The Generation Skipping Transfer (GST) Tax Exemption is the amount of wealth you can pass directly (or indirectly) to a grandchild without being penalized for skipping your children.
The GST Exemption is currently $3.5 million.
The GST Exemption is scheduled to return to $1 million in 2011. If this happens, you will have LOST the higher exemption altogether.
This Exemption CAN be locked in today, without paying any Gift Tax, by utilizing a special type of Trust. This Trust is called a “QTIP” trust.
A QTIP Trust is a trust set up for your spouse, paying all income to your spouse for the rest of his or her lifetime.
You can take advantage of QTIP Trusts to:
• Lock in today’s high GST Exemption with no gift tax cost.
• Create creditor-protected assets for your spouse (and vice versa!).
• Enhance other Estate Tax Planning opportunities.
One major planning opportunity is the ability to inherit QTIP Trust property from your spouse (yes, that is assets you first give your spouse) in a GST Tax Exempt, Asset Protected, Divorce Protected, Grantor Trust.
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