If you have a sizable estate one of your primary objectives may be transferring your estate assets to your children and only your children. The idea of anyone else having access to your hard earned estate assets is frightening and disturbing. But there is a way to ensure that the inheritance your child (children) receives is preserved for his/hers (their) entire life as well as the lives of your grandchildren. It's called a dynasty trust. A dynasty trust is designed to remain in existence for a child's entire lifetime, as well as that child's children's (your grandchildren) lifetime.

Creditors
When a child receives an inheritance outright, that inheritance money becomes exposed to creditors. Everything you worked so hard to leave to your child can be taken away if your child has some unfortunate, unforeseeable event occur. That event could be a malpractice lawsuit, if your child is a professional, or a horrific car accident.

Divorce
Another event that can play havoc with your child's inheritance is a divorce. Depending on how your child handles his or her inheritance, some portion of that inheritance is likely to end up in the hands of the divorcing spouse. It may be a small amount or as much as half.

An appropriately designed dynasty trust can protect your child's inheritance from creditors and a divorcing spouse. Neither has the ability to access the funds. The assets left to the child simply stay titled in the name of the trust until the trustees decide to distribute the assets to the child. The distributions can be large or small, as there is no limitation on the amount the trustees can distribute to the child. The trustees watch over the trust assets in a protected shell. In order for this to happen a dynasty trust must be structured correctly. For example, the child cannot be the sole trustee. There must be an additional trustee. Additionally, the non-child trustee must make the distribution decisions. Your child, however, can retain certain powers in the trust that would make the child comfortable with this arrangement. The goal is not to keep the inheritance from the child, but to provide your child with the tools to enjoy the inheritance without interference from creditors or a divorcing spouse.