New Jersey trust attorney Christine Matus (https://matuslaw.com/4-things-know-dynasty-trusts/) of The Matus Law Group has recently provided an in-depth analysis of dynasty trusts, highlighting their significance in estate planning. In the article, Matus discusses the intricate aspects of these trusts and their potential benefits for individuals aiming to preserve wealth across generations.
The New Jersey trust attorney explains that a dynasty trust, also known as a perpetual trust, is designed to transfer wealth across multiple generations while leveraging certain tax advantages. Maintaining assets within the trust can allow families to potentially bypass gift, estate, and generation-skipping transfer taxes that might otherwise apply. This structure allows for the preservation of wealth beyond the lifetime of the person who established it.
According to New Jersey trust attorney Christine Matus, one of the primary advantages of a dynasty trust is its capacity to provide tax benefits. Under the Tax Cuts and Jobs Act, individuals can transfer up to $13.61 million ($27.22 million for married couples) into such a trust without incurring federal estate, gift, or generation-skipping transfer taxes, as a lifetime exemption. This allows for the preservation of wealth beyond the lifetime of the person who established it. Additionally, because a dynasty trust holds the assets rather than the beneficiaries, it offers protection against claims from creditors or division in the event of a divorce, as the assets are not considered part of the beneficiaries’ estates.
Matus emphasizes that dynasty trusts are not exclusively for large estates. The New Jersey trust attorney notes that even smaller estates, those with less than a million dollars in assets, can justify dynasty trust protection. A reduced dynasty trust protection can be provided for those who would like to preserve portions of their estate for future generations. This flexibility makes dynasty trusts a viable option for a broader range of individuals seeking to secure their family's financial future.
However, it's important to recognize that dynasty trusts don't last forever in some states. While certain states place no limitations on trust duration, allowing the trust to continue passing from generation to generation indefinitely, others have specific restrictions. For instance, states such as Alaska, Maryland, South Dakota, Idaho, and Wisconsin have done away with laws against perpetuities, requiring the trust to end 21 years after the death of the last known beneficiary. Understanding these state-specific regulations is crucial when establishing a dynasty trust.
Selecting the appropriate trustee is another critical aspect of setting up a dynasty trust. Given the trust's intended longevity, Matus advises that many choose to designate a corporate trustee, such as a bank or an independent trust company, who will be able to serve as trustee for the entire lifetime of the trust. This approach facilitates consistent and professional management of the trust's assets over time.
Incorporating charitable giving into a dynasty trust is also a possibility. Matus points out that many people like to gift a portion of their assets to charity upon their passing. This can also be done in a dynasty trust. Incorporating a charity into a dynasty trust is relatively simple. For example, individuals can have their attorney include a provision that states that with every beneficiary’s passing, 20% of the trust’s assets get donated to the charity of their choice. This feature allows individuals to leave a lasting philanthropic legacy alongside their familial one.
While dynasty trusts offer numerous benefits, there are potential disadvantages to consider. Matus notes that because dynasty trusts last through several lifetimes, a corporation is usually named as the trustee, which is most often accompanied by substantial administrative fees. Additionally, the amount of wealth decreases with each generation, and the longer the trust lasts, the less the beneficiaries are related to the decedent. These factors underscore the importance of careful planning and consultation with a knowledgeable trust attorney when considering a dynasty trust.
For those interested in establishing a dynasty trust or exploring other estate planning options, Christine Matus and The Matus Law Group can offer experienced legal guidance. Their team can assist in creating a trust that aligns with financial goals and family needs, helping ensure that assets are protected and effectively managed for future generations.
Understanding dynasty trusts is essential for individuals aiming to preserve and grow their wealth across generations. With the support of a qualified New Jersey trust attorney such as Christine Matus, they can manage the legal aspects confidently and make informed decisions about their estate planning strategy.
About The Matus Law Group:
The Matus Law Group is a New Jersey-based law firm well-versed in estate planning, trust administration, and related legal services. Led by attorney Christine Matus, the firm is dedicated to helping clients protect their assets and plan for the future with personalized legal solutions.
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