Mullen and Iannarone, P.C.
Serving the legal needs of corporations, individuals and
families of Suffolk County since 1972

The benefits of a dynasty trust in estate planning

Families in New York with significant assets frequently use trusts to pass down wealth. These trusts have many advantages related to tax planning and asset control. When a grantor wants to make sure money is passed down even further, perhaps to grandchildren and beyond, they may want to consider using a dynasty trust. This type of trust is designed to last more than one generation past the grantor. It has two unique benefits for multi-generational families.

A dynasty trust helps keep wealth out of the transfer tax system so that beneficiaries can keep as much of their inherited wealth as possible. If a dynasty trust were not in place, assets would be subject to gift and estate taxes each time they passed through one generation to the next. This way, beneficiaries can still benefit from their family's wealth without incurring the penalties of ownership.

A dynasty trust is often structured as a grantor trust, meaning the assets would not be subject to income taxes. This provides an additional layer of tax protection that allows the money to grow faster. In addition, the grantor paying taxes reduces the overall taxable assets when it comes time to calculating estate tax.

Families that strive to minimize inheritance tax for their heirs will find the dynasty trust a useful tool. It may be easier to set up this trust with the help of an estate planning attorney as well as certified accountants. They can discuss options with their clients so that all objectives are covered. It's the responsibility of an attorney to stay current on changes to the tax code and laws regarding trusts in order to protect the financial interests of a client.

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