A dynasty trust is an irrevocable trust designed to last for multiple generations—potentially in perpetuity. Several states have abolished the rule against perpetuities, allowing trusts to continue indefinitely: South Dakota, Nevada, Alaska, Wyoming, New Hampshire, and others. Assets inside a properly structured dynasty trust grow free of estate and generation-skipping transfer taxes at each generational transition.
The math is compelling. A $5 million trust growing at 7% annually becomes $38 million in 30 years, $290 million in 60 years, and over $2 billion in 90 years—all without estate tax erosion at each generation. By contrast, the same $5 million passing through taxable estates at 40% each generation shrinks to roughly $1.8 million by the third generation.
But here is what the math obscures: 70% of generational wealth transfers fail by the second generation, and 90% fail by the third. The architecture survives. The family's understanding of it does not. A dynasty trust without educational mandates, governance protocols, and value transmission frameworks is a perpetual structure with nobody who understands why it exists.
Seven-generation thinking requires more than perpetual duration. It requires instruments that teach. Governance that renews itself. Trustee succession criteria that prioritize alignment with the family's values over professional credentials alone. The trust should compound not just wealth but wisdom.
The states that permit dynasty trusts give you the legal framework. The drafting gives you the architecture. The philosophy gives you the reason it endures. Grace can explore what a multi-generational structure looks like for your family.