A dynasty trust is a trust designed to hold assets for many generations. Most other trusts are designed so that the trust assets will be distributed to the beneficiaries at staggered ages. A dynasty trust, on the other hand, is drafted to encourage the trustee to hold as must of the assets in the trust for as long as possible. The beneficiaries are permitted to have some limited access to the trust property but they generally will not receive it outright.
It has been said that all good things must come to an end, but a dynasty trust may be an exemption. In the state of Tennessee, this type of trust allows substantial amounts of wealth to grow free of federal gift, estate and generation-skipping transfer taxes for up to 360 years, allowing many generations to benefit from your wealth. For more information on how a dynasty trust works, contact a Dynasty Trusts Lawyer in Franklin, TN. Our experienced Tennessee Dynasty Trusts Lawyer will give you all the details you want to know about such trusts. Call the Music City Estate Law at (615) 628-7775 to talk with a Franklin Dynasty Trusts Attorney.
How Trusts Avoid Estate Tax and Generation-Skipping Transfer Tax
The biggest advantage of a dynasty trust is that it can save your descendants a significant amount of money in estate taxes. The assets you put in the trust (plus any increase in their value over the years) are subject to federal gift/estate tax just once, when you transfer them to the trust. They are not taxed again, even though multiple generations benefit from them.
In contrast, if you simply left a large sum of money to your children (without a trust), it would be subject to the estate tax. And whatever they left to their children would be taxed again. If you tried to avoid one of those tax events by leaving assets directly to your grandchildren, the federal generation-skipping transfer tax could apply. (Keep in mind, that only large estates are subject to federal estate or generation-skipping transfer tax). If you are not sure how you can benefit from a dynasty trust, contact a Dynasty Trusts Lawyer in Davidson County. You can do that by calling (615) 628-7775 to schedule a consultation with one of our lawyers or attorneys.
Control and Lack of Flexibility
You have a lot of control over a dynasty trust- your descendants have little. This offers both advantages and disadvantages. You get to decide who your beneficiaries are and what rights they have. Typically, children are the first beneficiaries; after their deaths, the grandchildren are next in line.
You appoint a trustee to manage the money and spend it on beneficiaries’ needs according to the terms you set out in the trust. Those rules can be as detailed as you wish. You can also give the beneficiaries power to give away some of the trust assets or leave them to others at their own deaths.
Because dynasty trusts are irrevocable, you can’t change your mind later and your descendants can’t alter the terms of the trust when family or financial circumstances change.
Creating a Dynasty Trust
Dynasty trusts are complex and must be carefully prepared by an attorney who has experience with trusts, taxes and investments. It is important to make certain your assets are handled properly. Whether you’re looking to get in touch with a Brentwood Dynasty Trusts Attorney, a Memphis Dynasty Trusts Lawyer, a Dynasty Trusts Attorney in Williamson County, a Murfreesboro Dynasty Trusts Lawyer, a Dynasty Trusts Attorney in Rutherford County, a Dynasty Trusts Attorney in Knox County, a Dynasty Trusts Lawyer in Shelby County or a Knoxville Dynasty Trusts Lawyer, call (615) 628-7775 right away. Contact the Law Office of Justin M. Gilbert for guidance on setting up your Tennessee Dynasty Trust.