An irrevocable trust is a legal arrangement in which you, as the grantor, may forfeit your ownership rights over certain property and assets used to fund it. While this may seem unideal at face value, the greater reason behind this is that this property and assets may not count towards your taxable estate. Therefore, you may preserve more assets for the next generation, as your beneficiaries. And if you wish for multiple generations to benefit from your allocated wealth, you may specifically look into the irrevocable trust option of a dynasty trust. Nonetheless, please follow along to find out more about the dynasty trust and how a proficient New York City trusts attorney at Zimmet Law Group, P.C. can help you set one up accordingly.
What is a dynasty trust and how does it work?
Put in the simplest way possible, a dynasty trust is a long-term, irrevocable trust type that may allow you to preserve and pass on your property and assets through multiple generations. Such preservation is possible because this trust type may evade the generation-skipping transfer (GST) tax instituted by the Internal Revenue Service (IRS). Notably, as of 2025, this tax rate is set at a lofty 40 percent after exceeding the exemption of $13.99 for an individual or $27.98 for a married couple.
This may be in addition to avoiding other death taxes that would otherwise affect your estate. What’s more, your dynasty trust may allow you to transfer your life insurance proceeds over without exceeding the GST tax exemption. Ultimately, your dynasty trust is structured to allow your funds to grow and compound over time, making more available to spread throughout even more generations to follow.
How long is a dynasty trust set to last?
In New York State, your dynasty trust may last for 21 years after the death of the last person for whom it was established. So, if the last generation you include in your trust is that of your great-grandchildren, it may remain in effect until 21 years after the death of your last surviving great-grandchild. This means that your trust has the possibility of lasting over 100 years, theoretically if you have sufficient funds that can endure this test of time.
With that being said, it is worth mentioning that you must go back and add new children, grandchildren, and great-grandchildren as beneficiaries to your dynasty trust whenever they enter your life. This is because they may not be automatically included. Importantly, if these heirs are not yet born but you still want them to benefit from your wealth, you may still name them before it is too late.
Speaking with an attorney is never a bad idea, even if you are unsure whether you require legal advice to set up your estate plan just yet. So when in doubt, please schedule an initial consultation with a talented New York City estate planning attorney from Zimmet Law Group, P.C. today.
