What is a generation-skipping trust?

A generation-skipping trust, also known as a “dynasty trust,” is a type of trust available in Minnesota that allows assets to remain outside of the taxable estate of a deceased individual for multiple generations. When a grantor of the trust dies, the assets are transferred to the next generation and continue to bypass estate tax for each succeeding generation. When someone dies, their entire estate is generally subject to estate taxes. However, with a generation-skipping trust, the grantor can create a trust that avoids estate taxes, even over multiple generations. This type of trust is usually set up to provide for a line of descendants, such as a parent-grandparent-great-grandchildren. Designing a generation-skipping trust in Minnesota requires a skilled trust administrator or attorney. This structure can include provisions that limit the use of the trust’s assets by the beneficiaries, such as only to be used for education expenses, and can provide a list of trustees who are authorized to distribute the assets. The benefits of a generation-skipping trust in Minnesota are significant–it can provide for the long-term financial security of descendants and avoid estate taxes for multiple generations. However, it is important to understand the complexities of the trust structure and the tax implications to ensure the trust is benefiting the beneficiaries in the most effective manner.

Related FAQs

Who can be a trustee of a trust?
Can I set up a trust without legal help?
What are the elements of a trust?
What is a living will?
What is a will?
What is a trust deed?
What is an irrevocable life insurance trust (ILIT)?
What are the types of trusts?
What is a grantor?
What is a charitable remainder trust?

What is a generation-skipping trust?

Related FAQs

Related Blog Posts