Most of the time, people leave the bulk of their assets to their immediate heirs — the adult sons and daughters they leave behind.
But what if that’s not really your preference? What if you’d prefer to skip the next generation and leave your wealth to your grandchildren, instead?
Why do people sometimes skip a generation in their wills?
Sometimes, it is for highly personal reasons. Maybe you had a falling out with your daughter but you want your grandson to have the benefit of your wealth for his future goals. Perhaps you simply believe that your son has enough money — but you want to make it possible for your granddaughter to live an independent life when she comes of age.
Other times, people skip a generation when they pass on the bulk of their wealth so that they can minimize the tax liability to their estate and their heirs.
This is where a generation-skipping trust (GST) can come in handy. Not only can you use a GST to make sure that your grandchildren have the assets you wish them to have, it’s an effective vehicle that can help avoid unnecessary taxes — when it’s handled correctly.
What if you want to set some assets aside for your children, too?
There’s nothing stopping you. You can fund the GST as you wish and leave other assets, personal items and other valuables to your children however you like. GSTs can be used in conjunction with other estate-planning tools, beneficiary designations, transfers-on-death and more.
Most people have very little idea about the different options available to them as they draft their estate plans. Find out more today.