A generation-skipping trust is a type of legally binding trust agreement in which the contributed assets are passed down to the grantor's grandchildren, thus skipping the next generation, the grantor's children. By passing over the grantor's children, the assets avoid the estate taxes on an individual's property upon his or her death that would apply if the children directly inherited them. Generation-skipping trusts are effective wealth-preservation tools for individuals with significant assets and savings. Because a generation-skipping trust effectively transfers assets from the grantor's estate to grandchildren, the grantor's children never take title to the assets. This is what allows the grantor to avoid the estate taxes that would apply if the assets came into the possession of the next generation first.Become a supporter of this podcast: https://www.spreaker.com/podcast/investment-terms--4432332/support.

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