A Generation-Skipping Trust (GST) is an estate planning tool that allows individuals to pass assets directly to their grandchildren (or other beneficiaries at least two generations younger) rather than their immediate children. This strategy can be particularly advantageous for families looking to preserve wealth across multiple generations while minimizing estate taxes.
How Does a Generation-Skipping Trust Work?
A Generation-Skipping Trust is typically set up as an irrevocable trust, meaning once it’s established, the terms cannot be changed. Here’s how it benefits families:
- Estate Tax Savings: By skipping a generation, the GST can help reduce estate taxes that would normally be applied when assets are transferred from one generation to the next. For example, instead of passing assets to their children and then to their grandchildren, the grantor directly leaves assets to the grandchildren, thus avoiding estate taxes at the children’s generation.
- Generation-Skipping Transfer Tax (GSTT): While these trusts help avoid some estate taxes, they are subject to the Generation-Skipping Transfer Tax (GSTT), which applies to transfers skipping a generation. However, there’s a lifetime exemption amount for GSTT, currently over $12 million per individual. Assets transferred up to this exemption limit can pass tax-free, making GSTs particularly attractive for those with substantial wealth.
- Asset Protection and Control: The terms of a Generation-Skipping Trust can specify how and when grandchildren receive their inheritance. This setup allows the grantor to exercise control over the assets, ensuring they are used responsibly and protected from potential threats like creditors, divorces, or lawsuits.
Why Use a Generation-Skipping Trust?
Families with significant wealth often choose a GST to preserve their assets across generations while avoiding multiple layers of estate tax. The trust also allows for greater control over how the assets are managed and distributed, providing peace of mind that family wealth is being preserved for the long-term benefit of future generations.
How Approved Inheritance Cash Can Help
Approved Inheritance Cash can assist beneficiaries who are waiting to receive assets from a Generation-Skipping Trust. If you’re an heir set to inherit from a GST but facing financial needs in the meantime, Approved Inheritance Cash can offer an advance on your inheritance. This advance allows you to access the funds you need right away, without waiting for the lengthy trust administration process to conclude.
By providing financial relief to beneficiaries, Approved Inheritance Cash helps bridge the gap, so you can meet your immediate financial needs. Our team understands the complexities of Generation-Skipping Trusts and offers tailored solutions to help you manage the waiting period without compromising your financial stability.
If you’re interested in learning more about how Approved Inheritance Cash can assist with funds tied up in a GST, feel free to reach out. We’re here to support you and provide a smoother financial path as you await your inheritance.
