Dynasty Trusts: Multigenerational Wealth Transfer And Tax Avoidance
Trusts strengthen estate plans with structure, control and tax efficiency. For high net worth families, a dynasty trust offers advantages that standard tools cannot match.
At Cushing & Dolan, P.C., our Massachusetts lawyers provide guidance on creating strategies that protect assets across generations. Our attorneys focus on planning techniques that preserve wealth while minimizing transfer taxes. We also work in New Hampshire, an ideal alternate location for trusts.
What Is A Dynasty Trust?
A dynasty trust is an irrevocable structure created to hold and manage assets for children, grandchildren and future descendants. Massachusetts does not recognize indefinite perpetual trusts, but a dynasty-style trust can last for up to 90 years.
Its purpose is to keep assets outside the taxable estates of each generation, allowing them to pass without repeated erosion from estate or generation-skipping trust taxes. Allocating the grantor’s GST tax exemption at funding allows assets to grow and be distributed without triggering additional transfer taxes.
They are typically funded using the grantor’s lifetime exemption, which currently aligns with historically high federal estate tax thresholds. Once structured, they offer long-term wealth preservation, asset protection and tax efficiency.
The Tax Advantage: Avoiding The Generation-Skipping Transfer (GST) Tax
This is a separate federal tax imposed in addition to the estate tax. It prevents families from bypassing a generation of taxation by transferring wealth directly to grandchildren or lower generations.
A dynasty trust solves this problem by applying the grantor’s GST tax exemption to the assets in the trust. The trust’s property is sheltered from estate, gift and GST taxes for its duration.
This protection is especially valuable today because the federal exemption is scheduled to be reduced by nearly half in 2026. This makes timely trust and estate planning essential for Massachusetts families and individuals.
Talk With Us For Free
Massachusetts and New Hampshire families can speak with a trust attorney at Cushing & Dolan, P.C., at no cost to determine whether a dynasty trust aligns with their goals. Call us at 888-759-5109 or contact us online to schedule your free consultation and begin building a strategy that protects your legacy for generations.