A dynasty trust is a long-term, often multigenerational, irrevocable trust designed to hold family assets for descendants while minimizing transfer taxes and shielding property from creditors or divorcing spouses. Funded with lifetime gifts or bequests, it may leverage the generation-skipping transfer (GST) tax exemption so trust assets can grow outside beneficiaries' estates. Trustees follow written distribution standards and can retain assets, make discretionary payments, and manage investments. Properly drafted, a dynasty trust supports family governance, protects concentrated assets, and coordinates with insurance to provide liquidity and balance inheritances across branches.

In practice, families use dynasty trusts to preserve business interests, marketable securities, or life-insurance proceeds for future generations. Advisors pair the trust with an ILIT or wealth-replacement policy to replenish assets given to charity or to equalize among heirs. The trustee's discretion, investment policy, and distribution standards are calibrated to sustain growth while protecting beneficiaries from creditors and overspending.