What is a generation skipping Trust (GST)?

A Generation Skipping Trust (GST) is a type of trust that allows assets to be passed down to younger generations of beneficiaries while skipping one or more generations for estate tax purposes. Generation Skipping Trusts (GSTs) allow assets to bypass a generation for tax purposes.

What is a generation skipping Trust?

According to U.S. generation skipping trust rules, the beneficiary must be two or more generations younger than the trustor. Mentioned before, this means that the beneficiary must either be the grandchild of the trustor, or anyone who is at least 37 ½ years younger. They do not have to be a blood relative as long as they reach the age requirement.

Should you create a generation-skipping Trust?

Generation-skipping trusts allow the settlor to avoid estate taxes that would be applied if the immediate next generation, meaning the children, took ownership of the assets. If you’re considering creating a generation-skipping trust, here are some important points to consider.