The Mega-Wealthy Often Use Dynasty Trusts To Protect Their Legacy Against Divorce, Bankruptcy and Lawsuits… Now You Can Too!

As our society has become increasingly litigious, asset protection has increased in its importance to many of our clients. Unfortunately, many traditional estate plans give very little thought to the potential of future lawsuits and divorces stripping away family wealth over succeeding generations.

We believe that creditor protection and divorce protection are one of the most important elements to consider when drafting an estate plan. After all, there’s really no worry about estate taxes if future divorces, bankruptcies, lawsuits or levies strip away significant portions of family wealth.

One of the benefits often not given adequate consideration in family estate planning is creditor protection. Dynasty Trusts generally provide protection for their beneficiaries against creditors and from disgruntled spouses and ex-spouses of the beneficiaries. Drafted properly, this type of trust may accomplish this result on a multigenerational basis.

With the increasing number of divorces in today's society, many clients find that the ability to protect assets from spouses of their descendants in case of marital discord is an extremely compelling reason for establishing a dynasty trust.

Such a trust could be described as the ultimate in creditor and divorce claims protection.

Unlike the classic trust format, which usually pays the beneficiary a portion of assets at specified ages until the trust is depleted, a dynastic trust generally doesn’t terminate during the beneficiary’s lifetime. This one distinction can make all the difference when protecting a legacy for future generations.

Drafted as a beneficiary-controlled trust, the dynasty trust allows heirs the beneficial use of inherited assets. Future generations can have complete control over assets and the ability to make purchases and choose investments as they see fit.

However, because inherited assets remain inside the dynasty trust, this helps keep the inherited assets segregated from the heir’s personal assets and thus beyond the reach of creditors, divorcing spouses and federal estate tax, when drafted properly. Assets passed outright enjoy no such protections.

To learn more about the potential benefits of creating a “Dynastic Wealth Transfer Plan” please feel free to contact me for more information. To schedule a complimentary meeting, either in person or by telephone, please use the use the CONTACT US link and let me know.

I look forward to meeting you!