Generation Skipping Trusts (GST Trusts)
Generation skipping trusts (GST Trusts) are often used to primarily benefit a person’s children. While a GST Trust could be primarily used to benefit grandchildren, this is usually not the purpose. GST trusts can be used to protect money you give to a child from the child’s creditors, a lawsuit, or a divorce. Also, the money given in a GST trust would not be considered an asset for a child when determining if the child’s estate is subject to estate tax. If your beneficiary already has a large estate, has the potential to be wealthy, or is in a field that that is prone to litigation, GST planning should be considered.