Estate plans and future stability are fundamentally linked. One of the main goals of any estate plan is to provide lasting solidity and permanency to the family wealth and stability. In some cases, these goals are more short-term, such as choosing a guardian for your minor children in the case where you and the other parent pass away before the children have reached the age of majority. Estate plans can also help target long term goals, such as creating a financial safety net for your grandchildren. One tool used for that type of long term goal is a “perpetual trust.”
Perpetual trusts, also sometimes called “dynasty trusts,” are trusts that are created and meant to last for centuries, or even forever. The purpose of these trusts is to provide for all future generations of a testator’s family, friends, or even charitable institutions. Perpetual trusts may be incorporated into other types of trusts, such as irrevocable trusts. Moreover, perpetual trusts can incorporate other important language to make provision for hypothetical future issues, such as special needs trusts language. This would allow a future trust beneficiary to continue to receive needs based government assistance while still benefitting from the perpetual trust.
A perpetual trust, like some other types of trusts, can also help shelter assets from creditors or from divorce settlements. By transferring the assets to the trust instead of directly to the beneficiaries, the beneficiaries do not actually own any of the assets within the trust. Accordingly, creditors or soon to be former spouses will not be able to collect against any of the assets still contained in the trust.
Those creating a perpetual trust can tailor the terms of the trust to make sure that only specific types of individuals will benefit from the trust. For example, you can set up the trust to benefit only the descendants of two of his three children, or to benefit only a favorite charity. While most people limit the beneficiaries to their descendants, you can select any group of people he or she prefers. You can also make sure that both people and charitable institutions benefit. For example, you could provide that whenever a trust beneficiary passes away, a percentage of the assets remaining in the trust will be distributed to a particular charity.
There are many important considerations when selecting the estate planning tool that will best help you achieve your estate planning goals. Contact us today at (320) 299-4249 and talk to us about your assets and your estate plan.