The Ulitmate Generation Skipping Trust?

Estate tax professionals, whether CPAs, tax attorneys or other financial advisors, have long honed their skills at finding the most beneficial wealth transfer strategies. The goal in most cases is to reduce or eliminate tax liabilities, while also ensuring for other distributions such as charitable giving. There are many such strategies and the result is a tax specialty filled with an array of acronyms, such as CRATs, CRUTs, CLATs, CLUTs, GRITs, GRATs, GRUTs, an so on. And of course, there's the common GST, or Generation-Skipping Trust. But almost a century ago, one wealthy individual, and his intrepid planner, designed a considerably less common variety of the GST. One that eventually would take almost a century before paying its beneficiaries. Take this recent article from the Wall Street Journal (accessible without subscription from Yahoo Finance), involving the 1919 death and estate creation of a Saginaw, Michigan, multi-millionaire. His trust was designed not only to skip his children and his grandchildren, but not to disburse any funds until the death of the last of any grandchildren he may have by that point. The result was realized this year, 92 years later, with the passing of his last grandchild, resulting in distribution of more than $100 million to the 11 heirs still surviving. They range from great grandchildren to great, great, great grandchildren. While there are many potential reasons for his super GST, the WSJ article suggests it was motivated by not wanting to spoil his children. Might it have been motivated by a desire for tax minimization? Perhaps, as the Estate Tax had been established just three years earlier by the Revenue Act of 1916. The rates were low then compared to recent rates of 35% or more (except for the repeal of 2010), and even the top income tax rate from the then recently enacted federal income tax had only been rasied to 15% following WWI. Regardless of the motivation, the trust will probably make it into future tax courses as an example of how to give an IRS auditor a migraine. http://finance.yahoo.com/family-home/article/112715/shutting-kids-out-family-fortune-wsj For more on estate planning software, see: http://www.cpapracticeadvisor.com/article/article.jsp?id=3270

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