Donald M. Thompson - Wills, Trusts, and Estate Planning


Dynasty Trust

This is a trust that is held for the benefit of successive generations for a very long time. The trustee holds the assets with a direction to pay the income to children, then grandchildren, then great grandchildren and so on.

Since each person only has a life interest in the trust the trust assets would not be in his or her taxable estate. The trust would be subject to generation-skipping taxes so the value of such trusts on creation is usually limited to the exemption under the generation-skipping tax.

In the past the duration of a trust was limited by the rule against perpetuities. A trust could last only so long as a life in being upon creation of the trust plus 21 years. The "life in being" refers to all the current beneficiaries. Certain states now allow you to opt out of this rule.

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Donald M. Thompson * 55 W. Monroe #3950; Chicago, IL 60603
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