Generation-skipping transfer or trust

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Generation-skipping transfer or trust

A trust in which a principal amount is placed in a trust on the death of person A and is transferred to A's grandchildren when A's children die. The income from the trust goes to the children of person A while they survive.

Generation-Skipping Transfer or Trust

A trust into which assets are deposited and invested, but for different beneficiaries. That is, the assets of the trust are held on behalf of the grantor's grandchildren; they are divided among them when the grantor's children all die. On the other hand, income from the investment of those assets is distributed among the grantor's children. Generation-skipping trusts allow the grantor's assets to bypass estate taxes that the children would have to pay if the assets were directly transferred.
References in periodicals archive ?
A dynasty trust ensures that each generation will receive sufficient income to live, but be unable to divert remaining assets from future generations.
The new budget plan proposes limiting the existence of a dynasty trust, which currently can exist perpetually, to 90 years.
Thus, if "John Doe" created the trust, the name section of the Form 1099 or Schedule K-1 would contain the following: "John Doe, grantor of the Doe Dynasty Trust dated 12/30/2012.
Richard Nenno, a leading expert on and proponent of dynasty trusts, provides the following contrasting examples--which are admittedly oversimplified--of a dynasty trust funded with $1,000,000 and a bequest that is subject to estate tax at 45% every 25 years:
2004 Dynasty Trust and Jocelyn Woolworth 2004 Dynasty Trust on October
You can also set up a dynasty trust, which avoids the generation-skipping tax by using the exemption and by picking the right state to create the trust, such as Delaware.
Other Travelers Life & Annuity estate planning products available on WebStory include supplemental income, family income trust, lifetime exemption trust, credit shelter maximizer and family dynasty trust.
How dynasty trust planning will be different and more popular, with back up benefits for the donors
This customized presentation system, which links directly from Travelers Life Illustration System and Travelers WinFlex, will focus initially on estate planning products, including Travelers Life & Annuity's supplemental income, family income trust, lifetime exemption trust, credit shelter maximizer and family dynasty trust.
Grantors with sufficient means to plan for more than one generation of heirs should consider creating a dynasty trust.