What is a generation skipping trust and how does it work?

A generation skipping trust is a type of trust specifically created to transfer assets from one generation to the next. This type of trust can help heirs avoid estate taxes due to the fact that the assets are transferred from one generation to another, instead of the assets being passed directly to the children or grandchildren. In Kansas, a generation skipping trust may be created to distribute assets in a manner that bypasses the intermediate generations, such as the children of the Grantors and transfers the assets directly to the grandchildren or other future generations. These trusts are designed to protect the assets from the estate taxes that are due on the transfer of the assets to the immediate heirs. In order to establish a generation skipping trust, the Grantor must make a written stipulation, commonly referred to as a trust instrument, which contains the details regarding the trust’s purpose and the instructions to be followed by the chosen trustee. The Grantor also must establish the terms of the trust in the trust instrument and must fund the trust. Once the trust is established, the trustee will manage, invest, and use the assets of the trust for the designated purpose. The trustee is responsible for providing the beneficiaries of the trust with reports and detailed information regarding the trust’s activities. The trust can be used for various purposes, including passing on assets to the generation skipping beneficiaries, reducing estate taxes, and protecting family assets.

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What is a generation skipping trust and how does it work?

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