Dynasty Trusts Can Protect Many Future Generations of Loved Ones

Dynasty Trusts Can Protect Many Future Generations of Loved OnesAlthough a key objective of constructing an estate plan is to provide an effective procedure for leaving one’s wealth to one’s loved ones, such as their kids, sometimes a more long-term view is appropriate. Many people wish for their financial legacy to help not just their children but also their grandchildren, great-grandchildren, and successive generations. Although a simple will can provide a means of leaving one’s estate to one’s children or other living beneficiaries, it is inadequate for ensuring that your legacy will continue to benefit future generations within your family.

A dynasty trust may constitute a more effective estate planning mechanism for ensuring that the legacy that you create benefits multiple future generations. This estate planning tool can be used to shield assets passed to your loved one’s from potential financial obligations of your beneficiaries that include ex-spouse property and support claims, personal injury judgments, creditor claims so that the funds continue to be available for successive generations. A dynasty trust cannot only protect assets from these types of claims but also reduce estate tax liability and prevent a family business from being sold so that future family members cannot continue to participate in the business.

Because the function of a dynasty trust is to ensure the availability of the assets for multiple generations, the law allows such trusts to be created for a very long duration of time. Since a dynasty trust cannot be accessed by creditors or others who are not designated beneficiaries, it can essentially last forever provided the funds are not exhausted. In most states, the dynasty trust cannot necessarily last forever in terms of protecting assets from creditors, but it can last hundreds of years. The long duration of a dynasty trust means that in practical terms the trust essentially lasts forever because few people actually plan hundreds of years in advance.

Beneficiary Characteristics to Consider When Deciding on a Trust

The above information is designed solely to illustrate general principles of law, and does not constitute a specific legal opinion on individual cases. We suggest that you contact experienced legal counsel for a specific opinion tailored to your individual circumstances.

If you have questions about asset protection of a dynasty trust, our New Mexico Estate Planning Attorneys at Life Leaf Legal Group, PC offer a free consultation in our centrally located offices in Santa Fe and Albuquerque so that we can discuss your specific situation. Call us today to schedule your free consultation at (505) 856-3591 to learn about your rights and options.

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