Trusts are a popular estate planning tool, and with good reason. They offer flexibility and assure you that your assets will pass directly to your beneficiaries per your instructions without going through probate.
Many older adults are discovering that a generation-skipping trust (GST) is an excellent way to preserve generational wealth and minimize taxes.
Could reduce estate taxes
When wealth is transferred from generation to generation, estate taxes are levied each time. While the current estate tax exemption is $13.99 million, in 2026, that exemption will drop significantly to $7 million.
The GST allows you to skip one generation of estate taxes by directly transferring your assets to your grandchildren (or beyond). This “skip” helps preserve more wealth for future generations. A GST doesn’t leave your children with nothing. You have the ability to design the trust so that your children can benefit from the trust’s assets during their lifetime without having direct ownership. Upon their death, the wealth is eventually passed to your grandchildren.
Provides protection
Another benefit of placing your assets into a GST is the protection it provides. Since the trust owns the assets and not an individual, they are protected from creditors, lawsuits and ex-spouses (if a grandchild divorces). This adds an extra layer of security for wealth preservation.
Assets held in a GST also avoid the probate process, which can be time-consuming and costly. The trust can help ensure a quick and easy transfer to your beneficiaries and keep the details of your finances from the public.In regard to tax efficiency, Florida is one of the best states for establishing a GST. Income from a trust isn’t subject to a state income tax, allowing your assets to continue to grow within the trust. With a GST, you can have the assurance that your wealth will be preserved for generations to come.