Dynasty Trust's Annual Income

The donor and successive generations receive annual income from the Dynasty Trust. The annual earnings on the principle determine the amount of distributions the donor and heirs receive. Since the trust retains the principle, it is possible for the trust to continue for generations, hence the name Dynasty. However, most states set a limit on the length of time a Dynasty Trust can last. Consult your attorney about what your state laws require.

The Dynasty Trust can make investments to increase earnings. One of those investments is life insurance. The trust can purchase life insurance on the donor and members of his or her family. The trust pays the premiums and owns the policy. At the insured's death, the trust receives the insurance proceeds. The trustee may use these proceeds to purchase life insurance on other family members, make other investments, or increase the amount of the earnings distributed.