State Considerations

An important issue when setting up a Dynasty Trust is the applicable state’s rule against perpetuities (“RAP”), which generally provides that an interest in trust is invalid if it can last longer than the lives of persons named in the trust plus 21 years. Although this rule has been abolished or significantly modified in many states (limiting the duration of trust to several generations), clients wishing to create a dynasty trust that could last perpetually should consider creating it in a jurisdiction that has no RAP. Illinois law allows trusts to opt out of RAP, and thus potentially last into perpetuity.