J. Kelly Kennedy, Attorney/CPA, PLLC

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Many generations of beneficiaries can live off of a dynasty trust

Trust instruments can be helpful for people who want to maximize the efficiency of their estate plan. A variety of different trusts are available, and an experienced trust administration attorney can advise on which ones may be a good fit based upon a person's specific life and family circumstances. One kind of trust that could be useful for some people in Polk County is known as a "dynasty trust."

A dynasty trust provides a legal mechanism by which a person, or couple, can pass down their assets to multiple generations of beneficiaries. Unlike an ordinary trust, through which a person will usually leave their assets to living beneficiaries, a dynasty trust allows a person to leave their assets to unborn beneficiaries.

The dynasty trust makes the most sense for people who have a net worth that is higher than the federal estate tax threshold, which is $5.45 million for an individual or $10.9 million for couples. This is because the dynasty trust allows the assets to pass from generation to generation, in perpetuity, without federal estate taxes diminishing the family's assets that are in the trust. Another benefit of the dynasty trust is that it protects each generation from creditors who might otherwise be able to make successful claims against the assets.

Dynasty trusts are not for everyone because they only make sense for a small percentage of Floridians. However, this is just one example of a special type of trust that can greatly benefit people who have specific estate planning needs. Individuals with more modest assets may benefit from incorporating other types of trusts into a plan for the distribution of their assets.

Source: The Wall Street Journal, "Dynasty Trusts Make Sense for Certain Wealthy Families," Mark A. Oller, Accessed on Aug. 23, 2016

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