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Perpetual Trusts
Old 09-12-2012, 03:22 PM   #1
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Perpetual Trusts

Anyone have experience with so-called perpetual or dynasty trusts? Some states allow such trusts to last 1,000 years
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Old 09-13-2012, 07:37 AM   #2
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What kind of experience? Delaware is one state that permits perpetual trusts, Alaska I believe is another. Duration of trusts in most states are limited by the rule against perpetuities. This has been effectively repealed in the few states that now allow a trust to continue indefinitely. I don't know what you mean by experience with them. It only means you can establish a trust that continues beyond the lives of those living at the time of its creation.
Bruce
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Old 09-13-2012, 08:49 AM   #3
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The IRS used to not allow them... I do not know if that has changed...

I remember this because they used to have a clause in them that said the trust was valid until the last death of a Kennedy died... (I think they had to be living at the time the trust was set up)....
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Old 09-13-2012, 08:57 AM   #4
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I've looked at trusts......am not the receipient of one.......but I do know.....1. you have to have a lot of money. 2. they are expensive to set up. 3. Many receipients of large family trusts get lazy. 4. they become a memorial to the giver.....some want that, I don't.

My family trust for my kids will go away by donating whatever is left following the death of my kids and gradkids......you can pick the category or charity of the trust following their death, and it will be administered and dispersed by Vanguard.....they were the cheapest to administer the trust and the trust leadership team really gave me good direction. And, I did have my own lawyer and CPA. I'm been really lucky......and, so are my kids.....luckiest becasue?.....I have a great wife and good kids.
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Old 09-13-2012, 09:08 AM   #5
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Quote:
Originally Posted by Texas Proud View Post
The IRS used to not allow them... I do not know if that has changed...
The IRS has nothing to do with them. Trusts are governed by state law.
Bruce
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Old 09-13-2012, 10:05 AM   #6
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Quote:
Originally Posted by MBMiner View Post
The IRS has nothing to do with them. Trusts are governed by state law.
Bruce
http://search.yahoo.com/r/_ylt=A0oGk...ust_States.pdf


Here is an interesting article about them....

From the article:

Last year, the IRS seems to have
fired a shot across the bow of perpetual
regimes. Internal Revenue
Code Section 2041(a)(3) was
established to prevent the use of
powers of appointment to
extend the term of a trust
beyond the common law
rule against perpetuities
or the uniform statutory
rule against perpetuities.
Violation of this rule is
sometimes referred to as

the “Delaware Tax Trap.”


When I was doing taxes, I know there were some tax issues with perpetual trust... It was a long time ago and I can not remember what or where it was... you look like you are right that it is state law that governs the trust, but that does not mean the federal tax laws will agree...
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Old 09-13-2012, 10:50 AM   #7
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Thanks for all the replies. I did do some initial research, but was curious if anyone on these boards had ever used one for estate planning purposes. Some folks here do have a fair amount of money stashed away and would like to keep it in the family (as opposed to the IRS), with certain restrictions on access by succeeding generations, of course.

Personally, I'd like to find a way for my hard-earned money to benefit many generations of my family without making them lazy. As everyone here knows, money gives you freedom of choice in what to do with your life. If a descendant of mine wants to be a Ph.D. in an obscure field because it is his/her passion, then my money will pay the bills.
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Old 09-13-2012, 11:11 AM   #8
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A perpetual trust may have estate planning benefits, but it won't save estate taxes. THe IRS taxes generation skipping transfers as part of the estate tax and such a trust would normally be designed to skip future generations.
Bruce
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