The legacy planning guide

Legacy planning is where the plan stops being about you and starts being about what you leave behind. For families with meaningful assets, this is the difference between a will that distributes everything once and a structure that influences your family for generations.

Dynasty trusts

A dynasty trust is an irrevocable trust designed to hold assets across multiple generations without triggering estate or generation-skipping transfer tax at each generation's death. Properly structured, the trust can provide for your children, then your grandchildren, then further descendants, with the assets growing outside of anyone's taxable estate.

Arizona is particularly hospitable to dynasty trusts. A.R.S. § 14-10401 abolished the rule against perpetuities for most trust purposes in 2008, meaning a trust set up in Arizona can continue for generations. Some states still limit trust duration to a specified period. Arizona doesn't.

Funding a dynasty trust uses a portion of your lifetime gift and generation-skipping transfer tax exemption. The exemption is at historically high levels under current law ($14 million per person in 2026), but it is scheduled to sunset at the end of 2026 unless Congress acts. Families considering a dynasty trust should evaluate this window carefully and take action before the sunset.

Education trusts for grandchildren

An education trust is a carved-out portion of a larger plan that funds education for grandchildren and further descendants. These can be structured as:

529 plans owned in a family's name. Contributions count toward the annual gift tax exclusion ($19,000 per beneficiary per year, indexed) and up to five years' worth can be contributed at once without gift tax consequences (26 U.S.C. § 529(c)(2)(B)).

Generation-skipping trust with education priority. A portion of the dynasty trust is explicitly earmarked for education expenses.

Direct tuition payments. Payments made directly to an educational institution for tuition are exempt from gift tax regardless of amount (IRC § 2503(e)(2)(A)). Grandparents can pay grandchildren's tuition directly without using annual exclusion or lifetime exemption.

Charitable structures

Families with significant charitable intent have multiple structures available.

Donor-advised funds. Administratively simple, deduction taken in the year of funding, grants made over time. Good for families that want to bunch deductions into high-income years.

Charitable remainder trusts (CRTs). You or a beneficiary receive income for life or a term of years, and the remainder passes to charity at death or term end. Useful for turning an appreciated asset into an income stream without realizing the capital gain.

Charitable lead trusts (CLTs). Charity receives the income for a term, and the remainder passes to family. A way to pass assets to family with reduced gift tax consequences if the trust performs well.

Private foundations. The most control, the most administrative burden. Families with $5 million or more of planned charitable giving may find the control worth the overhead.

The statement of values

Documents move money. A statement of values moves a family. This is a letter or short document, usually prepared alongside the trust, that explains why the plan looks the way it looks: what you believe about money, what you hope your descendants will do with the resources they receive, and what you consider the responsibilities that come with inherited wealth.

The statement is not legally binding, and it shouldn't try to be. Its job is to give your family context. A dynasty trust without context feels like a cage. A dynasty trust with a thoughtful statement of values feels like a gift.

Business and family operating structures

For families with an operating business, legacy planning often involves a separate family holding structure. A family limited partnership or family LLC can hold operating businesses, investment assets, and real estate, with ownership distributed in a tax-efficient way and management concentrated in a small group.

These structures aren't for every family. They come with real administrative costs, tax filing complexity, and governance requirements that some families welcome and others find cumbersome. The question is whether the long-term benefit (tax efficiency, creditor protection, centralized management) outweighs the annual cost of keeping the structure alive.

When to start

Legacy planning conversations benefit from long runways. The tools involve irrevocable commitments, and the trade-offs are easier to evaluate when you still have time to observe results and adjust around them. Families typically start serious legacy planning work a decade or more before they expect to pass significant assets.

The 2026 exemption sunset is driving urgency for families with estates above the projected post-sunset exemption amount (approximately half of today's level). If your estate is in that range, plan to have dynasty or gift strategies in place before December 31, 2026.

Next steps

If you have meaningful assets and are thinking about how they should work after you're gone, schedule a free 30-minute consultation. We review the situation, walk through the structures that fit your values and your family, and quote a flat fee for the planning work you decide to move forward with. You'll know the exact number before you commit.