Generation Skipping Trust
Skokie Trust Attorney
Why Use a Generation Skipping Trust?
If one of your estate planning goals is to provide for the financial security of grandchildren, great-grandchildren or even generations beyond that — generation skipping trusts may be your most effective tool to achieve that.
Above and beyond estate taxes, transfers to grandchildren or more remote descendants may be subject to a "generation-skipping transfer tax", or GST tax at the maximum transfer tax rate. This tax effectively allows the IRS to tax every generation. Fortunately, there is an exemption from the GST tax which is equal to the applicable exclusion amount (currently $5MM). There may be many reasons to skip a generation outright or via a trust.
Personal reasons for using generation skipping trusts are common. For instance, you could be estranged from your own son or daughter but don't want that to get in the way of doing what you feel is right for your grandchildren. Perhaps you have plenty of money and simply want to spread it around the family. Maybe your child is in danger of a major lawsuit or has a large estate of her own, does not need your inheritance, or doesn’t want assets that will just compound her own estate-tax "problems." In these instances, shifting money to your grandchildren instead of your own children might make sense.
Proper use of a GST Trust is akin to giving your children a gift of the applicable exclusion amount, plus future growth, exempt from estate taxes in his or her estate and protected from his or her creditors. An additional technique our attorneys can use in establishing the trust might be to include “spray” trust provisions. Spray trust provisions allow trust assets to benefit any descendant at any level, so that any child, grandchild or great-grandchild can be helped according to individual needs.
Experienced estate planning attorneys often use living trusts, created while you are still alive, as a way to avoid probate and its associated costs. To ensure your estates' privacy and to better-define how you want your estate handled Contact Our Chicago Trust Attorneys
Types of Trusts We Establish:
- Estate Planning
- Probate & Trust Administration