Protecting wealth across generations

A dynasty trust is one tool for managing wealth across multiple generations that some individuals in Ohio may want to look into. The trust can be set up in an amount up to the available gift tax exemption, which in 2023 is $12.92 Million and may be reduced or changed in 2026.

The dynasty trust cannot be altered once it is set up, and the grantor must relinquish controls of the assets. A trustee is appointed to manage the trust. The individual setting up the trust might place conditions on when beneficiaries can receive distributions. For example, they might be tied to educational achievement or age. It is possible to set up what is known as a quiet trust in which beneficiaries are not aware of its existence until they reach the point at which they are supposed to receive distributions. Some people feel that this is a better way of distributing wealth because their heirs will be more likely to continue educational and career pursuits if they do not expect a large sum of money.

A dynasty trust creates a pool of family wealth that can be drawn on for decades. Grantors should avoid making stipulations to distributions so specific or binding that they trap family members in conditions that make them unhappy.

Conversations with family members and professionals about estate planning can be difficult, but it is important that people have them. Without an estate plan, the state law of intestacy will determine how a decedent’s assets are distributed. An estate plan allows people to pass on items of both monetary and sentimental value, and various types of trusts can be used for different family situations.