A Malthusian Analysis of the So-Called Dynasty Trust

41 Pages Posted: 3 Oct 2008 Last revised: 7 Sep 2015

William Turnier

University of North Carolina School of Law

Jeffrey Lynch Harrison

University of Florida - Levin College of Law

Abstract

Select financial institutions and members of the Bar have seized upon the presence of the limited exemption from the generation skipping transfer tax provided under the Internal Revenue Code to promote so-called dynasty trusts as a means whereby individuals can build dynastic wealth for a family forever free from transfer taxes. To realize such benefits, the trust must be governed by state law that does not impose the Rule Against Perpetuities. The promise of dynastic wealth is unlikely to be realized due to several factors. Administrative and tax costs are likely to reduce the yield on such trusts to a level where inflation, rising expectations and an ever growing band of beneficiaries are typically assured to outpace the ability of the trust to deliver the benefits anticipated by trust settlors.

Suggested Citation

Turnier, William and Harrison, Jeffrey Lynch, A Malthusian Analysis of the So-Called Dynasty Trust. UNC Legal Studies Research Paper No. 1276224; University of Florida Levin College of Law Research Paper No. 2008-04. Available at SSRN: https://ssrn.com/abstract=1276224 or http://dx.doi.org/10.2139/ssrn.1276224

William J. Turnier (Contact Author)

University of North Carolina School of Law ( email )

Van Hecke-Wettach Hall, 160 Ridge Road
CB #3380
Chapel Hill, NC 27599-3380
United States
(919) 962-4114 (Phone)

Jeffrey Lynch Harrison

University of Florida - Levin College of Law ( email )

P.O. Box 117625
Gainesville, FL 32611-7625
United States

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