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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
Many, but certainly not all, dynasty trusts are structured as grantor trusts, where the settlor must report the trust income on his tax return and bear the tax burden.
Dynasty trusts: The ultrarich have been turning to a key tool -- the dynasty trust -- to take advantage of the law doubling the amount that can be passed to heirs without being subject to estate and gift taxes.
(14) Many states do not follow the Murphy approach, which may or may not present a significant risk to both self-settled and third party dynasty trusts. (15) The aforementioned states are term-of-years states, hybrid states, and opt-out states.
In this case, the decedent created dynasty trusts benefiting her three sons and their respective families.
Morrissette's trust funded the policies, which were held in dynasty trusts, with lump sum premiums totaling $29.9 million.
So-called "dynasty trusts" now allow super-rich families to pass on to their heirs money and property largely free from taxes, and to do so for generations.
* Limit the duration of Generation Skipping Transfer Tax-exempt Dynasty Trusts. The new budget plan proposes limiting the existence of a dynasty trust, which currently can exist perpetually, to 90 years.
Freidman predicts the following proposals from the president are "more viable" options: to close "loopholes," including (1) eliminating the ability of someone who inherits an IRA or 401(k) to "stretch" the payments over his or her lifetime; and (2) curtailing the availability of sophisticated wealth transfer techniques such as grantor retained annuity trusts ("GRATs"), intentionally defective grantor trusts and dynasty trusts.If the budget committee fails to reach an agreement, Freidman warns, Congress faces yet another choice on Jan.
The 2004 repeal allowed for the creation of "dynasty trusts," which allow for wealth to pass from generation to generation while minimizing the federal estate tax.
Also gaining traction among the wealthy, says Lapiana, are generation-skipping transfer trusts or "dynasty trusts." Unlike a traditional irrevocable trust, a dynasty trust distributes income to trust benefits for several generations while keeping the remaining trust assets outside of the beneficiaries' taxable estates, and thus free of the generation-skipping transfer (GST) tax.
They attended seminars covering the following topics: Tips Relating to IRS Audits of Family Limited Partnerships; Federal Tax Update; Valuations; Perpetual Dynasty Trusts Tax Planning and Jurisdiction Selection; Trustee Missteps; Washington Tax Issues Associated with Transfers of Property; Washington Probate and Trust Law Update; Intra-Family Transactions: Lessons in Forgiveness of Debt; Tax-Efficient Disposition of Qualified Plans and IRAs; Planning with Gifts in 2012; TEDRA: A Panacea for Curing Trust and Estate Ailments; Tax Compliance for U.S.