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Such trusts that can run for an unlimited term (i.e., those not limited by state laws against perpetuities), are often referred to as dynasty trusts. Using the generation-skipping tax exemption in this manner offers two important advantages: The trust will escape all transfer taxes when the children die and will pass tax-free to the grandchildren.
A dynasty trust is a trust designed to avoid or minimize estate taxes being applied to family wealth with each subsequent generation. [1] By holding assets in trust and making well-defined (or even no) distributions to beneficiaries at each generation, the assets of the trust are not subject to estate, gift or generation-skipping transfer tax (GST) taxes.
Most trusts would be subject to a generation-skipping tax after 25 years — at which point The Northern Trust Institute estimates your assets would have grown to be worth $46.08 million — but ...
Dynasty trust (also known as a 'generation-skipping trust'): A type of trust in which assets are passed down to the grantor's grandchildren, not the grantor's children. The children of the grantor never take title to the assets. This allows the grantor to avoid the estate taxes that would apply if the assets were transferred to their children ...
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Continue reading → The post Simple Trusts vs. Complex Trusts appeared first on SmartAsset Blog. A trust can be a useful estate planning tool, in addition to a will. You can use a trust to remove ...
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