How a retired couple set up a multigenerational plan

The problem

A couple we'll call Frank and Elaine came in the year Elaine turned seventy-two. Two adult children, four grandchildren. The estate was split across a Gilbert home they no longer needed and a summer vacation home near Pinetop the family used every year. The rest sat in a portfolio of public equities and bonds plus a minority interest in a private holding company Frank's father had founded. Net worth roughly $22 million.

They had three goals. Pass the vacation home to their children with structure, so it stayed in the family after everyone in their generation was gone. Fund a long-term charitable commitment to a university their son had attended. Make use of the federal estate and gift tax exemption before it sunsets at the end of 2026, cutting the available exemption roughly in half.

What we did

We built an Arizona dynasty trust under A.R.S. § 14-10401 to hold the vacation home and a portion of the public securities. Frank and Elaine gifted $10 million into the trust, using a substantial portion of their lifetime exemption while it was still available. The trust names the children as beneficiaries, then the grandchildren, with provisions continuing for future descendants. The vacation home's use rights are defined so all branches of the family have access on a rotating schedule, and a specific fund inside the trust pays the property taxes and maintenance.

For the charitable piece, we structured a charitable remainder trust (CRT) funded with $3 million of appreciated publicly traded securities. Frank and Elaine receive a life annuity from the CRT calculated to hit IRS minimum and maximum requirements, and the remainder passes to the university's endowment at their deaths. The CRT generated a significant up-front income tax deduction and converted the appreciated securities into a predictable income stream without triggering the capital gains tax.

The remaining assets stay in their revocable living trust for their lifetime use and eventually for the children, coordinated with the dynasty trust structure so nothing double-counts or conflicts.

We also drafted a separate statement of values to accompany both trusts, explaining Frank and Elaine's philosophy about inherited wealth and the role they hoped each component would play in the family.

The result

Frank and Elaine locked in the benefit of the pre-2026 exemption before the sunset. The vacation home now sits in a structure that can last multiple generations. The university received a substantial long-term commitment without disrupting the family's lifetime finances.

The dynasty trust's initial funding grew to $10.8 million in its first year. Estate tax on that growth, had it been retained outside the trust, would run well into seven figures under current rates. The children and grandchildren now see the plan as a gift of structure, not a constraint on what they inherit.