In today's tax system, estate and gift taxes may be levied every time assets change hands from one generation to the next. Dynasty trusts avoided those taxes by creating a second estate that could outlive most of the family members, and continue providing for future generations. Dynasty trusts are long-term trusts created specifically for descendants of all generations. Dynasty trusts can survive 21 years beyond the death of the last beneficiary alive when the trust was written.
A New Mexico Irrevocable Generation Skipping or Dynasty Trust Agreement for the Benefit of the Trust or's Children and Grandchildren is a legally binding document that allows individuals in New Mexico to protect and manage their assets for the benefit of future generations. This type of trust offers several benefits, including estate tax savings, asset protection, and control over how assets are distributed. The primary purpose of the trust is to bypass one generation for estate tax purposes, typically the trust or's children, and instead transfer assets directly to their grandchildren or future descendants. By skipping a generation, the trust avoids incurring estate taxes twice, allowing for the preservation and growth of wealth within the family. The New Mexico Irrevocable Generation Skipping or Dynasty Trust Agreement can be tailored to fit specific needs and preferences, offering various options and provisions. Some different types of trusts within this agreement may include: 1. Standard Generation Skipping Trust: This trust provides the basic structure for preserving wealth for future generations and ensuring tax efficiency. 2. Irrevocable Life Insurance Trust (IIT): By placing life insurance policies within an IIT, the trust or can provide financial security for their children and grandchildren while minimizing estate taxes. 3. Charitable Dynasty Trust: This trust combines the benefits of generational wealth preservation with philanthropic goals by allocating a portion of the trust's assets to charitable organizations. 4. Educational Dynasty Trust: Designed to support the education of the trust or's children and grandchildren, this trust allows for the payment of educational expenses, such as tuition fees, books, and other related costs. 5. Special Needs Dynasty Trust: This trust caters to the needs of beneficiaries with special needs, ensuring that they receive the necessary financial support without jeopardizing their eligibility for government assistance programs. When establishing a New Mexico Irrevocable Generation Skipping or Dynasty Trust Agreement, it is essential to consult with an experienced estate planning attorney to ensure compliance with state laws and to customize the trust to meet the individual's unique circumstances and goals. By doing so, individuals can provide a solid foundation for the financial security and well-being of their children and grandchildren for years to come.
