Dynasty / GST-exempt trust
Long-duration irrevocable trust with GST exemption allocated (Form 709 or 706 Schedule R). Designed to benefit multiple generations without repeated federal estate/GST tax at each generation. Illinois limits duration (prudent-period rule, not true perpetuity).
| Facet | Detail |
|---|---|
| Also called | GST-exempt trust, generation-skipping trust, perpetual trust (within state limits) |
| A-B / A-B-C role | Often remainder of B trust or separate lifetime trust |
| When created | Lifetime or at death |
| Revocable | No |
| Inter vivos / testamentary | Either — lifetime funding common for GST allocation |
| Typical beneficiaries | Children, grandchildren, remote descendants |
| Primary purpose | Multi-generation wealth transfer with one GST tax hit at funding |
| Marital deduction | No |
| Uses estate exclusion | Yes — lifetime gift or testamentary funding uses exemption |
| In survivor's estate | No |
| Basis step-up | Carryover if lifetime gift; step-up if testamentary |
| Income tax | Complex trust 1041; may be grantor trust in some designs |
| Crummey powers | Often for annual exclusion gifts into trust |
| GST / dynasty | Core feature — inclusion ratio 0 if fully exempt |
| Spendthrift | Yes |
| See-through (IRA) | Possible but coordinate 10-year and trust tax rules |
| Key tradeoff | Generational tax efficiency vs cost, duration limits, and ongoing administration |