Pulling the Plug on Perpetual Trusts
February 10, 2026
By: Aaron Burton
The Colorado Lawyer
This article explains why multigenerational trusts are becoming more common and discusses legal and tax issues that clients could face when terminating a multigenerational trust.
Perpetual trusts allow wealth to grow and be distributed to beneficiaries for many generations while protecting assets from estate and gift taxes, creditors, and divorce settlements. Due to changes to the rule against perpetuities, along with tax and family law considerations, multigenerational trusts are becoming more common across a broader range of income levels. This article provides an overview of trust structure, highlights circumstances in which perpetual trusts may be particularly advantageous, and outlines common reasons clients may seek an early termination of a trust. It also examines the legal and tax implications of terminating an irrevocable trust.