A Generation‑Skipping Trust (GST) is an irrevocable trust designed to transfer wealth directly to grandchildren or other beneficiaries at least 37.5 years younger than the grantor, thereby skipping the children’s generation for estate‑tax purposes. This can dramatically reduce cumulative estate taxes and preserve family wealth over multiple generations.
This trust is almost only useful when grantor has already exhausted exemption amount ($15M now). Even then, there are other better tools than GST.
A flat 40% federal tax applies to transfers to skip persons above the exemption amount ($15M now).
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