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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