Estate planning has traditionally been considered to be a set of tools used to deal with the financial consequences of death. Many people plan their estates with an eye towards avoiding probate or litigation, and minimizing estate taxes. Estate plans designed for these purposes are typically completed shortly after the death of the executor.
A recent article discusses the benefits of one alternative to traditional estate planning, dynasty estate planning. This type of estate planning “looks further down the road and involves making long-term preparations for your family to have a positive relationship with money.”
To create a dynasty estate plan, it is necessary to have a transfer vehicle, such as a special irrevocable trust, that will last for multiple generations. Irrevocable trusts can be designed with built-in dynasty provisions, which allow them to last for generations to come. The major benefit of these trusts is that they are able to shelter assets, family businesses, and real estate from estate taxes. Often, these trusts are funded through gifts made while the grantor is still living.
Often, grantors pass on more than money through dynasty trusts. Through the legacy of family values, grantors also pass on emotional, social, and spiritual guidance.