What is a generation-skipping trust?

A generation-skipping trust is a type of trust set up in California to benefit generations after the original trust creator. It is designed to be used by people who wish to save their wealth not only for the direct heirs of their property, but also for any grandchildren and other descendants. The trust’s primary purpose is to skip an entire generation of heirs and pass assets directly to the later generations. In terms of its structure, a generation-skipping trust is similar to other trusts in California. It is set up by the original creator, or grantor, who names a trustee to manage the trust assets. This trustee also identifies the beneficiaries of the trust, which can include anyone from the grantor to grandchildren and other descendants. It can also name charities or any other non-profit organizations as beneficiaries. The main advantage of a generation-skipping trust is tax savings. Assets passed on through the trust will not be subject to estate taxes imposed on the donor’s death. This allows the donor to pass their assets to their descendants without having to worry about hefty taxes. Additionally, the generation-skipping trust can be specific concerning how the trust is to be used by the beneficiaries, which can help ensure that the assets are used in the way the donor wanted them to be. Ultimately, a generation-skipping trust is an important tool for California residents who wish to pass on their wealth to later generations in an efficient and cost-effective manner. It allows them to ensure that their assets are passed on to the next generation without the burden of hefty taxes.

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What is a generation-skipping trust?

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