Dynasty Trusts and Generation Skipping Planning

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You have worked hard to build something worth protecting. Whether it is a family business, real estate, investments, or savings, you probably want your wealth to benefit not just your children, but your grandchildren and beyond. That is where dynasty trusts and generation-skipping planning come in. At Slowik Estate Planning in Atlanta, Georgia, we help families build legal structures that protect wealth across multiple generations, using tools rooted in both federal tax law and Georgia state law. If you want your legacy to last, this page is for you.

Table of Contents

What Is a Dynasty Trust?

A dynasty trust is a long-term, irrevocable trust designed to hold and protect assets for multiple generations of your family. It is an irrevocable trust that incorporates both asset protection provisions and generation-skipping transfer tax strategies, and it can be designed to last indefinitely. Think of it as a legal container that holds your wealth, shields it from creditors, and passes it down to your children, grandchildren, and great-grandchildren, all while minimizing estate taxes at each generational transfer.

So how long can a dynasty trust actually last in Georgia? Under O.C.G.A. § 44-6-200 through § 44-6-206, Georgia’s Uniform Statutory Rule Against Perpetuities currently allows a non-vested interest in property, including interests in trusts, to remain nonvested for up to 360 years. Specifically, O.C.G.A. § 44-6-201 provides that a nonvested property interest is invalid unless it either vests or terminates within 360 years after its creation. That is a significant amount of time. It means a trust you create today could potentially benefit your family through many generations to come.

Georgia amended O.C.G.A. § 44-6-201 by extending the safe harbor duration found in Georgia’s version of the Rule Against Perpetuities from 90 years to 360 years, a change that strongly benefits dynasty trusts, those that exist for many generations, and means new Georgia trusts will be able to last for 360 years. This update made Georgia a much more attractive state for long-term trust planning.

A dynasty trust is also governed by the Revised Georgia Trust Code of 2010, found at O.C.G.A. Title 53, Chapter 12. That code covers everything from trustee duties and trust administration to spendthrift protections and trust investments. When you work with Slowik Estate Planning, we draft dynasty trusts that comply fully with Georgia law and reflect your family’s specific goals. If you have not yet explored this option, now is a great time to start. Reach out to us to schedule a conversation about whether a dynasty trust makes sense for your family.

Understanding Generation-Skipping Transfer Tax

Before you can plan around a tax, you need to understand it. The generation-skipping transfer tax (GSTT) is a federal tax on transfers of assets or property to individuals, or to a trust for their benefit, that are more than one generation below the transferor. This includes transfers from a grandparent to a grandchild or to other individuals who are more than 37½ years younger than the transferor, often called the “skip” generation.

Why does this tax exist? Enacted in 1986, the generation-skipping tax closed a loophole that previously allowed people to pass money to their children’s children, with the transfer only subject to estate taxes once. Now, if you pass assets to your grandchildren, the taxation is essentially the same as if you passed the gift to your children and then they passed it to their children later. In other words, the gift and estate tax is applied twice, once on each transfer.

This tax is equal to the highest federal gift and estate tax rate at the time of the transfer, which is 40% in 2026, and it is in addition to any other federal gift or estate tax that may be owed. That is a significant hit on your wealth if you are not planning carefully.

There are three types of GSTT transfers you need to know about. A direct skip occurs when assets are transferred from one individual to a skip person, either outright or in trust. For direct skips, the transferor or their estate pays the tax at the time the transfer takes place, based on the value of the assets received. A taxable distribution occurs when an irrevocable trust has been created and a distribution of income or principal is made by the trust to a skip person. Understanding which type of transfer applies to your situation matters a great deal for tax planning. An Atlanta estate planning lawyer at Slowik Estate Planning can walk you through how these rules apply to your specific family and assets.

How the GST Tax Exemption Works in 2026

Here is the good news. The federal government gives every person a substantial exemption from the generation-skipping transfer tax. The GST exemption was increased to $15 million per taxpayer for 2026, up from $13,990,000 in 2025. For married couples, that means a combined exemption of $30 million. This is a powerful planning tool.

The higher exemption level was made permanent and slightly increased to $15 million in 2026 by P.L. 119-21, the FY2025 reconciliation bill, commonly known as The One Big Beautiful Bill Act. This amount is subject to an annual cost-of-living adjustment, so the $15 million threshold may change in future years. Unlike earlier legislation, the increased exclusion and exemption amounts do not expire.

Dynasty trusts are typically designed to provide for a wholly exempt trust by the allocation of the transferor’s GST exemption to all transfers made to the trust. This is the core strategy. You fund the trust with assets up to your available exemption amount, you allocate your GST exemption to those transfers, and the trust becomes what planners call a “GST-exempt” trust. Once that trust is exempt, the assets inside it, and all future growth on those assets, can pass from generation to generation without triggering the GST tax again.

You report lifetime transfers using IRS Form 709. Form 709 covers transfers subject to the federal gift and certain generation-skipping transfer taxes, as well as allocation of the lifetime GST exemption to property transferred during the transferor’s lifetime. Getting the paperwork right matters. A missed allocation can cost your family millions. Slowik Estate Planning works closely with clients to make sure every transfer is properly documented and every exemption is correctly allocated. We also help you think about how your wills and trusts work together as part of your overall plan.

Asset Protection and Spendthrift Provisions in Georgia Dynasty Trusts

One of the biggest advantages of a dynasty trust is not just the tax savings. It is the protection it provides to your trust beneficiaries from creditors, lawsuits, and poor financial decisions. Georgia law specifically supports this through spendthrift provisions.

Under O.C.G.A. Title 53, Chapter 12, Article 5, Georgia recognizes spendthrift and discretionary trusts. A spendthrift provision prevents a beneficiary from assigning their interest in the trust to a creditor. It also prevents creditors from reaching trust assets before they are actually distributed to the beneficiary. This is a critical protection for families with significant wealth.

Think about this scenario (for illustration purposes only): if your grandchild faces a lawsuit or a divorce, assets held in a properly drafted dynasty trust with spendthrift language are generally shielded from those claims under Georgia law. The trust holds the assets, not the individual, so the individual’s creditors typically cannot reach them. This is one of the most compelling reasons families use dynasty trusts beyond just the tax benefits.

Georgia’s Revised Trust Code also allows for significant flexibility in how a dynasty trust is managed. Trusts in Georgia now have statutory authority to split up the trustee’s duties among multiple parties, with each only being liable for their own duties and powers. For example, one or more parties can serve as the trustee with administrative duties, while one or more other parties can control investments or distributions to the beneficiaries. This directed trust structure lets you put the right people in charge of the right decisions, which is important when a trust is designed to last for generations. Proper trust administration is essential to keeping these protections intact over time.

The Role of Rev. Rul. 2023-2 and Basis Planning in Dynasty Trusts

When you transfer assets into a dynasty trust, you need to understand how the tax basis of those assets is treated. This matters because basis determines how much capital gains tax your beneficiaries will owe when they eventually sell an asset. The IRS addressed this directly in Revenue Ruling 2023-2, and the answer has important implications for dynasty trust planning.

Under Internal Revenue Code Section 1014(a)(1), property acquired from a decedent generally receives a “step-up” in basis to the fair market value of the property at the date of the decedent’s death. This step-up can eliminate years of built-in capital gains. However, Rev. Rul. 2023-2 clarified that this step-up does not apply to assets held in an irrevocable grantor trust if those assets are not included in the grantor’s gross estate for estate tax purposes. In other words, if you transfer assets to a dynasty trust in a way that removes them from your taxable estate, those assets will not receive a basis step-up when you die. Your beneficiaries will inherit the original carryover basis instead.

This is a real trade-off that families must weigh carefully. You save on estate and GST taxes, but you may give up the step-up in basis. For highly appreciated assets, this trade-off deserves careful analysis. The right answer depends on the type of asset, how much it has appreciated, and how long your family plans to hold it inside the trust. Under O.C.G.A. Title 53, Chapter 12, Article 16, Georgia trustees are also held to a prudent investor standard when managing trust investments, which means the trustee must consider tax efficiency as part of the overall investment strategy. Slowik Estate Planning helps clients think through these trade-offs so that your dynasty trust plan works as efficiently as possible. We also help families with related planning needs, from pet guardianships to complex multi-generational structures.

FAQs About Dynasty Trusts and Generation-Skipping Planning in Atlanta, Georgia

What is the difference between a dynasty trust and a regular living trust?

A regular revocable living trust is designed primarily to avoid probate and transfer assets at death. It can be changed or revoked at any time during your life, and it typically distributes assets to your children within a few years of your death. A dynasty trust is irrevocable, meaning you give up control of the assets when you fund it. It is designed to hold assets for multiple generations, sometimes up to 360 years under Georgia law, while providing ongoing asset protection and minimizing transfer taxes at each generational level. The two tools serve different purposes, and many families use both as part of a complete estate plan.

How much does it cost to set up a dynasty trust in Atlanta, Georgia?

The cost of establishing a dynasty trust varies depending on the complexity of your estate, the types of assets involved, and the specific provisions you want included. Dynasty trusts are more involved than standard revocable trusts because they require careful drafting of distribution standards, trustee succession provisions, spendthrift language, and GST exemption allocation strategies. Slowik Estate Planning is happy to discuss fee arrangements during an initial consultation. All fee information will be clearly communicated to you before any engagement begins so there are no surprises.

Can I be the trustee of my own dynasty trust?

Generally, if you serve as the trustee of your own irrevocable dynasty trust and retain certain powers, the IRS may include the trust assets back in your taxable estate, which defeats the purpose of the trust. For the trust to work as intended for estate and GST tax purposes, an independent trustee is typically required. Georgia law under O.C.G.A. Title 53, Chapter 12, Article 11 provides detailed rules governing trustee duties, powers, and liability. Many families name a trusted family member, a professional fiduciary, or a corporate trustee to serve in this role. Slowik Estate Planning can help you think through the right trustee structure for your family’s needs.

What happens if Congress changes the GST tax exemption in the future?

The GST exemption is currently $15 million per person in 2026 and has been made permanent under the One Big Beautiful Bill Act, subject to annual inflation adjustments. However, Congress can always change tax law in the future. A well-drafted dynasty trust accounts for this possibility by including flexible distribution provisions and giving the trustee discretion to respond to changing tax rules. Some trusts also include a trust protector, a person with the authority to modify certain trust terms if the law changes significantly. Planning now, while the exemption is high, is generally considered a smart move because transfers made today lock in the current exemption amount for the assets transferred.

Does Georgia have its own estate or generation-skipping transfer tax?

Georgia does not currently impose a separate state-level estate tax or a state-level generation-skipping transfer tax. This means Georgia residents are only subject to the federal estate tax and the federal GST tax. This makes Georgia a relatively favorable state for estate planning compared to states like Massachusetts, which still imposes a state estate tax with a $2 million exemption. Georgia families still need to plan around federal taxes, but the absence of a state-level transfer tax is a meaningful advantage. Slowik Estate Planning, located in Atlanta, Georgia, helps clients take full advantage of Georgia’s favorable trust and tax environment to protect family wealth for generations.

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