Bloomberg provides an excellent and accessible intro to dynasty trusts and the great features families can use to multiply wealth across generations. The article highlights some legal differences between various dynasty trust jurisdictions – such as New Jersey, Pennsylvania, and Delaware – and some unique provisions of Delaware trust law that may be especially attractive to estate planning clients and families contemplating business succession issues, including expanded protections against creditors and civil law suits (including lurking divorces).

The growth of dynasty trusts as a tool in the estate planner’s portfolio, especially for clients with significant wealth or business interests to be transferred to future generations, has been made possible by a phenomenon of states repealing their Rule Against Perpetuities statutes. A growing number of states have repealed the Rule Against Perpetuities, a relic of the old common law of property, and thus allowing perpetual or dynasty trusts. In the Kansas City area, Missouri allows dynasty trusts, but Kansas does not (having refused to repudiate the Rule Against Perpetuities). Currently, 28 states (and the District of Columbia) (56% of American states) allow dynasty trusts: Alaska, Arizona, Colorado, Delaware, Florida, Hawaii, Idaho, Illinois, Kentucky, Maine, Maryland, Michigan, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, North Carolina, Ohio, Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, Virginia, Washington, Washington, D.C., Wisconsin, and Wyoming. Expect that number to continue to grow steadily in the future, as more states vie for trust business.

Delaware may well become the bastion of trust law, just as it’s already the bastion of corporate law, thanks to its favorable corporate law statutes and the Chancery Court’s business-friendly jurisprudence.

(c) 2011, Stephen M. Johnson, Esq. All rights reserved.