Becoming successful at entrepreneurship can set you up for a challenge later in life: estate taxes. It’s easy to accept that you can’t take your wealth with you, but you probably want to pass it on intact—without the taxman taking up to 40% off the top. That’s been especially difficult if you’re a very wealthy entrepreneur.
Dynasty Trust is a long-term trust designed to preserve family wealth across multiple generations while minimizing estate, gift, and generation-skipping transfer (GST) taxes. When properly structured, it allows assets to grow and pass down without being reduced by transfer taxes at each generational hand-off.
Significant Changes Due to the One Big Beautiful Bill Act:
Portability Maintained: Surviving spouses can still use any unused exemption from their deceased spouse
Who Should Consider a Dynasty Trust?
For estates under those thresholds, a Dynasty Trust may not be necessary. But if your estate will exceed those amounts—especially if you have $50 million, $100 million, or more—it can be one of the most powerful tools for protecting and growing your wealth for future generations.
Why Delaware?
The U.S. estate tax system was originally designed to limit the rise of perpetual family dynasties, like those seen in Europe at the time the United States was founded. Over time, lawmakers imposed limitations such as:
A key turning point came in 1986, when Congress changed the GST tax rules. Then, in 1995, Delaware abolished the Rule Against Perpetuities for personal property trusts, allowing them to last forever. (For real property, Delaware imposes a 110-year limit, unless the property is held through an entity such as an LLC.) Delaware also eliminated mandatory minimum distributions.
These changes, combined with sophisticated legal drafting, led to the modern Delaware Dynasty Trust.
How It Works
A Delaware Dynasty Trust can hold appreciating assets—such as the stock of a rapidly growing company, investment portfolios, or other valuable property—for multiple generations without triggering estate or GST taxes at each transfer. Assets can remain protected from creditors and divorce claims, and the trust can be tailored to control how and when beneficiaries receive distributions.
Important Considerations
The Bottom Line
If you’re in the wealth range where a Dynasty Trust makes sense, Delaware offers one of the most favorable legal environments in the nation. By taking advantage of its perpetual trust laws for personal property and its trust-friendly tax climate, you can protect and grow your legacy for generations.
Harvard Business Services, Inc. does not draft these trusts but recommends that you use a trusted accountant or lawyer to set up your Delaware Dynasty Trust. We can coordinate with the professional of your choice to file Delaware Dynasty Trust forms on an expedited basis, making the process as seamless as possible.
*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.