Learn how dynasty trusts can support multi-generational wealth planning, offer tax efficiencies, and align with your family's long-term financial goals. Get insights from advisors at EP Wealth.

Dynasty Trusts and Multi-Generational Wealth

For families with substantial wealth or special circumstances, preserving assets across multiple generations often requires more than a traditional estate plan. A dynasty trust is one tool that can support long-term wealth transfer while offering structure, control, and potential tax advantages.

Whether you're planning to provide for children, grandchildren, or even future generations you may never meet, a dynasty trust may help address key priorities—like minimizing estate tax exposure, shielding assets from creditors, and maintaining family intent over time.

What Is a Dynasty Trust?

A dynasty trust is an irrevocable trust designed to last for multiple generations—potentially indefinitely, depending on state law.

These trusts are typically used by families who want to:

• Transfer wealth in a structured way
• Avoid repetitive estate taxes at each generational transfer
• Provide asset protection for beneficiaries
• Incorporate family values into long-term financial planning

Unlike more common tools such as wills or revocable trusts, a dynasty trust is specifically designed to extend control, manage distributions, and address tax considerations across multiple generations.

Benefits That Extend Across Generations

Several core features make dynasty trusts appealing for long-term planning.

Generation-Skipping Transfer (GST) Tax Strategy

GST tax is a federal tax applied when assets are transferred to a “skip person” such as a grandchild or someone at least 37.5 years younger than the grantor. A dynasty trust can utilize lifetime GST exemptions to potentially avoid these taxes, meaning wealth may pass between generations without incurring this additional layer of taxation.

Estate Tax Considerations

Assets placed in a dynasty trust are generally excluded from the grantor’s taxable estate. This structure may offer additional opportunities to explore estate tax efficiencies compared to more traditional estate tools.

Asset Protection Features

Once funded, a dynasty trust can protect assets from external claims such as divorce settlements, lawsuits, and creditors. Grantors can also include stipulations that help manage spending behaviors by controlling when and how funds are accessed.

Long-Term Control and Customization

Dynasty trusts allow for significant customization, making it possible to align distributions with specific goals or values. Some families include provisions that tie distributions to life milestones such as completing education, launching a business, or engaging in charitable work. Others incorporate mission statements or ethical clauses that reflect the family's long-term vision for legacy planning.

Funding a Dynasty Trust: What Assets Can Be Used?

A variety of assets can be used to fund a dynasty trust, each with different implications for administration, tax treatment, and liquidity:

• Cash and investment portfolios
• Real estate and rental properties
• Closely held business interests

Funding a dynasty trust with illiquid assets like real estate or business shares requires careful consideration to cover administrative costs and future distributions.

Dynasty Trust Implementation Process:

1. Planning Stage: Identify goals for multi-generational wealth transfer 
2. Jurisdiction Selection: Choose a state based on perpetuity laws and tax benefits 
3. Asset Selection: Determine which assets to transfer (cash, investments, business interests, real estate) 
4. Trustee Appointment: Select an individual or corporate trustee and establish oversight 
5. Trust Establishment: Work with an attorney to draft and establish the trust 
6. Funding: Transfer selected assets into the trust structure 
7. Ongoing Management: Implement distribution plans and adjust as needed via trust protectors 

Where You Establish the Trust Matters: Jurisdiction and Perpetuity Laws

Where the trust is established can impact how long it can last and what protections it offers. Some states, including Alaska, South Dakota, and Delaware, offer perpetual trust durations. While Nevada doesn’t offer perpetuity, it does permit an extended trust term.

In addition to your financial planner, working with a qualified estate attorney is helpful when navigating trust laws and selecting the right jurisdiction for your family's goals.

Trustee Selection and Oversight

When selecting a trustee for a dynasty trust, families typically choose between an individual, such as a relative familiar with family dynamics, or a corporate trustee that provides consistent, long-term administration.

Individual trustees may raise concerns about bias or administrative difficulties, while corporate trustees offer a more structured approach. To support effective oversight, many families incorporate distribution committees or appoint trust protectors with the authority to modify trust terms under certain conditions.

Common Misconceptions About Dynasty Trusts

Next, let’s debunk common myths that may discourage families from exploring dynasty trusts:

• “They’re only for billionaires.” While dynasty trusts are complex, they may benefit families with $5M–$10 M+ in assets.
• “They lock everything up.” Modern trust law often allows for mechanisms like decanting or trust protectors to provide flexibility.
• “They cause family conflict.” When designed thoughtfully, dynasty trusts may actually help reduce future conflict by providing a clear structure.

Incorporating Dynasty Trusts into Your Broader Estate Plan

A dynasty trust is rarely the only piece of a comprehensive estate plan. It often works alongside:

• Revocable living trusts
• Business succession planning
• Charitable foundations
• Life insurance strategies for liquidity or equalization
• Family LLCs or partnerships

Coordinating these tools strategically can help support long-term goals and address differences among heirs, including varying roles in a family business.

How EP Wealth Supports Multi-Generational Planning

While the legal creation of dynasty trusts falls under the role of an estate attorney, EP Wealth helps clients explore whether this type of trust fits within their broader financial strategy.

Our team supports:

• Collaborating with attorneys and trustees to align planning with your family’s vision
• Developing multi-generational financial strategies that reflect both tax considerations and family values
• Structuring wealth plans that consider charitable giving, education funding, and business transition goals

You can learn more about how EP Wealth helps families approach these conversations through our estate planning services. Connect with an advisor near you to get started.

DISCLOSURES

• EP Wealth Advisors, LLC. is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability.
• Request an appointment with an EP Wealth Advisor when you have a minimum of $500,000 in investable assets – which includes qualified retirement plans (IRA, Roth IRA, 401(k), taxable brokerage, cash (savings / checking) and CDs. Investable assets do not include your home, vehicles, or collectibles.
• An estate plan is a helpful tool that can assist individuals in managing and arranging affairs in the event of death or incapacity. However, the scope and extent of the plan varies depending on the unique circumstances and desires of the individual client. It is for this reason, that the analysis encompassed herein is not intended to be comprehensive in nature nor should it be interpreted as legal advice. Please consult a legal professional to determine the extent, scope, and the drafting and creation of the appropriate estate documents. EP Wealth Advisors is not in the business of providing legal advice or preparing legal documents. Our review is limited to and in association with Financial Planning only.
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• Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions. Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice.   
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