You may have a very close bond with all of your grandchildren and have the hope that your legacy stays in their memory for the rest of your lifetime. At the same time, you may find yourself in the very fortunate position that you have enough estate assets to spread considerably across your children, grandchildren, and overall two or more generations of your family. These circumstances may make you the ideal candidate for a generation-skipping trust. Well, for more information, please continue reading to learn the function of a generation-skipping trust and how an experienced New York City trusts attorney at Zimmet Law Group, P.C. can help you understand what strategy will benefit your grandchildren the most.
What is the purpose of a generation-skipping trust for my grandchildren?
In short, a generation-skipping trust may allow you, the grantor, to skip over your own children to pass your estate’s property and assets to your grandchildren.
Upon initial thought, you may wonder why you would ever want a generation to miss out. Well, this is not entirely true. This is because your children may still benefit from the income generated by the property and assets you use to fund this generation-skipping trust. All the while, you may still designate certain property and assets for your children through your Last Will and Testament document or separate trust funds.
Therefore, a generation-skipping trust’s purpose is to ensure that your property and assets last long enough for your grandchildren to enjoy them. That way, your legacy may live on for multiple generations rather than just one.
What other estate planning strategies can I adopt for my grandchildren?
On the one hand, you may not be in a financial standing that allows you to set up a generation-skipping trust while also leaving a fair and just amount of property and assets for your children and other beneficiaries. Or, on the other hand, you may be a considerably high-net-worth individual who exceeds the generation-skipping tax exemption of $13.99 million; which means a flat 40 percent tax rate in addition to other state estate, federal estate, and gift taxes.
All of this to say, you may resign to the fact that establishing this trust type is not in your or your grandchildren’s best interests. So, you may sooner adopt other estate planning strategies. For one, we commonly advise our clients to look into making outright gifts to their grandchildren throughout their lifetime. Specifically, the annual gift tax exclusion is $19,000 per grandchild as of 2025. Or, you may set up a 529 plan if you are particularly interested in supporting your grandchildren’s educational needs in a way that still comes with federal tax benefits.
If you have gotten this far, we now ask you to reach out to a skilled New York City estate planning attorney to schedule an initial consultation. Overall, we strongly encourage you to retain legal representation from Zimmet Law Group, P.C. for all your estate planning needs.
