Dynasty Trusts

What is a Dynasty Trust?

In Estate Planning, a Dynasty Trust is an Irrevocable Trust incorporated into a Will or Revocable Living Trust designed never to end, but instead continue perpetually providing for descendants. A Dynasty Trust may also be included within other Irrevocable Trusts, such as Irrevocable Life Insurance Trusts and Disclaimer Trusts.

What is the Purpose of a Dynasty Trust?

A Dynasty Trust shelters the trust assets over generations from death taxes as well as the beneficiaries’ divorces and creditors. A Dynasty Trust can contain Special Needs Trust language, so a recipient is not excluded from needs-based government programs. If a beneficiary cannot be trusted to manage their money, a Dynasty Trust can be designed to protect the recipient from themselves. It is an excellent device to keep assets within the family. If developed and managed correctly, a Dynasty Trust may also be a significant tool to avoid state income taxes.

Example: Father’s Will divides his assets into shares down his bloodline which, at his death, is two equal shares one for Son and one for Daughter. At Father’s death Son is being sued. If drafted correctly, the Dynasty Trust shelters the inheritance from Son’s creditors. At Father’s death Daughter is divorcing. If written correctly, the Dynasty Trust shelters the inheritance from Daughter’s spouse.

Example: Using the facts from the prior example, Son dies soon after Father survived by his three children. The Dynasty Trust divides the remaining trust assets into three equal shares, one for each of Son’s children, and the Dynasty Trust continues.

Typical Estate Questions About Dynasty Trusts:

Here are some questions clients, beneficiaries, and Trustees ask:

What is the maximum amount of time a Dynasty Trust can be open?

Each state has rules dictating how long a Dynasty Trust may last. Several states, such as Pennsylvania and New Jersey have no time limit. Dynasty Trusts can last forever in these states.

Can I set an end date for a Dynasty Trust?

Yes, For example, you can say the Dynasty Trusts end at a specified date or the death of the last grandchild.

Do new children born or adopted by descendants get added automatically to a Dynasty Trust?

You can include or exclude anyone from a Dynasty Trust.

Does a Dynasty Trust have to include only family members?

No, you can include anyone. Though, as the term indicates, most people limit beneficiaries to their descendants.

Can a charity also be a beneficiary of a Dynasty Trust?

You can incorporate a charity into a Dynasty Trust. For example, you could say that each Beneficiary’s death, 10% of the trust’s assets pass to Penn State.

Reasonable Prices | Years of Experience | We Make Trusts and Estate Planning Easier

If you have any questions about Dynasty Trusts or any other estate planning topics, please contact us to schedule a free consultation. For more than two decades Klenk Law has focused only on Estate Law. We’ve seen it all, and this experience allows us to explain complex estate law and planning techniques clearly and concisely. We make it easy for you to understand Dynasty Trusts and Estate Planning so you can make the best decisions for yourself and your family.

Peter Klenk is the founding member of Klenk Law, a seven attorney boutique estate planning law firm. We serve clients in Pennsylvania, New Jersey, New York, Minnesota and Florida. Peter Klenk received his Masters in Taxation LL.M. from NYU Law School and his J.D. from the University of Minnesota Law School. He served his country in the Navy JAGC during Desert Storm. Easy to talk to, feel free to call Peter for an appointment. We will make the process as easy as possible!

Free Consultation

Client Review

"I worked for Peter Klenk for 4 wonderful years. I can’t speak highly enough of everyone at the firm. Everyone truly cares about their clients and has a strong sense of responsibility to get things done right. I would highly recommend Klenk Law!"
Flora Novick
Client Review

Bill

I met Peter soon after he started his practice in Philadelphia, PA. He and his team have always been there for me and my various inquiries throughout my life-changing events, corporate relocations. I have lived in various cities throughout the nation, I have never had a problem in contacting Peter or a member of his team. He and his office responds quickly and returns calls to me to fulfill my requests for information or to revise my estate needs while posing relevant thought-provoking questions that I need to consider to secure my future. One of Peter's best qualities is his ability to answer clients complicated questions in a simple way to ensure comprehension.

A Google User

Peter is a model attorney who puts his clients first at all costs. His extensive expertise in estate planning and tax planning was a great comfort as we began, and have expanded, our family. He is very thoughtful, generous, and quick witted. His approach towards his business has been an inspiration to his peer group, and his zest for life is extremely infectious. Without reservation, I highly recommend Peter as trusted and cherished counsel

We are a Veteran Owned Business, providing 20% discounts for Veterans, First Responders, Elementary and High School teachers. Please contact us to set up a phone or Zoom meeting. Taking care of you and your family, It's What We Do!

Dynasty Trusts: Everything You Need to Know