A plain-language guide
What is a dynasty trust?
A dynasty trust is a trust meant to last for many generations. A family puts money into it once. The trust invests the money and pays some of it out to the family each year: first to children, then grandchildren, great-grandchildren and so on, for as long as the law allows and the money lasts. Because the money stays in the trust instead of being inherited, it can avoid estate tax each time a generation dies.
What this tool does
It plays out the future thousands of times. In each run it invents a family (who is born, who has children, when people die) and a market history (good years, bad years, inflation), then follows the trust year by year: investment growth, taxes and fees go in and out, and the yearly payout is shared among everyone alive. Looking at all the runs together shows what usually happens, and how good or bad things could get.
How to use it
- Describe the trust. Under Trust, enter how much goes in and how much is paid out each year. A payout of 1% to 3% of the trust's value is typical for a trust meant to last.
- Describe the family. Under Family, enter the ages of the children (and grandchildren, if any) and how many children each descendant tends to have.
- Pick an investment outlook. Use the Conservative, Base or Optimistic buttons at the top of the settings. This is the setting that matters most.
- Read the results. Start with the summary sentence and the cards at the top of Overview. Then look at the payout chart to see what each generation might receive.
- Try changes. Press Save scenario, change one setting, and compare in the Compare tab. "Generate a random family" shows one possible future in detail.
How to read the results
- Today's dollars. Amounts are adjusted for inflation, so $100,000 in year 80 buys what $100,000 buys today.
- Median. The middle outcome: half of the runs did better and half did worse.
- 10th and 90th percentile. A bad case and a good case. In 1 run out of 10 things turned out worse than the 10th percentile, and in 1 out of 10 better than the 90th. The shaded band on the charts is the range between them.
- Log scale. On the charts each gridline is ten times the one below, so very large and very small amounts fit on one picture. Untick "Log scale" for an ordinary scale.
- Family line dies out. The share of runs where no descendants are left. The trust would then end, usually under the terms set in the trust document.
What matters most
- Investment return versus payout. If the trust earns more after inflation, taxes and fees than it pays out, it grows. If it pays out more, it shrinks. Over 100 years or more, a difference of one percentage point changes the outcome many times over.
- Family growth. The payout is shared by everyone alive. A family that doubles every generation splits the money among many more people, so each person's share falls even when the trust grows.
- Taxes and fees. Small yearly costs add up over long periods, just like returns.
Key terms
- Real and nominal
- Nominal amounts are actual dollars. Real amounts take out inflation. A 6.5% nominal return with 2.5% inflation is about a 4% real return.
- Distribution rate
- The share of the trust's value paid out each year.
- Pot trust and branch trusts
- A pot trust is one shared fund for the whole family. Branch trusts split the money into a separate trust for each child's line. The Compare tab shows how the choice changes who gets paid.
- GST tax and exemption
- The generation-skipping transfer tax is a 40% federal tax on wealth that passes to grandchildren or later generations. Each person can shelter a set amount from it ($15 million in 2026, rising with inflation after that). This tool assumes the whole trust is sheltered. If you put in more than the exemption covers, real results would be worse than shown.
- Rule against perpetuities
- A state law that limits how long a trust can last. Some states let trusts last forever or for several hundred years; others limit them to around 90 years. Use "Years simulated" to match your state.
- Monte Carlo
- Running a model many times with random inputs to see the range of possible results.
- Tax drag
- The yearly cost of taxes on the trust's income and gains, shown as a percentage of its value.
What it doesn't do
It doesn't give advice, forecast the future or replace a lawyer. It doesn't model the GST tax on non-exempt money, state income tax on the trust itself, changes in tax law, spouses as beneficiaries, or the trustee's discretion to pay more to someone in need. Use it to understand the trade-offs, then take your questions to an estate attorney and a tax advisor.