What is a generation-skipping trust?

A generation-skipping trust is a type of trust designed to provide for multiple generations of beneficiaries. It is most commonly used to facilitate the passing of an asset from one generation to the next without the asset being subject to tax or the burden of estate planning. In a generation-skipping trust, a grantor, typically a parent, makes an initial contribution of funds or other assets during his or her lifetime. The grantor will then designate a trustee and beneficiaries, such as grandchildren, in a legally-binding trust document. The trust also includes instructions that describe how the assets are to be managed and distributed for the benefit of the designated beneficiaries. The trust will remain in place until the designated beneficiaries receive their inheritance. Depending on the type of generation-skipping trust established, the beneficiaries may receive distributions of principal or income at regular intervals. The trust is designed to ensure that the assets pass to the designated beneficiaries without being taxed, or without the burden of costly estate-planning fees. Ultimately, a generation-skipping trust is a powerful tool to preserve and pass on wealth to future generations. When used properly, generation-skipping trusts can help families save on taxes, better manage wealth, and provide financial security and generational continuity.

Related FAQs

What is a revocable living trust?
How do I probate an estate?
What is a charitable trust?
What are the advantages of a revocable trust?
What is a pour-over will?
What is a business succession plan?
How do I transfer real estate into a trust?
How can I create a trust?
Can I change the terms of a trust?
How do I distribute assets from a trust?

What is a generation-skipping trust?

Related FAQs

Related Blog Posts