Define: Generation Skipping Trust

A Generation Skipping Trust is a legal arrangement that allows individuals to transfer assets to their grandchildren or future generations, bypassing their children as beneficiaries.

Creating a GST can help individuals minimize estate taxes, as assets transferred to grandchildren or future generations are not subject to estate tax when the children pass away. It also allows individuals to provide for future generations and protect assets from potential creditors or divorces of their children.

Anyone can create a GST, provided they have assets they wish to transfer to future generations and meet the legal requirements for establishing a trust.

There is no specific limit on the amount of assets that can be transferred to a GST. However, it is important to consult with a legal professional to ensure compliance with tax laws and regulations.

In most cases, a GST can be modified or revoked by the grantor, as long as the trust document allows for such changes. However, it is advisable to consult with an attorney to understand the specific terms and conditions of the trust.

Yes, a GST can be structured to provide for multiple generations, allowing assets to be distributed to grandchildren, great-grandchildren, and beyond.

While assets transferred to a GST are not subject to estate tax when the children pass away, there may be generation-skipping transfer (GST) taxes imposed on the transfer itself. It is important to consult with a tax professional to understand the potential tax implications.

Yes, a properly structured GST can help protect assets from potential creditors of the grantor’s children, as the assets are held in trust and not directly owned by the children.

Yes, a GST can be structured to allow for distributions to be made for specific purposes, such as educational or medical expenses of future generations.

If a beneficiary of a GST passes away without any descendants, the trust document will typically specify how the remaining assets should be distributed. It is important to consult with an attorney to ensure the trust document reflects the grantor’s intentions in such scenarios.