additional flexibility to provide for future generations and protect wealth from creditors.
A dynasty trust is essentially an irrevocable trust that can “live” beyond the lifetimes of the grantor and the initial trust beneficiaries. In North Carolina, a dynasty trust can exist in perpetuity, without being forced to pay assets to residuary beneficiaries and taxes to the IRS and the state government. Dynasty trusts can allow trust assets to be used for the benefit of several generations, providing support while keeping the investments and other holdings inside the trust and, importantly, outside the beneficiaries’ taxable estates.
Before creating and funding a dynasty trust, it is important to understand the potential benefits and considerations of this type of estate planning vehicle.
The following benefits make dynasty trusts appealing for many people:
There are also some potential drawbacks to using dynasty trusts that bear consideration before deciding on this approach:
There are other potential pros and cons of using dynasty trusts, so if it’s something you are considering, talk to an estate planning attorney who can help you evaluate whether this approach may make sense as an element of your plan. Contact our office to learn more and explore various strategies.
Andrew is a member of the firm's Trust and Estates practice area. He primarily represents clients in matters involving estate planning, estate administration, special needs law and elder law. Originally from Grand Haven, Michigan, Andrew attended the University of Michigan, graduating with a Bachelor of Arts degree in Political Science. He earned his J.D. from Michigan State University College of Law....LEARN MORE