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Advanced Estate Planning

California Generation-Skipping Trust Attorneys

Helping Clients Minimize Estate Taxes and Pass on an Inheritance to Future Generations

When you are ready to think about estate planning, some of your top priorities are probably protecting the family wealth by avoiding unnecessary estate taxes. A generation-skipping transfer is one excellent way to avoid estate taxes and pass on an inheritance to successive generations. The trust assets will be owned by the trust rather than in the trust creator’s name, keeping taxable estate assets to a minimum. Your own children can also benefit from this process as they avoid double taxation and still gain income from the trust’s assets.

Creating any form of trust can be complicated, especially when it’s an irrevocable trust like a generation-skipping trust. These trusts are extremely difficult to change or adjust, making it crucial for the trust creator to speak with trusted legal representatives before taking action.

Our legal team promises to answer your questions thoroughly and honestly as we help you determine the best trust for your estate plan. We can help with additional documents, including a traditional will. Call 510-901-5375 today for skilled, caring estate planning lawyers to help minimize your tax exposure and protect your family’s wealth.

What Is a Generation-Skipping Trust?

A generation-skipping trust is a great way to avoid paying a higher estate tax. This transfer process skips your children and passes the family wealth on to your grandchildren, skipping one generation. When passing on an inheritance, you are protecting your estate from being taxed twice, first to your children and then to the following generation.

California does not impose a state estate tax, but many individuals own property and assets in states that do. So, establishing generation-skipping trusts is a valuable aspect of estate planning for many individuals. However, it is important to understand that generation-skipping trusts are irrevocable trusts, meaning that while they provide excellent protection from taxation and creditors, they are very difficult to change once created. It is crucial to contact a trusted legal representative before creating a generation-skipping or any other irrevocable trust.

Reach out to our knowledgeable legal team to learn more about a creditor-protected, estate-tax-protected trust, such as a generation-skipping trust.

How Can a Generation-Skipping Trust Help Me Avoid a Higher Estate Tax?

Generation-skipping trusts are highly sought-after by individuals hoping to avoid paying estate taxes more than is absolutely necessary. When you have assets transferred to a trust, the trust itself owns the items, and they are no longer in your name. This protects you while you are alive and offers greater privacy after your death. However, assets held in a trust are still subject to the generation transfer tax, which is less than desirable for many individuals. What’s even more frustrating is that when you give a generous inheritance to your children, and they pass it on to their children, the assets may be taxed twice.

When you create a generation-skipping trust, you leave assets directly to your grandchildren, avoiding double taxation. It is also important to note that the beneficiaries need not be your grandchildren. You may choose any person you wish to benefit from your inheritance who is at least 37.5 years younger than you. This may include children you gave birth to later in life, nieces, nephews, and even great-grandchildren.

If you want to leave a legacy of generosity and wealth for at least two generations, a generation-skipping trust may be right for you. Call our law office immediately to learn more about the benefits and drawbacks of generation-skipping trusts.

What Are the Advantages and Disadvantages of Generation-Skipping Trusts?

Benefits of Generation-Skipping Trusts

  • GST creators avoid double taxation when the estate is passed on only to the second generation.
  • The estate owner enjoys the flexibility and protection a trust offers.
  • The family’s privacy is protected as the assets are exempt from probate.
  • The grantor may indicate specific wishes for beneficiaries to receive an inheritance, such as abstaining from illegal drugs.
  • The grantor’s children can still benefit from income-producing assets in the trust.

Drawbacks of Generation-Skipping Trusts

  • The GST is an irrevocable trust, meaning it cannot be changed easily.
  • Higher-value estates may be subject to a 40% generation-skipping transfer tax on an inheritance higher than the tax exemption.
  • Choosing a trustee can be complicated and may generate distrust or contention among family members.
  • Although the grantor’s children can still receive income from the trust, they may resent the inheritance skipping them entirely.

Other Trust Options

If you are unsure whether a GST is right for you, please contact our team of skilled estate planning lawyers. We will explain your options and help you determine which type of trust is right for you.

Some examples of other unique trust types that may fit your family include:

  • Dynasty trust – Dynasty trusts can last for many generations, passing on an inheritance without additional taxation as long as the items remain in the trust.
  • QTIP trust – Also known as a QTIP trust, the qualified terminable interest property trust allows the surviving spouse to maintain ownership after their spouse dies, helping them retain access to the family’s money and properties.
  • Qualified personal residence trusts – In these trusts, the grantor removes their personal residence from the estate, reducing the gift tax beneficiaries must pay.

Do I Need a Lawyer to Create a Generation-Skipping Trust?

Understanding estate planning laws and the nuances of trust creation can be complex and confusing. Hiring an attorney can make all the difference, as you’ll have someone on your side who understands the law and can offer personalized advice based on your unique circumstances.

Some duties your estate planning lawyer will provide include:

  • Educating you on the many options available when including a trust in your estate plan
  • Analyzing your situation to help determine which type of trust is right for you
  • Drawing up the terms of the trust, including any specific instructions you wish your posterity to receive
  • Ensuring your documents are legally sound so they protect your family when the time comes
  • Helping you maintain control over your assets while you are alive
  • Adjusting and updating current estate plans to match your family’s present needs

Should You Hire Our Generation-Skipping Trust Lawyers?

At The Singh Law Firm, we have helped countless families prepare for the future, including creating trusts to minimize their loved ones’ tax burdens. We can identify the right trust for you and your loved ones, including a generation-skipping trust that allows your child to benefit from income-producing property without an unnecessary tax burden.

Contact our compassionate group of attorneys for more information about generation-skipping trusts and other documents that could benefit you and your loved ones. We promise to explain your options in terms you can understand while answering your questions and concerns.

Irrevocable trusts should only be entered into with the help of skilled lawyers. You can trust our team of attorneys to help prepare a bright future for your family. Call 510-901-5375 now to schedule a free consultation.