Generation-Skipping Trust

Generation-Skipping Trust
A type of legally binding trust agreement in which the contributed assets are passed down to the grantor's grandchildren, not the grantor's children. The generation to which the grantor's children belong skips the opportunity to receive the assets in order to avoid the estate taxes that would apply if the assets were transferred to them.

Because a generation-skipping trust effectively transfers assets from the grantor's estate to his or her grandchildren, the children of the grantor never take title to the assets. This is what allows the grantor to avoid the estate taxes that would apply if the assets were transferred to his or her children first.

Generation-skipping trusts can still be used to provide some financial benefits to a grantor's children, however, because any income generated by the trust's assets can be made accessible to the grantor's children while still leaving the assets in trust for his or her grandchildren.

Investment dictionary. . 2012.

Look at other dictionaries:

  • generation-skipping trust — n. A trust created to facilitate a generation skipping transfer. The Essential Law Dictionary. Sphinx Publishing, An imprint of Sourcebooks, Inc. Amy Hackney Blackwell. 2008. generation skipping trust A …   Law dictionary

  • generation–skipping trust — see trust Merriam Webster’s Dictionary of Law. Merriam Webster. 1996 …   Law dictionary

  • generation-skipping trust — A trust established to transfer assets more than a single generation removed from the transferor. See deemed transferor generationskipping transfer tax …   Black's law dictionary

  • generation–skipping transfer — n: a transfer of property or of an interest in property that is to a person of a generation more than one generation below that of the transferor and that can be characterized as a taxable termination, a taxable distribution, or a direct skip see …   Law dictionary

  • generation skipping — adj., adv.    referring to gifts made through trusts by a grandparent to a grandchild, skipping one s child (the grandchild s parent). Originally intended to avoid or defer federal gift or estate taxes if paid through a generation skipping trust …   Law dictionary

  • Generation-skipping transfer tax — The U.S. Generation skipping transfer tax imposes a tax on both outright gifts and transfers in trust to or for the benefit of persons two or more generations younger than the donor, such as grandchildren. The generation skipping tax will be… …   Wikipedia

  • generation-skipping transfer tax — The 1986 Tax Reform Act imposes a generation skipping transfer tax on (1) transfers under trusts (or similar arrangements) having beneficiaries in more than one generation below that of the transferor, and (2) direct transfers to beneficiaries… …   Black's law dictionary

  • generation-skipping transfer — Transfer of assets more than a single generation removed from the transferor (e.g., from grandfather to grandchild). See generationskipping transfer tax generation skipping trust …   Black's law dictionary

  • generation-skipping transfer or trust — A trust in which a principal amount is placed in a trust on the death of person A and is transferred to A s grandchildren when A s children die. The income from the trust goes to the children of person A while they survive. Bloomberg Financial… …   Financial and business terms

  • Form 706-GS(D): Generation-Skipping Transfer Tax Return For Distributions — A tax form distributed by the Internal Revenue Service (IRS) that is used to calculate taxes due on trust distributions that are subject to a generation skipping tax (GST). Form 706 GS(D) is used by any taxpayer who receives a taxable… …   Investment dictionary

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