When people draft an estate plan, they are typically thinking about how to provide for spouses, children and grandchildren after their passing. However, it is possible to go a step further and include provisions in estate planning that can benefit many generations for years to come. New Jersey residents who wish to leave a lasting legacy may want to take a closer look at dynasty planning, which often includes having an irrevocable trust.
The goal of dynasty planning is to ensure that future generations have a good relationship with money. However, it is not just monetary assets that get passed down, but fundamental values and goals. Dynasty planning is typically accomplished through an irrevocable trust with built-in dynasty provisions, which allows the trust to continue indefinitely. If this trust is set up properly, it can protect assets-real estate, business and life insurance funds, among others-from federal estate taxes.
An irrevocable trust of this nature is typically funded through gifting. With the new estate tax laws now in place, couples can gift up to $10.5 million this year without taxes. Trustees must also be established for a dynasty trust. Those who choose to set up a dynasty trust often leave a statement for trustees through the generations. A statement usually provides detailed instructions on how to handle family assets and encourage family values.
A dynasty trust allows assets to grow over time, but more importantly, it imparts the wisdom and personal values of the person leaving behind his or her legacy. The estate tax legislation makes this a particularly ideal time to set up such a trust. New Jersey residents may want to consider this along with their other estate planning options.
Source: deseretnews.com, “Dynasty estate planning helps families have a positive relationship with money,” Richard Bloomfield, Feb. 12, 2013