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Definition of "Dynasty Trust"

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What is a dynasty trust?

According to the Northern Trust web site, a dynasty trust “is designed to hold assets in trust without direct ownership being transferred to any beneficiary. Instead, successive generations may receive distributions from trust assets or assets that remain held in trust, allowing for future benefit and growth.”

One of the goals of such a trust may be to avoid estate taxes over several generations and to retain certain other benefits that might not be available in the event of a change of ownership.

According to a March 5, 2011 Wall Street Journal article, Dynasty Trusts are under attack as a tax avoidance vehicle, and their longevity could, at some point, be federally limited under the Internal Revenue Code.

First published on 5/30/11

First published on 05/30/2011

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