The type of trust you choose to establish may depend on your main points of concern and the outcome you wish to get out of it. For example, your top priority may be to preserve your property and assets enough to last several generations, even for generations of grandchildren and great-grandchildren you have not met yet. In this case, you may strongly consider the option of a dynasty trust. Without further ado, please read on to discover how a dynasty trust is supposed to work and benefit your future generations and how a seasoned Broward County trust lawyer at The Probate Lawyers can help you establish one if they see fit.
What should I know about a dynasty trust?
First of all, a dynasty trust is an irrevocable trust type. So, an irrevocable trust is a legal arrangement where you (i.e., the grantor) relinquish control over the property and assets you choose to fund the trust with. In this way, you remove this property and assets from your taxable estate. This means that you may reduce estate taxes that may affect your loved ones (i.e., the beneficiaries) when it is time for them to inherit the trust.
Therefore, a dynasty trust is a long-term legal arrangement where you may pass your property and assets through multiple generations without incurring transfer taxes. In other words, your wealth may last for so long because it curbs the Internal Revenue Service’s (IRS) hefty generation-skipping transfer (GST) tax of 40 percent, along with other imposed federal estate taxes and gift taxes. At the same time, these funds may stretch out even more because this trust type is designed to compound its assets over time.
How does a dynasty trust benefit future generations?
There are many other benefits to a dynasty trust besides its avoidance of GST tax and other federal estate and gift taxes. Most of them have to do with continually building and preserving funds for the sake of future generations. More specific examples read as follows:
- Your property and assets used to fund this trust type may be protected from creditors’ collections or property division proceedings in a divorce.
- You may hold your life insurance policy within this trust type so that the death benefit may be paid into this trust tax-free.
- You may still maintain a sense of control with the provisions you set for this trust type, working in your beneficiaries’ best interests:
- You may control how, when, and in what manner your beneficiaries are to inherit your trust’s funds.
- You may create incentives for your beneficiaries to meet before they can inherit your trust’s funds.
- You may leave a portion of your trust’s funds for your favorite charitable organization.
Speaking with a lawyer is never a bad idea, even if you are unsure whether you require legal advice to set up your estate plan just yet. So when in doubt, please schedule an initial consultation with a competent Broward County estate lawyer from The Probate Lawyers today.
