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Dynasty Trust
A dynasty trust is a device through which all of a person’s assets can be passed to many future generations, ensuring that many people get a share of it. Compare this to a standard will, which might leave all of the grantor’s property to a few people, who might blow through it in a single generation. A dynasty trust, however, can help ensure that countless future generations benefit from the life’s work of the grantor. Every transfer is exempt from transfer taxes.
The dynasty trust is irrevocable, and once it is created, it cannot be modified by the grantor. In theory, it can last forever, as long as the grantor has descendents. Of the states that allow dynasty trusts, however, some have imposed time limits. For example, in Alaska, a dynasty trust cannot last for more than 1,000 years. For most purposes, this should be more than long enough.
Some states still retain the common-law rule against perpetuities, which, in this context, would prevent any trust from lasting longer than 21 years after the death of the last potential beneficiary alive at the time the trust was created. However, in states that have abolished this rule (including Alaska, Delaware, Maryland, South Dakota, Wisconsin, and Idaho), a dynasty trust can last forever, or for a period of hundreds of years.
A dynasty trust can also protect the grantor’s assets from creditors, so long as they remain with the beneficiaries of the trust.
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