You’ve worked hard to build a legacy that will span across multiple generations. From acquiring valuable assets to building wealth through effective financial accounts and real estate investing, your children and grandchildren are going to see the fruits of your labor. But, what they inherit may be subject to taxes – or worse yet a divorce or lawsuit – that would otherwise take away from what you’ve built. This is especially true when you’re trying to pass assets to your grandchildren through your own children.
Consider a situation where you live in California where there is no estate tax, but your children are living in New York, which does have an estate tax. Passing assets to them outright that are to be passed down to your grandchildren through them later would incur that tax, potentially even twice. That’s where a Generational Wealth Protection Trust comes in as part of your overall Asset Protection Plan. These trusts are designed to hold an inheritance in a trust that legally evades the estate tax, as well as protects inheritances to your children, grandchildren, and future generations from bankruptcy, divorce, and lawsuits.
What is a Generational Wealth Protection Trust?
The Generational Wealth Protection Trust is a type of trust we’ve helped clients structure to protect their assets. Not only does the trust shield the inheritance you’ve set aside for future generations from the uncertainties in life—such as divorce, bankruptcy, or lawsuits—but it also allows you to avoid out-of-state estate taxes that would otherwise lessen the inheritance.
Whether you’re putting assets aside for your children or for your grandchildren to acquire when they’re of age, the Generational Wealth Protection Trust provides stability and allows you to select the manner in which the inheritance will be distributed.
Limited Power of Appointment
The Generational Wealth Protection Trust can be set up with a limited power of appointment at death. What this does is it allows you to account for generations beyond just your own children by limiting who can receive your children’s inheritance to a class of individuals (such as your grandchildren), or specific people.
Adding on to the example above, if your children live in New York or another state with an estate tax, you can provide them with limited power of appointment under the trust. This means they are limited on who they can choose to receive their inheritance through your Trust.
Because of this limit, the assets are not subject to the estate taxes of the person (i.e., your children) who was designated as the power holder within the trust. So, rather than having them hold general powers in the trust and exposing the assets to their applicable estate taxes in New York, you can potentially (if done right) bypass those taxes.
Your children can even exercise their limited power of appointment and direct the inheritance in your Trust to the child’s own Revocable Living Trust. Their Rust would have Generational Wealth Trust provisions, thereby protecting your inheritances into perpetuity if future generations do the same – hence where the name comes from.
Protect Your Legacy With Dahl Law Group
The Generational Wealth Protection Trust was created by the experienced team at Dahl Law Group, which serves the families and business owners of California and around the U.S. Our plans not only provide peace of mind but also protect your legacy and all that you’ve built by allowing your chosen beneficiaries and heirs to receive their portion of your estate without having to face additional tax burdens. When you’re ready to protect your legacy for generations to come, contact Dahl Law Group at our offices in Sacramento and San Diego.
Dahl Law Group
