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Are There Non-Tax Reasons to Use a Dynasty Trust?

The non-tax reasons for creating the dynasty trust vary depending upon the needs and desires of the trustmaker. Dynasty trusts can be created to provide creditor and “predator” protection for the beneficiaries of the trust, generation after generation. They can shield against divorce proceedings initiated against a beneficiary of the trust, or creditors of a beneficiary arising out of a business failure.

The dynasty trust can also provide a pool of assets to be managed by a trustee for the benefit of all of the beneficiaries, thus preventing individual beneficiaries from squandering their inheritance by misusing the funds or investing poorly.

The Dynasty Trust can also be used to encourage participation in certain worthwhile causes or discourage behavior that is unacceptable.

One of the greatest ways Dynasty Trusts are used by families who value education is to establish a fund that will pay for the secondary and graduate education of many future generations. When you ask most people to name their great-great grandparents, they are unable to do so. But when you provide full college and graduate school tuition and other education costs for your great-great grandchildren through a dynasty trust, you can be sure you’ll be remembered!