It’s beneficial to be aware of the threats that exist when you are arranging for the transfer of assets to your loved ones after your passing. One of these would be the estate tax; another would be the costs associated with probate. Both should taken into consideration. There are ways that your estate planning attorney can navigate around these potential sources of asset erosion, and this is why legal representation is key.
Another potential danger is the possibility of claimants or former spouses attempting to attach funds that you leave to your loved ones. This is where asset protection comes in, and one way you can protect assets is to place them into a generation-skipping trust.
As the name suggests, you skip a generation when you name a beneficiary, selecting your grandchildren rather than your children. As a result, your children do not own the resources placed in the trust, so no one seeking redress from the children could try to attach them. However, the children are not left out. They can still benefit from the trust throughout their lives, receiving income and using property placed into the trust. Whatever is left at their death transfers to your grandchildren. Hence the term “generation-skipping.” It’s generation skipping only as to ownership, not to benefits received or use of the assets.
Asset protection is not the only benefit derived from the creation of a generation-skipping trust. There are also significant tax advantages. To find out more, don’t hesitate to take action and arrange for an appointment with a licensed and experienced Oklahoma City estate planning lawyer.
Author, President and Founding Attorney
Parman & Easterday