Generation-Skipping Tax Explained: Secure Your Grandchildren’s Future with Trusts

In this episode, Dr. Friday discusses how transferring assets to your grandchildren can trigger generation-skipping tax (GST) and explains why setting up trusts through your children is the smart move to avoid a steep 40% tax.

Transcript – Edited for Readability:

G’day, I’m Dr. Friday, president of Dr. Friday’s Tax and Financial Firm. To get more info, go to www.drfriday.com. This is a one-minute moment.

Something to talk about. Transferring to your grandchildren may be a subject of generation skipping tax. We do have GST tax, and that is 40%. So if you decide to skip a generation and you say, hey, I really want to leave everything to my grandchildren, even though your children are still alive, the government says, wait, you’re trying to spread it out further. So we’re going to tax you on that if you do certain things. Your best bet is to set it in trust, put it to your children, keep the trust to have certain regulations so the grandchildren can still inherit. There are ways, but talk to a good estate attorney.

You can catch the Dr. Friday Call-In Show live every Saturday afternoon from 2 to 3 p.m. right here on 99.7 WTN.