Understanding The Benefits Of A Connecticut Dynasty Trust
Recent changes to Connecticut Estate Laws now make it easier to plan for your future legacy and generations of wealth down the line. A dynasty trust no longer has to close after ninety years. When properly administered, a Dynasty Trust can benefit several generations and continue to shield the trust assets and their growth from gift, estate and generation skipping taxes for the entire duration of the trust up to a maximum period of 800 years. But what exactly is a dynasty trust, and is it only a viable option for wealthy families? Why is it advantageous to a simple irrevocable trust?
What is a Dynasty Trust?
A dynasty trust is an irrevocable trust that outlives the settlor (person creating the trust) and is meant to pass on wealth for generations without incurring gift, inheritance or transfer taxes. While there are limits to how many assets a dynasty trust can hold without tax penalties, it is an extremely attractive option for settlors who desire to pass assets or real property on beyond the immediate generation to follow. It is a tool that can be utilized to ensure that grandchildren, great-grandchildren and beyond receive the benefits of the trust. A dynasty trust is truly one of the only methods that can guarantee future generations stand to benefit from your hard work and strategic legacy planning. The Connecticut Uniform Trust Code has now extended the length of irrevocable trusts from 90 to 800 years, making it possible for families seeking this option.
How is a Dynasty Trust Established?
A dynasty trust must be formed while the settlor is living and must be irrevocable (meaning the settlor cannot change the terms or have any control over the trust). The settlor can choose which assets, investments, stocks, securities or real property can be added to a trust. The settlor also nominates a trustee (and future trustees) to administer the trust. A trustee handles the administration of assets to beneficiaries in accordance with the trust agreement terms and any legal paperwork or procedural issues that arise. Because the dynasty trust will outlive its trustee, there is usually a clause added to the trust agreement giving the current trustee the option to nominate a future trustee. Usually, a substitute trustee is also listed in the event the first trustee cannot perform their duties. Any assets placed in the dynasty trust are not subject to transfer taxes, and creating the trust completely avoids probate as long as there are no remaining assets not held in it. The settlor also has the option to set terms on how assets are to be distributed, based on a beneficiary’s age, when they finish college, etc.
Contact Canton Trust & Estates Attorney Brian S. Karpe
If you want to leave something to future generations but are concerned about transfer, estate and inheritance taxes, there is no better option than a legacy trust. Canton estate planning attorney Brian Karpe can walk you through the benefits of establishing an irrevocable trust. He serves clients throughout Hartford County, and with a specialized degree in estate law, you can trust that you are in good hands. Call today to schedule a consultation.
Resource:
cga.ct.gov/current/pub/chap_802c.htm
