Wednesday, May 20, 2015

Dynasty Trusts? The New Money Has Doubts

David G. Klein
Although this WSJ Wealth Adviser column points out several ways to make dynasty trusts flexible, "forever trusts"seem like a hard sell to first-generation wealth:
Financial advisers and estate-planning professionals say many of their clients feel uncertain about the kind of world their heirs will inhabit…. These concerns are making it hard to steer estate-planning conversations beyond simply the next generation to thinking many decades, or even centuries, down the line….
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Add in uncertainty about what the family will look like, and what kind of tax rules and other financial issues they will face…. It can make recommending… handing assets over to a dynasty trust…very tricky.
For those who can predict the estate tax rules that will be in place in 2115, perhaps dynasty trusts make sense. But if all possible flexibility (trust protectors, decanting, powers of appointment, etc.) is built into a trust, hasn't its creator essentially relinquished control over his or her "legacy"?

Because dynasty trusts represent advanced estate planning, they tend to be paired with sophisticated investment strategies. Good idea? Maybe not. Preston McSwain explains why Yale's David Swensen believes family funds should not be invested like a tax-free university endowment.

2 comments:

Roger Pace said...

The process of how trusts and wills works has always confused me. It's something that plays a huge role in society and that makes me want to learn more about it. This helped a ton and I hope to learn more soon.

http://www.snavelylaw.com

Jim Gust said...

I ask again. What social policy is served by the tax exemption for the Yale endowment?

How big an endowment is "enough"?