What is a generation-skipping trust?

A generation-skipping trust is a legal agreement that allows you to transfer assets to a beneficiary who is two or more generations below yours. For example, a trust could be set up so that assets are transferred from a grandparent to a grandchild, bypassing the grandparent’s children. This type of trust is most often used to keep assets in the family for the longer term, with the intention of protecting them against estate or income taxes. In Washington, the law allows for the creation of this type of trust, and it must meet certain criteria. In general, the trust must identify at least one beneficiary who is at least 37.5 years younger than the person who creates the trust. It must also be irrevocable, meaning it cannot be changed once it is put in place. Additionally, Washington law requires certain information to be included in the trust, such as the trust’s purpose and the beneficiaries involved. When properly set up, a generation-skipping trust can offer many advantages. These include helping to protect assets from creditors, reducing or eliminating estate taxes, and allowing for the continuation of family wealth for multiple generations without the risk of it being taken away by the government in taxes. Furthermore, a generation-skipping trust may also help to distribute wealth more efficiently and provide more control to the trust creator.

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What is a generation-skipping trust?

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