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Dynasty trust can leave surviving spouse without inheritance
The report says a $2 million bloodline trust would pass to the couple's daughter if the husband dies first, rather than to the surviving spouse.
A couple on The Ramsey Show highlighted how a bloodline trust, also called a dynasty trust, can change who receives inheritance after a death, even when a surviving spouse expects to benefit. According to a Yahoo Finance write-up, the husband in the case receives quarterly checks from his family trust, but if he dies before his spouse, she would not inherit his share and the $2 million trust would pass to their daughter.
Yahoo Finance also explains that bloodline trusts are designed to protect family wealth, particularly as more Americans experience divorce and remarriage. The outlet cites Pew Research Center analysis that about 1.8 million Americans got divorced in 2023, and that two-thirds of divorced Americans will marry again, along with U.S. Census Bureau data showing 21.2% of U.S. couples who lived together in 2021 had children from a prior relationship.
The piece says the trust structure helps bypass probate and shields trust assets from creditors. It also notes that once the trustor dies, the trust becomes irrevocable, meaning the terms cannot be changed, and it describes how such trusts can preserve assets for direct descendants while protecting them from certain future relationship outcomes, including divorce.
The Yahoo Finance article further notes that bloodline trusts are often not widely understood, leaving many people unaware of how they can affect financial security for a surviving spouse.