There are many steps and challenges that can go into planning your estate and ensuring that you have protected your assets for future generations. In high net worth estates, particularly if there is significant family wealth, many families choose generation-skipping trusts to help them transfer wealth directly to their grandchildren. Understanding generation-skipping trusts can help families in Coral Gables and elsewhere make the right decisions regarding asset management and estate planning. Our local trusts attorney can offer further guidance.
When someone in Coral Gables sets up a generation-skipping trust, their assets pass directly to their grandchildren, bypassing the grantor’s children. The assets are placed directly in a trust that will ultimately be inherited by a younger generation. In some cases, the grantor can provide financial support for their children by providing them access to the income generated by the assets placed in the trust, while the assets themselves are left to a younger generation.
Placing assets in a generation-skipping trust can offer a number of potential benefits. Trusts when drafted with careful language can help shield many assets from things like bankruptcy and lawsuits, and may prevent assets from being divided in a divorce, which means that generation-skipping trusts can help ensure that those assets remain in the family. They can also help save significant amounts in taxes, since the wealth is transferred directly to the grandchildren instead of passing through the middle generation first.
While generation-skipping trusts can offer long-term financial advantages for Coral Gables families, there are some elements that individuals planning to protect their assets in a trust should consider before they move forward with their plan. First and foremost, they should consider the impact the generation-skipping trust may have on the middle generation. While their children can be provided with some income from the trust to help with ongoing expenses, they will not have full access to those funds. Not only can this increase the risk of financial hardship, it may breed resentment in the middle generation, since they will never have ownership of the assets in the trust.
Trusts also require a trustee, who will be responsible for managing the assets in the trust and ensuring that the grantor’s desires are followed. In some cases, this can mean significant ongoing expenses—and since the assets are held in trust for a third generation, they may remain in the trust longer. With generation-skipping trusts, it is particularly important to clearly assign a second trustee to take over if the first is no longer able to fulfill those duties.
Finally, placing assets in a generation-skipping trust means that the assets cannot be withdrawn until the terms of the trust are met—often the third generation coming of age. In some cases, that can make it difficult for the middle generation to manage their expenses or to take full control of those assets.
Before setting up generation-skipping trusts in Coral Gables or elsewhere in Florida, you should carefully consider how that trust has the potential to impact your family both now and in the future. An estate planning lawyer can help you think through the possible legal and financial implications of those decisions and ensure that you are positioned to protect your assets as effectively as possible. At Veliz & Associates, P.A., we can help with all your needs, including setting up generation-skipping trusts and other asset protection solutions.
We evaluate your case and determine how we might be able to help.
We will meet with you to discuss your next options and lay out a plan.
Our team guides you throughout the process so you feel confident about your choices.
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