A dynasty trust is a trust that holds assets from which future generations will benefit. This has important tax consequences because assets placed into a dynasty trust are subject to the federal estate/gift tax only once. This means that the assets can flow down to further generations without future estate taxes.
Another benefit of the dynasty trust is that it can help reduce the effects of the generation skipping transfer tax (GST). The GST exists because people used to leave money directly to their grandchildren in an effort to avoid the double estate tax of the previous example. The GST can take as much as 55 percent of the money passed down to grandchildren in excess of $1,000,000. If the dynasty trust is created using that $1,000,000 dollar exemption, then it can sizably reduce the burden of transfer taxes on future generations.
To learn more about Dynasty Trusts, click on the link below and read this blog in its entirety;
http://www.dgaalaw.com/dgaablawg/the-dynasty-trust-a-new-method-of-creating-an-inheritance
If you believe that your estate planning could benefit from the use of a dynasty trust, contact a one of our attorneys today. (847) 934-6000.
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