As a parent, you may take great pleasure in watching the maturation and success of your children. You may also dote on your grandchildren and want to give them the same opportunities you gave your own children.
If you die without a will, your assets will first go to taxes and debts and then then to your spouse and children. If you want to leave something for your grandchildren, you need to specifically plan to do so. Sometimes, a grandparent might choose to use a generation-skipping trust in their estate plan to leave a legacy for their grandchildren.
By creating a carefully structured trust, those looking to establish a multi-generational legacy can potentially protect their grandchildren’s inheritance.
Why use a generation-skipping trust?
People decide to use a generation-skipping trust when the assets in the trust should only go to their grandchildren and not the parents of those grandchildren. People sometimes do this when they recognize that their children are financially sound and don’t need an inheritance.
Some people choose this type of trust because they worry that their children’s history of gambling or substance abuse make it likely that they’ll squander any inheritance they receive or use it to harm themselves. It’s also possible that someone simply doesn’t have enough resources to leave assets for everyone in their family and wants to support those who have not had as much time to benefit from family resources so far.
Regardless of your motivation, choosing the right trustee and properly funding a generation-skipping trust will be crucial to its success. Thinking about your estate planning goals and family needs will help you make the right choices while planning your estate.