[1] By holding assets in trust and making well-defined (or even no) distributions to beneficiaries at each generation, the assets of the trust are not subject to estate, gift or generation-skipping transfer tax (GST) taxes.
By keeping assets inside a trust for an extended period of time, wealthy families can by-pass taxes for several generations or even forever.
As of January 1, 2020, the GST exemption is $11.58 million per person (and twice that for a married couple).
Because this exemption (which is the highest ever) is scheduled to sunset on January 1, 2026, and could be repealed sooner depending on new legislation, the interest in dynasty trusts is steadily rising in 2020 just as it did in 2011 when there was a risk that the GST exemption could be severely reduced.
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