Shield generational wealth from taxation. A Washington DC dynasty trust is a perpetual trust created to pass wealth through generations without incurring transfer taxes.
Wow, the part about these trusts being irrevocable really stood out to me. It's such a complex financial mechanisim you explain so clearly. I'm curious, how do current regulations address the long-term, multi-generational impact on wealth distribution, especially with the "potentially forever" aspect?
The Rule Against Perpetuities (RAP) is amended at the state level, so your question has 50 answers. For instance, my research shows that South Dakota, Alaska, Ohio, Rhode Island, and Wisconsin all allow perpetual trusts, while Delaware offers perpetual duration for personal property held in trust, but strictly applies a 110-year period for real property interests. Wyoming, Colorado and Florida applied theirs at 1,000 years. As my post notes, the District of Columbia also applies a duration limit. And there are nuances. For example, planners often wrap Delaware real estate in an LLC or partnership, which then becomes a personal property asset in the trust, thereby extending effective perpetuity to the underlying real estate. I'm not an estate planner, lawyer or tax pro, so my posts are designed to introduce the topic to those who may be unaware of it, but anyone in a position to benefit is likely to have estate and tax planners who are. Here's a good read about RAP: https://legal.thomsonreuters.com/blog/the-rule-against-perpetuities/#
Wow, the part about these trusts being irrevocable really stood out to me. It's such a complex financial mechanisim you explain so clearly. I'm curious, how do current regulations address the long-term, multi-generational impact on wealth distribution, especially with the "potentially forever" aspect?
The Rule Against Perpetuities (RAP) is amended at the state level, so your question has 50 answers. For instance, my research shows that South Dakota, Alaska, Ohio, Rhode Island, and Wisconsin all allow perpetual trusts, while Delaware offers perpetual duration for personal property held in trust, but strictly applies a 110-year period for real property interests. Wyoming, Colorado and Florida applied theirs at 1,000 years. As my post notes, the District of Columbia also applies a duration limit. And there are nuances. For example, planners often wrap Delaware real estate in an LLC or partnership, which then becomes a personal property asset in the trust, thereby extending effective perpetuity to the underlying real estate. I'm not an estate planner, lawyer or tax pro, so my posts are designed to introduce the topic to those who may be unaware of it, but anyone in a position to benefit is likely to have estate and tax planners who are. Here's a good read about RAP: https://legal.thomsonreuters.com/blog/the-rule-against-perpetuities/#