Dynasty Trust

What Does Dynasty Trust Mean?

A dynasty trust is a specialized type of trust that families use to transfer wealth and assets across generations. These trusts are structured to be long-term and are often exempt from certain taxes, including the gift tax.

Dynasty trusts are commonly paired with life insurance to maximize the wealth transferred after the policyholder’s death. The policies used are almost always permanent life insurance, since the trust needs coverage that won’t expire before the insured dies.

Insuranceopedia Explains Dynasty Trust

A key feature of dynasty trusts is their ability to reduce the amount of money owed in estate taxes. This can result in substantial savings for high-net-worth individuals, making dynasty trusts an appealing option for passing estates to children and grandchildren.

Unlike other types of trusts, dynasty trusts are designed to last for extended periods. Because the life insurance policy inside the trust is often its largest asset, the choice of insurer matters. Comparing the best life insurance companies is a practical first step for anyone setting one up.