Mockensturm, Ltd.
Have Tax Questions? Talk To One Of Our Experienced Professionals.
P: 419-442-7764 TF: 800-718-0722

The advantages of generation skipping trusts

Sometimes it makes more sense to set up a generation skipping trust, particularly if the objective is to reduce the size of tax obligation among family members. This trust does this by directly placing assets with grandchildren and future generations rather than having them go through each successive generation, thus being taxed each time. According to a recent article, those who took advantage of a generation skipping trust saved between 18 and 40 percent on estate taxes, depending on the estate and how much was wealth was transferred.

Breaking it down

The following must apply for drafting a viable generation skipping trust:

  • The recipient must be 37 ½ years younger than the grantor.
  • The recipient cannot be a spouse or ex-spouse.
  • The children may be able to access to funds generated in the grandchildren’s trust.
  • The recipient need not be a grandchild.

Higher threshold under the Tax Cuts and Jobs Act

Whereas the tax-free threshold for generation-skipping trusts was set at $5.49 million in 2017, it was doubled to $11.2 million for individuals and $22.4 million for couples. It increases on a yearly basis to accommodate for inflation. The current law expires in 2026 unless Congress extends it or changes it.

Working with an attorney is always recommended

Attorneys with a background in tax law and estate planning can be a big help to individuals who wish to utilize a strategic transfer of funds to young family members and loved ones. The circumstances of each estate are different, yet a lawyer can provide useful guidance that directly addresses the needs of the client.

No Comments

Leave a comment
Comment Information
Email Us For A Response

Start Here by Contacting Us

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

P: 419-442-7764 | TF: 800-718-0722 | F: 419-724-3495 |

1119 Adams Street
Floor 1
Toledo, OH 43604

Toll Free: 800-718-0722
Phone: 419-442-7764
Fax: 419-724-3495
Map & Directions