Dynasty Trust

Definition - What does Dynasty Trust mean?

Dynasty trusts are a type of trust that allow the grantor to pass on wealth to his or her descendants for many, many years, without having to pay the taxes associated with other types of trusts. In the context of the law, dynasty trusts are irrevocable, meaning that the grantor no longer controls the assets once they are put into the trust.

Justipedia explains Dynasty Trust

It is possible for dynasty trusts to last over 100 years. This is because they can last 21 years after the last living beneficiary dies. So, if an 80-year-old man creates a dynasty trust and names his one-year-old grandson as a beneficiary, then the trust wouldn't expire until 21 years after the grandson dies. Many people create dynasty trusts to avoid having to pay the gift tax and the estate tax every time the assets change hands from generation to generation.

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