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.
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.
There are several reasons why some people want to exclude their children from their will. It could be because they are estranged from the child or because they have already provided lifetime gifts to the child. Still, wanting to exclude your child from your will requires significant consideration as it has legal implications.
Even if you would like to exclude your child or children from your will, you are not allowed by law to disinherit minor children. Minors are legally protected from disinheritance. The law entitles these children to any financial support they would have received if they had lived with you until they became legal adults.
The law does not protect adult children as it does minor children. However, failing to name them in the will is not enough to ensure that they don’t receive part of your estate. Sometimes, the court assumes that the lack of a name in the will is unintentional, and they can be awarded an equal share as the other beneficiaries you name. If you would like to disinherit your adult child, you must provide the omission as direct information and ensure that the omission is intentional and not an oversight.
Inasmuch as you can exclude your adult children from your will, you must consider a few other factors, such as the following.
Take Action to Ensure Your Wishes Are Honored
The law does not deny you the right to exclude your child from your will. However, the law steps in to protect the rights of minor children, the disabled, or those who need help with medical expenses. Consult an experienced estate attorney in Southaven, MS, to ensure that you navigate these complex decisions. O’Brien Law Firm, LLC, is here to help. Reach out to us today for a consultation.
If you love pets, it means that you consider them an important part of your family. Pets are categorized as one’s property in most states. Still, there’s a lot that goes into caring for pets, and that care and love should continue even after you are gone. So, how can you ensure that your pets are cared for in your estate plan?
In the same way that a person establishes a trust for their children who have not come of age, you can ensure that your pets are cared for in your estate by establishing a trust for them. Understandably, setting up a trust for your pets is usually a long, complicated, and expensive option. However, it is necessary if you want to leave your pets in good hands and with enough money to pay for their daily expenses throughout their anticipated lifespan.
When establishing a trust for your pet, you should plan to ensure that they will be in good hands when you are no longer around to love and care for them. Given that pets are like children and they tend to accept someone they trust and are familiar with, you must find them the right caretaker.
You can look from within your circle of friends and family and then speak to the persons you consider long before you include their names in the trust document. If the person accepts to be your pet’s caretaker, you should go over your expectations and see that they agree with these expectations. Most importantly, you should ensure you choose a person who has your pet’s best interests at heart.
The final step as you work on plans to ensure that your pet is cared for in your estate plan is to provide for them enough funds. Ensure that the funds can cover the cost of their food, vet visits, and grooming. The goal is not to burden the caretaker by expecting them to pay for the pet’s expenses out of pocket.
If you love your pets and want them taken care of after your passing, you can make plans to have them live comfortably with someone they know and trust. If you are unsure where to start, contact O’Brien Law Firm, LLC, for expert legal guidance today.
