If your goal is to leave a lasting legacy for your children and grandchildren, a generation-skipping trust can help make that happen. It offers more control over how assets are passed down while helping reduce estate tax exposure for future heirs. Your Arkansas Generation-Skipping Trust lawyer from Legacy Law Firm offers a complimentary 30-minute consultation to explore whether this tool fits your long-term planning goals.
What a Generation-Skipping Trust Can Do for Your Estate Plan
If you are thinking about how to leave something meaningful to your grandchildren or great-grandchildren, a generation-skipping trust might be worth considering. This type of trust lets you pass assets directly to younger generations without having to pay estate tax every time the wealth changes hands. It is a smart way to preserve more of what you have worked for and make sure your legacy reaches the people you care about most.
One of the reasons families choose this strategy is because it gives them more control. Maybe your kids are already comfortable, or you just want to help the next generation build something for themselves. With a generation-skipping trust, you can set the rules. You decide when funds can be used for, whether that is college, starting a business, or something else you want to support.
This type of planning works in part because of the exemption allowed under 26 U.S.C. § 2601. With the right structure, you can pass down a significant amount of wealth without triggering extra taxes on each generation. A generation-skipping trust helps you do that while keeping your intentions clear and your assets protected. If your goal is to support your family for years to come, this is one of the best tools that can help you do it.
Managing Tax Liability and Trust Control Effectively
If you are building a generation-skipping trust, you are likely thinking about two things: keeping more of your assets in the family and keeping the IRS out of the picture. That balance is possible with the right plan. Your estate planning lawyer can help you reduce taxes while making sure your family has long-term guidance and protection.
Using the GST Exemption to Avoid 40 Percent Transfer Tax
In 2025, the federal exemption for the generation-skipping transfer (GST) tax has dropped to just under $7 million per person. That is a big shift from what families had access to over the past few years. If you missed the higher exemption window, there is still time to plan. A generation-skipping trust can help you make the most of what remains and protect future gains from being taxed all over again.
This trust gives you a way to pass assets directly to grandchildren or other younger beneficiaries without facing another round of estate tax at every level. If you are holding investments, real estate, or a business that will grow in value, it may make sense to transfer it sooner rather than later. Once the assets are inside the trust, future appreciation stays protected and out of your taxable estate.
Structuring the Trust Without Giving Up All Control
One common concern with long-term trusts is whether you will lose too much control. The good news is that you do not have to give everything up to make this strategy work. You can help pick the trustee, add clear rules about distributions, and even reserve the right to make changes if the situation calls for it. Your Arkansas trusts attorney can help you find the right balance between protection and flexibility.
Arkansas law, under Ark. Code § 28-73-808, allows you to give trustees the authority to act while still keeping safeguards in place. You can build in options to remove or replace trustees, limit how funds are used, or create checkpoints for when family needs shift. This way, your trust stays aligned with your goals while giving the people you care about real support.
Planning for State and Federal Tax Shifts
It is easy to focus only on the federal numbers when talking about estate taxes, but state laws can matter too. Right now, Arkansas does not have a state-level estate tax, which is great news. But that could change in the future, and if you own property or have investments in other states, those tax rules may already apply. It is worth taking a little time to look at the full picture.
We like to build flexibility into your trust so it can adjust as tax laws shift over the years. That might mean giving your trustee a little room to make changes or adding fallback options that keep the plan working if the rules change. A few extra steps now can make it easier on your family later, especially when it comes to avoiding future tax headaches.
Giving Beneficiaries the Right Level of Access
One of the best parts about building a generation-skipping trust is that you get to decide how much access your beneficiaries have. You can keep things tight if you are worried about someone spending too quickly, or you can build in room for support when they need it most. There is no one right answer here. What matters is that the structure matches your family and your goals.
Is a Generation-Skipping Trust the Right Tool for You?
If you are thinking about how to leave something meaningful for your grandkids without losing a chunk of it to taxes, a generation-skipping trust might be exactly what you need. This type of trust gives you a way to pass assets down to younger generations while skipping the estate taxes that usually apply when wealth moves from parent to child and then child to grandchild.
It is a helpful option for families who want to keep their estate intact and avoid delays in probate. A generation-skipping trust might be a good fit for you if you are looking to:
- Avoid double taxation across multiple generations
- Leave property or savings directly to grandchildren
- Reduce the size of your taxable estate
- Keep your estate out of probate court
- Put clear limits on how and when assets can be used
- Work around today’s lower estate and GST exemptions
- Support family members with education or housing needs
- Protect wealth from future divorces or creditor claims
- Build a legacy that lasts beyond your children’s generation
- Plan for skipped generations or special family needs
- Let long-term investments grow under trust protection
This type of trust is not just for the ultra-wealthy. It works well for any family that wants to plan ahead and make sure future generations are supported in a thoughtful, tax-smart way. If your goals include leaving something stable for your grandkids and doing it in a way that protects your assets, this could be a great option.
What It Costs to Create and Maintain a Generation-Skipping Trust in Arkansas
If you are thinking about setting up a generation-skipping trust, one of the first questions you may have is what it actually costs to get started. Like many estate planning tools, the price depends on your goals, the number of assets involved, and how complex the trust terms need to be. Your estate planning attorney in Arkansas from Legacy Law Firm can walk you through the setup process and give you a clearer idea of what to expect based on your family’s situation.
Most trusts involve an upfront cost to create the legal documents and outline the rules of the trust. This can range from a few thousand dollars for a straightforward plan to more if your estate involves business interests, real estate, or custom provisions for specific beneficiaries. After the trust is created, you may also have administrative costs. These could include annual fees for a corporate trustee, filing fees, or ongoing accounting and tax preparation.
The long-term cost of a generation-skipping trust depends on how it is managed. If you use a professional trustee, you may pay an annual percentage of the trust’s value for their services. If a family member is serving as a trustee, you may still need legal or financial support to help with compliance and reporting. The good news is that a well-structured trust can more than pay for itself by reducing taxes, avoiding probate, and keeping your family’s plans on track for years to come.
Meet With an Arkansas Wills and Trusts Lawyer About Multi-Generation Planning
We work with families who want to protect wealth beyond the next generation. Your Generation-Skipping Trust attorney in Arkansas with Legacy Law Firm can help you build a plan that preserves what you have built while reducing estate tax exposure. Contact us to take the first step toward long-term protection.
Contact Us
Feeling lost or worried about your future? Our team at Arkansas Legacy Planning is here to provide personalized support for all your estate planning needs. Contact us today so we can start working on a clear, tailored strategy designed specifically to safeguard what matters most to you.
