Control Your Assets for Generations to Come With a Dynasty Trust
Dynasty trusts are trusts that can last for several generations, allowing the grantor of the trust to pass along money to subsequent generations without it being taxed at each step. Because of the incredible flexibility and control permitted in setting these trusts up, a grantor can be assured that the corpus will not be depleted either by taxes or their heirs. If you are the grantor of the trust you can control the assets for generations by leaving specific instructions with the trustee. If you do not want your grandchildren and their children and your future descendants to just kick back and collect money, the dynasty trust enables you to dictate how and when the beneficiaries can receive income.
Wealth “Control from the Grave”
This kind of “control from the grave” may not please everyone, but it is a good way to assure that your wealth provides for and encourages generations of productive descendants. In a typical dynasty trust a person transfers assets to a trustee who holds and invests the assets for the beneficiaries. As long as the assets stay in the trust they can pass from generation to generation without estate or generation skipping taxes. A Wyoming Dynasty Trust is not liable for any state income tax, nor does it pay any federal income tax to on assets distributed to beneficiaries.
Because of the Rule Against Perpetuities, Dynasty Trusts do not exist in many states. The rule has existed for centuries because the common law disfavored property being held forever in trust, so it was created to advance the marketability of property. The Rule acts to void any agreement which does not conclude 21 years after a life in being or one generation after those lives presently in being, plus 21 years. Because the Rule Against Perpetuities is state law, states have the option of relaxing or eliminating its constraints. While Wyoming has not abolished the Rule Against Perpetuities, it does allow Trusts to last one thousand (1,000) years. Because of this 1,000 year duration, the Wyoming Dynasty Trust exists as one of the most dynamic estate planning tools available today.
Wyoming Dynasty Trust
Wyoming Dynasty trusts not only provide extraordinary estate tax savings, they also offer the bonus of asset protection for the assets placed in trust. John D. Rockefeller believed that the secret of his success was to “own nothing and control everything.” This concept is at the heart of asset protection and a key tenant of Dynasty Trusts. The assets in a Dynasty Trust are protected because you don’t own them. The beneficiaries can enjoy the income from the trust assets without fear of losing them to a judgment creditor, your ex-spouse in a divorce, or medical bills and costs (outright distributions of wealth will likely make you ineligible for state or federal medical programs). Tax-free growth of assets combined with asset protection – what else could you ask for!
You can also take advantage of discounted gifting through the use of a Wyoming Close LLC or a Limited Partnership to fund your Wyoming Dynasty Trust. Because it is possible to limit the control of certain members in a Wyoming Close LLC and because limited partners by definition have no control over the assets of a limited partnership, it is possible to superfund your dynasty trust through the use of these entities and the discounts allowed by the IRS.
You do not have to live in Wyoming to set up a Dynasty Trust in Wyoming, you just need a trustee, or trust company, that is located in Wyoming. With Wyoming’s strong asset protection laws and lack of personal and corporate income tax, it is the perfect place to set up a Dynasty Trust.