If you’re in a position where you don’t want to leave your estate to your children but would like to leave it to your grandchildren, you should know that there are excellent options available. You can skip the middle generation by using a trust.
For example, using a trust, you could set up funds for your grandchildren that pay out at certain points in their lives, such as when they get married or attend college. You may also set up a fund that pays regularly following their 18th birthday or that pays out in a lump sum upon your death.
How do generation-skipping trusts give you more control over your assets?
Beneficially, these trusts also help by giving you more control. You can say that certain terms have to be met, such as good grades in school or no trouble with the law for a certain length of time.
Why use a generation-skipping trust for your estate?
There are many reasons why you might consider using a generation-skipping trust for your estate ranging from not wanting to give away assets to children who are irresponsible to avoiding providing an inheritance to your child who has legal trouble.
Are there any requirements for a generation-skipping trust?
Yes. Generation-skipping trusts can be used for anyone who is at least 37.5 years younger than you. This kind of trust does come with tax advantages, because you bypass one generation of heirs and leave assets to the next generation. Your asset, for example, may pass tax-free once your own children pass away, which allows your grandchildren to inherit their assets without taxes.
Do you have to use a generation-skipping trust for your grandchildren?
This trust doesn’t have to be used for your grandkids. You might use them for nieces, nephews, step-grandchildren and some others. It’s worth taking some time to look into this option if you don’t want to leave your assets to your children, because you can still leave an inheritance to your grandchildren and future generations without having to risk losing assets to a generation you don’t trust or do not want to provide for.