Texas families who have accrued significant wealth will want to take steps to ensure that their heirs retain as much of it as possible. The depletion of an estate is one of the biggest concerns that these families will have, so strategies to preserve assets, such as a dynasty trust are a wise consideration. Understanding how they work and other important facts about these devices is the first step toward deciding if it fits into an individual’s estate planning strategy.
Because of the overhaul of the tax code, those with significant wealth are seeking strategies to retain as much of that wealth as they can. The benefits of a dynasty trust are linked to this new tax template. A dynasty trust does not expire. It contrasts from other trusts where the trustee holds the assets to benefit others.
The popularity of dynasty trusts has grown since the amount that can be passed on to heirs without facing estate or gift taxes has doubled. These tax rates are guaranteed until 2025, providing people with time to pass their wealth to heirs without concerns about taxes. It also gives the testator control over how their money is spent. Trusts, in general, shield assets from creditors and previous spouses. A dynasty trust smooths the process, leaving assets to grandchildren and great-grandchildren, as well as children.
Most assets can be placed in the trust and it can be formulated in such a way that a certain amount will go to every generation of heirs. The remainder will be able to grow with no concern about estate or gift taxes. Until the person sells the assets, there will not be a capital gains tax.
When thinking about a dynasty trust or any other estate planning strategy, it is critical to have legal assistance from a law firm that understands these issues and knows how best to serve clients’ wants and needs. Before taking another step, it is imperative to speak to lawyers who can assist with trusts to take care of beneficiaries.