Trust agreements can be an essential element of a comprehensive estate plan. The type of trust you choose can significantly impact future generations. Generation-skipping trusts (GSTs) protect your legacy for future generations while providing numerous benefits for your estate.
At E.A. Goodman Law, LLC, our Morristown estate planning attorneys have extensive experience developing comprehensive estate plans. We design estate plans that include provisions for asset protection and minimizing taxes.
Call our office today to begin working with a skilled Morristown estate planning lawyer. We will help ensure your goals for your estate are accomplished through trusts and other estate planning tools.
How Our Attorneys at E.A. Goodman Law, LLC Help You Develop a Generation Skipping Trust for Your Estate Plan
Many grandparents plan to pass assets to their grandchildren. Choosing the best way to leave a legacy for future generations is essential. A generation-skipping trust (GST) allows grandparents to pass assets to grandchildren while providing other benefits for the estate. An experienced trust attorney can help you develop a GST that best fits your estate plan.
When you hire our top-rated Morristown estate planning attorneys, you can trust that we will:
- Take the time to learn what is important to you and your goals for an estate plan and trusts
- Discuss beneficiary rights and how a generation skipping trust can benefit your grandchildren and future generations
- Review goals for asset safeguarding and tax implications
- Analyze how a generation-skipping trust will complement your estate plan
- Ensure that your trust agreement is drafted to comply with the New Jersey Uniform Trust Code and other laws to avoid challenges and legal problems
Our attorneys have decades of experience assisting individuals throughout New Jersey with estate and elder law matters. We put our clients first. Our legal team builds long-term relationships with clients to help them with all estate and elder law matters they may encounter. Our elder law attorney helps clients revise their estates when life events require an adjustment, including adding trusts to address changes in their estate planning objectives.
Contact E.A. Goodman Law, LLC to schedule a consultation with an experienced Morristown generation skipping trusts attorney. We are here to help you make decisions that will benefit you and your family now and in the future.
What Is a Generation Skipping Trust in New Jersey?
Trusts allow you to accomplish many estate planning goals, including planning for long-term care, protecting assets, reducing estate taxes, providing for a person with special needs, and giving to charities. A generation-skipping trust (GST) is a specific type of trust that allows you to provide for future generations while accomplishing other goals.
A generation-skipping trust “skips” over the generation directly below the grantor to pass assets to the succeeding generation or generations. Grandparents often use GSTs to pass assets to their grandchildren. However, you can use a generation-skipping trust to leave assets to any beneficiary, provided they are at least 37.5 years younger than you are when you sign the trust agreement.
Benefits of Using a Generation Skipping Trust as Part of Your Estate Plan in New Jersey
Trust agreements, including GSTs, provide numerous benefits for estate planning, especially for high-net-worth individuals. However, many aspects of GSTs benefit individuals and families regardless of their financial situation.
Benefits of generation skipping trusts include:
Children Can Benefit From a GST
Even though a GST “skips” the generation directly below the grantor, that generation can receive income generated by the trust. Therefore, grandparents can provide income for their children while protecting the principal assets in the trust for future generations. You can provide income and assets to multiple beneficiaries over several generations.
Tax Benefits of a Generation Skipping Trust
A GST is subject to the generation-skipping transfer tax. It applies to transfers from grandparents to grandchildren, even in a trust. Any amount over the exemption amount is taxed at the highest federal estate tax rate, currently 40 percent.
However, you can avoid this tax by transferring assets to the trust that are under the exemption amount. The exemption amount in 2024 is $13,610,000 for individuals and $27,220,000 for married couples.
Increases in the value of the assets in the trust can be allocated to the beneficiaries of the trust. Because a GST is an irrevocable trust, your estate does not owe generation-skipping taxes even if the value of the trust assets grows to exceed the exemption amount when you die.
Preservation of Wealth
Using generation-skipping trusts, you can preserve a larger portion of your wealth. GSTs reduce estate taxes by reducing the amount of your taxable estate. If you fund the GST with assets under the gift tax exemption, you also avoid those taxes. By minimizing taxes, your grandchildren and future generations receive a larger inheritance.
Asset Protection
A correctly structured GST can protect the trust assets from creditors. It also protects the assets from spouses during a divorce. The funds in an irrevocable trust would not be subject to equitable distribution in a divorce, bankruptcy proceedings, or creditor judgments.
Generation Skipping Trusts Are Irrevocable Trusts
A downside of GSTs is that they are irrevocable trusts. You lose control of the assets once you transfer them into the trust. The assets are managed by the trustee named in the trust agreement.
However, you do have control over the trust terms. You can set the conditions of when and how beneficiaries receive distributions from the trust. You can also provide restrictions or guidelines for investing trust assets. You also choose the trustee and the successor trustee for the agreement.
Schedule a Consultation With Our Morristown Estate Planning Attorneys
Generation-skipping trusts are complex trust agreements. Before signing and funding a GST, you must consider all factors, including your overall estate plan. GSTs offer some flexibility, but there are drawbacks. A skilled trust attorney can help you determine the best options for your estate goals.
At E.A. Goodman Law, LLC, our Morristown estate planning attorneys tailor trusts and estate plans to meet your goals and needs. Contact our office to schedule a consultation to discuss how a generation-skipping trust can help you obtain your objectives.