When a Pennsylvania family has concerns over how their wealth will be passed on after their death, a number of solutions are available. One is the creation of a generation-skipping trust, which allows a family to pass wealth down to their grandchildren while also providing value to their adult children. This type of trust also protects the wealth from the estate tax, which is a big draw for many families.
When creating a generation-skipping trust, adult children can be granted the ability to withdraw any earnings that the trust makes, while leaving the base of wealth in place for their own children. When the time comes for the grandchildren to inherit, they will do so without incurring the estate tax. It should be pointed out that the earnings from a sizable trust can be significant, giving adult children a valuable stream of income.
Creating and funding generation-skipping trusts is also a great way to protect an inheritance from losses that can accompany divorce or legal troubles. Because the base wealth is owned by the trust itself, and not the heirs, that wealth is protected from seizure through divorce or legal judgments. This provides an added layer of security for Pennsylvania families that wish to provide for their grandchildren.
Generation-skipping trusts are just one way to ensure that loved ones receive their intended inheritance and avoid the estate tax. There are numerous other options that will also meet that goal. Each Pennsylvania family has a unique set of estate-planning needs and should work with an estate planning attorney to find a solution that works.
Source: Forbes, “Do You Need A Trust For Your Estate Plan?“, Gary Plessl and Kevin Houser, May 14, 2015