Scranton Dynasty Trusts Lawyer
Dynasty trusts are long-term trusts designed to pass wealth on through each generation without having to pay transfer taxes like estate, gift, or generation-skipping tax, provided the assets continuously remain in the trust. They earn their name based on the duration of the trust, as they can survive many years.
Current tax reform makes dynasty trusts more interesting to some investors since the amount that can be passed to heirs has been increased. There was also a rule that prohibited trusts from lasting a long time. Some states had rules that said a trust couldn’t last more than 21 years after the death of a beneficiary who was alive when the trust was initially created. Pennsylvania is one state where there is no time limit — a dynasty trust can last forever. You can specify an end date or state that the trust ends upon the death of the last grandchild, or it can remain in perpetuity.
Dynasty trusts are complex, and it’s important to speak with a knowledgeable Scranton dynasty trust lawyer who can advise you on the most up-to-date thresholds and terms of dynasty trusts.
Benefits of a Dynasty Trust
There can be a number of benefits to dynasty trusts. Some of these include:
Protection from Taxes: When a dynasty trust is properly set up and funded, the trust’s assets are exempt from estate taxes on the estates of all family members. In some situations, the dynasty trust can even help defer or avoid state and local taxes.
Promotion of Family Values: A well-designed dynasty trust can focus on passing down family values in addition to financial wealth. A trust creator can use it as a tool for “values-based” estate planning. It may include different incentives to influence beneficiaries to remain productive and not become a “trust fund” kid.
Protection from Creditors: This type of trust can protect the assets from any creditors of the trust’s beneficiaries. The reason is because the trust owns the property rather than the beneficiaries, so the creditors can’t touch any property that remains in the trust.
How Do You Get Property from a Dynasty Trust?
There are different ways a dynasty trust can be set up. A beneficiary can have maximum control over the property so that it appears there are no restrictions as to the use. However, it’s important to point out that the less restrictive the trust is and the more control a beneficiary has, the less protected the trust’s assets may be.
Many dynasty trusts opt to use a professional trustee who can help ensure there is no abuse of the family’s wealth. A professional trustee can put simple measures in place, or can opt for more complex procedures like a family council that allows the family to provide input into how the trust is administered without giving any one beneficiary too much control.
Retaining a Pennsylvania Estate Planning Attorney
If you have questions about dynasty trusts or other estate planning tools, contact the attorneys at Haggerty Hinton & Cosgrove, LLP at 570-354-5205 to schedule a consultation. Let one of our knowledgeable attorneys assist with all your estate planning needs.