“How did the backdoor came about? Didn’t Bush just do it using exec order in 2010? Even if he had to go through the Congress, it may be remedied for being used not intended by law. Let me look for the article. There were quite a few the president could take a unilarteral action on.”
Bush was not the president in 2010.
What I know about one dynasty trust:
(1) My sibling wanted to remove the amount from sib’s taxable estate.
(2) Sib did not want the funds to go directly to the next generation for fear of “ruining” them. Sib wanted to make sure to address potential unborn grandchildren and children of step-grandchildren. Sib is a young step-grandparent.
(3) Sib did not want money to go directly to next generation in case next generation is involved in divorce or creditor issues.
(4) Terms of dynasty trust allow for regular distributions (not enough to allow for lives of leisure) and distributions for education, business seed money, house down payment, etc. (“good things”) to be “approved” by family committee. I do not know how this factors into the relinquishment of control of the assets in the trust.
Generally, dynasty trusts are hard to amend once set up because that’s the point. The beneficiaries have to agree. It sounds like a great deal of work to me but it might meet someone’s needs.
@igloo and @cbreeze I was looking for a way to protect assets and estate planning together. I think estate planning considerations on their wouldn’t have gotten me to a dynasty trust as their are probably less cumbersome ways to do things. However, I do also believe that the bringing the threshold down may be one of the easiest ways to fill public coffers when we realize that we can’t solve our fiscal problems just by raising taxes or just by cutting costs. We are far too polarized at the moment to act in accord with obvious sanity, but pendulums swing. In addition, if you can put enough in the trust, it can fund lots of things that make kids and grandkids lives easier without giving them too much too early (again, there are undoubtedly less complex mechanisms for doing that). On asset accumulation, fortunately, I have not been doing too badly. Hopefully that will continue.
What are the ills? Traffic jams? Its traffic could still be much better than Houston or DFW.
We like DFW too, especially its major airport. DFW is the hub for AA and Houston is the hub for Continental. It is easy to fly out from either of these two airports (to the east or the west coast.)
Why do people tend to overlook San Antonio? The river walk is “nice”. A large military base is there so there should be many hospitals, I think. The COL is lower. So is the housing cost. It is not as humid as Houston.
AttorneyMother, thanks for the links.
Igloo, I would like to see a link that states the president can wipe out carried interest. I believe the president has proposed wiping out carried interest. Why didn’t the president just do it?
If I remember correctly, the tax proposal the president made a few week ago did not include carried interest interestingly. You would think it is the easiest remedy to make. I just got back. Let me try harder to find the article. I clearly remember the article mentioned carried interest.
I think these are rather common terms for any irrevocable trust. Most also include a phrase allowing some distribution to beneficiaries, up to 25% for example.
@Iglooo
Here you go:
http://dealbook.nytimes.com/2014/06/12/how-the-president-can-increase-taxes-on-carried-interest/
Treatment of carried interest rests on a 1993 Revenue Procedure.
@Iglooo
I’m sure that’s the case. The primary difference is that the life of a dynasty trust is intended to surpass the life of any particular beneficiary. So, the principal is generally not distributed at stipulated ages to the beneficiary. This particular feature prevents the beneficiary from weighing down his/her estate or having the assets be subject to divorce or creditor claims.
mcat2,
Austin has grown so much in the past 20+ years, it is hardly recognizable to those who lived there in the 1980s. For decades Austin was unsure about the pursuit of growth, and it’s in an environmentally sensitive (aquifer) area, so big construction was not encouraged. That resulted in terrible traffic.
Anyway, if you want more info about the relative merits of TX cities, perhaps you should start a new thread because that’s beyond the scope of this one.
AM, Thank you for the links. And I agree with you about the benefits of a dynasty trust, you never have to pay estate tax on it.
Yes. Thanks for the links AttorneyMother. I think there would be quite a big uproar if the treasury changed the regs. We are talking about a regulation which affects people who make $1 billion a year. The loophole should be closed. 
Those who are benefitting by the carried interest loophole have no reason to read the posts in this thread. 
@dstark
No doubt! Although if they are, they’re welcome to come out and share their expertise in preparing for retirement.
Rule no. 1) Have your ordinary income categorized and taxed at long term capital gains tax rates.
@dstark
That sounds simple enough. But, it is actually difficult to accomplish in practice for most ordinary people. I’m not even referring to “owning” securities, which most of us do through our mutual funds in 401(k)s and IRAs. Funds distribute out of 401(k)s and tIRAs as ordinary income (as we all know).
Let’s say that we want to be in the capital-gains crowd via the ownership of securities. That requires substantially non-tax sheltered accounts outside of the 401(k)s and IRAs. Dedicated saving and investing could accomplish that. But…
Leaving periodic dividend and cap gains distributions out of this discussion, you’d still have to “sell” your underlying securities to capture the capital gains treatment. Then there’s the lot matching to make sure you have LT gains. How much and at what time. That would require some measure of analysis and decision-making that I may not want to do in retirement. Some might, but that seems like quite a bit of work.
@AttorneyMother, I think dstark was referring to the strategy of working for a hedge fund and having your earned income deemed capital gains as “the expertise in preparing for retirement.” Methinks dstark was being a bit dsnark
@IxmayBob
I got it.
In the alternative: return to workforce and get hired by one such hedge fund. Do the hired help get paid via carried interest. I doubt anyone other than the principals do.
IxnayBob, yes and no. 
Most people are not going to be able to turn ordinary gains into long term cap gains.
I am not very wealthy. I am reading the posts on this thread. You welcomed the very wealthy to share their expertise and number 1 is very big.
You don’t have to be super rich to turn short term gains into long term gains but you have to make money trading the right instruments.
Actually you don’t have to make money. If you have a trading business and outside income, you can break even in your trading business and still come out ahead. If you have business expenses, you can deduct those expenses at ordinary rates and some of your trading profits can be taxed at long term rates.
I have filed many tax forms 6781. I think the loophole is ridiculous.
^ I think you have to be a “general partner.”
No. You don’t.
I have become quite adept at turning dividend income, state tax exempt interest, and long term capital gains into ordinary income by holding securities in my traditional IRA ! 