KPInvestorParticipantStatus: PhysicianPosts: 76Joined: 10/16/2017
Pros and cons of a dynasty trust. Ive read on it and I cant seem to decide whether a simple living trust is better than doing a dynasty trust.
Id love to hear advice or opinions on this.
ThanksDecember 7, 2018 at 11:33 am MST #172249Larry RagmanParticipantStatus: Other ProfessionalPosts: 519Joined: 08/30/2018
Since you have read up on pros and cons, I’ll share with you my bottom line conclusion. Dynasty trusts do not make sense for you or your family unless you are very wealthy. Like tens of millions at a minimum. If that is you, go see an estate and trust lawyer that is recommended by three friends all of whom have one?
Comparing a dynasty trust to a revocable living trust strikes me as apples to oranges. The former is an irrevocable trust intended to lock up wealth for generations in order to avoid taxes, and perhaps to centralize the wealth management of an early family founder to prevent subsequent generations from squandering it. They are very complex, and expensive to maintain since the trustee has to keep up with current law, not to mention managing the money and meeting the terms.
A RLT is just to avoid probate. It has neither the asset protection nor estate tax benefits of an irrevocable trust. There are times when having one really makes a lot of sense, say if you have real estate in multiple states or just live in a state with an onerous probate process. You might consider irrevocable trusts for some other reason. See this for an interesting idea: https://wealthyaccountant.com/2017/07/14/living-with-a-nimcrut/ But in general, I don’t think dynasty trusts are really in the trade space with RLT.StarTrekDocParticipantStatus: PhysicianPosts: 1897Joined: 01/15/2017
Dynasty trusts were popular before the Death Tax changes. It MAY come back, but it has a relatively high bar to need to get there. For some in the $10M NW plans—sure, but that’s a pretty selective group.
Wealth Management advisor- – absolutely. Whether that entails a RLT — probably if you’re thinking of wealth management, but really depends on state regulations.December 7, 2018 at 1:35 pm MST #172295FIREshrinkParticipantStatus: PhysicianPosts: 953Joined: 01/11/2017
Agree with Larry. I ran a somewhat hypothetical low 8 figure situation by a very highly regarded and nationally known estate planning attorney and he was clear that dynasty trusts were for a different league entirely. I didn’t ask what the cutoff was, as it was clear it would never be a concern of mine, even if the above figure were to double.
Several tens of millions of dollars seemed to be the ballpark where it started to make sense.December 8, 2018 at 8:32 am MST #172613GParticipantStatus: Physician, Small Business OwnerPosts: 1644Joined: 01/08/2016
Can’t speak to the specifics of your question, but I recently listened to “Family Wealth” by James Hughes. It was dry and somewhat repetitive–ideal for audio while commuting. Anyway, it brought up interesting ideas about generational wealth planning that was new to me. You might find it a worthwhile $10 if you are thinking dynasties….December 8, 2018 at 6:33 pm MST #172717CraigyParticipantStatus: SpousePosts: 1961Joined: 09/16/2016
“living trust” vs “dynasty trust” is a pretty broad, almost non-question.
An estate planning attorney should be able to help you figure out what is the right choice for you and your family.
LEVEL 1 WCI FORUM MEMBER.December 10, 2018 at 1:22 pm MST #173150