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Dynasty trusts: trust administration for the wealthy

On Behalf of | Aug 2, 2011 | Trust Administration

Trust administration for wealthy Nevada families is an important tool to help minimize ever-growing estate and gift taxes. Whether you are a successful business owner or have a sizeable estate, it is probably safe to say that you may have spent some time contemplating the best way to ensure your family benefits from your hard work after your death. Planning for your money’s future through trust administration, will not just take care of your kids, but also future generations.

For example, a dynasty trust can be used to pass money to multiple generations of heirs, while still paying as little in taxes as possible. The other benefits of a dynasty trusts are that they don’t expire and there are no minimum distribution amounts.

As it stands right now, through 2012, an individual may gift up to $5 million during his or her lifetime without incurring gift tax. Whereas, starting in 2013 that exclusion is reduced to $1 million. Also, the top federal tax rate on gifts and estates is now 35 percent, but beginning in 2013 that figure climbs to 55 percent.

There are many scenarios to a successful dynasty trust. One example may include an initial $10 million being placed in a dynasty trust. Over the course of 50 years, provided intergenerational transfer taxes aren’t applicable, that trust could be worth as much as $184 million. If that same money was not placed in a trust it could be hypothesized that it would be subjected to estate tax and in 50 years only be worth $39 million.

Trust administration in Nevada and elsewhere is complicated, and a dynasty trust is irrevocable. An attorney experienced in estate planning and trust creation may be a helpful resource for those individuals looking for a long-term protection of their assets.

Source: Bloomberg, ” Dynasty Trusts Let U.S. Wealthy Duck Estate, Gift Taxes Forever,” Elizabeth Ody, 28 July 2011