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

A Generation Skipping Trust is a type of estate planning tool used to avoid or reduce estate and gift taxes. It allows an individual to pass assets directly from one generation to the next, without the estate taxes and other costs associated with estate transfers. Generally, assets pass from the grantor, or person establishing the trust, to his or her descendants, such as children or grandchildren. The trust is usually set up so that the assets will be held in trust until the designated person reaches a certain age. At that time, the assets will be released to the beneficiary of the trust. Depending on the amount of assets being transferred, the trust can allow the designated beneficiary to receive full or partial control of the assets before the designated age. Generation Skipping Trusts are also beneficial because they protect the asset from creditors and lawsuits. This type of trust is especially useful for people who don’t want their assets to be subject to estate taxes. It’s important to remember that these types of trusts are taxable in the state of Maryland, so it’s important to consult an estate planning attorney who can provide more detailed information.

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

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