Who Can Be the Beneficiary of a Generation-Skipping Trust?

Everyone has a different goal and outcome they wish to achieve with their estate plan. Personally, you may want your estate’s assets to last far longer than your lifetime and stay within your family for as many subsequent generations as possible. Well, you may consider adding a generation-skipping trust for considerable long-term planning such as this. Without further ado, please continue reading to learn who can be the beneficiary of a generation-skipping trust and how an experienced Putnam County trusts attorney at the Law Office of Andres D. Gil, PLLC can help you understand whether this will be truly beneficial for the generations of family members to follow.

Who is allowed to be the beneficiary of a generation-skipping trust?

As the name says for itself, a generation-skipping trust is meant to skip over your children. Therefore, it is primarily intended for your grandchildren to be the beneficiaries of this trust type. Or, you may even select your grand-nieces, grand-nephews, great-grandchildren, or any other close family member who falls two generations below you. Importantly, this is so long as this “skip person” is at least 37.5 years younger than you.

How might my beneficiaries possibly benefit from this trust type?

Likely a principal reason you might set up a separate generation-skipping trust for your grandchildren or younger beneficiaries is to evade serious tax implications, all within a legal manner. For example, if you pass your estate’s assets to your children directly, they may be subject to estate and gift taxes. Then, when your children decide to hand them down to your grandchildren, they may be taxed again.

Paying taxes upon each transfer may significantly diminish your estate’s value. Therefore, a generation-skipping trust may work to ensure your grandchildren have an equal opportunity to enjoy and benefit from these assets. With this, it is worth mentioning that the federal estate tax exemption allows a considerable amount of assets to go through a generation-skipping trust before taxes apply. Specifically, the exemption is $13.99 million per person as of 2025.

In addition, the assets you use to fund this trust type may be protected from any creditors, legal judgments, or divorce cases your grandchildren may encounter in their adult life. This further ensures that these assets last for longer. All the while, you may get more control over what, when, and how these assets are supposed to be distributed to your grandchildren. This is instead of leaving it up to your children, who may have intentions and plans that severely contrast with yours.

This may all seem great, but we cannot conclude without mentioning that, just like any other estate planning tool, there are potential drawbacks you must consider deeply before proceeding. If you have gotten this far, we now ask you to reach out to a skilled estate planning attorney in Putnam County to schedule an initial consultation. Overall, we strongly encourage you to retain legal representation from the Law Office of Andres D. Gil, PLLC for all your estate planning needs.