Mitt Romney, the former Massachusetts governor currently running for the GOP nomination for president, has often been confronted with the question of his wealth. This includes both what he made at the corporate firm Bain Consulting, and what he may have inherited from his father, George Romney, who was the CEO of American Motors Company and a governor of Michigan.
With respect to Mitt Romney's inheritance, Mother Jones recently reported an interesting nugget of information. It turns out that in an earlier interview with Reuters, Mitt Romney made an telling remark:
“What I got from my parents when they passed away I gave away to charity and to my kids.”
Mother Jones points out that just passing on inherited wealth is not quite the same thing as giving it all away or “not inheriting the money at all.”
The question then arises if perhaps Mitt Romney or his father used a dynasty trust, which is a generation-skipping estate-tax exempting device that the Wall Street Journal points out is used by quite a lot of wealthier individuals.
A dynasty trust, also called a wealth trust, is essentially a tax-free way of passing your money. You can avoid the estate tax if you leave your assets to heirs who are more than one generation below. One of the recognized consequences of dynasty trusts is that the grandchildren are sometimes believed to become trust fund babies even if their parents don’t want them to be.
If you’re in a position where you’d like set up a dynasty trust, you should speak to a local attorney. Be aware, however, that New York has a law that limits the length of time a non-charitable trust can exist.
- Find a New York Estate Planning attorney (FindLaw)
- Generation Skipping Trust Can Mean Wealth Stays In the Family (FindLaw’s New York Estate Planning News)
- What is an AB Trust and Who Should Use AB Trust? (FindLaw’s New York Estate Planning News)