Benefits of a Generation Skipping Trust in Illinois

Benefits of a Generation Skipping Trust in IllinoisIf you have started with some research on estate planning, you probably came across the term generation skipping transfer. When used properly, your estate planning can encompass goals and giving across multiple generations, which benefits many families across Illinois. Although there are certainly situations where giving conversations only involve one generation, many individuals and couples entering the estate planning process are interested in the potential to leave a legacy through several generations. When working with an experienced estate planning attorney, your generation skipping transfer can be aligned directly to your needs.

Estate planners must be able to consider how the actions of previous generations will impact future generations, so it’s critical to hire an attorney with a deep understanding of estate planning. The federal Generation Skipping Transfer Tax has been in existence since 1976 (although that version was later repealed retroactively, making the effective date in 1986 with the Tax Reform Act).

A typical transfer trust involves distributions to a child and grandchildren (although some people wish to transfer assets to even more remote relatives). In a generation skipping transfer, the assets are passed “beyond” the children to the grandchild so that the child can avoid the taxes associated with those assets.

If the total value of the combined estate for a husband and wife is less than $1,000,000, the generation skipping transfer tax will not be a direct concern for this family. For those individuals with more than $1,000,000 in assets but less than $2,000,000, special planning can be used to help avoid the generation skipping transfer tax.

There can still be financial benefits for a grantor’s children, since income generated by trust assets can be accessed by the grantor’s children while still keeping those assets in the trust for the grandchildren. Proper estate planning requires the assistance of a talented Illinois estate planning attorney, so if you are considering setting up trusts for your beneficiaries, contact the offices of experienced attorneys today.