Estate planning becomes more complex when it involves leaving assets directly to grandchildren. The Generation-Skipping Transfer Tax (GSTT) was created to ensure that taxes are paid at each generational level. This tax can significantly impact how grandparents structure their estate plans, especially if they want to preserve wealth for future generations.
The GSTT is a federal tax applied to transfers made to “skip persons.” A skip person is typically a grandchild or any relative who is more than 37½ years younger than the person making the transfer. The tax applies to direct gifts, trust distributions, or transfers that bypass the immediate next generation. At a flat rate of 40%, the GSTT can create a major financial burden if not planned for effectively.
Below are various ways GSTT affects estate planning for grandchildren.
The GSTT reduces the value of assets reaching grandchildren if they exceed the current exemption amount. For 2025, the exemption is $13.99 million per individual. Any transfer beyond this limit is taxed at 40%, significantly lowering the inheritance for future generations.
Trusts are a common way to transfer wealth, but they must be managed properly to avoid unnecessary taxes. For example:
GSTT liability can arise from:
The GSTT adds another layer of complexity to estate planning, especially for those wishing to leave a legacy for their grandchildren. However, with proper planning, such as using trusts and allocating exemptions wisely, families can reduce its impact. If you are considering how the GSTT affects your estate plan, contact O’Brien Law Firm, LLC, today to learn how we can help you protect your family’s future.
Filing for Chapter 13 bankruptcy can be a turning point for people struggling with debt. Unlike Chapter 7, Chapter 13 allows individuals to reorganize their debts and create a repayment plan while keeping key assets like their home or car. However, it is important to understand how this decision can impact your financial future.
Chapter 13 bankruptcy stays on your credit report for up to seven years from the filing date. During this time, your credit score will be affected, making it harder to qualify for loans or credit cards. However, the structured repayment plan helps you establish a history of consistent payments, which can improve your credit over time. Some people find that their credit begins to recover shortly after completing the plan.
After filing for Chapter 13, you may face challenges in getting loans or credit. Lenders often charge higher interest rates or impose stricter terms. That said, tools like secured credit cards or small personal loans can help rebuild credit. Over time, these steps can make it easier to access better financial opportunities.
Chapter 13 requires a long-term commitment to following a strict repayment plan, which typically lasts three to five years. This process teaches better budgeting and spending habits, as every payment must be accounted for. Many individuals leave bankruptcy with stronger financial discipline, which can prevent future debt problems.
One of the biggest advantages of Chapter 13 is the ability to keep important assets. Homeowners can stop foreclosure proceedings and catch up on missed payments, while car owners can avoid repossession. This protection allows people to maintain stability and avoid losing items essential to their daily lives.
Completing a Chapter 13 plan results in the discharge of eligible debts. This fresh start provides an opportunity to rebuild savings, improve credit, and plan for the future without the weight of unmanageable debt.
While Chapter 13 bankruptcy can have challenges, it also offers a path to long-term financial recovery. If you are considering filing, contact O’Brien Law Firm, LLC, today to learn how we can help you take the next step toward financial stability.
Filing for bankruptcy can bring debt relief, but for those with co-signed loans or joint accounts, it may complicate financial responsibilities. When a loan or account is shared, both parties are responsible for the debt, and bankruptcy can shift the burden in unexpected ways.
When someone co-signs a loan, they are legally bound to the same responsibilities as the primary borrower. This means that if the borrower cannot repay the debt, the lender can pursue the co-signer for payment. Bankruptcy can change the situation depending on the type filed.
In Chapter 7 bankruptcy, the primary borrower’s debts are typically discharged, meaning they no longer have to pay them. However, the co-signer remains fully responsible for the debt.
The lender can pursue the co-signer for the entire balance, and if the co-signer cannot pay, they may face collection actions, wage garnishments, or negative credit reporting.
Chapter 13 provides some protection for co-signers. During the repayment plan (usually three to five years), an automatic stay known as the “codebtor stay” may prevent creditors from pursuing the co-signer, provided the borrower keeps up with the plan payments.
This stay can be lifted if the creditor proves that the co-signer directly benefits from the debt, such as using a car financed through the loan.
Joint accounts, often opened by spouses or family members, operate similarly. Both parties are equally liable, which means bankruptcy affects each account holder.
Bankruptcy can provide significant debt relief, but it is important to consider its impact on co-signers and joint account holders. Each bankruptcy type has different effects, so it is important to review all options with a legal professional. For guidance tailored to your situation, contact O’Brien Law Firm, LLC, today.
When most people think about estate planning, they imagine retirees or wealthy individuals with extensive assets. However, estate planning is not just for older adults or those with significant wealth. For young adults, having basic estate planning documents can provide peace of mind, protect loved ones, and ensure personal wishes are honored in unexpected situations.
Estate planning is not solely about dividing up money or property. It is about making important decisions regarding your health, assets, and loved ones. Even if you are in your twenties or thirties and do not own much, you are likely to still have possessions and responsibilities that need to be addressed.
For example:
For young adults with children, having an estate plan is crucial. If something happens to you, these documents allow you to appoint a trusted guardian to care for your child. This ensures that your child’s future is in the hands you choose, not a court-appointed guardian. Estate plans can also specify how financial resources should be managed for your child’s education, healthcare, or extracurricular activities.
Once you turn 18, privacy laws prevent your parents or loved ones from accessing your medical records or making decisions on your behalf. This can create complications during emergencies. By preparing documents like a healthcare directive or a durable power of attorney, you can:
Estate planning is not just about what happens after you are gone. It is about ensuring your wishes are followed, your loved ones are cared for, and your responsibilities are handled. Young adulthood is the perfect time to take control of your future. Contact O’Brien Law Firm, LLC, today to learn how to get started on this essential process.
Estate planning might seem like something only wealthy people need, but if you own a small business, it is crucial. Without a plan, you risk leaving your business and your family in a tough spot if something happens to you. A solid estate plan makes sure your business can continue to run and that your family and chosen successors are taken care of.
When you own a business, you are not just thinking about yourself but about everyone who depends on it. Estate planning helps you protect both your personal and business assets. If you do not create an estate plan, the state will decide who gets control of your business. This can lead to unintended consequences like splitting ownership between your spouse and children, which might not reflect your wishes.
Tools like wills or trusts can ensure your business ends up in the right hands. You can even pick different people to handle your personal and business assets, which makes sure everything is managed by the right person.
One of the most important things for business owners is having a succession plan. This plan says who will take over your business if you can no longer run it. Without one, your business could face confusion or, worse, arguments among family members or partners.
If your business is an LLC, you can pass ownership to your children while also cutting down on estate and gift taxes. This way, your business stays in the family without unnecessary legal and tax complications.
Another big benefit of estate planning is that it helps lower taxes. Using strategies like buy-sell agreements, life insurance, and trusts, you can reduce estate taxes, giving your family more of your assets. It also provides the liquidity needed to pay off any debts, so they do not have to sell parts of the business to cover costs.
Estate planning is key for small business owners who want to protect their legacy and provide for their families. The right plan can help reduce taxes, avoid legal complications, and ensure a smooth transition for your business. For help with your estate plan, reach out to O’Brien Law Firm, LLC, for experienced guidance.
