All of the statements regarding a dynasty trust are correct, except: A. Distributions of trust assets are postponed as long as possible.to avoid payment of estate taxes.
B. A transferor can allocate a portion of a GST exemption to each premium payment made to an ILIT to offset GST tax when there are skip-person beneficiaries.
C. A GST exemption applied to annual premiums in an ILIT protects the trust corpus from GST tax.
D. Dynasty trusts can be established in all states.

The statement that is not correct regarding a dynasty trust is:

D. Dynasty trusts can be established in all states.

Explanation:

A dynasty trust is a long-term trust created for the purpose of passing wealth from one generation to the next generation, without incurring transfer taxes, such as the gift tax, estate tax, or generation-skipping transfer tax (GSTT) for as long as the assets remain in the trust. The dynasty trust's defining characteristic is its long duration.  For example, in California it can last for 90 years.