A generation-skipping trust is a great way to ensure that your grandchildren can receive part of your estate’s assets and overall that your legacy lives on for multiple generations. However, depending on the extent of your estate’s assets, we may advise you to stick with handling inheritances through your Last Will and Testament document. For further explanation, please follow along to find out the circumstances in which establishing a generation-skipping trust might be a smart idea and how a proficient Broward County trust lawyer at The Probate Lawyers can help you understand its implications.
Under what circumstances should I consider a generation-skipping trust?
Generally speaking, a generation-skipping trust may be a great estate planning tool for grantors with relatively larger estates. This is because the assets you use to fund this trust type will, as the name suggests, “skip” over your children and go to your grandchildren directly. Your children may still benefit from the earnings that these principal assets produce, so long as they remain preserved. However, this single income stream may not compensate your children enough, in the way you would have liked; this may be especially true if they were relatively dependent on your financial support throughout your lifetime. All of this to say, it is highly advisable that you have enough estate assets to be fair and establish trusts for all your children and grandchildren.
What should I know about generation-skipping trust tax exemptions?
Appealingly, the state of Florida does not impose estate taxes. However, federal estate taxes may still apply. Now, the federal government implemented the generation-skipping tax to prevent families from bypassing estate taxes continuously for multiple generations. Now, this tax is a flat rate of 40 percent for estates surpassing the $13.99 million exemption as of 2025. It is worth mentioning that this may be in addition to the federal estate and gift tax rate of 40 percent.
So, as you may likely conclude, only truly high-net-worth individuals need to worry about exceeding the generation-skipping tax exemption. However, within the year, this tax exemption may be scheduled to decrease alongside federal estate and gift taxes. This means that, when the time comes, you may have to confirm your estate’s true value and reevaluate whether establishing this trust type is still worth it for your and your family’s sake.
It is understandable to feel overwhelmed by all these regulations and implications. But you may rest easier knowing that, so long as you are proactively planning like you are now, you may find a feasible means to legally reduce these future tax obligations for your children, grandchildren, and multiple generations of family.
If you have gotten this far, we now ask you to reach out to a talented Broward County estate lawyer to schedule an initial consultation. Overall, we strongly encourage you to retain legal representation from The Probate Lawyers for all your estate planning needs.
