Providing financially for one’s children after death has long been a common desire of people in Indiana. The legacy that can be created through an inheritance can be both sentimental and financially beneficial for generations to come. In addition to leaving something for your children, you may be particularly interested in ensuring that your grandchildren receive something from your inheritance. Such a desire is part of why the generation-skipping trust has been developed.
As the Motley Fool explains, the generation-skipping trust may be just the ticket to provide financial assets for your children’s children but there are certain things you will want to know and evaluate as you consider this type of trust. One of these is the taxation model associated with a GST. When not carefully created, a GST may leave your assets vulnerable to a high level of taxation.
Leveraging your lifetime exemption as well as setting up your generation-skipping trust to be irrevocable are two things that may help reduce the tax burden on the assets in the trust, thereby leaving more for your grandchildren. You might also consider providing annual gifts up to the allowed amount while you are still alive as another way of avoiding a high level of taxes on assets you wish to transfer to your grandkids.
If you would like to learn more about the pros and cons of a generation-skipping trust and how to protect your assets while providing for your grandchildren, please feel free to visit the generation-skipping trust page of our Indiana estate planning website.
