A generation-skipping trust is an estate planning tool designed to transfer wealth to grandchildren or later generations while limiting certain tax consequences. These trusts can allow assets to benefit younger family members while preserving long-term financial control. At Jones, Gregg, Creehan & Gerace, we help individuals and families in Pittsburgh and throughout Allegheny County create generation-skipping trusts as part of a broader estate plan. If you want to structure long-term wealth transfers or protect assets for future generations, we can explain how this type of trust may fit into your planning goals.
Why Work With Jones, Gregg, Creehan & Gerace on Generation-Skipping Trusts
Planning a trust that may last for multiple generations requires careful drafting and coordination with the rest of your estate plan. Our attorneys have worked with Pennsylvania families on trust-based estate planning strategies for decades.
Clients work with our firm because:
- We bring more than 90 years of experience serving individuals and families in the Pittsburgh region
- We assist clients with complex estate planning strategies, including multigenerational trusts
- We coordinate trusts with wills, powers of attorney, and other estate planning documents
- We draft trusts designed to preserve family wealth while allowing appropriate distributions
- We remain available to assist with trust administration questions after your plan is in place
Thoughtful planning can help ensure that assets pass according to your intentions and remain protected for future generations.
What Is a Generation-Skipping Trust?
A generation-skipping trust (GST trust) transfers assets to beneficiaries who are at least two generations below the person creating the trust, most often grandchildren or later descendants. The trust allows assets to pass through multiple generations without being taxed each time wealth transfers from parent to child.
Without this type of planning, assets may be subject to estate tax each time wealth moves from one generation to the next. A generation-skipping trust can reduce that repeated taxation while preserving assets for younger beneficiaries.
Children can still benefit from the trust during their lifetimes. In many cases, they may receive income or discretionary distributions for education, health, or other needs. When they pass away, the remaining assets continue to the next generation according to the terms of the trust.
This structure allows families to provide financial support across generations while maintaining long-term oversight of how assets are managed.
How Does the Generation-Skipping Transfer Tax Work?
Federal law imposes a generation-skipping transfer (GST) tax on certain transfers to beneficiaries who are two or more generations younger than the person making the transfer. This tax exists to prevent families from bypassing one generation in order to avoid estate taxes.
However, federal law also provides a GST tax exemption that can allow properly structured trusts to avoid or reduce this tax. Estate planning strategies often involve allocating that exemption to the trust when it is created or funded.
Because tax laws and exemption limits may change over time, generation-skipping trusts should be drafted carefully and reviewed periodically as part of an overall estate plan.
Who Should Consider a Generation-Skipping Trust?
Generation-skipping trusts are often associated with larger estates, but they may also be appropriate for families who want to preserve assets across generations.
You may consider this type of trust if you:
- want assets to remain available for grandchildren or future descendants
- want to reduce the tax burden on wealth transferred to later generations
- want to provide financial support to children without transferring full ownership of assets
- want to protect assets from potential creditor claims or divorce risks affecting beneficiaries
- want to preserve a family business or investment portfolio over time
The decision to use this type of trust depends on your financial situation, family structure, and long-term planning priorities.
How Are Generation-Skipping Trusts Created?
Creating a generation-skipping trust begins with evaluating your assets, family structure, and long-term goals. The trust document must address how assets will be managed, how distributions may be made, and who will serve as trustee.
The trustee is responsible for managing trust property, making distributions according to the trust terms, and maintaining records for beneficiaries. Because these trusts may remain in place for decades, selecting an appropriate trustee and drafting clear instructions are important steps.
Funding the trust is also critical. A trust must hold assets in order to function as intended, so part of the planning process involves transferring appropriate property into the trust.
Plan for Multiple Generations With Jones, Gregg, Creehan & Gerace
Estate planning often involves balancing current family needs with long-term financial goals. Generation-skipping trusts can provide a structured way to transfer assets across multiple generations while maintaining oversight of how those assets are used.
At Jones, Gregg, Creehan & Gerace, we help individuals and families throughout Pittsburgh and Western Pennsylvania develop estate plans tailored to their circumstances. If you are considering a generation-skipping trust or reviewing your current estate plan, contact Jones, Gregg, Creehan & Gerace to discuss how we can assist with your planning needs.
Frequently Asked Questions
Can a generation-skipping trust benefit people other than grandchildren?
Yes. While grandchildren are common beneficiaries, the trust may benefit future descendants or other individuals, depending on how the trust is structured.
How long can a generation-skipping trust last?
The duration depends on the terms of the trust and applicable state law. Many generation-skipping trusts are designed to remain in place for several decades.
Can a generation-skipping trust be modified later?
Some trusts can be amended or modified depending on how they were drafted and applicable state law. Estate plans should be reviewed periodically.
Who should serve as trustee of a generation-skipping trust?
A trustee may be an individual, a financial institution, or sometimes a combination of both. The choice depends on the complexity of the trust and the family’s needs.