Retirement & Financial Planning Report

A solid estate plan might include transferring part of your wealth into an irrevocable trust. Once assets are in such a trust they’re out of your taxable estate; they’re also out of reach of creditors as long as no fraud was intended.


Going a step further, irrevocable trusts can become “dynasty trusts.” Such trusts can provide for your descendants as well as yourself. A dynasty trust offers many advantages. It:

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  • Can keep assets out of the reach of future creditors, claimants, divorcing in-laws, and so on.

  • Can reduce estate taxes. Assets that are out of the reach of your creditors are outside of your taxable estate, as well.

  • Promote wealth accumulation. Assets transferred into the trust can be invested and may grow to prodigious amounts over the long term. Indeed, one trust company advertises that $1 million will build to $800 million . . . for your great-grandchildren.

  • Can be a taxpayer. In some situations it may pay to have income taxed in the trust at lower rates than would be paid by you or your family members.

  • Can serve as a landlord. If the trust has the right provisions it can own one or more real estate properties, for use by the trust beneficiaries at little or no cost.

  • Can serve as a banker. The trustee can be given the power to lend money to the beneficiaries for certain purposes, such as starting a business.

  • Can help deal with special situations in your family, now or in the future. If one of your family members needs extra care, the trustee can ensure that beneficiary’s well-being. At the same time, it can protect vulnerable family members from predators or from squandering accumulated wealth.

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  • Avoids probate. Assets owned by the trust won’t be subject to the time and expense of probate at the death of you or your spouse.

    Is private. While your will must be made public, provisions in trust documents can be kept secret.

  • Can provide seamless continuity in case of incapacity. If you, your spouse, or another loved one can no longer manage his or her own affairs, trust assets will be preserved. They’ll be managed by a trustee or a successor for the benefit of the family member who has become incompetent.

In short, dynasty trusts deserve a close look.