At Capital Tax, we specialize in Dynasty Trusts—an advanced estate planning tool designed to preserve and grow your wealth for multiple generations. Our team of Certified Public Accountants (CPAs) is dedicated to helping you create a lasting legacy while optimizing tax benefits and ensuring your family's financial security.
We utilize a three-step approach to ensure optimal estate and trust tax outcomes:
A Dynasty Trust is a type of irrevocable trust designed to extend the benefits of your estate plan beyond your lifetime and into future generations. Unlike traditional trusts that might terminate after a single generation, a Dynasty Trust can potentially last for many decades or even centuries. Here’s how it works:
Long-Term Wealth Preservation: Assets placed in a Dynasty Trust can be held and managed for multiple generations, preserving wealth within the family.
Tax Advantages: By leveraging the generation-skipping transfer tax exemption, Dynasty Trusts can help minimize estate and gift taxes across generations.
Flexibility and Control: The trust can be structured to provide for specific terms, conditions, and protections, ensuring that your assets are used in accordance with your wishes.
Trust Design and Structuring
Development of a customized Dynasty Trust plan tailored to your family’s tax needs and long-term goals.
Strategic advice on trust terms, including tax implications of distribution provisions, governance, and succession planning.
Asset Transfer and Management
Ongoing tax management and oversight to ensure the trust’s assets are properly invested for proper tax planning.
Tax Planning and Compliance
Expertise in utilizing Dynasty Trusts to maximize tax benefits and minimize tax liabilities across generations.
Assistance with tax reporting and compliance to meet IRS requirements and optimize financial outcomes.
Trust Administration and Review
Regular reviews to adapt the trust to changes in tax regulations, family circumstances, or financial conditions.
Year round availability to answer any questions that arise.
Family Education and Support
Offering support to ensure that future generations understand and adhere to the trust’s tax terms and tax implications.
After identifying your interests and organizing your affairs, we set up a timeline to process the appropriate tax filings for you. As needed, we notify heirs to trustees of important updates to the estate and/or trust. We oversee the implementation from beginning to end until you attain your most tax-efficient estate.
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What is the difference between a trust and a dynasty trust?
A trust is a legal arrangement where a trustee manages assets for the benefit of beneficiaries, while a dynasty trust is designed to last for multiple generations, often with the goal of preserving wealth and avoiding estate taxes over many years. Dynasty trusts are typically structured to exist for several generations or even perpetually.
What is the difference between GST and dynasty trust?
A GST (Generation-Skipping Trust) allows wealth to be passed directly to grandchildren or later generations, skipping over the immediate children. A dynasty trust is a type of long-term trust that can incorporate generation-skipping provisions, but it focuses more on wealth preservation across multiple generations without paying estate or generation-skipping taxes.
Who pays taxes on a dynasty trust?
The trust itself may be responsible for paying taxes on income generated by the trust’s assets if the income is not distributed. However, if the trust distributes income to beneficiaries, they are typically responsible for paying taxes on the income they receive.
Can I take money out of a dynasty trust?
Yes, you can take money out of a dynasty trust, but it depends on the trust’s terms. Beneficiaries may be able to access funds for specific purposes, such as education or health, but the trustee has discretion on distributions and must follow the trust’s guidelines.
What are the fees associated with a dynasty trust?
Fees for a dynasty trust can include setup fees, trustee fees, and administration costs. These fees vary depending on the complexity of the trust and the services provided by the trustee, but they typically range from 0.5% to 2% of the trust’s assets annually.
What happens to a dynasty trust when the grantor dies?
When the grantor of a dynasty trust dies, the trust typically continues to operate according to its terms. The successor trustee takes over, and the trust remains in effect, managing assets for the benefit of the beneficiaries for generations, as specified by the trust document.
What are the problems with dynasty trusts?
One potential issue with dynasty trusts is the complexity and cost of maintaining the trust over many generations. Additionally, some states have laws that limit how long a trust can last, and there may be unintended tax consequences or conflicts among beneficiaries if not properly structured.
Why are trusts taxed so high?
Trusts are often taxed at a higher rate because they are considered separate taxable entities by the IRS. Trusts that accumulate income instead of distributing it to beneficiaries face high income tax rates to encourage distributions, preventing trusts from being used solely for tax avoidance.
Do you have to pay inheritance tax if your money is in a trust?
Whether you pay inheritance tax depends on the type of trust and your jurisdiction. Generally, revocable trusts are subject to inheritance tax, but irrevocable trusts may offer tax advantages by removing assets from the taxable estate. It’s essential to consult with a tax advisor to understand local rules.
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