If you have substantial assets, it’s essential to have reliable estate planning on how you will protect those assets and pass them to future generations. With the right planning, you can ensure your family will be provided for for decades.

A Laguna Niguel estate planning attorney can guide you through the process of establishing personal assets and dynasty trust that will keep assets in your family for several generations. 

Here are the basics of establishing a trust that will keep essential assets in your family even after you pass away. 

What are Personal Assets and Dynasty Trust?

A dynasty trust is a long-term trust designed to pass wealth down through several generations—while avoiding the taxes that usually come up during the transfer of wealth. 

Unlike other trusts, there are no time limits on this type of trust. With careful drafting, you can pass money down within your family through several generations. As long as your assets remain in the trust, the beneficiaries will reap the benefits. Most other trusts end within 21 years of the trustor’s death.

Irrevocable Dynasty Trusts

Specifically-designed dynasty trusts must be irrevocable trusts, meaning the terms cannot be changed and that the beneficiaries do not legally own the assets contained in the trust. That limits your control over those assets and it may not be something you want during your lifetime.

However, you can add a provision to your living revocable trust to turn it into a dynasty trust upon your death. With a knowledgeable attorney, it’s possible to add many useful provisions to your estate planning documents.

Because the trust will become irrevocable and future generations will not be able to change it, it’s essential to make sure that the terms are set carefully and deliberately by your attorney. 

It’s also known as a perpetual trust because it has no end date and instead continues to exist as long as there are assets in the trust. You can create one of these trusts during your life, or have it spring into existence upon your death.

Personal assets trusts are designed to protect assets from ex-spouses, creditors, or even your beneficiaries themselves. You can place limitations on the use of trusts to prevent excessive spending and other concerns.

How Do Personal Assets and Dynasty Trust Protect Your Assets?

A dynasty trust is designed to protect your taxable estate from all the potential losses that could occur. You can avoid estate taxes in perpetuity with a carefully drafted trust. 

Trust income generated within one of these trusts can still be taxed, but there are options like tax-free municipal bonds that still allow for substantial growth over time. 

This type of trust is designed to protect your assets so future beneficiaries can access them without leaving those assets vulnerable. Without these protections, assets could be lost to creditors, judgments, and divorce.

An Orange County Trust Attorney  can help you set the terms of your trust according to your specific concerns. Every trust is different, which is why you need an experienced attorney’s input and knowledge of the legal field to help you establish one suited to your family and financial situation. 

How Can You Add Limitations to a Trust?

With personal assets held in a dynasty trust, you can decide how much control your beneficiaries will have over their share of their inheritance. As the grantor, you have a lot of control, and your descendants will have to abide by the rules you set. 

This lack of flexibility can present potential problems down the line. That’s why it’s important to meet with a lawyer who can provide insight into how any stipulations set in the trust can affect your grandchildren or even great-grandchildren.

Your Children as Trustees

You can name children as trustees of their own shares, giving them total control over their assets to use as they wish. If your children are young, or you have concerns about how they might use their shares, you can also delay giving them control over their shares.

Alternatively, you can name a third party as trustee in order to manage your assets until your children reach a certain age, or even for their entire lives. If you have concerns about reckless spending or loss of assets through a divorce, this is a good option to consider.

You can stipulate that a trustee will be able to disburse funds to the beneficiaries for specific purposes, such as education, or simply limit disbursements until the beneficiary reaches a certain age that you feel is responsible enough to handle more access to their inheritance.

A trustee can manage assets for your children, help them make smart decisions on investments, distribute benefits when necessary, and much more. It’s essential to find a reliable trustee, whether you choose a legal professional, trust company, or even a loved one to fill this role.

How Does a Dynasty Trust Protect Your Beneficiaries’ Interests?

A dynasty trust protects the interests of the beneficiaries, because when assets are secured in a trust, they’re not officially under any beneficiary’s name. While that can limit their control in some situations, it also protects them from claims and major losses. 

For one, it means that the government may not charge estate taxes on the assets imposed after a death in the family. Instead, the money will transfer to the beneficiaries tax free (up to the current Federal Estate Tax Exemption amount). Your children can also borrow funds against the trust and enjoy limited exposure of the assets to creditors.

A dynasty trust is another way to ensure that the assets stay within your family. During a divorce, it’s possible to lose unprotected assets to a former spouse. The dynasty trust has legal ownership of your assets instead of individuals having legal ownership,  protecting those assets from loss due to a lawsuit, personal debt, or divorce.

Choose the Right Estate Planning for Your Needs

Our law office has experience in the field of dynasty trusts and estate planning.

We offer free consultations to help you find the best path forward for your family and financial needs. To get started creating a trust that will protect your family’s finances for decades, contact us at Parker Law Offices today at (949) 385-3130.

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