For families managing significant wealth, safeguarding assets for future generations while minimizing tax liabilities is paramount. A powerful tool to achieve this is the Generation-Skipping Trust (GST), which allows families to pass wealth to grandchildren or younger beneficiaries, bypassing intermediate generations and reducing the tax burden.
Leveraging the 2024 GST Tax Exemption
The 2024 federal Generation-Skipping Trust tax exemption has increased to $13.61 million per individual (or $27.22 million for married couples), allowing families to transfer significant assets free from federal estate and Generation-Skipping Trust taxes. This increase offers a crucial window of opportunity for individuals to make impactful gifts or set up trusts before these historically high exemptions revert to pre-2018 levels in 2026, when the exemptions may fall to approximately $6-7 million.
Advanced Tax Strategies and Multi-Generational Planning
Generation-Skipping Trusts are most effective when integrated into a comprehensive estate plan. For families, it is vital to consider strategies that minimize taxes, ensure liquidity for estate management, and support long-term wealth preservation. Beyond direct gifts, Generation-Skipping Trusts can be used with other sophisticated structures, such as Irrevocable Trusts or Grantor Retained Annuity Trusts (GRATs), which allow for the continued growth of assets without additional estate tax exposure.
Act Now to Preserve Wealth
Given the looming reduction in tax exemptions, swiftly implementing a Generation-Skipping Trust can secure the advantages of today’s favorable tax environment. This can be particularly critical for families with illiquid assets like real estate or businesses, where strategic liquidity management is required to cover future expenses without diminishing the underlying wealth.
Tailored Expertise from Legacy Private Trust Company
We understand that no two families are alike at Legacy Private Trust Company. Our seasoned experts specialize in crafting bespoke estate planning strategies tailored to protect and grow your family’s wealth across generations. Contact us to explore how a Generation-Skipping Trust could seamlessly integrate into your broader financial strategy, ensuring a lasting legacy.
If you are a Legacy client and have questions, please do not hesitate to contact your Legacy advisor. If you are not a Legacy client and are interested in learning more about our approach to personalized wealth management, please contact us at 920.967.5020 or connect@lptrust.com.
This newsletter is provided for informational purposes only.
It is not intended as legal, accounting, or financial planning advice.
