Q.What are the disadvantages to the Dynasty Trust?

A.There are several disadvantages. First, every year the Dynasty Trust must performing an accounting and prepare and file its own tax return – IRS Form 1041. Second, as to protection from creditors, the Dynasty Trust will not prevent a creditor from attaching a direct payment from the Dynasty Trust to the child. Third, if your child is not financially savvy, your child could frivolously spend everything as there is no one in a position to stop her.

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