The purpose of the Dynasty Trust is to provide for future generations and to minimize taxes on the wealth passed to those generations. Generally speaking, wealth is subject to taxes each time it passes to another generation. The Dynasty Trust is designed to skip some of these transfers and taxes. 

 

The donor establishes a Dynasty Trust by making a generation-skipping gift and by completing the necessary legal work. At the donor's death, the trust pays annual income to the next generation. At the death of that generation, the trust pays annual income to the next generation, and so on. 

 

Example:

First, let's assume matrilineal descent. The grandmother establishes a Dynasty Trust. At her death, the trust pays annual income to her daughter. At the daughter's death, the trust pays annual income to the granddaughter, and so on.

 

See the following topics for more information: 

 

• Dynasty Trust Annual Income
• Dynasty Trust Limit

 

 

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