I would like to make sure my wealth stays in my family for generations. Is there a way to accomplish this? – Estate Planning Attorney – Portland, Oregon

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The attorneys with Nay & Friedenberg discuss generation skipping trusts.

Folks who have accumulated wealth by hard work are reluctant to risk its loss through irresponsible behavior, divorce or other problems.  There are a number of options available to clients.  All of them require the creation of trusts for future beneficiaries which can be included in ones will or trust, or can be drafted as stand-alone entities to receive lifetime gifts.

For one’s adult children, it is common to include family protection trusts that keep the assets as separate and much less likely to be lost through a divorce.  For our grandchildren, there are any number of support, education, or discretionary trusts that preserve the funds.  Because they skip a generation, they must be carefully drafted to avoid a federal tax specifically designed for generation skips.

A trust may be able to extend beyond grandchildren but historically this has been impossible due to laws favoring the vesting of trust interests within three generations.  In Oregon, for example, there is a statute that generally discourages trusts exceeding 90 years from when the interest vests.  This means if a 70 year old dies in 20 years with a trust for grandchildren, the trust will have lasted 110 years.

However, there is a trend in other states, particularly Idaho and Alaska, allowing ‘dynasty’ trusts to last forever.  Similarly, small islands such as the Cayman Islands in the Caribbean, have created offshore havens to allow and manage dynasty trusts, referred to as ‘offshore’ trusts.

The objectives of a dynasty trust must be weighed against its disadvantages.  Most notably, whether ones lineal descendants in 100 years merit one’s largess, the large unknowns regarding the taxation of these trusts and the significant fees earned by the corporate trustees managing them.

An experienced estate planning attorney can help you assess which documents best fit your family’s planning needs. Contact the Estate Planning attorneys with the Law Offices of Nay & Friedenberg in Portland, Oregon at (503) 245-0894 to set an appointment.