Legacy Trusts

Lawyers in Scottsdale, AZ – Legacy Trusts

A Family Legacy Trust is also known as a Dynasty Trust. It is created for the long term financial success of your family. The idea is to make use of the power of compounding interest so that more wealth can be passed on to future generations. As a simple example, if you pass $500,000 on to your kids when you die, it is most likely going to be simply spent within a short period of time. However, if it is held in Trust (available for emergencies, but not automatically distributed), it can be invested and increased over the years. If that $500,000 is invested at 7.5% for 20 years, it would be worth over $2,000,000. After 40 years, it will be worth $9,000,000. And after 60 years, it is worth over $38,000,000. In other words, you can “force” your future generations to be wealthy even if they wouldn’t have the self-discipline to do it themselves.

The problem with most Estate Plans is that the surviving spouse and kids normally spend the money, without giving it an opportunity to grow. A well-drafted Family Legacy Trust will have the following characteristics:

  • It is available to your surviving spouse during his or her lifetime, but your surviving spouse will not be able to change the Trust and disinherit any of your kids – or other intended beneficiaries.
  • After you and your spouse have died, it is available for your children, grandchildren, and future generations, but it is structured in such a way as to not create trust fund babies.
  • It avoids probate proceedings on your death or disability.
  • It avoids death taxes.
  • It provides protection from having your property seized by the creditors of your spouse after you have passed away, and your children (when they become adults), or involved in their divorces.
  • It prevents future family squabbles over money because there is a way of resolving disputes.

A Family Legacy Trust avoids various estate taxes, which can be very costly to your children and grandchildren, yet provides flexibility to use the money. The terms of this type of trust are often times complicated and detailed and should be written by an attorney that is knowledgeable in Legacy Trusts. Our attorneys at Magellan Law have that expertise.

If you think your Estate Plan can benefit from creating a Family Legacy Trust, please contact us at Magellan Law for a confidential and complimentary in-office consultation to discuss how we can assist you in creating, or updating, your ideal Estate Plan portfolio.


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