When you love your grandchildren, you may want to find a way to financially protect their future. A “Generation-Skipping Transfer” Trust or “GST” allows you to give your grandchildren or great-grandchildren assets in a trust so they can use them and avoid estate taxation after your death. A GST, also called a Grandchildren’s Trust, skips a generation, and assets are passed down to the grantor’s grandchildren, not the grantor’s children. A GST Trust avoids having your estate taxed twice — when your children inherit, and when your grandchildren later inherit your assets.
1. You can transfer up to $11.40 million — the same as the estate tax exemption — in a generation-skipping trust and only the estate tax applies, or $22.80 million if you’re married.
2. Any money beyond $11.40 million is subject to the generation-skipping transfer tax, which is a flat 40% tax.
3. GSTs are not only for blood relatives. You can designate anyone at least 37.5 years younger than you and who isn’t your spouse or ex-spouse as the recipient of funds in a generation-skipping trust.
4. You can specify that the funds in a GST are for a specific purpose such as education or the purchase of a first home.
Planning how your assets can protect your family after you’re gone can be confusing and stressful, especially with new and changing tax laws.
Contact the experienced estate planning attorneys at Estate and Probate Legal Group in Dupage County, Illinois, to discuss how to preserve your wealth for the next generation. Call us today at 630-800-0112.