A Heritage Trust or a Dynasty Trust can better protect your family’s inheritance from creditors, spouses, and future estate or property taxes. In a typical estate plan, you will leave a portion of your estate to your child him or her with them receiving the assets either at the time of your death or at a future date, which is typically related to the child’s age. For example, your child may receive his or her inheritance in portions, at ages 30, 35, and 40.

If you are looking for an alternative method for distributing your assets to your children’s benefit that provides more advantages than the traditional distributions to beneficiaries and avoids probate, then you may want to consider setting up a Heritage Trust or a Dynasty Trust, which will better protect your child’s inheritance from creditors and a divorce, as well as avoid estate taxes when you child passes away. At Tisser Law Group, APC, we bring with us over 50 years of experience to help you properly establish Heritage Trusts and Dynasty Trusts. We have helped countless individuals and families throughout the San Fernando Valley and Los Angeles, and we stand ready to do the same for you.

Contact Tisser Law Group, APC online or call (818) 226-9125 to get started. Our Encino heritage trusts attorney work closely with clients in helping them achieve specific needs and goals.

What are Heritage Trusts and Dynasty Trusts?

In a Heritage Trust, inherited assets are placed in the trust for your child, to be used throughout his or her lifetime. Your child can be the trustee and handle the trust’s administration. The Heritage Trust has a Distribution Trustee who is involved in the distribution of the trust’s assets to your child.

The purpose of the Distribution Trustee is to provide better asset protection to your child. Your child, however, will have the right to remove and replace the Distribution Trustee at any time, provided that the replacement is not, in general, a person related to them.

At your child’s death, the assets remaining in the trust will then continue to be held in trust for his or her children. If your child has not reached the ages at which you want them to be in control of the assets, you would name a trustee, usually the same person as the trustee in your family trust, to be in control of the assets until your child reaches the designated ages to take over his or her Heritage Trust.

Dynasty Trusts do not have Distribution Trustees.  If you would like to set up a trust to better protect your child’s inheritance and you do not want to use a Heritage Trust (because it involves a Distribution Trustee), you should consider the use of a Dynasty Trust.  The difference is that a Dynasty Trust does not involve the use of a Distribution Trustee, but still gives the child better protection from creditors and divorce, as also avoids estate taxes when the child dies.

Benefits of Heritage Trusts and Dynasty Trusts

There are several benefits of establishing a Heritage Trust or a Dynasty Trust for your child, including:

• At the child’s death, the assets should pass to their descendants without being subject to estate taxes. For example, if the assets put in the Heritage Trust for your child are worth $500,000 when you die and $4,000,000 when your child dies, the entire $4,000,000 can pass estate tax-free to your grandchildren. This makes the Heritage Trust and the Dynasty Trust Generation-Skipping Tax Trusts.
• Assets in the Heritage Trust and Dynasty Trust should not be subject to your child’s creditors. In California, a person cannot, in general, gain protection from creditors by creating this type of trust and putting their own assets into it. By establishing a Heritage Trust or a Dynasty Trust for a child, you can provide your beneficiaries with better asset protection than they would otherwise have.

A Heritage Trust or Dynasty Trust can help protect a child’s inheritance from their spouse. If a child has a Heritage Trust or a Dynasty Trust that owns assets inherited from you, he or she will not be able to commingle them with community funds since they are kept separate in the Heritage Trust. This ensures that the assets would not be treated as community property and divided between the spouses upon a divorce.

To set-up a heritage trust for your child today, contact Tisser Law Group, APC at (818) 226-9125. Our Encino heritage trusts attorney can guide you through the entire process and ensure proper trust administration.