Generation Skipping Trusts

If you have a large estate or your children have large estates or if you are concerned about possible divorce or creditor problems for your children, it may not be desirable at your death to leave all of your assets outright to your children.  This could result in not only having your property taxed at your death, but again at your childrens' deaths and be subject to loss through divorce or lawsuits against your children.

One way of avoiding the estate tax at your childrens' deaths, provide them with a measure of protection against loss due to divorce or lawsuits and still give your children control and flexibility over their inheritance would be to direct their inheritance into generation skipping trusts rather than have it distributed to them outright.  Under this arrangement, each of your children could be trustee of his or her own trust.  Each child could receive the net income from his or her trust and could withdraw principal for  purposes  of  his or her  health, education, support and maintenance.  Each child could also have the power to appoint his or her trust at death to anyone other than his or her creditors.  Upon the death of each of your children without having exercised this power of appointment, the trusts would distribute to their descendants or could continue on for your grandchildrens' lives.

The objective of this planning would be to set up trusts for your children from which they would receive substantial economic benefit, would have control as trustee and yet the assets of these trusts would be partially shielded from the claims of their creditors and would pass tax free at their respective deaths to their descendants or whomever they appointed.