I received a sizeable inheritance a few years ago. Should I do any planning to make sure that, when I die, my grandsons inheritance from me wont be swallowed up by taxes?
If you have considerable assets, additional advanced planning may be necessary. For example, grandparents must be aware of the generation-skipping transfer (GST) tax, a federal tax that is in addition to the usual estate tax. The GST tax applies whenever anyone gives assets to someone who is two or more generations younger. Currently, the GST tax rate is between 45 percent and 46 percent, depending upon the year of the transfer. You may pass down as much as $2.0 million without paying the GST tax. There are several techniques you can use to pass down assets for the benefit of your grandson without paying the GST tax. For example, you may wish to do the following: * Arrange to have your grandsons tuition and medical expenses paid for directly. As long as the payment is directly to the educational or medical provider, no GST or gift tax is triggered. * Set up a “grandchilds trust.” A grandchilds trust is irrevocable and must be used for the benefit of a particular grandchild. At the gran
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