How Does the Generation-Skipping Trust Impact Settlement of the Estate of the Trustor?
A. Whenever a trustor dies, the assets need to be appraised to establish the new “tax basis” of the assets for any capital gains taxes on future sales and to determine the value of the estate. If the estate is taxable, a Federal Estate Tax Return will need to be filed and taxes paid. If the trustor left assets in a Generation-Skipping Trust, a Federal Estate Tax return may need to be filed even if the estate is not taxable so that the Generation-Skipping Exemption can be claimed to protect the assets from taxation when the beneficiary of the lifetime benefit trust passes away.
