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| Pay It Forward |
The Lure of Dynasty Trusts
Michael Sisk
12/01/2003
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 Modern fertility techniques are a godsend for many—but they seriously complicate the definition of heir or beneficiary. A hundred years ago, a patriarch designing a dynasty trust—those long-term multigenerational vehicles for managing family wealth and shielding it from taxes—would have sacrificed little peace of mind to concerns over whether his specific intent would be obscured with time. The law simply did not address surrogate motherhood, in vitro fertilization, egg donors, sperm banks, or frozen embryos—nor how these might bear on conflicts three generations down the line. Today, estate lawyers are tasked with examining the wording of that 100-year-old trust in order to discern how the 19th century gentleman might regard these issues, were he alive today. And, notes Ronald D. Aucutt, a partner at
McGuireWoods in McLean, Va., and president of the American College of Trust and Estate Council, individuals who have recently established trusts, or are currently doing so, must grapple with these challenges head on. With relatively new rules in some states allowing dynasty trusts to exist indefinitely, questions of how to structure these vehicles to be flexible enough to withstand the vicissitudes of time come to the fore. But before fretting over how unborn heirs will manage the changes ahead, families must weigh whether a dynasty trust is the appropriate vehicle for their needs in the first place. A powerful estate planning tool to be sure, this solution is not necessarily suited to every family’s unique set of personalities or circumstances.
A growing number of people are mulling over the advantages of these trusts. "There is significant interest in dynasty trusts," says Erin Willoughby Jozik, senior trust adviser and vice president at Wachovia. "It’s been a hot commodity over the past several years." Uncertainty over U.S. estate taxes has elicited much of the interest. In 2001, Congress passed a law that would gradually eliminate estate taxes by 2010, but the law is set to expire in 2011 unless further legislation is approved to make the repeal permanent. Those who find this uncertainty unsettling may find the solidity of a dynasty trust comforting.
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