Georgia residents who have significant wealth may want to consider using a dynasty trust as part of their estate plan. A dynasty trust is unlike the majority of other types of trusts in that it does not expire. It can be opened in a select number of states.
Dynasty trusts are experiencing a resurgence in popularity due to the increased amounts money that can be left to heirs without being assessed gift and estate taxes. However, because the increased thresholds are valid only until 2025, there is a limited window to pass on the additional wealth to heirs free of tax and have the necessary legal devices in place to ensure that the inheritances are managed according to the wishes of the grantor.
The use of trusts is ideal for individuals who want to protect assets intended for their heirs from former spouses or creditors that the heirs may owe. The grantors are able to place stipulations on how the money should be distributed or spent. For example, the assets placed in the trust may be earmarked to pay for the college expenses of grandchildren.
Individuals can place stocks, cash and other types of assets into a dynasty trust. They can structure the trust so that only a portion of the proceeds of the trust is distributed to each generation, allowing the rest of the funds to accumulate without being assessed gift or estate taxes. Taxes will typically have to be paid on gains and income; however, no capital-gains taxes will be assessed until the assets have been sold.
An estate planning attorney may advise clients on which types of trusts may be most appropriate for an estate plan. The attorney is responsible for considering a client’s assets and goals before making a recommendation.