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Building wealth for generations: Creating a dynasty trust

On Behalf of | Feb 23, 2024 | Trusts |

Planning can secure your family’s financial stability for future generations. One way to accomplish this is by establishing a dynasty trust.

This type of trust allows you to preserve and grow your assets while minimizing taxes and protecting your wealth from various risks.


If properly designed, a dynasty trust will last multiple generations, providing ongoing financial benefits for your descendants. Connecticut law permits dynasty trusts to exist for up to 800 years.

Transferring assets into this kind of trust ensures that your wealth remains intact and supports your family members long after you are gone. A trustee (typically a bank or other financial institution) that you appoint controls the trust’s operation.

Tax benefits

In Connecticut, assets held within the trust are generally not subject to state inheritance or generation-skipping transfer taxes, allowing your wealth to grow more effectively over time. They can be subject to these taxes when you transfer if the assets exceed federal tax exemptions.

Income taxes do apply if the assets produce income. Individuals often transfer assets to these trusts that do not produce taxable income, such as non-dividend-paying stocks and tax-free municipal bonds. These transfers minimize the income tax burden.

Asset protection

When you place your holdings in a dynasty trust, you shield them from creditors, lawsuits and other potential threats. Once transferred, you are no longer the legal owner of the assets. They become the legal property of the trust. Creditors can not attempt to attach those assets to collect outstanding debts.

Long-term wealth preservation

Unlike other trusts with limited durations, a dynasty trust can span multiple generations, providing ongoing financial support for your descendants. As each generation of beneficiaries passes, the trust splits into sub trusts – one for each living heir. This process allows you to preserve and grow wealth over a long period.

Creating a dynasty trust is a powerful tool for preserving wealth for future generations. You can provide your family financial security and stability with careful planning and foresight.