What is a generation-skipping trust?

A generation-skipping trust, also referred to as a "dynasty" trust, is a type of trust that allows a grantor to pass their assets directly to their grandchildren, bypassing their children. This type of trust is increasingly popular because it allows the grantor to avoid estate taxes that their children would potentially be subject to had they inherited their parents’ assets. The trust also allows the grantor to maintain control of the assets and determine how and when they are distributed. In South Carolina, a grantor must take certain steps for the trust to be properly established. First, the grantor must create a document that outlines the trust’s terms and conditions for distribution. This document must be signed by both the grantor and any co-trustees. Additionally, the grantor must designate a trustee, or trustees, to manage the trust. The trust must also be properly funded with the grantor’s assets. In order to be properly established, a generation-skipping trust must also comply with state and federal laws. In South Carolina, generation-skipping trusts must meet the requirements of the South Carolina Generation-Skipping Transfer Tax Act and South Carolina Uniform Trust Code. A generation-skipping trust can be a valuable estate planning tool for those looking to pass assets on to future generations.

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What is a generation-skipping trust?

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